Transcription
I'm excited to share with you the opportunity to buy a piece of land that you probably never knew existed. You're going to look at land in a whole new way. I'm also going to share with you the many mistakes that people make. You're not going to need good credit; you certainly don't need a bank, and you don't need to borrow money from anybody. I'm also going to share with you some of the mistakes that people make when buying raw land that can cost you thousands.
To begin, I want to share something with you that I just recently discovered. It's called Superfund. Superfund sites are sites deemed by the EPA, the Environmental Protection Agency, as somewhat, in the past, have been contaminated. Now, these are sites often times owned by individuals. They can sell those properties, but it's imperative that they disclose the previous use of that property, because that's going to make a big difference on what you can do on that land and not do on that land, and most importantly, your health and what's coming out of the ground in that land. You see, often times the contaminants that come out of that land are there for decades to come.
Now, the EPA does do a great job at actually testing that land on a regular basis and producing reports on that land. That's why it's important to know that when you find a piece of dirt that you like, whether it be a large track, a quarter-acre track, a 100-acre track, to do a little bit of research. You can do that by going to your local library and, most importantly, Googling Superfund and going to the Environmental Protection Agency. They do a really good job of giving you a full list of where those sites are actually located. Now, some of these sites still pull contaminated water out of the soil, which is really important if you're going to be putting a well on the property and, most importantly, you're going to be living on the property. So, often times it may be a great piece of land for hunting on, but not so much for living on.
Another thing you need to be concerned with and really just to look out for is fracking. Now, fracking is where they take a piece of land, they'll drill down hundreds of feet, and they'll pressurize that land to push the gas out, and in doing so, a lot of people just have a fear or discomfort for that, and they don't want to buy the land. So you have to always consider resale when you're buying a piece of land, whether you're going to build your home on it and you're thinking about reselling it, you're thinking about subdividing it; you have to know your surroundings. All that stuff is public information; it's just better to know it before you buy the land than after you buy the land.
Now, the way you buy a piece of property without having a bank and having bad credit and never having to borrow money from anybody, you have to know that there's raw land all around the country that is available for sale for anyone that wants to buy it on owner's terms. And often times these properties are not even available for sale. A good website or app, if you will, to use is called LandGlide (landglide). There's no endorsement or anything like that; it's just a personal app that I use. The app will actually show up on your phone; you can drive around and it will show you who owns that property. Once you find out who owns that property, you can go to your city, your county, your registered of Deeds office and find out more information on that property. Then you can do the research and actually find that property owner's name and phone number and personal information. As a result, you can ask them if they would be willing to sell you the property on their terms, owner's terms.
Now, really quick, I'm going to share with you what owner's terms is and then how to negotiate a deal and how that works as far as closing and everything. Owner's terms is quite simply just like it sounds: the owner sets the terms. However, it is negotiable, regardless of what anybody ever tells you when you're purchasing a piece of real estate, whether it be a land, a house, commercial; it doesn't matter. Just because they tell you a figure doesn't mean you have to be satisfied with that, but you just have to know going in that most of these properties you don't need a credit check, background check; you just have to write a check, and that check is for typically 10% of the value of the land or the purchase price. So if you're purchasing a piece of property that's $50,000, like the one I'm walking on right now—this is a $60,000 piece of land—the owner would gladly take owner's terms. It's going to take you a minimum of $6,000 down; they'll typically finance that over 15 to 20 years at an interest rate of probably around 7 1/2 to 8 1/2%.
Now, a good question that you may want to ask is, "Wayne, what can I do on that land?" You can do anything you want to on that land. The deed's going to be put in your name; the title's going to be put in your name, and basically they're going to act as the mortgage, or just like a mortgage company or bank, and you're going to pay them monthly installments, typically not to the owner, but but actually to a third party like a title or a closing attorney, that way everything's done legally. It's in your name; you're paying for the property, and as you pay, even though you're paying interest, you're still paying down the principal balance. And you also have to know a few checkpoints: not just can you do whatever you want to do with the property, but what you cannot do with the property.
Now, what I talk about not doing with the property is you have to look at the deed restrictions and the covenants, and those are typically handed down from owner to owner over the past decades. If you want to raise an emu farm, if the deed restrictions and covenants say you can't, it's hard to get those changed. Or if you want to raise chickens or cows or pigs, often times there may be deed restrictions, the most important of which is the size of home that you can build. Often times people call me and say, "Wait, I want to buy this house; I want to put a mobile home on it," but the restrictive covenants and the deed restrictions say you absolutely can't. Now, even though you're not in an HOA, those are restrictions, they say what you can and can't do; they're pretty much set by the person that really cut and developed that land from day one.
Look, the last thing you want to do is to buy a piece of property and only find out after you bought that land that you can't put a double-wide on it, or you can't put a single-wide on it, or you have to build a minimum of a 2,000-square-foot home and you just wanted to build a 1,500-square-foot home. All of that information is important; that's why I always tell and suggest to people, get a copy of the deed restrictions, the covenants, read over those, make sure they mix and jive and max with what you want to do with the property. It's also a really good idea to get a survey, get a survey on the property, or at least get a copy of the survey and make sure it's pretty recent. Often times, if a survey is 20-plus years old, you'll want to get a new survey, and here's the reason why: an older survey can lead to encroachments, encumbrances on the property. For example, you're buying a piece of property and there's somebody that set up a tent; well, you don't know whose tent that is or where that property begins. Is there a fence on the property? Is there a storage building? Has the neighbor just built a piece of property and he's put a dog house or a fence or whatever it may be? You need to know that going in, and what a survey will do is they'll measure the metes and bounds and they'll draw lines and pull string and they'll show you exactly where the property begins and where it ends, that way you know going in if there's any kind of encroachments or easements or anything on the property that's not supposed to be there. You can then address it with the property owner, and they can address it with the person that's encroached upon their property before it becomes your property.
Now, really quick, let me explain the three: encroachments, easements, and servitude. So an encroachment is when somebody's encroaching upon the property; an easement is when they've been granted an easement, a right-of-way, if you will, to be able to cross onto that property, the property that you're looking to purchase or the property that you own, to get to another property; and a servitude is from the city, the state, the county, and basically the servitude says, "We reserve the right to own this piece of property," and you can see that on a survey if it's, for example, power lines, water, sewer, gas, internet, electric.
Now, look, I need you to do me and yourself a big favor: make a promise to me that if you buy a piece of property, you'll get a title policy, you'll get title insurance on the land. It's so important to get title insurance on the land because if that land's vacant and there's never been any structure put on that property, you need to make sure you have a title insurance on it, and here's the reason why: the last thing you want to do is to buy that land and somebody comes and says, "Hey, I cleared trees off that land; you owe me money." Well, you're going to have a hard time proving that he didn't or did, or she didn't or she did, if you don't have a title policy. A title policy protects your interest from the day you take ownership on that property until the previous owners owned it and you into the future, and it's a one-time purchase that you pay for at closing, or the seller can pay for it for you on your behalf. It's not that expensive; on a $100,000 piece of land, it literally may run you less than $600, but it will be well worth it.
Now let's jump back over to the financing part of it, and a good question to ask is, "What are closing costs?" We always hear of closing costs. You have to understand that the only closing cost that you're going to have when you purchase a piece of land, commercial, residential, it doesn't really matter, is the title policy that you have to pay, and that really just depends on—and it's negotiable—some states the seller pays for the title, some states the buyer pays for the title. The cost of closing, you're not going to have all these closing costs: one, you're buying a piece of land, and two, you're not borrowing money from anybody. So the cost to close the transaction typically runs you $400 to $500, and that's the attorney fee and then whatever your title policy will run you. So you can see how you're not out of pocket a whole lot of money. If you purchase a piece of land, it's a $100,000 track of land, you bring $110,000, you may have to bring 11,500 total, and it's yours.
But look, before before you make it yours, I need you to do a couple more things, and hopefully you're writing these things down; if not, you can go back and watch this video as much as you want. Give me a thumbs up if you like this video; subscribe to the channel. My goal is to teach you everything I've learned in my nearly 30 years selling real estate. What you need to do—it's so important, and you should do this if you're buying any piece of property, especially residential and raw land—is get out and talk to the neighbors. Go talk to the neighbors. If you're going to build a home here, you need to know who you're going to live around, and you can do that. Often times people say, "Well, Wayne, what about a survey? What about encroachments and liens and doing all this work?" Listen, if you find a piece of property that you like, the contract's going to spell out that you reserve the right to do your due diligence, and that time frame is typically 10 to 14 days. So you find a home, property, piece of land, if you will, that you like; you're going to have 10 to 14 days to do your research; that locks the land into you, so no one can come along and buy it out from under you, and it gives you time to do all of your homework, and as I mentioned, get out and talk to the neighbors, talk to the people, ask them, go three or four blocks in each direction and find out was that land ever used for anything. Remember the Superfund.
So look, I'm not trying to be Debbie Downer, but you got to know this stuff up front. A couple of more things you need to really look at is what is the flood zone of that property. Often times if you see a little creek, a little stream, it looks real good, looks wonderful, you can kind of dream of a babbling brook; that property may flood, and you need to know your flood zones. You can research that, but quite simply, there's A, B, and C; all of them are flood zones, but C is the best, B is not so good, A can be the worst, but it doesn't necessarily mean you're going to flood every year; it just means that you may be in a flood area and it may flood once every 10 years. In that case, you need to know up front better than later to make sure you can build your property up.
Now another one, and this one's really important especially in certain parts of the country, and that is mineral rights and water rights. A lot of people say, "Well, Wayne, what's the big deal with mineral rights and water rights? I'm from Nashville, Tennessee, and there mineral rights, water rights, really not a big deal." I live now and have been for 15 years in Southern Louisiana, and I'm going to tell you there's a lot of oil way down deep underneath this land. So anytime a piece of property, land, commercial, anything is sold, the seller can keep their mineral rights, and you need to make sure you know that going in. So when you buy a piece of land, that the mineral rights are transferred, and it's it's really simple; it's just written in the contract. Most real estate broker companies, if you've got a good agent, they use a standard state-issued contract; most of them are state-required contracts, and in those contracts it says that the mineral rights will be transferred to you. You just need to make sure that when you buy a piece of land, no one's going to come encroaching up on your land, knocking on your door with a bunch of equipment that says, "We're about to start drilling for oil or drilling for water."
And look, if you want to get a really good deal on a piece of land, there are land foreclosures. You can go to FindMyForeclosure.com. When you go to FindMyForeclosure.com, you're going to see every foreclosure available for sale; you'll see really cheap houses, affordable homes, bankruptcies, tax sales, you name it, at FindMyForeclosure.com. And yes, land is available there for sale. And just know this: you can do your due diligence; you can have it inspected; you can do your research and try to pull surveys once you make an offer on the property. If it's bank-owned, you can deal, reserve the right to do any sort of inspections, but that doesn't mean that the bank's going to make any repairs or anything. When you buy any piece of property from the bank, 99% of the time you're buying it as is, where is. However, you can get some really good deals on a piece of raw land. Just use this video as a good checklist; take notes; go down that list if you contract something that's a foreclosure or any piece of land for that matter, and make sure that you make sure that you're comfortable once you sign on the dotted line. I'm Wayne Turner. Thank you for watching the video; give me a thumbs up; subscribe to the channel. I promise you you will learn something new about real estate in every episode.