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I recently got an email from a guy named Ray Zhang.
He told me he had been a real estate investor for a couple of years, mostly focusing on infill land flips, and this past year his net profit was about $1 million, with about 3-4 hours of work per day.
His niche is similar to most of the land investors in the REtipster Community; he focuses on buying land at around 40 cents on the dollar and selling it back to the market at around 90 cents on the dollar.
In this interview, we'll figure out how Ray is pulling this off and what steps can be taken to replicate this kind of success.
Links and Resources
- VirtualFlipLand on Instagram
- How Land-Specialized Real Estate Agents Can Change the Game for Real Estate Investors
- How to Find Portfolio Owners with PropStream
- How to Find Portfolio Owners with DataTree
- BatchLeads (REtipster Affiliate Link)
- How to Find Land Values and Market Insights with Zillow
- Go For No! by Richard Fenton
- Never Split the Difference by Chris Voss
- Flip the Script by Oren Klaff
- How I Win Negotiations (By Avoiding Them Altogether)
- Joe McCall's Interview with Ray Zhang
- What Is a Maximum Allowable Offer (MAO)?
- Rocket Print & Mail (REtipster Affiliate Link)
- Land Investing Masterclass
Seth: Hey everybody, how's it going? This is Seth Williams and you're listening to the REtipster podcast. I recently got an email from a guy named Ray Zhang, who told me he's been doing real estate for a couple years, mainly focusing on infill land flips. And this year his profit is about $1 million. His profit, not his gross sales. And he works about three to four hours per day.
When I heard that, it sounded fairly similar to a lot of land investors, but the whole three to four hours per day thing and the $1 million net profit thing was like, “Wow, those are two things that sound really cool together. I like that.”
His niche is similar to most of the land investors and the REtipster community. He focuses on buying land at 40 cents on the dollar and then selling it back to the market for around 90 cents on the dollar. And when he emailed me, he said, “I will not hold back on any of my secrets and we'll do whatever I can to help your audience.” And he also said, “I will not offer anything for sale on the podcast.” And I thought, “Wow, it's kind of hard to say no to that.” He's checking some really important boxes there.
So, here we are and I'm going to grill Ray on what he's doing and how his business works, and we're going to see what kind of new findings and “aha” moments come out of this.
So, Ray, welcome to the podcast. How you doing?
Ray: I'm doing very good and it's a pleasure to be here. It’s really impressive what you and your community can do. Everyone knows you guys in the land space.
Seth: Thanks man. I appreciate that. Well, it's great to have you here and correct me if I'm wrong, but you sound like maybe you didn't originate from the US. Is that accurate? Where are you from?
Ray: I'm actually originally from Africa. No, no, I’m just kidding.
Seth: I was like, “Huh?”
Ray: Yeah, I came from China about 10 years ago and that's when I started to learn English. And if you can understand me a little bit, that means you have a very good hearing, I guess.
Seth: You're doing great. Maybe we started it right there. How did that happen? So, did your whole family come to the U.S. or just you? Or what made you want to come here and how did that transpire?
Ray: I came here by myself with about $3,000. That's all I had. My mom told me, “This is all our money in the family to support you to school.” She thought that $3,000 can fund all my tuition in the four years, but it didn't. That $3,000 ended about in the first semester. So, I had to think about something to support myself and that's when I started to flip a lot of stuff. I was homeless for a couple of months and then I started to flip all the free stuff online. I go to Craigslist and find the free stuff and sell it back on the Facebook marketplace and it all started from there, I guess.
Seth: So, were you still going to school and homeless at the same time?
Ray: Yeah. I told the school that I lived elsewhere because in the dorm, they charge a lot. Right. And they agreed. I just lived in my car. The school has a place, I can shower and I can eat there. That's how it all started.
Seth: Yeah. It's funny we're talking about this. I just got an email this morning from somebody who I don't know their whole story, but they were asking me questions like, is it possible to flip land in the U.S. when I'm not a U.S. citizen? And I don't know what that means. I don't know if that means they're living somewhere else or they're moving here and they're in the immigration process or what.
But are you an actual U.S. citizen or are you in the immigration process or does anything about that make the land business a difficult thing? Are there any weird things you have to maneuver through or not really?
Ray: I'm a permanent resident. People who have the green card. To answer your audience question, you can literally do this business virtually from anywhere and in any market. Even though you are back in China or if you go on vacation for a couple months, you can still do deals because you can utilize some online notary and as long as you have the current U.S. ID and U.S. bank account, I think you can do this anywhere. Me and my wife, we went to the Bahamas and did two deals there. Bahamas is not even the U.S.
The second is you can do this in any market no matter where you are. So, when I started land investing, I was in Hawaii and I did deals all over the place on the mainland. And right now, I'm on the mainland, I do deals in Hawaii. So, you can do this from anywhere.
Seth: Now one interesting thing you mentioned, the notary. I know that has been an issue that I've heard repeatedly over the years when people are not in the U.S. and they don't have easy access to a notary. And I know there's the online notary thing. What online notary service have you used or which one are you familiar with?
Ray: I'm not using that too much because I live in Florida. And those ones are costing money too. I just go to the bank, I'm a very frugal guy. I don't want to spend money if I don't have to. But you can just search “online notary” on Google. There are a couple of them.
Seth: Yeah. And the reason I ask is because I know, with a lot of counties now, you can record documents digitally, but there are some out there that still require a wet signature where you have to mail in the hard copy of this thing. And I don’t know how you'd do that if you use an online notary. Say if I live in, I don't know, Poland or something, and I'm trying to get a U.S. notary, we do it online, but there's still no hard copy. Is there a solution for that or do those people just have to find an embassy or something?
Ray: I think the embassy is providing the international notary. Actually, I have a military friend, and right now he is stationed in Poland exactly like you said.
Seth: Oh, weird
Ray: Yeah. And he does deals still in Texas. So, a lot of deals in Texas, Georgia. That's amazing.
Seth: Cool. So, the bottom line is where there's a will, there's a way. It can be done.
Seth: So, maybe we start with just getting into the actual land stuff of your business. When and how did you first learn about land investing? What made you decide to give this a shot?
Ray: I was in car flipping for a long time, and then I just watched people making real estate happen. I was like, “How many cars do I have to sell to equal what other people are doing in real estate in one deal?” I tried to do a lot of real estate transactions in Hawaii, but it didn't work because I've tried to do wholesaling houses. It was hard in Hawaii and I tried to virtual wholesale houses. I thought that was easier, but that was actually harder for houses.
And then I started to do apartments and that one didn't work out either. If you talk about this, it seems easy, but I was already six years in and trying all this different stuff. I was just about to give up because I paid too much. At least $200,000 on all the webinars, the fliers, or the coaching. I just wasted a lot of time and money, but I stomp onto land investing and that's where everything changes. So, from there.
Seth: Yeah. I'm curious about Hawaii. What was it about Hawaii that made it hard to do the house thing?
Ray: They are not allowing people to buy for foreigners. And also, for wholesaling houses, it is doable. Maybe you can do a couple deals in one year, but not too many. You have to send a lot of direct mail to get one deal.
Seth: Gotcha. So, when you guys started with land, what year was it when you got started, by the way? How long have you been doing this?
Ray: That was about four years ago.
Seth: And I guess I'm making a lot of assumptions here, correct me if I'm wrong, but I'm assuming you probably did what most of us do with getting a list and sending out direct mail. I think a lot of people learn that standard approach to getting started, but not everybody makes it to where you are, where you're making as much as you are per year. It doesn't sound like your business is controlling your life if you're only working three to four hours per day.
So, what changed? I'm assuming you're not doing the same thing today that you were back then. So, how has your business evolved when you think about the biggest pivotal changes along the way?
Ray: I always want to just be better. That's my mindset. But when I first started with land, I paid this guy a $70,000 coaching fee, and all he taught me was about terms. There's a lot of niches in land investing. So, he taught me to buy land for like $1,000 or $2,000 and sell them on terms for $7,000 or $6,000 and every month you collect $150 cash flow, they said.
That didn't work well for me because in nature I'm a very impatient guy. I don't want to talk to a lot of people. They push the button, is this available? And they're gone, you cannot find them. So, it was very hard for me because I want to make some money in land, not $150 cash flow every month.
So, I was like, “Is there a way to do this?” And I see a lot of terms investors. I was like, there must be a land they want because they sell on terms. So maybe I can find land for them instead of I do the terms thing myself. So, I mail to this county and I only mail to sellers or landowners if they own more than five land. If they own less than five, I don't mail to them.
I hit this guy, he’s kind of a jackpot. He has about 300 lots in the same subdivision. So, I bought 150 of them and I sold it back to all the term investors for about 250% return. I bought it for 150% return. I bought it for $1,000. I sold it to the term investors for $2,500 and everything was gone in four months. So, that was kind of my first big deal.
Seth: Yeah. And just to clarify, when you say sold it to other term investors, do you mean other land flippers or do you mean selling it to people who were buying it with seller financing?
Ray: Yes. Those people who do what I did. Which is you buy land for a thousand or a couple thousand and sell on terms for $6,000 or $7,000. And instead of them trying to mail to the landowners, I sold it all to them. So, they don't need to mail them themselves.
Seth: So, if the motivated seller is person A and then a normal land flipper who buys cash and sells with terms, if that's person B, you were sort of inserting yourself between them.
Seth: Okay. Gotcha. Cool. Is that still what you do to this day or is that just one isolated example?
Ray: No, that's one example. After that I just tried to do that again and nobody owned more than 300 lots at the same subdivision anymore. That's kind of a rare case.
But I was like, “How can I be better? How can I make a consistent income?” That's when I met this guy who was in the military. He owns infill lots. And in about 10 months his profit was about $1.4 million, net profit. He only does one to two hours a day because of his obligation in the military.
I was calling him like crazy, I know he was busy, but I called him, I really want to learn. And eventually, I learned everything from him. That's when everything started to change by about October last year. Right now, the whole process is very clear. It just has been an awesome journey.
Seth: So, what happened last year? What was the change in thinking or change in direction that made all the difference?
Ray: Right now, I only do infill lots. I don't do anything far away from a major growing city. For example, if you are in Dallas, I don't do it specifically in Dallas because Dallas is very competitive, but I do, I call it the donut strategy. You circle Dallas for about 30 to 90 minutes and I do business there. It is easier to sell, it's just easier to buy than Dallas too.
Seth: Donut strategy. I'm curious what data service do you use to get your lists from and do your property research?
Ray: Right now, I use ListSource.
Seth: ListSource. Okay. Because I feel like a fool for not having known this earlier, but I was just on a call with somebody from a company called BatchLeads. I don’t know if you've heard of them. She was showing me that donut strategy. I was like, “Oh yeah, interesting.” You're not really searching by the county per se. You're just finding a city and using that lasso tool or the polygon tool and you just draw a big donut around it. So, it's kind of cool.
Ray: And I do search on the county base and I only do deals in the counties that have more than 40 sold land in the last three months. If it has lower than that number, I don't want to go there. There's no competition. There is not too much sold. I want things that can be sold pretty quickly. So, that's my strategy.
Seth: Gotcha. In that county, you said there need to be 40 sales in the past month? Is that what you said?
Ray: Three months.
Seth: Three months, okay.
Ray: Yeah. Yeah.
Seth: Do you figure that out just with Zillow or something or ListSource? How do you figure that out?
Ray: I use Zillow or Redfin. You can see that pretty obviously. You just put a county in Zillow and search sold land in the last three months it will show you how many results. If it is over 40, that's good enough.
Seth: Yeah. I've actually got a video on that too for the listeners out there. I’ll include a link to that in the show notes for this episode. This is episode 149. So, retipster.com/149. I'll link to a video that explains that too.
And when you were talking about finding property owners that own five or more properties, is that something you do in ListSource as well? Or how do you determine that?
Ray: Yeah, I do it with ListSource. Yes.
Seth: Awesome. And I've got another video on that too. With all these data services, there are ways to figure that stuff out. I've got one that shows how to do with DataTree and another one with PropStream. PropStream is a lot cheaper to do this particular function. So, I'll link them to that one in the show notes too, if you guys want to check that out.
This idea of offering 40% on the dollar and selling it for 90 cents on the dollar. I know this has changed a bit in the past few years as the land market has really heated up. There was a time when I couldn't even fathom ever making a 40% of market value offer. I would just never go there. Not that it wasn't appropriate in some cases, but it was just going out on a limb for me.
Nowadays, I feel like that's almost more commonplace to make that kind of offer depending on how fast the market is growing. It sounds like if you're only working in growing cities, then it sounds that probably makes sense a whole lot more often than not.
Have you ever been burned by that? Has there ever been a time where you're like, “Oh man, I shouldn't have offered that much,” or has that pretty much always worked out?
Ray: I have three layers of safety for my investment. The first layer is I offer 40% on the sold data. That's a first layer because when an offer comes back, it's already 40 cents on the dollar. And after that, if people accept that offer, if they sign the offer letter or call me back saying, “Okay, I'm ready to sell.” I still don't buy that land. I still don't buy it. What I do is I negotiate on top of that based on the condition of the land. In all of the cases, all the land I bought, I never paid the original offer price ever.
For example, I just got land recently that I eventually bought for $1,000, but I sent the offer for $13,000, but that land is worth about $26,000. So, I sent half of the sold price. And after I talked to the seller, I sensed there was some motivation there and plus some negotiation skills. And after about 20 minutes we bought it for $1,000. So that's a second layer, which is negotiation.
And the third layer is, this could be already safe enough, but I want to talk to the expert. So, who knows more about the lot than me? It's the local realtors who actually sold land in the same subdivision. So, I will talk to the realtor. I will ask their opinion on what is the minimum I can sell this land for if I want to in about 60 days. A lot of realtors are so confused. “Do you mean maximum?” I’m like, “No, I mean minimum.” Because realtors have this tendency to give you the maximum price. That's the three layers to keep your money safe.
Seth: Yeah. So, are you sending out blind offers? Is that your first point of contact? Are you doing direct mail blind offers? Is that the approach you're taking?
Ray: Yeah. That's two pages offer letter with a price on there.
Seth: Okay. And that price starts at the 40% on market value number.
Ray: It's all about 40 to 55%. I never pay more than 55 cents on the dollar. Let's say if there's land sold for $20,000. I would offer about $8,000 to $10,000.
Seth: It sounds like negotiation is a big part of getting these things lower than that. And really the blind offer is more just to get a call or get a response back from people.
Seth: What is happening in this negotiation process? When you talked about this deal, I think you said it started at $13,000 and went down the $1,000. So, what happened there?
Ray: Basically, I have this approach. I learned this from different books. Here are some books I highly recommend. The first book is called “Go for No!” And the second book is “Never Split the Difference” by Chris Voss. And there's a third book, which has a lot of impact on me. It's called “Flip the Script.” It's a yellow little book, not a pretty girl one. There's another book with a pretty girl on the book. It's not that book, it's just a yellow book. Very small.
These three books have been making so much impact on my negotiation. But basically, when we talk to people, we always think negotiation is you offer 10, I offer five, and let's sit in the middle 7.5. That's basic. It cannot be more basic than that. That's not negotiation.
In negotiation, you try to take away or try to pull back instead of trying to run towards to the seller. A lot of time we find out ourselves trying to convince the seller to sell that land to me at that price. That's not the right way to do it. The right way is you try to pull back, meaning you are hesitating to buy that land in the first place. So, it just like a dog. You chase the dog, it runs away. But if you run away, that dog will run to you. So, I'm not comparing dog with the seller, but that's just a metaphor, I guess.
When we try to run to the seller, if I ask you, “Hey Seth, you want the land for $10,000. Let's do $8,000. How about that?” You won't feel very good. But instead of saying that, I would say, “Seth, I really don't know how much I can offer this price, because this land has this problem. What do you think is the best you can do?” Instead of saying “I have to buy this land at this price,” I try to pull back and pretend I'm not interested in buying it at all.
Seth: Okay. Based on what you just said there, so you're not actually saying a number, you're just identifying a problem and sort of leaving it in their court to come up with a lower number?
Ray: Yes, but whatever the number comes up next it will be very close to the overprice because that overprice is the first anchor the seller has. But after that, if the seller throws a number, I will throw a second number that makes you extremely uncomfortable. Meaning, I don't know what the number is, but whatever number you feel like, you're so ashamed to say you said that.
For example, on this deal, on the $13,000. I called him back, I said, “Well, what do you think is the best you can do?” And he said, “Probably $10,000.” And I was like, “Oh, I'm so sorry. I don't think I can even do anything close to that. I don't want to offend you. I'm in the probably $1,000 or $2,000 range.” I didn't give a specific number, but I gave a range. And that is so low. That's the second big anchor for the seller. So, if he is really interested in selling, he will join that $2,000 offer. It's better than $10,000, right?
Seth: Yeah. How often does that work out? You look at your average person who responds to your 40% to 55% offer, you get on the phone with them, you do this stuff. What percent of the time do they say, “Nope, don't want to do it,” and they leave versus “Yeah, let's do it?”
Ray: I think it works 100% of the time. Maybe not this drastic difference of price change, but it definitely works 100% of the time because they will give me a discount for sure. For example, I bought land for $70,000 and the initial offer was $95,000. So, the $25,000 negotiation happens in 10 minutes of talking like that.
It just depends on how motivated that seller is. The more motivated they will sell for a lower price. But initially, they will give you a price deduction for sure.
Seth: Gotcha. Now in that example of the $13,000 to $1,000. What was it that made you pick $1,000 to $2,000 when you were saying that? Was there something specific that made your brain go that low?
Ray: Yeah. Like I said, it is a number that you feel so ashamed to say. I think for me, the shameful number for me is a thousand bucks. If I do $4,000, it wouldn't make me shameful. I just want to go lower.
Seth: Why not 50 bucks? If we're talking about shame, like let's go big, right?
Ray: Right. I guess you can try that, but that's too low, I guess.
Seth: Yeah. Interesting. You and I, we're talking about this from the perspective of land investors who are trying to get a good deal. But I can just envision somebody out there who maybe is a land seller or somebody who doesn't understand this business and they're like, “Man, Ray is a bad guy. He's swindling people out of this stuff.”
What would you say to that? How do you think through this to not feel ashamed of yourself? I've had this mental dialogue for years and I've had this conversation with people for years and I'm just curious, how do you think through that?
Ray: I think we come from a place of helping the seller because they know we try to make money for sure. And we don't do this for nothing. But secondly, we really help them to unload a lot of their stuff. For example, I got two lands for free this year because the owner was just so tired of it. I offered that price on the offer letter. They don't even want that money. They want this land gone. So, this is how bad they want their land because sometimes they live off-state.
For example, I buy land in Florida, they live in New York. Over the years, they don't have time to clean the weeds. The city gave them tickets and they have to pay property taxes and the neighbor throws trash on their property and they are just so fed up with this property. We are coming from a place of helping and of course, we don't do this for nothing. We got to have a good deal.
This just comes from my perspective and of course, people will say, “Oh, this is bait and switch. You try to switch to a lower price.” But that's my perspective.
Seth: Yeah. Interesting. Yeah, I can kind of see that because at least a lot of the people I know, they don't do that where they go in with a higher price knowing that they're not going to actually pay that higher price. I think that's the one place where I wouldn't know what to say about that. But I guess at the end of the day though, and I feel like this is kind of getting lost these days. Not everybody sees it this way, but it's up for everybody to act in their own best interests and understand, “Is this good for me or not?” And not just leave their future in somebody's hands and just trust a stranger. It's a healthy amount of skepticism. It’s necessary in all areas of life. I mean, just ask them the questions like, “Is this the right move?” And whatever the numbers end up being, they need to have this mental dialogue. And if they hear you bringing up objections to why the property is worth less than that, whatever the reasons might be, it's like, “Okay, research that. Is that actually true? What makes this person say this? Is he being truthful with me?” Just this idea of personal responsibility.
Ray: Right. Yeah. Also, I don't encourage people to lie or exaggerate. The actual problem is you just tell the seller the truth. If there is weeds, you tell them. Whatever you see on Google Maps, you just tell it, be truthful and be honest. That's the bottom line.
Seth: Yeah. Now it sounds like this negotiation step is an important step part of your business. And I know negotiation, it can certainly be learned, but it's not like you just hire a random VA and they understand how to do this stuff. Are you involved in all of these conversations or do you have an acquisition specialist who does these conversations with you now? What role are you currently playing in this process?
Ray: That's probably where I spend my three to four hours a day most at. I love talking to people and getting deals. I guess I'm a deal junkie. I haven't trained anyone to do what I do on the negotiation part. Maybe I should take this business even more scalable. But I really enjoy this part of talking to people right now.
Seth: And it's interesting. I guess kind of a side note from my life and I know there are a lot of other people out there who are similar to me in that I don't love spending time on the phone, and if anything, I don't know if I'd say it intimidates me these days, but there was a point in time at which I was definitely intimidated by it. I was downright scared to pick up the phone and talk to people. I look at somebody like yourself, English is not your first language. And not only do you do it, but you enjoy it and you do well at it. Maybe it's just a frame of mind thing, maybe we are wired differently or something.
But has it ever been hard for you? When you first started doing this, were you apprehensive or nervous about calling people? What is it about that experience that you enjoy? How could somebody like me rewire their brain and be like, “No, no, it's not that I don't want to do it. I want to do this and it's fun.”
Ray: Right. Absolutely. There are two kinds of people. Sometimes we want to pursue the pleasure of doing that and sometimes we resist the pain of doing that. And of course, for me right now, I sometimes feel that pain too. I don't want to make so many calls. When the call comes in, I don't want to reply to them. So, that pain is always there. You are not going to get rid of it.
But the thing is, the pleasure is so much more than the pain for me right now. Because think about it, one conversation, you can break down a $10,000 discount. Who doesn’t enjoy that, right?
I guess you just have to do that until to a point that you are good at it and that you can get some actual results. And those results really give you so much pleasure than the pain you're going to experience. It is really a mind thing and it is also practice.
I think what really helped me was my very early years serving a church calling. They had us go on the street to talk to strangers every single day. That was really hard. Imagine, you don't speak English, you try to talk to people. But at some point, you get used to it and then you get good at it and then you do more of it.
Seth: Yeah, for sure. If you had to hire and train somebody to do exactly what you're doing, could you do that or would you find that really challenging? Maybe it just has to be the right individual or something. What you've explained so far, it doesn't sound that difficult per se, but when I think about trying to hire somebody who really has expertise in that, it seems like a difficult thing to do, to just find somebody who understands how to do that kind of thing. So, could you do it? What do you think?
Ray: My mentor Tom Crow shared with me about this. He said all entrepreneurs have one problem. They think what they do, they are the only person that can do it. They think they're the king in the universe and nobody else can do it better than them. That's actually false because if you hire someone and train them and this is all they do, and one day you'll find out, “Oh, that guy actually does a lot better than me.”
I think it's definitely a skill to learn. I don't think anyone is born a negotiator. Of course, there are people who like talking or some people hate talking or want to be alone. But you just hire the people who want to talk and then you teach them the skill. And here you go, you've got a better person than what you do yourself.
Seth: Yeah. Well, I guess I already know the answer to this, but I'll just ask you. Do you think you could have these kinds of negotiation conversations with people by email or by text without even talking on the phone?
Ray: I did get one deal out of it by test, but not too much because people really love conversation. If you cannot meet them in this case, because we do everything virtually, you at least need to talk to them. People want interactions. You make them laugh, you make them think, and eventually, you make a friend that will sell you a good deal.
Seth: Yeah, I know it seems like if nothing else, just the human trust element of being able to hear a person's voice and tone of voice and that kind of thing, it goes a long way. It might not solve all problems, but I can certainly see how that helps a lot.
Seth: Getting properties sold. Are you just using agents for that exclusively or are you selling all your stuff to other land flippers? Tell me about your selling process. Who are you selling to, how are you getting them sold? Talk about that a little bit.
Ray: I just have them sold by the agent. They list them on MLS, that's why we save a lot of time. I used to not do that because the deal was very small and a lot of people say big deals take as equal time as small deals, but that's partially true. The truth is big deals take less time because people will sell them for you. The title agent is really eager to help you get it sold. So, it saves a lot of time.
Seth: Yeah. How many of your deals are big deals versus the smaller infill lot deals?
Ray: Right now, I don't do anything that I cannot get the realtor involved. The minimum deal size, I have to make $10,000. So, I try to stay with lots worth at least $15,000.
Seth: Is that specifically what you're going after? When you pull a list, it's like okay, we're going to go for those lots within the price range of, I don't know, $15,000 to $50,000 or something. Or are you just going for everything that's above that minimum threshold?
Ray: I would go from $15,000 to $300,000. Anything higher or lower, I'm not interested.
Seth: Yeah. How many markets are you working in right now?
Ray: Oh, at least 40 right now. I send so many mailers every month.
Seth: Wow. So, you must have 40 different agents then, right?
Ray: I never hired the same agent. That's very odd. Because all the properties, even in the same subdivision… A subdivision is already small enough. But even in the same subdivision, if there are two properties far from each other, I would only contact the one that's sold near my lot I want to buy. They know everything because they sold something there. So, I want to talk to the expert.
Seth: When you say you don't ever use the same agent, do you mean just from market to market or literally every deal you do, you have to find a new agent?
Ray: Absolutely. Every deal I do, I find the expert in that specific small area. Because to be honest, no realtor will know the entire area. Of course, you'll save a lot of time finding realtors, but it's not that hard. Just look at what's sold near the lot you want to buy and contact them. So, give them a call. The conversation will go like, “Hey Mr. Realtor, my name is Ray. I'm a national land flipper and I'm about to buy this land very close to the one you sold and I want to get your opinion so I don't lose my money. And of course, if I buy them, I would list it for sale by an agent like you.” I kind of give them some hope. And that’s what I actually do. After I buy them, I send it to them and they list it for me.
Seth: Okay. So, I guess the thing that qualifies them as the expert to you is you just see who sold a vacant lot and that's it. Or is there anything else you have to ask them to make sure it wasn't just a lucky deal they did, that they actually do a lot of these things?
Ray: I only find the buyer agent, meaning sometimes if you go through Redfin or Zillow, you see there are two agents. Listed by agent A, sold by agent B. I only contact that agent B because those guys have buyers, they know the area. And every agent can list, that's not hard, but whoever guy has sold is the one I want to contact.
Seth: Is there anything you look at in terms of how good do their listings look? Because I know one time, actually, a few times, I've hired an agent and they were the listing agent and I found the buyer and I sold the thing and they were credited as the agent. So, how would you avoid finding somebody like that? Or do you just not worry about those?
Ray: I don't worry too much, but there's one thing I worry about. If a real estate agent is bragging about how many listings he has currently on sale, I will be very cautious. I contacted a realtor and he said, “I have 100 land deals worth more than $30 million for sale right now.” I immediately find another one because it is not about how much you have for sale. If I give it to him, I'll be the $30 plus million. So, you don't want to contact a realtor bragging about how much is for sale but how many he has sold. That's the main thing.
Seth: Could you just ask that? Because what if that does mean everything is good, they just didn't tell you the right number? Could you just say, “Okay, well, how much did you sell?” Or is it just “No, automatic no because you sound arrogant?”
Ray: Yeah, I did ask him. And I asked him three different times the same question, “How many you have sold in the last three months?” And he always tried to find the answer, he tried to distract me. So, I was like “Not you.”
Seth: Yeah, I know, it's hard to find truth and transparency in the world. Everybody in every social interaction, unless you're in some unique environment where people are intentionally being vulnerable, it's like everybody's trying to frame it up so that they look the best and they're not going to tell you about their mistakes and the ugly parts of their life and their business. It's frustrating. It's unfortunate that we always have to be skeptical and wondering about what the truth actually is or at least that's how I'm always thinking these days. And it bothers me. I wish I didn't have to think that way.
Ray: Definitely. If you look at Instagram, everyone lives a better life, right? They always pretend they have more money.
Seth: Yeah. I know.
So, is direct mail the primary way that you're finding deals or is there anything else you're doing besides direct mail and blind offers and that kind of thing?
Ray: I only do blind offers right now. And I tell my students, your blind offer is your army. And that little army will “kill” all the non-motivated sellers. So, all you’re left with are the motivated sellers.
Seth: Yeah. Has that been working? Since you've been in this for four years now, have you seen the effectiveness of that go down at all over the past couple of years?
Ray: People have been saying that for years, but it really works. So, it works for me. I have a friend that did half a million profit this year only in texting. So, that one works too. So, whatever you choose at the beginning, you have to focus. If you try to do direct mail, do that. Don't change it to text message the second day. So, if you do text message, okay, do that. Don't do direct mail. So, you need to be in singular focus, I guess.
Seth: Yeah. Do you think it's because you're going at it with this 40% to 55% of market value approach? Say if I'm going to send the same thing to the same market at the same time as you and my offers are 25% of market value, you're probably going to win.
Seth: Just because the whole blind offer approach, it's kind of a cold approach. You're not trying to give them much warm fuzzies, you're just hitting them with a number and if they don't like it, they can leave. So, given that mentality, it seems like that might be why it's working well for you. Would you agree?
Ray: Absolutely. It's like a stone in the water. You have to go left and right. There's no way you can go through me.
Seth: Yeah. I have to assume you've got an army of virtual assistants working for you if you're in 40 markets and you're working three to four hours a day.
Ray: Yeah, I have huge… One VA and I pay him $2 an hour actually.
Ray: Yeah. Maybe I should raise the payment. But that's how much he is getting paid right now and he's super happy.
Seth: Where did you find this guy?
Ray: I found him on Upwork. And there's another one where you can find them. It’s called Freelancer.
Seth: Yeah, I've been an Upwork fan for many years. I’ve done a lot of stuff there. What exactly is he doing? Is he coordinating descending of direct mail? What are his tasks?
Ray: He is only making offers. I tell him what to do and he sometime does the market selection. That's about all he does. So, the offer, it’s not hard to mail out, it takes a couple minutes. And then the call starts coming, I'll take it and then I just send it to the realtor to sell them.
Seth: Yeah. How granular are you getting with these blind offers? Are you trying to drill down to individual subdivisions to determine market values or are you just taking assessed value? How much time do you spend on that?
Ray: What I do is I go to the subdivision by subdivision. And we have a formula, then you have to be about 40% of the sold price in the same subdivision. And that's how I made that offer. And me and Joe McCall, we had about an hour of conversation on that. And that's on YouTube if your audience wants to listen to it.
Seth: Yeah, I will link up to that conversation with Joe in the show notes as well. So, with these 40 different markets that you're working in, how did you land on those? Was it just a list of the biggest cities in America or the growing cities? How did you decide on those? And then how do you decide which markets to spend the lion's share of your marketing dollars to go after?
Ray: What I teach my students, there are three ways to find a market. The first one is Zillow and Redfin and ListSource. They're all for free. But initially, if you are brand new to land investing, I would suggest finding a county that has more than a hundred sold in the past three months. If you are very experienced and you have so many markets, more than 40 will do. It has more than 40 sold in the past three months, it will do.
You just try to find those counties in nearby major cities. And what is a major city? You can think of Dallas, Austin. If you're in Florida, there's Orlando, Tampa. I won't go too much on Miami. It’s expensive. Maybe Jacksonville. All those cities that people are moving in. But I won't go to states like New York or California because people are moving out. About 19% of people in New York move out this year. That's not something I want to be in.
Seth: What if it's an area where people are moving out, but you do see that there are a hundred plus transactions, which would be the trump card in terms, “Nope, this matters more than that.”
Ray: Yeah. For me, I will not go there at the moment because I want to see. I know they're still selling in those areas, but it tends to stay longer because people are moving out. The builder will be less, they won't buy too much land. It's more days on the market.
Seth: Yeah. In terms of that ratio of how many properties have been sold, I know that can be a different thing if it's a county on the east coast, which are smaller counties versus a west coast county, which are huge. Sometimes the size of five counties or that kind of thing. I don't actually know this, but I'm pretty sure just given the size of those counties on the west coast, there's probably a lot more deals happening there.
So, do you have to take that into account in terms of, “Well, this is a bigger county with a bigger square mile radius around it. So, there's a different metric for that one.” Or do you just not think too hard about it?
Ray: Yeah, not too hard. As long as the county is not like a state. That huge. If it’s bigger, a lot bigger, you can kind of increase that number a little bit like 150. But I won't think too much about it.
A lot of people get stuck here. They think, “Okay, I have to find this perfect market. I have a student who told me, “Hey Ray, you find me a market that has no competition at all and I can do deals like crazy.” I said maybe there's a county on the Moon, not on the Earth. So, you just don't have that county. Every county has competition and you just have to do it one at a time.
And remember, we try to do this business nationwide. We don't want to stay in one county and stay there forever. So, don't think too much, just pick a county and send mails and do some deals. That's my approach.
Seth: Gotcha. This next question is very broad and open-ended, but when you think about how your business runs today, are there any specific tools or resources that you found just critical? Like you could not survive without it or even just mildly helpful? If so, what are some of the software or websites or things that you use every day?
Ray: For me it's just three. Not so expensive. Zillow, Redfin, ListSource. That's about it. And I don't even have a CRM. I use Google Sheets. And Joe was laughing about that. But I try to be cost-effective or no expenses, not that much. So, I don't see a lot of software as that helpful other than those three.
Seth: Okay. What makes you choose ListSource just out of curiosity? I don't know many land investors who've landed on that as their number one data service.
Ray: Yeah. Because we try to offer the sold price and ListSource has that sold price. You can add it as a field and they will show up on your list. But if you go to DataTree, it will cost you extra to add that function. And PropStream. I don't like to use PropStream that much. I just use ListSource.
Seth: Other than what we've talked about already with your approach of sending blind offers and then relying heavily on your negotiation, is there anything else unique about the way you're running your business that other land investors aren't doing?
Ray: Unique? I think it's not so much unique. Everyone knows the stuff. It's not like I have this huge secret nobody knows. I think the main thing is I am really an action taker and I don't overthink. Just do as many counties as you can. I think that's the biggest secret. Don't overthink. Do one county if you have success or just go to another county.
Seth: Yeah. So, what is keeping you from just finding another VA like the one you currently have in doubling your direct mail output? And would you say that you are the bottleneck because you have to talk to all these people?
Ray: I don't mind talking to more people. I think I should do that but the VA is not even busy enough, so I never hire another one. But I think that's what I'm aiming right now. Next year I'm trying to go to more counties and if I'm too busy to take the calls, I'll have to hire someone to do what I do right now.
Seth: Gotcha. Is there like a monthly goal you have for getting a certain number of mail units out the door? How do you know when you're doing enough?
Ray: Yeah. For me, I have to mail at least 15,000 or 20,000.
Seth: Per month?
Ray: Per month. Yeah. I tell people if you want to make this land business happen, you have to mail at least 3,000 mailers every single month. No exception. I don't care if that's your birthday or Christmas. To send it every single month for at least 3,000, you are bound to have a deal.
Seth: Gotcha. I'm just trying to do the math on sending out that many and then the people who must respond with some kind of interest and then you have to get on the phone to then close a deal. What is your response rate or your close rate on the number of units you set out?
Ray: I think at least 1%. When they respond, the cost rate is pretty high because they already know the offer, they're motivated to sell. So, I don't talk to people that don't know the price. They already know the price. Just with the negotiation, I try to buy as much land as possible.
Seth: Okay. Maybe you answered this already, but it sounds like the magic happens when you get on the phone with them. Of the people that you pick up the phone and talk to, what percentage of those deals actually end up closing?
Ray: I haven't really dug into that number, but for every call that comes in, out of 10 calls at least I can get one to two deals. And sometimes an owner has more than one property. I would think at least that number.
Seth: That's pretty good. It sounds like a pretty good close rate. And that's also considering that they're going lower than the original offer was. So, they're not just saying yes, they're actually lowering their price before they say yes. Do you have a goal in mind like, “What I actually want to buy this for is 25% of market value?” Is there a number in mind that you're trying to get them to before they actually close on the deal? Or does it just depend on the deal and the problems it has?
Ray: Yeah, I try to get as slow as possible. I never have any number in my mind before I call them. A lot of people talk about this MAO offer. Maximum Allowable Offer. I don't like that concept. For land, everything is possible so you don't give a number in your mind. And then when you talk to them, you set no limit to your offer price. And sometimes you'll be surprised how much you can get.
Seth: Yeah. That feels kind of like loosey-goosey to me because there isn't like a goal before you pick up the phone. And I think it's just whatever that number of embarrassment is for you which feels kind of arbitrary because what if my level of embarrassment is different than yours? Is it really that simple? Just think in your mind lower. Okay, now I'm embarrassed. That's my offer. Is that kind of how you think through it?
Ray: Yeah. I don't really know the number until I talk to the seller. The number depends on what the seller wants to do. For example, I made an offer for land that is oceanfront. And this lady in 2001, she paid $155,000 and then I signed the offer for $21,000. And she picks up the phone. She sounds so eager to sell it. Eventually, I bought it for $700. I asked her, “Why did you even sell it to me for $700?” And she said I have a tax burden and she has to claim a loss on that loss this year. So, whoever can close the fastest, get the deal. I just told her I can close this within a week. So, you give the seller what she wants and you get what you want. That's an exchange. Did I have the $700 in my mind before I called her? Absolutely no way. But I got that deal.
Seth: Are you using title companies to close all these?
Ray: Yes, I use a title company.
Seth: Are they usually able to move in a week? Is that a normal turnaround time for them?
Ray: Normally it's about at least two to three weeks, but this one they kind of make it faster because I don't know what faster means by her. But I tried to make it happen and they made it happen. About a week and a half, they made it happen.
Seth: Gotcha. When you think about the different things that you are good at as a person, and sometimes this is hard for us to recognize because they just come natural to us. They don't seem like anything special, it's just the way we are. But when you think about your different talents, what do you think is your unfair advantage? What are you able to do well that supports you in this business that most people can't do or are unwilling to do?
Ray: I think I don't like to procrastinate. That's my advantage. Because if a call comes in, let's say there are 10 calls coming in today. My mindset is “I will get to that 10 calls or I don't sleep.” So, I have to finish that call. When you do things repeatedly, you naturally get good. It's not like I'm a natural negotiator, I'm just an action-taker. I have to get it done today. I don't want to do that tomorrow. That one thing, if you are consistently doing that, you'll be successful no matter what in the land business. And the land business in nature is much easier than the houses.
Seth: Yeah. I think I kind of have that too.
Ray: Of course.
Seth: Not to make this about me, but I have that similar thing where I'll have these different things that I want to get done and I use this little Reminders app on my Mac and iPhone and I just put them in there. And sometimes I'll put a date to have it done by it and sometimes it's just there. But it genuinely troubles me when I don't get stuff done. I don’t know if I lose sleep or it eats away at me. I get anxiety about it. And this is just stuff that I randomly decided was important. And sometimes it is, sometimes it's not. But I think there is something to that mentality.
I was talking with a friend of mine the other day who was telling me about his issues with procrastination or almost like sloth, for lack of a better word. I was just like, man, I don't even understand that. I just don't work that way. I have to be doing something or I don't feel like I have a purpose or something. But yeah, I would agree.
When you say that, that's something I don't even know if I recognize that was something unique, but I think it probably is and it probably is a differentiator that makes people get ahead and actually make progress in life.
Ray: Yeah. That's actually a habit. Because how to build that habit is you build on small things. Let's say, for example, you make yourself a commitment to clean your floor today. And then you write it down. That's a small goal, but you commit to that, you do that, you build confidence. If you have so much confidence in yourself, you have to get that thing done. And just by building that confidence every single day, it will really help. And eventually, you'll be like Seth. And nothing is going to stop me from doing this test today. Get it done.
Seth: Yeah, yeah. I gotcha, man. As we are near the end here, if somebody is listening to this, maybe they haven't started in the land yet, or maybe they have, but things aren't going well or maybe they're just finding themselves running up against obstacles, would you have any words of advice for them? When you think back to your first year and what you know now, what would you tell yourself to get you through that first year?
Ray: Start immediately. I would say that. Whatever you choose to be your coach, just follow their direction, make sure that coach has results himself. And then do whatever they do. And don't be like, “Okay, this is Christmas coming. Maybe I'll do it on the new year.” Do not. You'll forget about it. Something new will come in the time between. So, start today. Just do whatever you can to make it happen.
Thanksgiving just passed. And I didn't even know that was Thanksgiving. My wife said “That was a big holiday in America. You don't even know what Thanksgiving is.” And I was like, “Oh, okay, alright, let's rest a little.” I was still working in the morning. You just have to do whatever it takes to make the results you want to happen.
Seth: Yeah. Yeah, that's very true. I kind of like how simple you just said that. Because I think we all do this. I've certainly done that to myself where it's just like, “Yeah, I'll get to it at this point.” But you don't really learn anything that sticks until you just do something. And I don't think anybody's ever going to have the perfect formula figured out, no matter whose approach they're taking or who teaches them. You got to make it your own. But you can't do that until you just start moving and figuring out what's going to work for me. What's my unique advantage? What is my thing that I can do that other people can't? And sometimes that's obvious and sometimes it's not until you just get into it. So, the sooner you get moving, the sooner you'll figure that stuff out.
Ray: Definitely. You learn by doing.
Seth: Yeah, for sure. So, at the end of most of our podcasts, we like to ask a few closing questions just to learn a little bit more about how our guests tick. And this has nothing to do with land per se or real estate, it's more just “Who is Ray?” So, Ray, what is your biggest fear?
Ray: My fear of poverty. I'll do whatever I can not to get back to that car.
Seth: Yeah. Like being homeless and having no money.
Seth: Yeah. It's interesting. I interviewed another guy this year who grew up poor and he says he still has nightmares about being poor. And the guy's a multimillionaire. There is no way he's ever going to be poor again. At least I don't see how that's possible. Even if he did lose everything. He's so brilliant, he'll figure something out. But it's interesting how formative that can be in your younger life, just feeling the sting and the pain of not having anything, what that can do to really motivate you to not be that way.
Seth: Do you have kids?
Ray: I have three.
Seth: Okay, gotcha. Yeah. As you think through this, for most people who have found success in some way, the lives of their kids are almost certainly better than the lives that they had growing up. Is there anything you're doing to intentionally make sure your kids know what poverty feels like? Maybe not that far, but how do you make sure that your kids are going to have that same fire and that motivation to succeed?
Ray: I think they just have to do it on their own. I'm not going to give them my money to support them. If they go to college, you do it yourself. My kids are still very little, but I really admire what Donald Trump has done. All his kids are brilliant and very, very good in that sense. Just try to have them do things. Maybe at a young age, take them to some business venture and see what kind of life they want to do. And maybe just set an example, I guess.
Seth: Yeah, it's interesting. You can't force your kids to have your passions. I've seen a lot of people do that. They started the family business and just assumed “My kid is going to take this over.” And then when the time comes, they're like, “No, I don't want to do that.” It's interesting. I don't know how much of that is nature or nurture, but at some point, everybody needs to find their own way and decide what's important to them. It's not like you can make them go down a certain path or care about something that they don't care about.
So, what would you say you are most proud of?
Ray: I'm proud of my kids. They're very good. I'm also proud of my wife. She really supports me in the back to make a family goes well. I’m proud of all the people that inspire me. People like you and all my mentors. I cannot do anything without them.
Seth: Yeah. That's awesome, man. Very cool. I appreciate that.
Last question. Let's pretend you just got $100 million wired to your bank account and you are not allowed to stay on your same current career path. So, you can't do land, you can't do anything with real estate, but you can do anything else you want for the rest of your life. So, money is not a motivator here. You're just doing what you want to do. What would you do?
Ray: I think I will buy a huge parcel of land and then I'll build a big cabin. And then I will build a gun range on the side. I went to all these different gun ranges. They said “You cannot shoot metal here. You have to be a paper target.” I really didn't like it. So, I would just build something on my own. I would shoot whatever metal I want to. So, that's my dream.
Seth: That sounds amazing. You'll have to let me know when you do that and we can go out and shoot some guns together.
Ray: All right, so give me the $100 million first.
Seth: I'll let you handle that part.
Ray: All right.
Seth: Cool. If people want to learn more about you, where should they go? What can they do?
Ray: They can go to my Instagram. It's called virtualflipland. One word.
Seth: Cool. I will link up to that in the show notes. Again, this is retipster.com/149 for episode 149. Ray, thanks again for being on the show. It was great to talk to you, great to learn more about your story. We'll have to stay in touch. I hope things continue to go well for you.
Ray: Absolutely. Thank you so much, Seth.
Seth: You bet.
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