My flagship program the Land Profit Generator teaches you how to find and purchase pieces of land for WAY below market value (usually 5 – 20%, depending on the size and value of the parcel). Many, many people have had great success with my program, but I have seen that one of the more intimidating parts of flipping land can be identifying which legal document to use and when.
In the Land Profit Generator program, I go over each step of the process in detail and provide you sample documents that you can edit and adapt to your own circumstances (if you haven’t yet picked up the LPG program, you can get it by clicking here), but I thought that it might be a good idea to go over the basic documents here on my blog.
So without further ado, here are the 5 most important documents that you use when flipping land.
1) Letter to land owners. This is the letter that you send out to a list of property owners. It shouldn’t be very complicated, but it should convey a couple of pieces of information:
- Identify those who view property ownership as “a burden”
- Make it clear that you are willing to purchase their property from them for a SMALL CONSIDERATION
Including this information will weed out owners who expect a full market value purchase and thus save you from spending time on pointless conversations.
2) Purchase/Sale Agreement. Once you have spoken to the person and negotiated a price, you will need to prepare a document that sets out the terms of the purchase (making sure to leave yourself the option to back out at any time and for any reason). Both you and the seller will need to sign the agreement.
I have found that the term “Sale Agreement” is easier to understand than “Purchase Agreement”, because some sellers think they are being forced to buy something they already own.
In most cases, there is no need to include anything about an escrow deposit.
3) Deed. This is the document that will actually transfer the title of ownership from the seller to you. Each state has a slightly different version of this document, and if you do not prepare it correctly it will be rejected by the Recorder/Clerk, causing you a headache.
To find out what kind of deed is used locally, you can either: a) use a title company for your first deal and then use the same type of document for future deals, or b) go to the office of the County Recorder/Clerk and look at recently recorded deeds (from the past few days). Then jot down the name of the document and the basic information it includes, and then make your own with a similar layout.
4) Purchase/Sale Agreement (this time as the seller). Once you own the property, you will need to market it to find a buyer. Once you have done that, prepare another Purchase/Sale Agreement, only with your name listed as the seller. Then send it to the buyer, making sure the document clearly states the payment terms (making sure that everyone knows what is expected of them.
5) Loan Servicing form. This final form is used when you sell with owner financing (which I think is a great way to generate some Temporary Cash). This is the form that you prepare and send to a third-party company who will take care of collecting payments and sending the money to you.
Once upon a time I used PayPal, but these days they frown upon handling payments for land. Just Google the term “Loan Servicing Company” and the name of the area you are investing in to find a local company.
Finally, there is a secret sixth document that can protect you legally: something I call the “as-is” form. This is a form where the person acknowledges that they are purchasing the land “as-is” and that they have personally seen the property. This prevents the person from coming back later and suing you for supposedly “hiding” and defects about the real estate. In fact, I am happy to say that after over real estate 3,000 transactions I have never been the subject of a lawsuit.
Use these documents to flip land, and please visit www.landprofitgenerator.com to purchase the complete program which covers these steps in much more detail.