How To Profit With Landlocked Properties
Is there profit to be made purchasing landlocked properties? I will walk you through my process for making money off these types of deals. So this was inspired by someone named James, who reached out to me while doing direct mail marketing. He was wondering how he could eliminate landlocked properties. Honestly, I couldn't even answer that question. When I target an area, I target specific demographics. I usually look for people outside of the area, no LLCs, and I hit everybody with a lowball offer. I don't care about the property type as long as it fits my size criteria and price. My price point is always incredibly low, so I’m okay with getting some landlocked deals. Now, if you listen to other people out there, they're probably going to advise you to avoid this, and that's a fair statement. Buying landlocked properties can come with challenges.
Take A Calculated Risk
My take on it is if you're getting the property cheap enough, then you could always find a buyer. Now you may be thinking, who would possibly want landlocked properties? Many people buy land on speculation or simply because they want a place to park their money. So let's say you swoop up five acres from the current owner, and they know it's landlocked. They feel it's worthless, and you were able to get five acres for only $500. Depending on the area, you could absolutely flip this for $1,500 to $2,500. It's well worth taking it down for $500. Now let's say you don't find anybody to buy the property, was the $500 investment a real loss to you or was it a lesson learned? You want to avoid that moving forward, and that's entirely up to you and the buyer pool you're targeting. But for me, I’ll absolutely risk $500 on deals that I think fit my criteria. I know I could always sell or finance these deals as an exit strategy. So you put in $500, do some marketing, and give all the property details. A great way to market this property is to say, “You could own this for only $25 a month for the next four years!” That way, you get a bit of cash flow coming in, and you still profit from a landlocked deal.
Another thing you could do with landlocked properties is find out who owns all the adjoining property. Then pull the parcels off a public record, look up the owner, and send them an offer letter. You could say, “Hey, I just acquired five acres adjoining your lot. Would you be interested in purchasing this for $1,500?” Play the odds and see who's interested. Many people who own land in a specific area would love to add to their existing parcels. Then they own a bigger plot and have a bigger bug-out property or whatever their motivation is. But really, don't be afraid of investing in landlocked properties as long as you know your exit possibilities, as long as you can get the property cheap enough. That way, it doesn't matter if it sits on the shelf for a while until you find the right buyer. My offers are always incredibly low, which makes me feel secure in making these types of deals. I know there could be some challenges when making these lowball offers, but I’m paying next to nothing for the property, so my risk is really, really low. Plus, where else are you going to put $500? If you put it in your bank account, it just sits there, not doing anything for you. You could put it in the stock market and get a little dividend, maybe $5 a month if you put it into a REIT. That’s still not as exciting as what you could get long-term by parking it in some raw land that you're purchasing well below value.
Stick To The Process To Profit Big
There are just a few things to consider. Honestly, I’m not sure how you can weed out landlocked properties when doing direct mail marketing. It might be best to talk with your direct mail service. But for me, I simply target a county. I want off-grid properties within that county, and I want a specific size. Then I look for owners that live out of state. Then eliminate all LLCs, which will weed out most investors. Ideally, you’re left with people who inherited the property or bought it on a whim and don't care about it. Then offer everybody one lowball offer. My offers are extremely low. I play the odds. Most of the time, those odds work in my favor because I can get three to five accepted offers for every 500 letters sent out. That gives me plenty of profit right off the bat. Then on the back end, usually within ninety days, people dig those letters out and say you know what? I just fell on hard times. Maybe the car broke down, their kid went to jail, or they have an unexpected medical bill. Whatever the case, maybe they will accept that offer. Boom, you close a couple more deals.
Then here's the trick; stick with me on this. In many cases, people who accept your offer don't tell you they own other properties. So I have a little trick to get more deals out of my direct mail offers. After people accept your offer and you make the purchase, look up their name and info online in the same county. If they own anything else, you can prepare deeds for the other properties. When you mail them their check for this first deal, send a deed with all the other deals. You can say, “Hey, I happen to notice you own all these other properties in the area. If you're interested in selling these, go ahead and sign, notarize, and mail back this deed. Then I’ll send you another certified check for (whatever amount).” There’s no commitment for them here. They either say, yeah, I’ll accept that offer, or not. If they do, cool, they sign, notarize, and mail it back to you. They already know you're good for it because you just sent them a check for the first deal. Now, bam, you picked up a bunch of additional properties without any marketing cost.
Now let's say you purchase property from someone, and they don't have anything else in the area. That doesn't mean that they don't own other properties, though. So what I will do is send the check to them with a letter attached. It says “Thank you so much for your business; we really appreciate you. If you own any other properties, please send a list of what you have available if you're interested in selling.” So maybe I purchased something from them in New Mexico, but they also own a bunch of stuff in Texas that we never even talked about. When you send them a check with a follow-up letter, you could pick up more deals without the expense of direct mail marketing. So while many people view direct mail as one and done, it can potentially turn into much more.
Wrapping Up
So like I said, if you do direct mail marketing, don't worry about landlocked properties. Just try to make offers so low that the risk is worthwhile. Then, once it converts, see if they own anything else, and if they do, swoop up those properties as well. Then keep it going, flip everything, and send out more mail to keep the cycle going. If you have any questions about landlocked deals, direct mail marketing, or the general land investment business, I can walk you through your first or next land investment deal. Visit my site for more information.
Check out my YouTube channel if you’re interested in more land investing tips. Also, if you have any questions about the land investing business and need some coaching, shoot me an EMAIL. Then, we can see if we're a right fit for each other and lock you in for a coaching call.
