Think of Land Flipping Like Farming…
Imagine you’re a farmer. You’ve got a field ready for crops, but if you plant at the wrong time or ignore the field for too long, you miss out on the harvest. Land flipping is surprisingly similar! Neglecting key steps and making common mistakes can mean the difference between a fruitful venture and a missed opportunity. We’ve made these mistakes ourselves and are here to help you avoid them, keeping your “harvest” profitable.
Ignoring the Balance of Buying and Selling
One of the biggest pitfalls we see — and experience ourselves — is spending all your capital on land purchases without keeping enough funds to market and sell properties. This is like a farmer planting all his seeds but forgetting to save some for the next season. Land flipping requires a constant flow, so always reserve enough to reinvest and keep deals rolling in.
Tip: always aim to balance buying vs selling, and don’t let one slip to zero. LotHunt makes it easy to find, scrub and mail land owners with ease.
Underestimating Lead Times
Once you stop sending out mailers, your pipeline dries up. When we first experienced this, we were stuck waiting for nearly three months before new deals started coming in. Think of it as turning off your water supply; once you reopen it, there’s a delay before the flow is back to normal. In land flipping, stopping marketing efforts can bring momentum to a halt.
Solution: Consistently send out mailers, even when you’re busy with existing properties. Steady leads will keep your board full and your business in motion.
Speculating with Too Small a Sample Size
Sending out a small batch of mailers and basing your entire strategy on that result is like planting just a few seeds and expecting to know how your entire field will grow. Realistically, smaller mailers can give misleading results. High volumes are essential to understanding market trends accurately.
Tip: Build up to larger mail volumes (aim for 5,000+) so you can base decisions on reliable data.
Not Accounting for Hidden Costs
It’s easy to focus on the purchase price and overlook hidden costs like road access improvements, legal fees, or environmental issues. We’ve been there — finding an ideal plot only to discover hefty hidden expenses. Some properties look great on paper, but make sure you’re aware of local zoning restrictions, development requirements, and additional costs that might impact profitability.
Strategy: Spend time researching neighborhoods and development requirements. This diligence will save you from costly surprises.
Pricing Errors – Too High or Too Low
One of our earliest lessons was on pricing. If the price is too high, sellers will jump on the offer, potentially draining your cash; if it is too low, you may get no responses at all. The key is a balanced offer that allows negotiation without wasting time on unrealistically priced properties.
Tip: Research comparable sales and aim for competitive offers that leave room for negotiation without creating a “time sink.” Our Explore feature displays parcels with prices evaluated from nearby comps.
Jumping into Seller Financing Without a Plan
Seller financing can be a double-edged sword. While it promises passive income, it also brings complexities like bookkeeping and legal implications. We’ve learned that while seller financing can work, it’s essential to consider your capacity to manage payments over time and evaluate whether holding notes aligns with your cash flow needs.
Advice: Understand the administrative side of seller financing before diving in. If you need quick liquidity, consider focusing on cash sales.
Build on Strong Foundations
Think of land flipping as creating a sturdy house. Each of these common mistakes we’ve highlighted is a “weak wall” you can avoid. With experience comes wisdom, and each mistake is an opportunity to refine your strategy for higher success rates and returns. Keep your pipeline filled, price wisely, and always do your homework to avoid these costly setbacks. Your future self (and bank account) will thank you!
