How To Avoid Land Flipping Schemes

Have you noticed all the bare land auctions online that don't require credit check and promise low monthly payments? Ever wondered how these too good to be true deals are made available? I'm sure there are lots of ways that this scheme is run, but I suspect this is the most common method.

How Land Flipping Schemes Work

1. Schemer buys land at a Tax Defaulted Properties Auction at an incredible discount. These auctions are normally hosted by local governments everywhere. For example Modoc County uses a service called bid4assets.com to faciliate their tax auctions.

2. The schemer never visits the land but instead posts it for sale at a much higher price and offers owner will carry terms. Sometimes they use an auction style sales tactic where bidders compete over the initial down payment which is often just a few hundred dollars.

3. Buyers are attracted by the low monthly payments and buy land without ever having a real plan about building on it.

4. Buyers default on payments and the seller takes the land back, or, buyer pays off land but eventually sells it off at a loss because the land is unbuildable (or not cost effective to build).

5. The same property reenters the cycle at a reduced cost again.

It finally occurred to me that this is what has been happening a California Pines for over 35 years. Not only have the big developers guilty of running their land investment schemes but so have a whole hord of small time land gamblers.

How Not To Be A Sucker

To avoid these schemes don't let yourself get suckered in by low monthly payments or unbelievably low prices. Instead do your homework on the area like I have been. Call realtors and the county offices to learn more about building requirements. Look everywhere for red flags as you do your due diligence before investing money.

There is a lot of really cheap land out there in remote places. Some of them are friendly to owner builders and alternative housing. You can make your land ownership dreams come true, just watch out for the landmines.