Just closed on a 40-acre parcel that I probably paid too much for, but I’m not sweating it because I’ve got five different ways to make money on this thing. Wanted to share my approach to exit strategies since I see too many people getting stuck with properties they can’t move.
The property cost me $55k. Comps suggest it’s worth maybe $50k on a good day. But here’s how I’m thinking about it…
First exit is the obvious one - flip it to another investor or end user. Even at $60k I’m only making a small profit, but it’s still a profit. I’m already marketing it at $65k to test the waters.
Second strategy is seller financing. I’ve found I can usually get 20-30% above cash price when I offer terms. So that $65k becomes $75-80k over time. Yeah, it ties up the deal longer but the return is solid. Already have two people asking about owner financing.
Third option is splitting it up. The county allows 10-acre splits here without major hassle. Four 10-acre parcels at $20k each gives me $80k. More work, more time, but way better margins. The surveyor quoted me $3k for the split.
Fourth strategy, and this one’s longer term, is leasing for recreation or hunting. Properties around here lease for $500 to $1000/month during hunting season. Even at $500/month for 4 months a year, that’s $2k annually. Hold it for 5 years while the area develops and I’ve made $10k plus appreciation.
Fifth exit, which is my backup plan, is donating it for a conservation easement and taking the tax write-off. My CPA ran the numbers and I could potentially save $20k in taxes over the next few years. Not ideal, but better than being stuck with a property I can’t move.
The key thing I’ve learned is you need to think through these exits BEFORE you buy. I actually have a spreadsheet where I run through all five scenarios for every property I’m considering. If at least three exits don’t show profit, I pass on the deal.
What exit strategies are you all using that I’m missing?