Are you considering investing in real estate but need help knowing where to start? Or you've been investing in traditional real estate business models but are looking for new opportunities to build wealth? Consider raw land acquisition and entitlements.
Raw land acquisition is different from traditional real estate investing in many ways. Instead of buying a property with a building already on it, you're investing in undeveloped land with the potential for future development.
But is raw land acquisition really a better way to make money than traditional real estate investing?
In this blog post, we'll compare raw land acquisition vs traditional real estate investing and explore why adding value to raw land and selling it to homebuilders can be the best way to make money in real estate. We'll also touch on the VestRight mentorship program, which teaches investors and entrepreneurs how to find and add value to raw land with development potential.
So, if you want to explore the world of land acquisition and entitlements and learn how to add value to raw land, keep reading.
Raw Land Acquisition vs Traditional Real Estate Investing: Understanding the Differences
Now that we have a basic understanding of raw land acquisition compared to traditional real estate investments, let's dive deeper into what both entail.
Real Estate Investing
Traditional real estate investing is a common way entrepreneurs grow their wealth. This investment strategy typically involves purchasing an investment property, such as a house or commercial building, to generate rental income or sell the property at a profit.
The process involves finding a property that's already built, securing financing to purchase it, and then managing or selling the property.
Traditional real estate investments include:
- House flipping
- Short-term rentals
- Long-term rentals
- House hacking
- Real estate investment trusts (REITs)
Advantages of Real Estate Investing
On the plus side, real estate investors can generate passive income through rental properties, providing a steady cash flow stream. Additionally, owning real estate can provide tax benefits, such as deductions for property taxes and mortgage interest.
Real Estate Investing Disadvantages
There are significant downsides to traditional real estate investing.
Traditional real estate is highly competitive, commonly called a “red ocean” market. The competition can make it challenging to find profitable deals and stand out from other investors. This can lead to bidding wars and paying a premium price for a property.
Another potential drawback is that traditional real estate investing is subject to market fluctuations. If the real estate market experiences a downturn, your property's market value may decline, making it difficult to sell for a profit.
It's also important to note that property taxes can be a significant expense, eating into profits. Additionally, managing rental properties can be time-consuming and expensive, requiring ongoing maintenance, repairs, and tenant management.
Overall, traditional real estate investing can be a solid strategy for real estate investors who are willing to put in the effort to manage properties and navigate market fluctuations. But for those who want to avoid headaches from those factors, raw land acquisition is a more appealing option.
Raw Land Acquisition & Entitlements
Raw land acquisition and entitlements, as we mentioned earlier, is a unique real estate investing strategy that involves prospecting vacant land, adding value to it, and selling it for a profit. This process is what we teach our students at VestRight, where we help real estate entrepreneurs capitalize on the demand for raw land with development potential.
With VestRight, our students (AKA land acquisition specialists) go through training to find off-market raw land and sell it to land-hungry homebuilders. By partnering with homebuilders, you maximize your profits by selling the land for a premium price.
Pros of Raw Land
One of the biggest advantages of raw land acquisition is the potential for high returns. Many times, no capital is required from you in the deal. This means you have low risk, and more potential for profit when you sell to a home builder.
Additionally, vacant land requires less maintenance than developed property, which saves you money on upkeep and repairs.
Another significant advantage of raw land acquisition is that it operates in a “blue ocean” market, meaning there is less competition and more opportunities to find deals that generate high returns.
Raw land is often considered a niche investment because it requires specialized knowledge of zoning laws, building codes, and land use regulations. As a result, many traditional real estate investors may overlook raw land, leaving a gap in the market for savvy investors to capitalize on.
This blue ocean market isn’t going away either. There is a continuous demand for raw land from housing developers who need to build to make money and to fill the demand for housing amid the ongoing national housing shortage. With a huge population and limited housing supply, the demand for raw land is steady.
Plus, the ongoing trend of urbanization and suburbanization has created a need for new housing developments in areas with land availability. This presents a unique opportunity for raw land acquisition specialists to capitalize on that demand.
Potential Cons of Raw Land
However, there are also challenges to raw land acquisition. One major challenge is the need for market research.
Land acquisition specialists need to identify areas with high demand for new developments, and then conduct thorough research on the local real estate market to ensure they can sell the land for a profit.
This research requires significant time and effort, but can yield valuable insights that inform investment decisions and mitigate risk.
Another challenge is zoning and land use restrictions. Before prospecting for land, land acquisition specialists need to make sure the land can be developed in the way they envision. This due diligence involves researching local zoning laws and regulations, which can be complex and time-consuming.
Moreover, as real estate markets are subject to cyclical fluctuations, land acquisition specialists must be mindful of potential economic downturns and other external factors that could affect the demand for developments and lower their land value.
Staying on top of market trends is important to make informed decisions and avoid costly mistakes.
While it may require time and effort, the benefits of informed decision-making and risk mitigation when acquiring raw land are well worth it in the long run.
Why Adding Value to Raw Land is the Best Way to Make Money in Real Estate
If you're looking for a way to maximize your profits in the real estate world, then raw land acquisition may be the answer you're looking for. However, simply purchasing land and holding it is not the most effective way to make money.
Instead, our value-add strategy is the key to transforming raw land into a valuable piece of property. This investment model is one of the best side hustles in real estate.
Understanding the Value-Add Strategy for Raw Land Acquisition
The value-add strategy involves identifying properties with the potential for residential development, and then adding value through various techniques.
The idea is to take raw land, essentially a finite asset, and transform it into something much more valuable, an approved development.
Why This Strategy is Best
The value-add strategy is better than buying and holding raw land or making traditional real estate investments because it allows you to achieve a higher return.
When you invest in a raw land deal with the value-add strategy, you take control of the process and actively create value for the buyer, seller, and asset.
How Our Value-Add Strategy Works
There are several ways to add value to raw land, including obtaining land entitlements.
One approach to land entitlements is seeking zoning changes allowing residential development. This process can involve working with local officials to rezone the property or petitioning for changes to local ordinances.
Land entitlements can also include obtaining permits for land use, such as building and environmental permits. These entitlements provide opportunities for profitable development, significantly increasing the land’s value.
Another way to add value to raw land is through infrastructure improvements. This step might involve forecasting the cost to install utilities, build roads, or create other amenities that make the property more attractive to potential buyers.
Benefits of Adding Value to Raw Land
Adding value to raw land can be incredibly lucrative. By adding value, the land’s marketability and selling price increase significantly. This can lead to more options for exit strategies and higher profits.
Multiple Exit Strategies
One of the major benefits of adding value to raw land is that multiple potential exit strategies are available.
Traditional real estate investments are often limited in how they can be sold due to rental agreements, mortgages and escrow, or other restrictions.
With added value, however, land acquisition specialists have greater flexibility when deciding how to pursue their exit strategy from the deal.
Higher Marketability & Selling Prices
Another advantage to adding value to raw land is its higher marketability compared to traditional real estate investments.
By planning for the installation of utilities, access roads, and other infrastructure, raw land can become much more attractive to buyers.
This increases its profitability and makes it easier to sell at a higher price point.
How VestRight Can Help You Succeed in Raw Land Acquisition and Entitlements
Acquiring land can be a great way to diversify your portfolio and ensure long-term financial stability. And with the right tips and guidance, you can get the most out of your raw land deal.
VestRight is here to help you succeed in understanding how to acquire raw land with our mentorship program. In this next section, we’ll get into the details of the program and explain how it can help you understand raw land and residential land development to maximize your returns.
Understanding the VestRight Mentorship Program
The VestRight Mentorship Program is an educational program that helps students learn how to maximize their profits in vacant land.
Through a comprehensive curriculum, the program teaches key concepts such as market research, due diligence, zoning changes, and infrastructure improvements so that participants can develop the skills required to identify profitable raw land and successfully sell them to homebuilders.
Designed for both beginners and seasoned investors and entrepreneurs in real estate, VestRight offers a unique perspective on how to identify properties with high potential for development. Participants learn all about the basics of land acquisition, from how to conduct due diligence before purchasing the land, to how zoning regulations can influence the process of selling raw land.
With our focus on helping vacant land owners capitalize on their investments, many investors and entrepreneurs have turned to this program for guidance in navigating today's raw land market.
VestRight Success Stories
At VestRight, we’ve helped many clients successfully add value to their raw land acquisitions and secure substantial profits. Here are three examples of value-add deals our most successful students have completed:
1) Our first example is Jeff, a VestRight student who closed a $110K deal in just three months. Jeff found a 10-acre piece of raw land that had huge potential. With the help of VestRight's training, he negotiated a deal with a build-to-rent builder for a 32-house development, resulting in a win-win situation for both parties.
2) In our second example, we have Craig and Mari, a power couple who completed the VestRight course together. They closed two raw land deals in just nine months, resulting in a profit of $680K.
3) Lastly, let’s look at Jon, a VestRight student who impressed a national home builder with his development approach thanks to his use of the VestRight model. The builder was so excited about Jon's skills that they expressed interest in doing dozens of deals with him over the next decade.
By leveraging VestRight’s innovative strategies, these investors and entrepreneurs earned big paydays – proving that adding value to raw land can be a life-changer when done right!
*IMPORTANT DISCLOSURE: This is an intensive educational program and not a “get rich quick” opportunity. Land deals are not easy and not for everyone. It takes a lot of work and determination. Of those students who have completed the VestRight course, 25% are actively doing land deals. The average profit generated by those students on closed deals is $476,556. This data is current as of December 2022.
Discover the Benefits of Raw Land Acquisition with VestRight
We hope this blog has shed light on the differences between traditional real estate investing and raw land acquisition, and why raw land is the most valuable investment strategy.
Overall, acquiring raw land offers many possibilities for profitable returns. By taking advantage of the value-add approach, raw land acquisition specialists can turn undeveloped land into a wealth-generating income source.
The benefits of raw land acquisition are clear: increased marketability leads to higher sales prices; multiple exit strategies provide flexibility; and significant profits await those who add value and stand out from the competition!
With the right training, anyone can learn how to succeed in raw land acquisition. That's where VestRight comes in. Our comprehensive training program covers everything a real estate investor or entrepreneur needs to know to succeed in raw land acquisition. Don't miss out on the chance to achieve significant returns in real estate. Download our free Raw Land E-Book today and start your journey toward financial freedom!
Leave a Reply