Have you ever gotten into something with a certain set of expectations, only to find that there were some ugly, inconvenient truths nobody told you about how it really works?
In this episode, Jaren and I are going to cover all of the things we wish we had known about how the land business works.
Some of these things are negatives that will apply to everyone who gets into this business. Others are necessarily negative and they won’t always apply to everyone, but they’re very real facts of life that we didn’t know when we got into it, and we want you to be aware of them.
Links and Resources
- What Are “Comps” In Real Estate?
- 030: A Decade of Land Investing Experience in 60 Minutes w/ Renee Riker
- How Does an Assignment of Contract Work?
- How to Find the “Market Value” of Vacant Land
- 124: Growing a Land Investing Business at Warp Speed
- 123: The Overlooked Opportunity in Mobile Home Investing w/ John Fedro
- 107: 7 Ideas to Help You Fund Land Deals Like a Pro w/ Reid Kurtenbach
- 078: 13 Things You May Not Have Known About Note Investing w/ Justin Bogard
- My Experience With Fund and Grow: 0% Interest Loans for Real Estate Investing and Beyond
- What Is a “Perc Test” (And How Much Does It Really Matter)?
- How to Identify (And Avoid) Wetlands
- The Land Investor’s Guide to Using Other People’s Money
- Land Investing Masterclass Review
- The #1 Reason Land Investors Fail
- BoxBrownie Review: My Real Estate Pictures Have Never Looked Better
Seth: Hey, everybody. How's it going? This is Seth Williams and Jaren Barnes. You're listening to the REtipster Podcast episode 125. Today, Jaren actually had a really good idea for a podcast episode. It was to talk about the dark side of land investing or things that we wished we had known back when we first got started.
The idea here is we're just going to talk about a lot of the things that we inevitably found out as we started getting into the business that we were like, “Oh, I didn't realize that's how this worked.”
I think this is a very common thing. A lot of times when anybody starts anything, they do it with this, “Pie in the sky sparkly, everything's going to be amazing” mindset or view of how things are going to work out, because it's very compelling. In the land business, especially, it's very compelling for a lot of reasons, but just the way the world works, there's downsides to everything. And sometimes that stuff is talked about on the front end. But a lot of times it's not. We're just going to talk about some of that stuff that we found.
And some of these things may be just inherently how the land business works while some of them, maybe they don't apply to everybody, but it's how it turned out for us. Like things that just the way we work or the way our business is panned out. It's like, “Oh, okay. So that's something I got to deal with.”
We're just going to go back and forth. And we've each made notes about the things that sort of jumped out to us, kind of the negatives, the downsides. And we're going to talk about that because if you are somebody who's thinking about land investing or maybe you've been in it for a while, it's stuff that you should know about, especially if you haven't done it yet. Just things to be like, “Oh, okay. So, I should be prepared for this. I wasn't aware of that.” Hopefully, you'll take away some of that stuff. And if you've encountered some of the stuff yourself, maybe it can just resonate with you.
By all means, if there's other stuff that we don't cover that you are thinking of as you're listening to this, feel free to jump in our forum, retipster.com/forum, and post your experience. I think we can all stand to benefit from just getting a reality check from all those out there who have been doing this for a while.
Jaren, do you want to kick it off or do you want me to kick it off?
Jaren: Well, before we get started Seth, one of the things that I also have hopes for in this conversation is not only what the negatives of the land business are, but also how to overcome them or what our best advice is when it comes to overturning those potential negatives of the business. I originally created, at least my outline on what I'm going to share as a blog post. Hopefully, maybe even in the show notes, we can outline these things, like bullet points and have it be a place that people can go to.
So many people come to land and for good reason, because it's amazing and awesome with just rose-colored glasses. And then when they find out, “Oh, it's not like ‘push-button’ easy. I actually still have to work.” Then sometimes they will move on to other things and think that it was not what it was cracked up to be, but it is. It's just everything in life has a set of pros and cons.
Jaren: I guess I'll start off with my first one here. It can be extremely difficult to determine the full market value of a land deal. I think that for most people, especially when it comes to hard money lenders and private money guys, that is the biggest thing that scares them away from lending on land or engaging in the land business. It's just certain markets and not all of them, if you're in Florida or California where there's tons and tons of data, then you don't struggle as much. But if you're in a place like Tennessee, I've been noticing with dabbling a little bit in Tennessee, values are pretty difficult to really wrap your head around.
Seth: I think it's a two-part thing, actually. I think part of it is what you said, it’s the availability of data. But also, even when the data is available, there need to actually be real comps there. And like you said, in Florida, I think there are a ton of valid comps because it's split up so nicely and there are these cookie-cutter lots and big subdivisions and you have the combination of data availability. Plus, the relevant comps do exist.
Whereas, in other areas like California, for example, they probably do have the best data, but even then, the comps still aren't there. So, it's like, it doesn't bring full circle. And in other markets, there's no data and there's no comps. So, it's really hard.
I think at least most states I've been in have been, not like Florida in that, it's just really difficult to get all the information you need and you can certainly wing it. And there are certainly software out there that will be happy to do that for you. But the problem is that the data that you need doesn't exist. No matter what algorithm you're using or what rationale you're using, you can't really bring it full circle. There has to be some estimation involved, and estimation inherently brings uncertainty into the picture.
It's a tough hurdle to get over. But in terms of solutions, baked into the whole business model, the whole idea of offering way below what we think its market value is, whether that's accurate or not, the whole idea behind that is if you do end up being wrong, you've got a big profit margin in there to protect you.
That's where I think it can get a little risky when people start offering 50%, 60% of market value even, if those comps aren't there and the data isn't there and they don't have a land specialized agent and they really don't know what that market value is. Because now they're really winging it. But if you are pretty confident in that, that's when making those higher percentage of market value offers can make sense because you actually have some sort of firm foundation to back that up instead of just wild guesses.
Jaren: Yeah. I also think the topography of the particular state you're doing business in comes into play in this a lot because Florida is universally flat pretty much. Whether I'm looking at a lot in central Florida or Southern Florida or the panhandle, it's all kind of going to be roughly the same and you're not going to ever deal with buying stuff at a 90-degree angle on the side of a mountain like you do in other markets.
I think that's really where a lot of the struggle comes from with comps in certain markets. It's like, well, just because I have a two-acre lot that's all flat here, just because this one over here is two acres, it doesn't mean it's the same value because if it's on the side of a mountain and you have to literally build into the side of a cliff or something, then that can be a lot more expensive and a lot more difficult. So, it diminishes the value there.
My solution is land specialized agents, 100%. I think that really finding somebody who is doing a ton of listings and a lot of transactions in the land space, that is going to be your best source for determining market value because they know they've been in it. They just sold three houses within a half a mile from your property and they can go to the property and look at the typography and see is there anything that's dire standing out saying, hey, do not buy this property. They're going to know that because they'll go buy on your behalf.
I think for me, even though it is a bit of an art to figure out how to really vet if someone knows what they're talking about, because most listing agents are going to be like, “Yes, yes, I specialize in everything, give me your listings.” You have to use specific language that only land people understand and see if they understand what you're saying.
And other little tricks to the trade, to determine if they know what they're doing. But if they do, I have no problem offering 40, 50 cents market value because I'm very confident in what market value is because I use land specialized agents. So, that's been my workaround.
Seth: Yeah. That whole thing you mentioned about topography. I agree that's certainly a super important part of it, but there's really a lot, even beyond that. Even in areas where it is flat, location is a huge thing. A two-acre property, a mile one direction can be worth substantially less than the other direction or more, depending on the location. Especially in Florida, you got wetlands and flooding and perc test stuff and there's a lot to it.
So, I agree with that. I think the whole land specialized agent can cover a multitude of sins when you have somebody who just really knows that area and they've dealt with similar quirky properties and other locations and they have this understanding that you can't really have unless you're working there and you just have that familiarity with it.
Then I think the question just becomes, how do you find that person who's actually a specialist? Maybe when you're getting started and you don't actually have that person nailed down, probably getting that opinion from a few different people until you can get really confident.
Jaren: Yeah. And sometimes Seth, it's actually good to have a second opinion on top of somebody you have an existing relationship with. I know that some private lenders that I work with, will require a CMA from at least two or three random agents before they fund anything. Just because it's a good way for us to have a system that checks and balances your opinion. Because even if I am for whatever reason convinced, this is a deal and my agent is, if there's somebody else that says no, then that would be a red flag for us to say, hey, well, why are they saying it? And just kind of double-check our due diligence.
Seth: When you say CMA, what is that?
Jaren: That's a comparable market analysis. It's the official comp report that agents can print off of the MLS. And another thing too, that I'll just chime in there before we move on to the next point. Another workaround, if you don't use agents, is tax-assessed value. Sometimes depending on what state you're doing business in, there's something called a market value that is a valuation that's determined by the county. So, you'll have a tax-assessed value and a market total value that are two different figures. Sometimes, again, like in Florida, they're the same, but in some other places they're different.
And you have to get into the weeds of your specific market to figure out which one you should go by. But sometimes that total market value might not be a true representation of market value, but it might be good enough, and it's the same way with the tax-assessed value as well. And if you use the model of, “Hey, I don't really know what this property's going to be worth, I just need to buy it so stinking cheap that I'm going to be okay.” I would probably use one of those metrics. I'd say tax-assessed value. And then I would just say okay, I know that I can at least sell it for tax-assessed value. So, I need to buy these properties beneath the tax-assessed value and you could potentially run your business that way.
Seth: Yeah, I know. It's a similar thing in Michigan. There's taxable value and then there's state-equalized value. I don't really pay a ton of attention to either one because neither one of them really means anything definitive, but the tax law value I believe is, sort of assessed based on the less sale price. But the difference is it can only go up in certain increments and it caps based on when it gets sold and all this stuff. And the state-equalized value is supposed to be more in tune with true market value. I don't know, it gets confusing.
Well, like I said, it's probably worth looking at, but it doesn't really mean anything in the grand scheme of things because the county and the state are not really appraisers in the end. If we find it this hard to value land, they sure as heck don't know what they're doing any more than we do.
Anyway, for me, I feel like the land valuation is a very fundamental problem with land. It's just a difficult thing in many markets, but more of just a practical issue that I struggled with in my first year was I didn't realize how time-consuming it was going to be. And I think maybe part of it was because of the education I got in the beginning. It was not at all focused on being a time-efficient thing. I originally set up things in a way that was just the most time-consuming way it can be done. I think sometimes some attributes of that can be appropriate if you have no money like I did, just because the more time-consuming way to do it often doesn't cost as much. And if you have the time to spend on it, that can be a way to get over that hump and get past that barrier.
But even beyond that, answering phone calls, just looking at individual properties, making tons of offers by hand, talking to every single person on the phone for 30 minutes before they say no. That was the kind of stuff I would do. It was just like the slowest possible way that I could have done it. And even beyond that, even if I hadn't done those things, just figuring out what I was doing, getting my spreadsheets and my documents and what I call the CRM back then put together. It just took so much time just educating myself, just figuring out “What am I doing?”
Luckily at that point in my life, I didn't have kids. I didn't really have a whole lot of other stuff to do. I didn't really have any hobbies. So, it was fine. I could totally do it, but that first year was just super time-consuming. And I will say after that first year, the time-wasting got significantly better. I just figured out a whole lot of things I didn't have to be doing. The initial learning of how to do the business had already been done. But just getting through that first hoop or two or three was a lot for me. I wasn't really prepared for that. Did you have that too, Jaren, or was it not as bad for you?
Jaren: No, mine was a lot better than that because I went through the REtipster masterclass.
Seth: Of course, that makes sense.
Jaren: That's how I started in the land business. Now, I think it's very important to approach the business almost in a phase one, phase two, phase three kind of way. The first phase of your business, you have to set up your infrastructure. And it's a bunch of one-time, one-off projects. Yeah, you might at some time down the road, reinvent a bunch of stuff like switch to a more sophisticated or more robust CRM system or whatever.
But at least at first you need to get some way to have people call you that is not attached to your personal cell phone. You need to have some way for people to send you stuff in the mail and you need to have some way to track leads. So, to take your notes and make sure that you're staying organized. You need to just have the ability to have process leads in place.
As long as you have that, that's kind of your first phase of working. And then the education piece, if you're brand new to investing in land. That's actually much more time-intensive, because then on top of that, once leads start coming in, you're still figuring out your systems and processing leads.
But you get to a point where that system is pretty much set up and then at least the way that I did the business, I can get to coaching students and stuff. I can get them to kind of phase two pretty quickly. And then you're just focusing on leads.
When you get to that stage, I do think that it's a lot more feasible. It's much more manageable, but I do want to emphasize that it actually does take time. I think you're at least looking at three to six hours of calls, depending on the volume that you're wanting to do. If you're just trying to get to one deal, you can do it in less time than that. But if you're actually going to be taking it seriously, I think you need to be putting aside at least 15, 20 hours a week, for sure.
Seth: Yeah, for me it was, I don't want to say 100%, but most of my weekends and after work hours. I wouldn't sit around and watch TV. I didn't play video games. I didn't do any of that stuff. It was just like, “If I've got time, it's going into land.”
Keep in mind back then, things like Pebble didn't exist. I don't think Trello even existed. There was none of this stuff. There's a lot of useful things available now that can help this, but even then, you still need to figure out, “Okay, so where can I deploy this tool? How can that help me? Where does it fit into the overall scope of my business?” And that stuff takes time. Just realistically I would plan to invest a good chunk of time. If nothing else just learning what you're doing and what does and doesn't work in the markets where you're at.
Jaren: Investing in education, whether it's coaching or some kind of course, or what have you, I think is a way to speed up that process for sure. But you're still going to run into some of it. There is still a learning curve. That's inevitable.
Seth: Another thing that was really useful to me that I didn't even really get into this until I think a year and a half, two years into it. But I got into my first mastermind group, which was just formed with me and another land investor that reached out to me and we got to know each other. And it was Renee actually from episode 30 of the podcast, I think it was. It was just profoundly helpful.
Her, me, and the three other people that were in this mastermind group, we spent tons of time on these conference calls together, just talking about what we were doing and what did and didn't work. That alone was also very time-consuming, but it was crazy, the things I learned from that, and the direction-altering insights that came out of those conversations. Nobody in the group was way ahead of anybody else. We were all relatively new people to this, but there's just a lot of learning that can come from that. It didn't cost anybody anything other than their time involved in it.
If you're, again, coming from a place where I was, where you don't have a whole lot of money to spend, finding anybody really who is active and really plugging away at this, I guarantee you're going to learn something valuable from that, assuming everybody's willing to share openly and be mutually helpful like that.
Jaren: The next one for me is land takes longer to sell.
Seth: Is this compared to houses? Is that what you mean?
Jaren: Yeah. Compared to wholesaling houses, which I feel like is the most similar model in most people's minds. People understand a lot of times if they're in the real estate world wholesaling, there's a lot of overlap surprisingly in-between land and wholesaling. You're taking title in land so you're not really assigning contracts much. Some people do assign and they do options. There are versions of that. But I would say the majority of people do the land business by actually taking title.
And where the major difference is, it's harder to get deals in houses, but it's easier to sell and that's reversed in land. It's easier to get deals. It's harder to sell. It just takes more effort generally speaking.
But when I moved my operation from Southern Indiana to Florida, I remember being super frustrated because I'm like, “I have this deal. All the numbers work out. I have it listed everywhere. I did all the pictures. I did everything that you're supposed to do. I've checked all the boxes. Why isn't it sold?” And all it needed was a little bit of time.
That was something that was a good “aha” moment for me, just recognizing that sometimes in land, it just takes six months to sell. Sometimes in land, it might even take eight months or a year to sell the property.
I've had properties sell within a week of having it listed. Right now, the state of the market seems to be closer to three months, but it's still not, “Okay, I got a deal. I can guarantee I’ll sell it next week.” It's not like that. There's more of a hold period. I like to think of it in my head more of the timeline of flipping a house without the renovation. You can literally do everything right and it just needs a little bit of time on the market to move. It's a negative, but it's good to be aware of.
Seth: Yeah, I know. That's a really good one to be aware of. Because I can think of at least a few deals that I know I didn't lose money on, but I made a lot less than I could have simply because I got really uncomfortable with what you're talking about. The fact that it just takes time, it's like “I got cold feet. I want this thing sold now. Why is nobody calling at it? Why are people not pounding down my door for this awesome deal?”
I just started desperately doing whatever I could think of to drum up more interest in it. And what I resorted to was just lowering the price, just lowering the price, lowering the price, or throwing out some crazy term’s arrangement. It was effective. It did get people to call, but I could have made a lot more. I just needed to wait.
The funny thing is I feel like this happens a lot where I'll have something listed and there doesn't seem to be interest, just silence for months sometimes. And then all of a sudden out of the blue, there's three people that call it at the same time. "I want it right now, right now." And there's almost this bidding war that ensues. I'm just like, "Where were you people? I've been waiting for you. What happened? I don't understand why you're all suddenly calling me. I'm glad, but what took so long?”
When you get a lot more experience in a certain market, this becomes easier because you can be a lot more confident in what a property is worth. No questions about it. When you know the price is good, you can just be confident and be like, ‘Okay, it's good. I'm just going to wait, because I don't need to lower this.”
But especially when you're working in a new place or you just aren't new to the business in general, it can be just disheartening to sit there and just wait and wait and wait. And it's kind of a mind game, but I think if you have the awareness of what you're talking about Jaren, that's very, very beneficial to be able to not freak out when something isn't immediately selling.
Jaren: Yeah. Or feel like you're doing something wrong. That's what I felt like. I felt like I was doing something wrong, but I literally was doing everything right. I just needed to wait because that was the nature of the beast. I typically wouldn't change anything for at least like two, three months as bare minimum. And then if you haven't gotten any traction, then maybe consider adjusting your listing or your pictures. I would leave price as the last thing that I change as a general rule of thumb.
Seth: I think that's actually probably a good segue to another one that's on your list and on my list, just this idea that slow-moving inventory can tie up working capital. I'm sort of taking the words right off of your page, Jaren. I don't mean to steal that from you, but it totally relates to this whole issue.
Jaren: Plagiarism is the highest form of flattery.
Seth: Yeah. There you go. Just knowing that sometimes land is going to take a little bit longer and sometimes it doesn't. Sometimes it sells immediately, but I wouldn't plan on that.
Knowing that it's possible for stuff to sell a little bit slower, it also has this consequence of tying up your capital longer. You can't keep moving your business forward until stuff sells and you can get that money and run it through the cycle again. And when you have to just sit and wait, it's frustrating. And it has a real impact on slowing down your growth.
This also comes into play if you start doing seller financing, which is another thing that we have a lot more to get into. But just this idea of accepting payments for your properties that you sell instead of getting one lump sum of cash, there's also a consequence to that. Meaning you're not going to get your profit for years in a lot of cases. What this all comes down to is, inevitably, unless you have this bottomless pit of money to work with, you're going to run out of cash. You're going to hit this point where it's like, okay, I can't do anything now. Something has to sell so I can get more money to run it through the life cycle again.
Knowing that, one way to deal with that is to just have a ton of cash to work with in the first place. But what most people have to do is find some other source of working capital, whether that's working with private money partners or taking out a line of credit, or getting some other source of cash to work with.
I didn't do that in the beginning. I just slowed down a lot. It took me a lot longer to get where I was inevitably going to go. Other people like Tim Krause that we talked to in the last episode, 124, he didn't hesitate at all. He went right into the whole thing of borrowing money from people and he grew really fast as a result of that.
I’m not saying you have to do it, but it’s something to be aware of. With land because of the slower sales cycle and if you get seller financing evolved, that's something to be prepared for. At some point you're going to exhaust your funds and if you want to keep growing at that same rate, you'll have to have something else to draw from.
Jaren: Yeah. I would encourage people to actually plan on using other people's money in some form, even if it's like some kind of business loan. Conventional financing takes a lot longer and a lot more dotting the I’s and crossing the T’s and making sure everything is set up properly to get approved. But even if it takes a year or two years of doing the business to get approved for something like that, that could be worthwhile.
Seth: What do you mean when you say conventional financing, Jaren? Just to clarify that.
Jaren: Like an equity line, a credit in your house or a business loan. Something that is actually given to you from a bank, not a person. But for me, one of the biggest game-changers, a huge leverage point, an instant growth, was when I started bringing on private money. You typically should do a couple of deals under your belt on your own because you need to have a track record in order to get approved. But once you have that, as quickly as you are doing your first deal, I would start talking to people and trying to line up financing because I'm in a position and I don't say this in an arrogant or braggadocious kind of way. I'm saying this just as a matter of fact and sharing it so that you can say, "Hey, if Jaren can do it, I can do it too."
I'm in a position where I almost have unlimited "capital." Obviously, there's a limit to all capital, but I'm in a position where the setup that I have created is very competitive and it's very attractive to private money guys. And so, there's a lot of opportunity. Then if literally tomorrow, all of the people I'm working with for whatever reason wanted to stop working together, there's a lot of other people that would be interested in the program because I'm super generous. And there's other things, I have years of experience at this point and that kind of thing.
But when you're first starting off, I would lead with generosity if you're going to start canvassing people for money. Understand, “Hey, you have no track record. You have no reputation. You have nothing really to bring to the table here.” They're taking a pretty big risk on you. And so, if you wanted to start off doing a 50/50 split or even something more, especially on your first deal, if you have no track record, if somebody's willing to pay for marketing, pay for acquisition and due diligence and all of that, for you to even learn the process, I think it's justifiable to even have the split be in their favor on the first deal.
But once you've done a few deals and you have a track record, then you have more negotiation. If you wanted to write out the gate, go after it and just be like, “Hey, I'm okay taking 30% of the profit.” Then that could be something that would be mutually beneficial.
In land, the going rate is much more expensive because of the things we're talking about on this podcast. Because of evaluations and the difficulties, a lot of lenders shy away from it. It's not uncommon for people to do 50/50 splits. There are other guys that offer different situations. We've interviewed a couple of them here. Reid Kurtenbach. How do you pronounce Reid's last name? I always forget how to say it. He is now doing parcelfunders.com. Do you know, Seth? Reid's last name?
Jaren: Yeah. Kurtenbach. There you go. Seth's like, “What the heck is this guy talking about?”
Seth: I'm very confused right now.
Jaren: To land the plane there, I think that if you're willing to be generous right out the gate, you can find people who will cover your costs. But if you need to be understanding that it's going to cost you a lot, in the beginning, if you're going to use that. If all things being equal you can do a handful of deals yourself, in the beginning, that could get you your track record to better financing. But I do think that everybody should plan on using other people's money at some point, if you want to scale.
Seth: Yeah. That whole topic of using other people's money. There's a lot that goes with that, that we're not really getting into. But the main point of why we're even bringing that up is just this idea that you're going to run out of money at some point. That happens to pretty much everybody, unless they have a bottomless pit of cash already.
That is not inherently a bad thing. Some people don't need millions. They just say, "Hey, I've got $50,000. I want to make that work harder." And once that's done, that's fine with me. It depends on your goals and what you want to do and how much time you have to spend on it. But I just understand that once you start bringing in other private money people there's other relationships to manage.
In some ways it can be beneficial to your education, for one thing, if you have a lender who knows a lot more than you do and has worked with a lot of other land investors, you could potentially learn a whole lot from them in the process.
But it sort of goes hand in hand with this idea of exhausting your funds is the seller financing topic. And seller financing is something that is a big deal with land and it does fit the land flipping business model very well, just because of the whole issue that most people cannot get conventional financing to buy vacant lots if they have no immediate plan to develop it.
And as a result, if you finance that land for the people you sell it to, you can usually sell it for more. You can usually make more money from it. You can just open up the opportunity to attract more potential buyers. You could sell faster, but those are all the good things that are pitched to new land investors in terms of why the business is so great. And those things are true. They're not wrong, but there's other sides of the double-edged sword in terms of seller financing.
I found when I started doing it, that there were a few things that I just didn't realize I was signing up for. And one of them is the fact that, especially if you're not doing any kind of credit check or background checks on people, people will absolutely stop paying you. And sometimes it'll happen almost immediately.
Sometimes there are easy ways to resolve that. Especially if you have good communication, they're actually willing to answer your calls and that kind of thing. But sometimes they'll just ghost you and you're stuck to whatever state is going to allow in terms of how easy it's going to be to get that property back. And it's true. You can get that property back in most cases and resell it and usually make more money. But that doesn't mean it's not a hassle. There's time that goes into that.
Jaren: There's work involved.
Seth: Yeah, there's work, there's thought, there's just communication. It's all stuff you wouldn't have to do if you were just selling for cash. And also, the fact that it's going to take a lot longer to get your money in the first place. It's just going to take longer for you to get that profit and put it back to the cycle again. There's the paperwork involved. There are the legalities that go on with every individual state and it's different everywhere.
The whole issue of collecting payments, figuring out a way to do that, which there's certainly solutions to. I don't mean to say it's resolvable. There are loan servicing companies, there's software. So, there's ways to handle it, but it's all stuff you don't have to think about if you're just selling for cash.
While seller financing definitely brings lots of benefits to the table, and for some people it's golden. It's what makes the whole business work for them. There's that, but also just realizing there's other stuff you have to worry about too, that may not be in line with what you want. It might not be what you want your business to do for you. Maybe it's going to make things too complicated. And that's okay. I don't think a person should feel bad if they're not doing seller financing. It's just understanding what it's going to do for you for better or worse.
Jaren: I'm going to say something, Seth, that's a little bit controversial.
Seth: Well, that won't be the first time. What's up?
Jaren: I don't actually like seller financing in land. For some people, like you said, it's a good move. And if your objective is to get to a position where you can quit a day job as soon as possible. I think the easiest solution is just go buy a bunch of stuff that you can sell on terms and run the numbers to figure out, “Okay, well, if I want to make $5,000 a month or whatever, just reverse engineer how many deals you need at how much down, how much per month and whatever.”
But it's way more work. That's something that a lot of people don't share when they're talking about all the amazing things about terms. Because the ROIs are great. It's cashflow and blah, blah, blah. But I think that people who do terms starting off versus people who do cash, like I said, you need to prepare for 15, 20 hours a week. If you're using land specialized agents, in that scenario, in my head, because I always use land specialized agents, it might be a little bit different if you're listing your properties for sale and actually processing your own buyer leads.
But I know Willie Goldberg, back in the day, he used to live in Chicago and we had him on the podcast and I asked him kind of what his work week looked like. And he was working 60 hours a week in the land business, which is a lot. A lot of people kind of think around this idea that in land it's the four-hour work week thing. Like, “Oh, I can work only two hours a week and I can live on a beach somewhere and make millions and watch the money just roll into my account.” Or you have to have enough systems in place.
I think the closest model to that is what I do. Because I use land specialized agents, all I do pretty much every day is just process motivated seller leads. And yeah, sure, I use a little bit of time to check in with my agents, “Hey, what's selling?” Or check-in with the title company, “Hey, what are we buying? What are we selling?” But the majority of what I spend my time doing is just being on the phone.
And in terms of time, that's very small compared to what I see people having to do with terms, because you're dealing with defaults, you're dealing with early payoffs, you're dealing with regular payoffs. And each time that happens, there's a set of documents you have to figure out, you have to coordinate a closing. You have to figure out how you can get back control of the property and make sure that the powers that be at the county or state-level are satisfied with the way that you handled everything and make sure that you are good to go. There's a lot that's involved that they don't advertise. They just say, “Yeah, just sell this thing that you bought for $500, for $3,500 and it's going to be great.”
Seth: Yeah. Case in point back where I used to work, it's a sort of different thing, but we did commercial business financing for real estate specifically. I think we had maybe 140, 150 loans on the books on average when I was there. It's a different type of property, different loan amount, that kind of stuff, but still very similar in the fact that this shouldn't be that much work. These are just loans for the people that are supposed to pay, how much work is there in theory? But it is a lot of work.
We had a full-time person dedicated to what we call loan servicing, which is literally just taking care of the people who are making payments in terms of verifying, “Are their taxes paid? Are they screwing things up? Did they stop paying? If so, how do we fix that? How do we communicate with that? What do we have to file in the county?” It just goes on and on and on. So, there's a lot going on.
I think there is such a thing as seller finance deals that are passive where the person just does what they're supposed to do. That can and does happen. But I would not plan on that happening. Especially if you're not doing any kind of background credit check stuff beforehand, then definitely don't plan on that because you're going to totally get the wrong people paying.
On one hand, while personally I don't try to sell the financing anymore. I haven't for a while just because of all this stuff that's tied up in it. And I fell out of love pretty quickly with that. But at the same time, I do think there's still value in trying it a few times simply because sometimes you will get properties that they're not going to sell any other way, unless you do seller financing. Maybe I shouldn't go that far. But you could either sit on the thing for two years or you could sell it in six months, if you do sell financing.
And it's nice to be able to know how to do that. To not just be like, “Absolutely not. Under no circumstances will I ever do it.” Just give yourself another exit plan, if and when you need it. In the worst-case scenario, it's nice to have that. And also, just to be able to have the experience to really know for yourself, “Do I want to deal with this or not?” Because everybody's kind of different. Everybody has different things they're trying to achieve and things that they do and don't want to deal with. Some people may totally be cut out to deal with that stuff.
I think there's some value in trying it, but also if you realize pretty quickly that you don't like it, then don't be afraid to pull out and just stop doing that because you don't have to. And honestly, a lot of land sellers, whether they're doing the land flipping business model or not, a lot of people won't do it. It doesn't make you a weirdo if you don't. It just means that if you do choose to offer that as an option, it's going to give you more flexibility in terms of what you can sell it for and how quickly you sell it, and all that stuff.
Jaren: Yeah. I think it's a great backup plan for sure. At least for me, my primary objective is to sell it for cash. But if somebody comes in with a term offer, I'll entertain it. I actually found out that there's kind of an interesting workaround. We had a guy on our podcast named Justin Bogard.
Seth: Episode 78.
Jaren: Yeah, he's an incredible guy. I was inches away from doing a deal with him this month where I had a property that was a difficult property to sell, had the wrong agent on it really is what it boiled down to. But we had it priced a little bit high and we bought it a little bit too high. Just got some bad advice from an agent, like I said. And the short of it is what we were looking at was an offer on the table for terms. We needed to walk away with $10,000 in order to be profitable and not lose money on the deal. Justin was going to let us keep the down payment of $2,000 and then he was going to give us $8,000 at closing and he was going to take over the terms.
So, we sold it for, I don't remember, $14,000 or $12,000 or something. He was going to give us, I think it was somewhere between $13,000 and $15,000, somewhere around there. But he was going to give us the $10,000 at closing. We were going to be out of the deal cash, but there was enough meat on the bone, and the interest and stuff was all set up where he was happy to take over as a note investor. So, that's a pretty cool exit strategy.
Seth: Yeah, that's cool.
Jaren: He says that he typically buys about 50% of the deals that come his way. And then the other half he lists as a note broker and has a nationwide buyer's list of notes. But if it's a situation where you have to sell it to somebody else besides him, and even if he may be giving me a favor, because we have a relationship or whatever, but a lot of the times you'll have to at least wait for three consecutive payments to have the note be considered mature or something.
Jaren: Seasoned, that's the word. Yeah. Seasoned, and then you can turn around and sell it. I've found that to be a really helpful exit strategy. Now that I have that in my back pocket, I don't mind selling things on terms as kind of a plan B.
Jaren: One last thing I want to say, Seth, about seller financing too, going back to what you were talking about. Certain people can be wired for terms where other people might not be wired. Here's the thing, you can automate anything through the right systems. If you really want to start off in terms or you've started off in terms and you feel like you're drowning because there's so much stuff going on. Just be aware that if you have either by hiring people or having the right software, that in and of itself is a mess and it's a mountain to ascend and to defeat, but it can be done. So, you can fix all of these issues through having the right systems in place and be the guy on the beach doing the four-hour workweek lifestyle. But it just requires systems.
Seth: Yeah. I would say one thing you cannot automate is another person's behavior. You have no control over whether they are going to do what they say they're going to do.
Jaren: I totally thought you're going to make a joke. And I thought you were going to be like, the one thing you can't automate is your marriage. You can't outsource that. I was like, yeah, you're right.
Seth: Oh, there's a way, it can be done. But to your point, when you talk about the right systems for hiring the right people, you can't automate another person's behavior once you're in bed with them, so to speak, but you can figure out ways to just not get hooked up with the wrong people in the first place. That was something that John Fedro talked about a little bit when we talked with him in episode of 123, because he does a lot of seller financing, but with mobile homes, which I would dare say a little bit more messy if you get the wrong person, because there's somebody living on the property now and you got to figure out a way to get them out of there.
This whole idea of getting into a seller finance relationship with somebody without doing a credit background check and really getting to know the person, even beyond clicking buttons and looking at reports, understanding their character and who they are, it sounds like it's unthinkable for him. It would never be something that flies because it's such an important thing. And when you do get the right person in there, its kind of does become passive because they just do what they say and all this unpredictability is gone from the equation.
I think the downside of that if you're going to get that stringent is that maybe properties won't sell as quickly in vacant land. Because a lot of people who would do it, you're going to end up saying no to because they don't fit the mold perfectly. So, there's a drawback to that as well.
But certainly, there are lots of systems and this is what every bank that's worth their salt is going to do before they extend a loan to somebody. It’s to really put them through the wringer and figure out, “Are we sure about this deal? Are we sure about this person?” And they have no problem saying no to you. So just different things to think about on that whole topic.
Another thing, and I think this might have been on your list too, Jaren. Something that was a big “Wow, I didn't expect that” was this whole process of self-closing. I know a lot of the gurus, so to speak. That's not what I am of course, but everybody else out there. A lot of people who pitch the land business talk about self-closing like it's nothing. “Yeah. Just get the deed and you're done, it's fine.”
Jaren: It's not like that at all.
Seth: Yeah. Well, I guess you could, if you wanted to just throw caution to the wind and not do a title search and not care about anything, it might be sort of like that. I personally think that's crazy to not look at all at the title history of a property.
When you look at what a title company does, I would say they probably go the abundance of caution approach, but as a result deals generally don't go bad unless they're absolutely terrible title company, then maybe they will. But typically, with closing a land deal, even when there's no financing involved, there's this aspect of doing a title search, which by itself, just the title search is something that takes a lot of education to really understand what you're looking at and how to identify problems.But that's one step of the process. There’s the preparation of all the documents. The deed, making sure that language is correct. That's another opportunity to mess things up. Then there's the whole issue of communicating with the other party and transferring the funds, which can get a little tricky when there's no third party to handle it for you like a title company would. And it just takes time. There can be trust issues that come up.
There are certainly ways to deal with it. I've done plenty of these on my own, I know it can be done, but it's still a hassle. And self-closing usually is something, I'll just speak for myself, that's something that I only look at doing when the property is so stinking cheap that it just doesn't make sense to go to a title company because the title company's going to cost more than the property did. And it just feels wrong. It kind of messes up the economics of the deal.
But when you're going after deals that are worth more, like north of $5,000, using the title company is usually a pretty easy thing to figure out to do. Because even though they're going to go slower, even though it's going to cost more, it just takes so much work off your plate and they probably will not make the mistakes that you are likely to make.
Jaren: And risk too. Not just work. They take a lot of risk off your plate.
Seth: For sure. The main thing with self-closing is I just didn't realize how time-consuming it was, how mentally taxing it was, how many opportunities there were to mess things up and make mistakes. There's a lot that goes into that. Every time you decide to self-close, gear up. You better be ready to go through a big process, because there's a lot of moving pieces in that.
Jaren: And if you're not detail-oriented, just do yourself a favor, just shy away from it.
Seth: Exactly, exactly.
Jaren: If you're not detail-oriented or if you're one of those hybrids, I feel like in some ways I'm detail-oriented and in certain areas, but when it comes to paperwork, no. My eyes cross over. I have to reread things like 4,000 times. It's horrible. So just do yourself a favor and just don't do it. Just go after deals that are more expensive and that can pay the cost of the title company.
Seth: Yeah, for sure. Yeah, I agree. It's one of those things I can certainly do, but I really don't enjoy it. It's the kind of thing where it is a pretty small box that would have to exist for me to even consider doing it at this point. I wouldn't say I'm totally sworn off, and it's actually not even that hard for me anymore. Just because of how many times I've done it, but I still don't like it and there are so many other things I'd rather spend my time doing, things that will make a heck of a lot more money than that.
It almost reminds me of seller financing for people who don't want to sell their property. There is some value in just going through it a time or two, just to understand what's happening so that you can almost understand what your title company is doing and holding them accountable. And we explain all the stuff in the Land Investing Masterclass. So, if you want to just get educated on it, that's there.
But I think there's some value maybe in trying it a time or two, but also just realizing if you don't sense that you're gifted in that or if you can think of a lot of other things you could be doing that would make you more money for your time, do that because there are a lot of hidden costs wrapped up in trying to self-close.
Jaren: Yeah. Honestly, Seth, I think hell for me would be if I was put in a room and for all of eternity, I had to just do paperwork. I had to do closings or mortgage docs or something like that. That would literally be hell. Every fiber in my being hates paperwork so much. I just give it all to my wife. I'm like, “Take care of it. Just don't let me look at it.”
Seth: Yeah, man. It's not my favorite thing to do by a long shot. I hear you. It's just not fun.
Jaren: I think what's weird is there are people who are wired for it, man. I think there are people who actually get really excited about spreadsheets and details and it's definitely not me.
Seth: Yeah. I think if you're a left-brained person, it can totally work for you. And that's awesome. That means you have a skill that people like Jaren and I value highly because we don't want to do it.
Jaren: Another thing that I have on my list is direct mail prep in the land business can be a lot longer than other types of real estate investing I feel like. When we compare land to houses, the fact that there's already a house there handles a lot of due diligence issues. Sure, you need to get inside so that you can at least run, I'm thinking as a wholesaler, some kind of ballpark rehab cost. Make sure that hey, if somebody buys from you, they're going to be able to turn around and flip it and make money or use it as a buy and hold.
But because it already has a structure on the property, that covers so much due diligence stuff that we look at as land investors. I had no idea. I think most people, when they first get started, they just pull a list from DataTree, using what we walkthrough and a lot of the content we have on REtipster, and just do a list of land properties and then they just mail it and they're like, "Oh, great. Now I'm going to get a deal."
It's not that simple. There's a lot of scrubbing that I do on my list. I mean, not everybody does it. And if you do enough volume, you'll still probably get a deal. I pull a list of say 10,000 records. I'm going to look at every single one of those records and then remove anything that's in wetlands, anything that’s an ocean of landlocked properties. If it's an island, I put it on a separate tab because I want to one day own an island. I really do. It's like a goal of mine. So, I'm preparing a list that I can mail to later in the future. But most people would just remove those.
Seth: One note on that, I think if you just Google “Islands for sale”, I forget what the website is. But buying an island is actually not that hard. There are islands all over the place you can buy for a couple hundred thousand, $500,000, like an entire island that you can do whatever you want on.
Jaren: Ah, man, you just gave me an incredible business idea. I should just go buy a bunch of islands and sell them on terms. That would be great. Except I hate the term business, but still, a lot of people would be wanting to buy those.
Seth: Man, it's such a compelling idea, isn't it? Totally impractical. I don't know. Yeah. I can guarantee you, it would be a total waste if I were to ever do this, but still, it's almost like the tiny house idea. It just sounds so cool, but in real life, I just don't know that it would ever actually happen.
Jaren: Islands are a lot of fun, but it's probably like us being men and having that whole ego thing of wanting to own the entire mountain. Like this is my island. I just want to know what that feels like.
Seth: I’m starting my own country. That’s what I want to do. One nation of REtipster.
Jaren: One nation. That's hilarious. REtipster as a nation. But getting back to what I was saying, certain states, it's not that bad. Florida, the qualified to unqualified ratio, at least in my scrubbing is about 50/50. So, I have to scrub two properties to get one qualified one.
Seth: What do you mean by qualified?
Jaren: Qualified means that it would meet my criteria. Flood zone X access, basic stuff. We don't go super granular. We don't do any kind of title search stuff, but does it have a road next to it? Are there houses nearby? Is there any junk in the parcel map view images? That kind of stuff. If a neighbor owns that lot and the lot next to it and there's a house on it and it's evident that the person lives there. Wetlands. There's a whole list. I have a whole spreadsheet.
In Florida, if I scrub two properties, then normally on average I’m getting one that I can mail to and actually make a deal happen. Tennessee though is different. Tennessee is one in four. That means in order for me to send out 4,000 records of mail every month, I'm scrubbing through 16,000 records. So that's a lot. That's a lot of work.
Seth: That is a ton.
Jaren: And I have VAs and stuff that are taking care of it. But that is something that I had no idea I would have to even think about. And then if you do like range offers or blind offers on top of it, it's like a whole another mess because now you have to figure out how to evaluate all these properties and be somewhat close enough where you can still get deals happening. I actually just recently have completely stopped doing blind offers. I just do neutral letters.
And I will tell you, I actually think that it's a hidden game changer. A lot of people don't know that it's a leverage point, because everybody does blind offers, everybody does range offers. But when everybody zigs, it's a good idea to zag. I'm getting deals in my pipeline that I never ever saw, ever, because it's general enough where I'm not accidentally offering $2,000 on a $20,000 property. Yeah, I'm dealing with a lot more people who are not really interested in selling at a discount, and I have a lot more leads, but I have a lot more opportunities as well. So, for me, at least, it's been a good move.
Seth: Yeah. I think that's even to this day, one of the biggest frustrations I have with the land business. I sort of have a solution for it. I think I do actually, but when I hear from people who say, "I sent out so many mailers to this county, or this state, or I'm doing all this stuff and no deals are coming out of it. Why?” I guarantee you there's an answer, and maybe we could drill down to it if we went through just tons of information, like where'd you get the list from? How did you fill in there? What did you send out? What did you say? What kinds of offers did you do? What time of year was it? There are just so many things you can look at, but really getting down to it and knowing definitively, “Oh, this is the reason.”
Sometimes you can do that if there was a really obvious error made, but a lot of times, I don't know what the answer is. Or the information that I get from people in terms of what they're willing to tell me, it's not nearly enough information to give them an actual, helpful solution. Direct mail, I feel like there's a lot of marketing in general. There's a lot of hypothesizing and saying things as if we know why people respond when and why they do, but we don't actually know. We're kind of guessing.
Jaren: Yeah. So, spot on.
Seth: I don’t know, it's a frustrating problem that I don't really have the solution to. And that bothers me, especially when people, myself even, when I spend thousands on direct mail and nothing comes out of it, it's like, “Okay, this a problem. I want to know why. What did I do wrong?”
I can make some pretty good educated guesses on that and make some changes and try again. And chances are, I'll probably do better, based on what I know of my own actions. But really telling people “This is the problem, do this and I guarantee it's going to work for you,” I can't do that because I just don't have the confidence I guess. And that bothers me. I don't know the answer.
Jaren: People want rules of thumb and easy Sunday school or textbook answers, but it doesn't work that way. The whole issue with “How many letters do I need to send out to get one deal?” And there are so many variables that go into it. There's no way if I'm going to be truthful, I can answer that question. Because I can tell you what it is in my business, but I do different things. With my letter, a lot of people just use a printout, no colors, no branded stuff. I go the opposite route. I have a colored logo and a colored thing on the side. I actually put my picture there.
And putting your picture on there can be a double-edged sword because sure, there's privacy stuff. But putting that aside for a moment, if you look just objectively, if you look intimidating or distrusting or you look a certain way or you don't smile in your picture or whatever, and you put that on there, that's going to literally have a negative effect. That's going to be a ding against your direct mail campaign. If you just literally do exactly what I do, that's not going to necessarily work for you, which is crazy. The amount of variables that go into the letter envelope that you use and the color of that envelope. It goes on and on and on. And the only real way to get to the bottom of it is to have millions of dollars for testing and just do a ton of testing. And why would you do that? That would be a waste of money, to be honest. Just get to good enough and move on.
At Simple Wholesaling when I worked for Brett Snodgrass back in the day, we tested a couple of things out. We actually noticed that we have a higher response rate if a girl's name is on either the letter or the bandit sign. And if we use hot pink bandit signs with a girl's name on it, and then when they call in, because we didn't have a girl who worked in acquisitions, they were just like, "Yeah, yeah. I work with her." And they would just take over the lead and do it that way. That's something that's interesting. There are all kinds of weird little things that increase conversion rate.
Seth: Yeah. I even tried to campaign this past year just not putting any name on it at all. Like literally no name. It was one campaign. So, I'm not going to tell you definitively that it did or didn't work better, but I didn't notice the response rate or acceptance rate to be any worse than I had in the past. So, I don't know. Like you said, I don't mean for people to hear what I just said and think, “Okay, that's what I need to do now.” Because I don't know.
That’s just my one experience, but it goes to show there are lots of different things you can play with and maybe they will or won't make a difference. But I think it underscores my problem with when response rates or acceptance rates aren't there for direct mail. I don't like how hard it is to know with 100% confidence what the problem was. If a person made a big enough mistake and they're willing to admit that, then I think you can actually say pretty confidently what the problem is. But a lot of times that information doesn't come to light and you don't really know. And that bothers me. But what's the solution? I guess, send more mail and hopefully do a better job. Whittling your list down.
Any other dark sides? There's one other one that comes to mind for me. It sort of has to do with that land valuation issue we were talking about earlier, but it's due diligence stuff with land. Due diligence obviously will bring out things that impact land value a lot of times in terms of, “Can you build on this property? Or if so, where can you build on it? Or what can you build on it?”
Jaren: Or what can you build on the property? Yeah.Seth: And there's lots of little hidden things that you can do things to get a halfway educated idea on it. But the only way to really know the answer is to spend some money and get somebody out there. For example, wetlands, perc tests.
Jaren: Perc tests. Yeah.
Seth: Visual assessments. Things like wetlands, for example, I know there's the Wetlands Mapper and it's horribly inaccurate. Many times it will tell you there's wetlands when there's not and vice versa, it won't tell you. I think if there has been an assessment out there like a person who visited it, then yeah, it's probably going to be accurate, but you don't really know when that's true or not.
In perc tests, and for those of you who don't know what perc tests are, they basically just measure the rate at which water drains through the soil. And the reason this is important is because that determines whether or not you can put a septic system there. And if you can't put a septic system there, then you can't put a dwelling there, which means it's not buildable, which means the value plummets all of a sudden.
There are ways to scope this out without spending money, just by looking at neighbors and understanding if they were able to put one there, then I probably can too. But even that is not always an iron-clad guarantee. And the way to get the guarantee is to get an actual perc test and then you know, but that costs money. It takes time.
It's one of those things that doesn't impact you a lot. It's not something that commonly ruins deals, but it can. It's one of these lurking issues that you need to be somewhat aware of. And in certain geographic areas, it can be much more of a problem than others. But I think that underscores the importance of just understanding the market where you're working. Is this a hot button issue I need to watch out for or not? Because if you're in the desert, you probably don't have to worry about perc tests or wetlands. But if you're in Florida, you probably do.
Just stuff like that are things that are not really mentioned a whole lot on the front end of getting into the land business, but it can totally get you if you don't know to look out for it.
Jaren: Yeah. Florida is not that bad when it comes to perc stuff. And this is not every single property, this is just a generalization. But the way that areas are sectioned off, a lot of places that would require a septic system are grouped together because I use agents to come and walk the property. I look at the Wetlands Mapper and I will remove it if it's 100% in wetlands based on that. But yeah, it's not too bad in Florida.
Where it really is troublesome is North Carolina. North Carolina has the most idiotic process. I literally have to supply building plans to the county and I have to pay for a backhoe. I don't even know what a backhoe is, but they have to go and dig holes in the soil. And it's a mess. So, if you do the Carolinas, be forewarned.
Seth: Yeah. I was just going to say one last note about perc tests in addition to the soil type that affects drainability and that kind of thing. The hassle of dealing with it also has a lot to do with the county health department, or whoever is in charge of administering and verifying the results of those perc tests. I know in some countries it's super easy. You literally just dig a hole with a shovel and dump water in and it might be $150 for somebody to come out and look at it. Other counties are a huge hassle. It's like $5,000 and you got to get heavy machinery out there, digging huge holes. I'm sure it probably does give you better results to dig a huge hole, but some counties require that, some counties don't. Again, understanding your market and what's required there, if and when you have to go down that road is beneficial.
Jaren: Seth, as we were going through our list here, I actually thought of a few things that I didn't write down originally. And you mentioned one of them in passing. Depending on what time of year you're mailing, that can actually negatively impact your direct mail. That's something to be aware of as well. It's really frustrating because when it comes to mailing in November and December, I've had months where it's been fine, and then I've had months where my campaign is completely bombed.
It's really frustrating because it's one of those things, there's an answer out there somewhere, but to get to it is going to cost so much time and resources. It's not worth it. I've had things happen like one year, I mailed in December. I had absolutely no results from it. And then all of the leads started flooding in January and it ended up being the best campaign I did all year. That's frustrating because how do you build a system around that?
But I have consistently only seen direct mail campaigns bomb in two scenarios. One when my pricing of blind offers is off or if it's been November or December. And so, I'm probably going to inch my way towards running a 10-month direct mail schedule and not mail November, December, because I've seen enough situations where there's been no response or a lower response than normal, but that's something also to be aware of.
Seth: Yeah. Speaking of seasonality, almost on the other end of selling. In the Northern states, when you get snow cover, that covers properties, interestingly, I don't know that that's ever actually prevented me from selling anything, but in terms of getting good pictures that allow a person to really see the property, it definitely gets in the way of that. I'm sure there's some negative consequence of that, but it's one thing that, again, I didn't really think about when I was getting into this.
And in Michigan especially, or probably Minnesota, Wisconsin, all these Northern states, land looks like garbage for almost like five to six months of the year when there's either no leaves on it. The snow actually can make it look better just because all of the dead, everything is covered and it sort of looks pretty in some cases.
But in the other six summer months of the year, it looks awesome, it's amazing. But it's just one of those things, when it comes to the selling side, it's just harder to make a property look pretty.
I think at the end of the day, if it's a really good property, if the size is good, if the location is good, it's not going to matter that much because anybody with a brain in the head is going to see the value there. But if you're trying to sell purely based to the dreamers, based on the pretty factor of the property, it's going to be harder to make it look pretty if you're getting pictures during that time frame.
And there are services like BoxBrownie, for example, that I've talked about before where if the sky is grey, for example, you can change the sky so that it looks like a sunset or a sunrise or just blue sky. You don't really want to get too far with altering the property itself. Because then you're materially changing what you're advertising. But just in terms of the sky, that kind of thing, which is half of most land pictures, there are ways to make that look better. Anyway, that's just another thing that I didn't really know. And there are some ways to deal with it, but just a thing to be aware of.
Jaren: Yeah. The next one on my list, again, this wasn't originally written down, but it came up in conversation. The land business is boring. I didn't realize how boring it is until I kind of transitioned out of being a W2 at REtipster and have entire days where I do nothing but the same conversation for six hours because that really is what you're doing. Even if you're talking to agents or you're talking to a title company, it's the same conversation over and over and over and over again.
I love the land business for the kind of money you can make in it. I love the land business for how repeatable and how predictable it is, but it is not soul-fulfilling like “I'm the greatest person” or “I'm doing super impactful work.”
That is something that you should be aware of. It's a means to an end. It can make you a lot of money. It can put you and your family on the map 100%. But if you're somebody like me, who's super deep, a lot of people give me that feedback that I'm like overly deep sometimes. If you're like me and you need to have some kind of soul-fulfilling activity, find it somewhere elsewhere. Just go into this thing, understanding, “Hey, it's a means to an end so that I have the money and the life that I need to pursue the things that fulfil me.”
Seth: Yeah. I almost wonder for the people out there who burn out on the land business. Some of them I think burn out because they can't find their stride or they can't find consistent repeatable deals or deals that are big enough or they don't have time or whatever. But I almost wonder if some of them burn out just because it's boring. They actually can figure it out, but it doesn't feed their soul, as you said. It really doesn't. I think the reason I've stuck to it for as long as I have is because it works, and a lot of things in the world don't work.
When you've tried enough things that don't work and you finally find something that gets results. It's like, “Man, this is gold. Even if I don't love it, the fact that results come from certain actions is a big deal and that's something you want to hang onto for dear life.” But yeah, in terms of finding your meaning, your value from that, not that you really should find it from what you do per se, but I don't think it's going to give you everything your heart desires in most cases, unless you don't really have huge ambitions. Maybe you're fine with that. Anyway, yeah, I agree. That's a really good point.
Jaren: It's just something to be aware of for sure.
Seth: Yeah. Anything else on your end, Jaren?
Jaren: I had one more that I was going to mention, but it's not really a negative, it's just a nuance in the land space. We might do a second version of a podcast like this where it's like the misconceptions or what is presented is similar to how a lot of people say that terms are amazing or that kind of stuff. I think we could dive into can you really buy lots at 10 cents on the dollar? Can you buy stuff for $500, $200 and actually make a business model out of that? There's a lot there. So maybe we'll do a follow-up podcast at some point of exposing the lies. I don't know what the right terminology would be.
Seth: Some provocative headline.
Jaren: Yeah, debunking all of the things that are presented to be true that aren't really the case when you're getting to the trenches.
Seth: Yeah. And some of that stuff, maybe it was true, but it's not anymore. The world has changed, especially right now with just the insanely competitive housing market. It's just stuff we've never seen before. So, this idea of buying for 5%, 10%, it may be possible in outlying cases and that kind of thing. But to assume that's what's going to happen on every deal today in this market, probably isn't that realistic anymore.
Jaren: Yeah. And maybe my language was a bit strong. Because a lot of the things that are presented in marketing about the land business are maybe half-truths or they are true, but with a few caveats. So, I wasn't saying right out of the water, all of those things are going to be like, “Yeah, this is a lie and this is the truth.” It’s just like, “Well, it's not that simple.”
Seth: Cool. Well, if you guys want to check out the show notes for this episode, go to REtipster.com/125. We've mentioned a bunch of stuff here with relevant links to other places on the internet where you can find more information about that stuff. And if you're listening to us on your phone, go ahead and text the word “FREE” to the number 33777, and stay up to date on all the stuff going on with REtipster. Thanks for listening and we'll talk to you next time.
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