Land is easier to buy sight unseen, houses are easier to sell, and the tradeoff is worth weighing carefully for remote investors

Question

Running both land and houses remotely makes the tradeoff between them clearer over time. Land suits the virtual model almost too well. There is no roof, no mold, no tenant, and most condition questions are answerable from a desk: parcel maps, topography, flood layers, whether the county will issue a septic permit. A local contact can walk the parcel for photos and confirm nobody has parked three cars and a shed on it. Acquisition risk on raw land tends to be genuinely low. The exit is where it gets hard. Land buyer pools are thin and specific. A lot priced right on comps can sit 90 days and then move 15% under, because the one buyer who wants it knows he is the one buyer. In a number of states sale prices are not public at all, which makes land comps worse than house comps in exactly the markets where an investor would want the most help. Houses invert the equation. The buyer list is deep, cash investors will look at anything with a number attached, and a contract can move in two weeks. But every unseen house carries condition risk priced off photos taken by someone who is not a contractor, and a $30,000 miss on scope is enough to kill an assignment or force a renegotiation. So the real choice for a remote operator is cheap acquisition risk with a slow exit, versus a fast exit with condition risk that cannot be seen from a desk. Both are manageable, but they ask for different skills and different patience.

mikeoconnell7 · Answer

Land tends to win, mostly because local help is cheaper and easier to find. A person with a phone and a truck can supply what is needed on a lot. Getting useful house photos requires someone who knows what a foundation crack looks like and what a panel should say, and that person has better paying work. A slow exit sounds like a marketing cost rather than a risk. Ninety days at a 15 percent haircut is bad, but it is a number that can be seen coming.

renee_dubois · Answer

@mikeoconnell7 the haircut is not the real risk, the earnest money and the contract clock are. A land contract at 30 days against a buyer who takes 90 to show up means extending with a seller who is losing patience, or eating the deposit. Houses tend to be the better bet. Condition risk is bounded if the inspection contingency is built properly and actually used. Buyer scarcity is not bounded by anything. On small multifamily, the deals that hurt are usually the ones where the buyer pool was misjudged, rarely the ones where the scope came in worse than expected.

brandonlee36 · Answer

Houses, though narrowing harder than @reneedubois suggests is worth it. One product type, one price band, and a buyer list actually talked to before contracting anything. Condition risk on unseen houses drops a lot when only ever underwriting the same shape of building, because the surprises and their costs become predictable. @nicoleadeyemi that land example is a pattern worth flagging. Comps in a state that does not publish prices means building value off asking prices and old listings, and asking prices on rural land are fiction about half the time.

Land is easier to buy sight unseen, houses are easier to sell, and the tradeoff is worth weighing carefully for remote investors

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