Hi All - I’m pretty new to flipping land but I’ve been listening to podcasts and following the forums for the past 6 months. Just sent out my first few mailers and am getting some interesting deals coming my way.
One I’m having trouble with is a potentially landlocked property in Arkansas. It was bought as part of a subdivision that never actually got developed. 95% of the area is owned by one person (in a trust), the rest being my potential property and three other, small landlocked parcels behind it (I’ve considered selling to these owners but if they aren’t interested, I’m SOL). There is a dirt road leading from the county road to the parcel I have under contract, which is shown on the original plat map but as far as I can tell is not public. There is also no record of an easement with the circuit clerk or planning department.
The seller told me he’s accessed the property just fine over the 40 years he’s owned it but the owner of the larger property does have a gate where the dirt road meets the county road which is sometimes closed.
If the road is on the original plat map - does it count as public? If the seller has used the road for so many years could there be a claim for adverse possession? (I know AR has pretty stringent laws about this that tend to deny access.)
This would be my first deal and has the potential for a large profit on about a $5,000 investment. Would it be worth consulting a local real estate lawyer? Or should I move onto less risky deals?
The seller also has a smaller property close by that he would like to sell that seems less risky. I may just move to buy that one instead.
There is a dirt road leading from the county road to the parcel I have under contract, which is shown on the original plat map but as far as I can tell is not public. There is also no record of an easement with the circuit clerk or planning department.
The seller told me he’s accessed the property just fine over the 40 years he’s owned it but the owner of the larger property does have a gate where the dirt road meets the county road which is sometimes closed.
That dirt road is significant. Even if there isn’t legal access, physical access still counts for something on a practical level and will give you an easier case for getting it sold (also, be sure to get some kind of disclosure statement signed when you sell, so your buyer is 100% clear about the fact that there’s no legal access). However, the gate poses an issue.
In any event, my offer to the seller would be pretty much the same; really, really low. The lack of legal access is a big problem that will hurt its marketability (it wouldn’t be impossible to sell, but if the neighbors don’t want it, you’d likely have to sell it at a huge discount, and your offer should reflect that).
This doesn’t mean a deal can’t be done, but you need to protect yourself on the speculative risk you’re taking with a deal like this.
When I buy properties like this, I’m usually paying 5-10% of market value (and usually on the lower end of the spectrum). I’ll go even lower than 5% if it’s clear the seller doesn’t care. This is not the kind of deal you want to stick your neck out for.
@retipsterseth Thanks for your response Seth! I’ll go ahead and reach back out to the seller with an appropriate offer and explanation. Excited to get some traction on one of my first mailers but I’ll sit tight for a better deal before jumping in.
@bgarinther If you are inclined to pass on the deal anyway there should be no downside to contacting the owner of the adjacent parcel, the guy with the gate, and asking him about an easement. The road already exists and that poses a potential legal problem for him.
Maybe you get it done for a few hundred bucks and pump value into your target parcel. If you get some traction, maybe look at tying up the other three adjacent small parcels. Without current guaranteed access they may be inclined to also sell cheap.