Seth Williams: Hey, everybody. How's it going? This is Seth Williams. You're listening to the REtipster podcast. Today, I'm talking with Luke Harris, somebody I've actually known for a pretty long time in the land business. In fact, Luke was one of the very first land investors I ever interviewed way back before this podcast even existed, when I was still doing interviews just for the REtipster YouTube channel. What's interesting about Luke is that he's stayed in the game for a pretty long time through changing markets and more competition and changing buyer demand and all the ups and downs we've seen in the land business over the past decade. He's continued evolving instead of disappearing. Luke at one point had as many as, I think, 17 people on his team and his gross profit hit like 2.2 million in 2024. And Luke has recently become a licensed real estate agent to expand the ways he can operate in this business. And he's also carved out a niche most land investors barely understand, which is timber deals. He's also experimented constantly with marketing and adapted his acquisition strategy over time. In this conversation, we're going to talk about what's working for him in the land business right now and why some investors are struggling while others are still finding great opportunities and how timber can completely change the economics of a deal and what it looks like to survive long enough in this industry to reinvent yourself multiple times. So, Luke, welcome back. How are you doing?

Luke Harris: I'm doing great. Thanks for having me. Thanks for the awesome intro there. Appreciate it.

Seth Williams: Yeah, of course. So when you look back at when we first talked years ago versus where you are today, what do you think you understand about the land business today that you completely missed back then? Like, how has your understanding just changed over time?

Luke Harris: There's so much I could say and answer that question, but it probably comes mostly from failures that I've had, deals that I've lost money on. Back in 2018, I guess it was when you interviewed me, I don't know that I really had a team at all. I might have had like one VA or something. So there's the whole people side of it, which I guess that isn't specifically land business related. But, the due diligence, the different types of deals. Back then, it seemed like it was just a simple buy the property and flip it. But the level that I've gone to with due diligence and the different exit strategies, entitlement, timber, everything that goes into a property being buildable. In 2018, I was doing more of the desert square model and then selling on inner financing, which is really just a completely different ballgame, completely different business model than what I'm doing now. I am still doing some of that. But yeah, it's shifted into larger properties with a number of different exit strategies. So I don't know if that answers the question.

Seth Williams: Yeah. No, I mean, there's a ton you could say there just with the whole people side of things. I mean, there's a lot packed into that. And I'm wondering, as things have changed, I've heard from a lot of different people, some of them are out of the land business, not completely. Some of them are still doing it, but their business is very different, very much like you. But through all of those changes, there's been some like kind of dark low points when they realize like, man, the way that I've been doing this isn't going to keep working. Did you have any of those moments? Like, what do you think has been the hardest thing to change.

Luke Harris: When the cash flow starts getting tight, you have to start making hard decisions. And that's usually kind of what it comes down to. There's so many things that I've had to do to change and pivot. And One of my maybe biggest weaknesses, which maybe is also one of my biggest strengths, is always trying new things. And so you end up spending a bunch of money on stuff that doesn't work out, but then you end up spending money on things that does work out. And honestly, those things that I've tried that have worked out has really saved our business, I think. There's probably been two or three times where the cash flow has just started getting really tight and I've had to lay people off, which is probably one of the hardest things. But change, cut costs, different types of marketing and everything and then try new strategies and then just stick with the ones that work.

Seth Williams: And you mentioned like changing things that saved your business. So like what are some of those things that you changed that ended up working out?

Luke Harris: The two kind of categories I can think of off the top of my head would be like marketing strategies and exit strategies. So exit strategies would be like entitlement. That did not work out well for me. I lost a bunch of money there and I just decided not to keep going down that I'm sure I could if I put more effort into it, but I just decided it wasn't for me. There's the whole DPA model, distressed property acquisitions, messy title and everything. We definitely do that to a certain extent still, just because you got to go deep and solve real problems for people. And so timber is an exit strategy that we're doing. I'm sure we'll talk more about that. So that's, I guess, one side of it. And then, yeah, the marketing, I guess, was the other category I mentioned. So we've done all kinds of stuff. We've done Google pay-per-click, SEO, texting direct mail blasting out offers on the mls to like on market stuff and then kind of different tweaks and changes of all those different ones i'm sure i'm forgetting a few but those are i guess the two kind of categories i can think of where we've had to change and pivot and try new things over the years you

Seth Williams: Mentioned the entitlement thing didn't work out was it just like one really bad deal or had you tried to do a bunch of them and none of them worked out or what went wrong there? Like what made you decide, nope, it's not for me.

Luke Harris: I definitely enjoy sales and marketing more than I do, the analytics and everything. And With doing entitlement deals, what I realized is you really have to have somebody on your team that loves crunching the numbers and creating a budget for it and really making sure all the I's are dotted and T's are crossed. And I actually had a business partner that had done some of the entitlement successfully, and I don't think he was really a detail-oriented guy either. And we spent money doing due diligence. So like wetlands lineations, you got to put a lot of money into soft costs just to figure out if you have a deal. So yeah, I mean, there were probably 10 deals that we put 5,000 or more dollars into that we ended up killing And then we had one that went all the way through and we closed on it and missed a couple pretty big things and lost some pretty serious money on it. So it was a pretty big net loss, but a really amazing education through the whole thing.

Seth Williams: Yeah, it kind of reminds me, I've heard stories of different people who have like 10 kids or something like that. Or I know one family that has 13 kids. It's interesting. The reason they had that many kids is because like, first of all, they liked it. But also the kids that they had, they were just kind of easy kids. Like it was just fun to parent. time. It wasn't a bad thing. But once they had the kid that was just really hard, they're like, okay, we're done having kids.

Luke Harris: Yeah, I could totally relate to that. That's funny.

Seth Williams: Tell me about the timber thing. Was that something you went out of your way to look for that? Or did a deal just fall into your lap where you're like, oh, I could do this. And then you dove deeper from there?

Luke Harris: I mean, it's honestly kind of why I got into the business originally. I grew up, my brother was a logger. And at 16 years old, he hired me and I was out there with a chainsaw cutting down trees for him. And then, I worked on a wildland fire crew and I was just in the whole forestry world, went to college, have a bachelor's degree from Virginia Tech in forestry, worked as a consulting forester, worked for some big timber companies, cruised timber full-time just as a contract timber cruiser for a long time. So that's just the world that I've lived in. And then when I started transitioning and started my land business, it was just always in the back of my mind, like how can I be monetizing timber? And it really took me a while to finally build that part of the business out. From the very beginning, honestly, it was in the back of my mind and doing the desert squares, there's obviously no trees on those. But in 2021, after I had had a really significant success with the desert square model, I pivoted. That was my

It did really hard and it was costly, but I'm super glad I did it and went into larger properties. And honestly, a big motivation for doing that was finding properties that had timber on them and starting to use my skills to monetize the timber side of it. And then I believe last month, it was 10 years since I bought the REtipster class. Yours was the first one that I got. It was April 2016. That was 10 years ago is when I started. it was about two years ago is when I finally did my first successful timber deal. So I don't know what took me so long, but I was always just kind of poking around trying to look for timber, seeing if it was on properties that I was buying. And so much of the time it's not. I guess that's kind of why it took so long. So many properties that have trees on them, it might even be a big property. And then you got to pay a forester to go out there and walk the property most of the to even know if there's anything there at all. And more than half the time, there's nothing. So that was one of the big barriers to entry early on.

Seth Williams: Did you say it's $2,000 to $5,000 to pay a forester to visit your property and figure out what the value is?

Luke Harris: $2,000 to $500,000, just to even see if there's anything at all there. And then a timber inventory would be more dictated by the size of the property. So that could easily be $2,000 to $5,000 probably for most of the properties that land flippers are doing in the like 10 to 100 acre range. That's roughly what you're going to be looking at for a timber inventory is what you said, $2,000 to $5,000. They'll do an actual appraisal of the timber, and that will tell you roughly what the value of the timber is at that point.

Seth Williams: I love getting into the nuts and bolts of this stuff. When I'm thinking about the most efficient way to find a property where it makes sense to harvest the timber. So it's got to be big enough. There's got to be enough trees. It's got to be the right kinds of trees. The trees have to be mature enough. All these different boxes have to be checked. What is the most efficient way? Say if you're using something like Land Portal or whatever your data service is to narrow these things down, like what are you looking for exactly?

Luke Harris: What we have started to do virtually, the biggest things that you can do are, off the top of my head, I can think of two things. I have a cool little map my forester made for me. And in the Virginia, West Virginia, North Carolina area that I live, he marked the counties that have the best timber markets. So there's really several things that play into that. Are there a lot of mills competing for the wood in that area? Drives the price up. It's completely different from where land is worth more, is where timber is worth more. It's a completely different market, obviously, you're looking at. So how many mills are there? How many loggers are in the area to be able to even cut the wood? So if it's an area that just doesn't have many loggers, it can be really hard to move it. And then just the soil type and the value of the timber. So those are really the three factors that help you know whether it's a good area. You might have a huge volume of timber per acre that's really great timber. But if you have to haul it four hours to a mill and there's no mills close by that want to buy it, then your price is going to be dramatically less. And then, yeah, the quality of timber and the loggers play into that, too. So he made a map kind of showing what counties are good in regards to those three things and which counties are not. And so that's one of the things we look at. Is it even in one of the areas that's a good area? And then,

Yeah, as far as like aerial imagery and everything, the big thing that you can do, and before I even talk to my forester, my acquisitions guy is connected directly to him too, is we look at the aerial imagery and talk to the owner. So you can just ask the owner. That's honestly the first thing you do is you just say, hey, have you cut the timber recently? And they can usually tell you sometimes they don't have accurate information, but a lot of the times they do. And then you can also look at the aerial imagery and see if it's been clear-cut. It'll just look like a moonscape. It'll be brown in whatever year that is. So you can go back in time. We use Google Earth and see if there's a year where...

Clearly clear cut. And then if it's in a hardwood area, then you're going to see more like skid trails and everything. And depending on if it's pine, because there's pine markets and then there's hardwoods and it's a completely different ballgame depending on what area you're in. In pine, you can make pretty good money on a 20-year-old stand. If it's 20 years ago that it was clear cut and there's aerial imagery easily back that far, you actually might be looking at some pretty good money. If it's in a hardwood area and it was cut 20 years ago, you don't even need to send the forester out there. But yeah, as far as filtering like the land portal i haven't looked into like automated ways i have been thinking about like with ai there probably is a way because you can buy a lot of stuff on market with these timber deals and pay market prices as long as there's really good timber there those are some of the things is

Seth Williams: There a map somewhere showing the locations of all the sawmills everywhere so you can kind of triangulate oh there's a lot of them here must be good.

Luke Harris: I'm not aware of one the timber world is just so different working as a consulting forester the technology takes a really long time To make it into the forestry world, there's some money there. But overall, timber markets are declining, and it's going overseas still. And I was talking to one of the owners. He owns several mills around here, and he said in the last 30 years, hardwood timber production has gone from 13 billion board feet per year to 4 billion board feet per year over time. It's not just market changes. It's like a trend away from wood. So that's not a good sign for the timber market.

Seth Williams: It better. If anybody's interested in this stuff, I had talked to Jonathan Bernard in episode 270, REtipster.com forward slash 270. He works for Southview Timber, which is like a company that invests in timber projects. And we talked about a lot of the stuff there. But one thing he brought up was this website, ForRisk, F-O-R-I-S-K.com, which apparently has some sort of database showing all of these sawmills everywhere. So if you're interested in that particular resource, but also just checking out that episode. There's a lot to learn about this from what he talked about as well.

Luke Harris: Awesome. I didn't listen to that one. I'm going to check that out.

Seth Williams: So the first time I ever heard about this idea of harvesting timber... And I actually wrote a whole blog post about it years ago. Some guy had called me saying that he had a friend who bought a piece of land and paid a discounted price for it. And then he harvested all the timber and the money he made from that more than paid for what he paid for the land. And he still had the land. So there was still like the dirt value and the timber value that the seller hadn't even thought about. And I'm wondering, how often does that happen? Like, have you had that where you bought a piece of land to harvest the timber, but like the seller had no idea what they had and they didn't care? They were just like, yeah, just whatever, just take it. Or is it like, no, they always kind of know what they're dealing with and you got to pay full market value because they're not going to come down on their price. What's been your experience with that?

Luke Harris: Yeah, I mean, we're looking for deals where we can do that. That's ultimately kind of the gold standard is the deal where you can pay for the land with the timber. Sometimes it's a little bit less than that. I would say probably 70, 80 percent if it gets much over that. So like the timber's worth 70 to 80% of the land. That's generally probably the bottom of what we would do for a timber deal. And sometimes, especially being a real estate agent, you talk to people and you advise them that, there's timber value on their property. Are they interested in selling the timber? Before they sell the land or do they want to sell it all together? A lot of people just don't want to hassle with the timber. They don't want to pay a consulting forester to go cruise it or work with a mill or whatever. And so a lot of people just want to sell it all together. That's very doable to pay for the land with the timber on it. And we've done a number of times. Yeah.

Seth Williams: So like what kinds of offers are you making? Like, are they still discounted offers? Is it like 50% of market value thing or is it more or less? When you know this is your end goal, how does that impact, if at all, what you're willing to pay?

Luke Harris: It's a very small percentage of our deals that fit into this category. So my acquisitions manager, we're doing mostly like SEO and Google pay-per-click as our marketing, which is not very targeted as far as the type of property that you're looking for. If I was doing direct mail, then I would do more targeted things specifically for timber deals. But essentially, we make the normal low offer that we're going to make that would not factor in the timber. But if the seller informs us that the timber has never been cut and they're not interested in doing the low offer, that's when we would say, well, maybe there's some timber value here. We do what I told you. Is it in one of the counties that's hot? Look at the aerial imagery. Is there been a timber harvest? Ask the seller about it. If so, then we hand it off to our timber guy. He'd go out and walk it and say, yeah, there's amazing timber. No, there's not. And honestly, it's been only 20 to 30% of the deals that he's gone out and looked at, puts his like some print of approval on it and says, yes, there's good timber here.

Seth Williams: So how do you find a good forestry consultant? Because one of their big roles is to kind of protect you, right? To make sure you're actually getting the value that your timber is worth. Am I correct that like in the logging industry, a lot of people can take advantage of you if you don't know what you're doing?

Luke Harris: Yeah, absolutely. Not only is it a very inefficient market, For example, prices can drop overnight, and something that was worth X amount becomes worth half of that all of a sudden. This happened just recently for Poplar. They bought like 6 million board feet of Poplar, and all of a sudden they have all the Poplar they need, and they were the biggest Poplar buyer around. And instantly they no longer need Poplar, so prices just drop. There's any number of other factors too. So the Association of Consulting Foresters website, they are held to a very high standard of ethics. and that would be the number one place that I would go to find a consulting forester. And yeah, typically they would charge you like a percentage. It's very similar to kind of what a real estate agent's role would be. And they would charge you a percentage of the sale. And there's several different ways we can get into it if you want of how to structure the sale. But yeah, it would be the association of consulting foresters is kind of the gold standard accreditation. If you're a member, then you're held to this high standard of ethics. Yeah.

Seth Williams: And your play is to always buy the land outright, harvest the timber, then sell the land? Or are you ever like, no, I'm just going to harvest it, I'll lease your land from you? You'd ever do that?

Luke Harris: Yeah, I guess you could. I've never thought about that. But yeah, so far we've always bought the property, sold the timber. I have some that I'm holding now where the timber... Paid for the land and I have them listed at like really high prices, I do want to keep, have that be part of my portfolio long term. I haven't done that really intentionally yet, but some of the ones that I sold the timber on, I'm still holding on to. Yeah, most of the time it's buy the property, take ownership, sell the timber, and then sell the property. That's primarily what I've done. But yeah, keeping some of them is going to be the other play that I'm going to do because, if you get your money out of it's like cash flow isn't as much of a problem.

Seth Williams: Do you just clear cut the thing? Or like, is there some strategy? Oh, we're going to leave up this big tree for some reason.

Luke Harris: So far, we've been basically just selling everything. There's a number of different ways you can do it. You can do like a diameter limit cut if for some reason you think that it would be beneficial or make it more valuable. We haven't done that yet. Like one of the properties that we did this on, it was just outside of Winston Salem, North Carolina. It was only 10 acres. And really, it was pretty valuable as a building location, possibly even entitlement. I didn't go down that route though. So it actually made it more valuable clear cutting it, than it was beforehand. And compared to what it was worth, I think we paid 50,000 for that one, sold the timber for 33 and then sold the whole property. Honestly, probably a discount for 70. So we've pretty much always clear cut it, I guess.

Seth Williams: And when you're reselling these properties, who are your buyers? Is there a certain way you need to clean it up before you sell it like grinding all the stumps or like you can just leave it a total mess and the next person will take it over.

Luke Harris: So usually this is kind of what happens. Most of them have been lump sale. So you can do it one of two ways. If it's a logger they usually don't have enough money to pay for it all up front and so they'll pay you as they take the wood to the mills. You'll get like 40% of it they get 60% of it. It's a pretty common split We have one property that's being logged like that right now over in West Virginia. Most of them have been cash sales. So it's usually like the mill. Sometimes the bigger loggers will do it and they'll just pay cash all at one time, which is obviously generally more appealing. When that happens, they record a timber deed and they usually have two years to cut it. But we don't want to wait two years to sell it. So we usually are selling it before their timber deed is up. That can definitely hurt your prospects to a certain extent. But we've made it work pretty well. One of them, yeah, the end buyer was somebody that wanted to build a house on it. One of them, the guy, he did farming, organic farming, and it was 55 acres, I think, and he was going to do what you said, like root out the stumps. He paid a really good price for this property, though, and he was fine waiting until they cut it.

Seth Williams: Am I understanding you right? You're saying you're selling it to the logger, and they're paying for it?

Luke Harris: The timber, just the timber part. Yeah, so when we sell the timber, you can either sell the timber in a lump sum and then you still own the property just not the timber anymore or you can sell the timber component as they haul loads of wood to the mill, then you still retain ownership of the land.

Seth Williams: But it sounds like the logger is paying you, but the sawmill is what determines the price. So how does the flow of money work? Does the sawmill pay the logger and the logger pays you? So the sawmill ultimately decides what it's worth, but the money is coming from the logger?

Luke Harris: Yeah, it totally depends on the structure and it really can be however you want it to be. Most of these cash sales, it's like a mill that buys the timber from us. We just get a wire into our bank account of whatever, $50,000, whatever. And then it's their problem. However, they're going to log it. They usually hire a logger on a per thousand board feet basis or something like that. So with the cash sales, that's how that would work. And then if it's the logger that's buying the timber from us, which there's a lot of bloggers that need to stay busy and maybe the mill isn't hiring them. So they need to go find their own wood to cut and they'll just haul the wood directly to the mill and they get paid. It's called gate wood. They get paid at the gate there at the mill. And in that case, usually I think it's been the mill that pays me. They take the wood to the mill, and then the mill pays the logger their percentage, and the mill has a copy of our contract. Even the consulting forester would get a percentage of it too, and then the landowner. It's called stumpage.

Seth Williams: Was I hearing you right that you said sometimes the loggers take like a couple years to harvest this stuff?

Luke Harris: Usually the mill, when they're paying cash for the timber, generally you will not get nearly as much for your timber if you don't give them two years to cut it. Yeah.

Seth Williams: So how do you sell your land then if it's going to take two years for them to harvest the timber? You just got to wait two years until they're done and then you can sell it?

Luke Harris: No, you can sell it right away. It's just encumbered. Typically, we sell the timber within a couple of weeks or a month of closing on the property. So we buy the property. We already know who's going to buy the timber. Typically, we close on it a week or two later, we get a wire for the timber and then immediately we put it up for sale. But there's a deed recorded at the county that says this mill bought the timber and they have till x date to cut it and after that date it's no longer encumbered by this deed so the mill doesn't cut it before that date then the timber is yours again whoever buys the property we sell it right away and so the people know when they're buying it they're buying property that if it hasn't been logged then it will be logged anytime before that day and it does make it a little harder sometimes to sell it but we've gotten pretty good prices you know if it's a good property people still want to buy it so you

Seth Williams: Get the money as they haul the timber off or in one lump.

Luke Harris: Sum it could be either yeah if a mill buys it they often will just pay you cash all at one time and then it's their problem after that if it's a logger they usually don't have cash to buy it up front and so they will pay you as you go along and some people think you know in forestry you know it's a common discussion like do you get more money. If you sell it, pay as they go. And there's a bunch of the factors on which one you want to pick. But I like the cash up front, but there's fewer people in that buyer pool.

Seth Williams: So whoever you sell this property to, they just need to be okay with loggers randomly stopping by and chopping down all their trees. And you can find people who are totally fine with that?

Luke Harris: Yeah. So usually we put them in touch with the forester who's managing the sale and they can ask all the questions they want. Like in one case, the lady was going to build a house there. She didn't have to build within two years or whatever. She was fine just kind of waiting until they cut the timber, and the mill was planning on cutting it quicker. Based on the contract, they could wait two years. And yes, she was happy going ahead and closing on it and locking it in.

Seth Williams: So like the people you're selling it to, is it just like individual people who want to build their own house? Or is it like a recreational property? Like what's the typical avatar of the person who is buying a property like this?

Luke Harris: We have one we did over in Wayne County, West Virginia. We still own that one. It could be like a hunter. I think there's several people that are interested in that. Clear cuts can actually be great places for hunting. There was a guy down in eastern Virginia. Year we did a property it was the first one I did successfully it was like 55 acres we sold the timber cash to a pellet mill actually I think wood pellet mill and they had two years to cut it and he was an organic farmer he had I guess hundreds of acres of farmland and he was apparently planning on digging all the sump stuff I can't imagine that's very cost effective but apparently the And he really wanted it. And then the one down in Winston-Salem, the lady wanted to build a house on it. And it actually increased the value and saved her some hassle having all the timber gone. So, yeah, those are just, I guess, some case studies of buyers that we've worked with.

Seth Williams: That's interesting. How does it increase the value to not have timber on it? I don't doubt that that's possible. I'm just curious, what was the situation there?

Luke Harris: So she was going to build a house and it was thickly wooded. So you can imagine if you're going to put a house up, you can't have trees in the way. So a lot of people pay even to have that done. Yeah. Or if she wants a yard, the whole thing was thickly wooded, very heavily stocked.

Seth Williams: Yeah. When I built my storage facility, just getting rid of the trees was 30,000 bucks just to cut them all down and burn them right there on site for, I was about like four acres worth of trees. So that makes total sense. If you got like an intended use in mind.

Luke Harris: Yeah.

Seth Williams: Let's say you've got a property. And you think it could be a perfect for harvesting the timber. What makes you think that? Like, what does the minimum acreage need to be? What types of trees? How big are they? What makes you pick up the phone and call your forestry consultant and pay money to roll the dice to see if maybe there's something here?

Luke Harris: It's crazy. I used to think it had to be 20 acres to make it a good timber deal. And then I did that deal down in Winston-Salem. We were about to close and I was like, hemming and hawing, is this a good deal or not? And I was like, you know what? let me just call him my forester. He was like, oh yeah, that's not far from me. I'll just run down real quick. And then he went down. He's like, this timber is awesome. So it was 10 acres. We sold it for like 35,000 or something like that. Just the timber, that one was 10 acres. But then he told me he had a job. It was two acres of walnut that was worth 65,000. So, size really doesn't

Factor in at all. If the right trees are there, I wouldn't really be spending a lot of time on anything under 10 acres unless I happen to have gone out to the property myself and looked at it and I was like, wow, there's some really nice walnuts here. That's pretty unusual. Walnut is like the highest value in the United States. It could be a really small property if it's walnut. That 10 acre property was like white oak and poplar, which are around here, some of the more valuable timber trees. Yeah. So size, I'm usually not too excited if it's less than 10 acres, unless I happen to go out myself and say, yeah, this is really good timber and I'm going out anyway for like a listing appointment or something. And then if I'm going out and looking at myself, it's pretty obvious just on the ground. I have experience looking at timber so I can just tell. But if I'm in the office, then it's, yeah, looking at the aerial photography, it doesn't look like it's been harvested. You kind of get a feel for like what mature timber looks like after doing it for a while. If it's in a pine, Waddle Lake Pine area, which is like the southern southeastern United States, it really only needs to be only 20 years old and it can be worth some pretty serious money. So if you see like it was clear cut 25 years ago and you know it's in an area where the Wabwale Pine kind of pine belt, which is southeastern United States, that would be worth calling. So it's aerial imagery, talking to the seller, and also that map that I referenced, knowing that it's in an area.

Seth Williams: And road access. I know sometimes some of the best land for harvesting timber, like you can't get to it. It's landlocked. Have you had that at all where you've had to like buy it, get road access, and then you could make it work?

Luke Harris: I have one right now, actually. It's like 35 acres out in middle of nowhere, West Virginia, that has really good timber on it. And my forester actually told me that there's a law, and this always comes down to how willing is the neighbor to work with you on it. It doesn't matter if there's a law or not. If they don't want to work with you, it's going to be a pain or costly. But there's a law that specifically for timber, you can get temporary access and the local magistrate or whatever will authorize it and you can just go in and start cutting. We haven't actually executed on that yet, but we do have this property that we own outright and it's apparently got some really amazing timber on it. Access is a big deal, as it is for any other land deal. If you can't get to it, then timber is a lot.

Seth Williams: Yeah. I think you said earlier, two out of 10 times the forestry consultant says, yep, this is great. Let's do it. The other eight out of 10 times it's no, it's not. So of those eight out of 10 times, what was the situation where like you thought it was good, but you were totally wrong and it wasn't good. Like, why did you think it was good and what were you wrong about?

Luke Harris: So just recently there's 158 acres up in West Virginia, I think it was. And there's a real estate agent that we know up there who was close to the property and he was like, I'll go out and take a look at it real quick. So he went out and he thought that there was pretty decent timber on it. So we made a pretty high, almost like market offer on it got under contract with our due diligence and it was going to be $4,000 to cruise the timber on the whole thing. So my forester drove all the way up there

Like three or four hour drive with his employee too, to cruise the timber. And he determined that it was not worth what we thought. We ended up not paying them the 4,000 because he walked it first. And I guess the realtor had only looked at part of it that had good timber, but the rest of it didn't. So that's one example. Another one recently, I think it was in Fayette County, West Virginia.

We were all excited about it. We were looking at the aerial imagery and it looked really big timber on it. And it was, but he got out there and it was all like sycamores, beech, black gum, these trees that are basically completely worthless. So it did have mature timber, but it was just wrong species type. Another one, actually, this has happened a handful of times down in far Southwest Virginia, had good timber. I actually walked that one with a forester. It was 160 acres or something. And we walked whole property together, spent the whole out there and we determined it had good timber. But then when I went to find loggers, it was one of those scenarios where there's not many loggers in the area and the road getting up. This is a big thing. I've run into this exact scenario two times. There's a turn to get up to the property that's too sharp for the big logging trucks to get around. So you have to find a logger that has a smaller truck. And a lot of times there just aren't loggers around that can even do it. So we ran into that scenario one time over in West Virginia, and we now have a local logger that's logging it on a pay-as-he-go, kind of like I described earlier. Every load that goes to the mill, he's going to pay us. We ended up finding a logger. It took a while, but we found somebody that could do it, even though it didn't work for the majority of the loggers. So I'm sure there's other factors that play into it, but having a strong local network, or at least a forester that has a really strong local network, can really be a big game-changer.

Seth Williams: I totally see that. But even like with sawmills, isn't it true that certain sawmills only take certain types of wood and only make certain types of product? Other sawmills do something totally different. So like you could have that sycamore example, how it's like there are mature sycamore trees, but... The sawmill doesn't want sycamores. What if there is some other sawmill that does? You just haven't called them yet. Or like the logger who like, yeah, I can't do it because my truck is too big. But the other one's like, hey, nope, I can do it. So does any of this come down to like just calling enough people until you find a buyer? Or is it truly like, nope, nobody wants this. This is just no good.

Luke Harris: It very often can truly nobody wants it because there's a limited number of mills. If it's really high value stuff, like white oak barrel stave logs or the walnut veneer, especially, they'll cross the entire country to get walnut veneer. But if it's like pallet wood or something, they're probably not going to drive more than just a few hours for it. And so, yeah, a lot of the time, if the wood isn't what they're looking for, there just truly is not a buyer for it. Unless you wait, sometimes the market changes.

Seth Williams: So for a land investor who has never touched a timber deal before, what's the safest way to get exposure to this niche without getting crushed? Like, is there a way you can dip your toe in the water or you kind of just have to get lucky enough to come across the right deal where the stars align and it works out?

Luke Harris: Honestly, building a relationship, if you're local, because building relationships with a bunch of consulting foresters in a bunch of areas can really be tricky. And if you get to where you have a good relationship with a local guy, like I finally developed, he will often go out and just drive by stuff for me for free. And that's a complete game changer. If you have to pay 500 bucks for every time, you don't know if it's a deal and finding out that can really kill the profitability of it. So, yeah, I mean, the best way to kind of dip your toe in and start would be find a consulting forester. Give me a call. I'm happy to help. I'll do a quick little call with somebody about it and help them out. But, yeah, I would be checking those things. It would be probably having a call with the forester because they could tell you just on the phone half the time, is this a deal or not? And push them and be like, did you check the aerial imagery? Because especially if you're paying them and you already agreed to pay them. They're like, well, I'll go out and look at it. They're paying me 500 bucks. But then they get out there and they're like, oh, I should have checked the aerial imagery. it was logged 10 years ago. That's a big thing that could save you some money. Really try to vet it before they go out. But having a really good consulting forester, that's really what you need.

Seth Williams: That seems to be the theme we keep coming back to, having that knowledgeable person with the network and the knowledge who's helpful. Like, it doesn't sound like you could survive without that. Is that safe to say?

Luke Harris: Unless you're local and you happen to be a forester yourself, I could do that, but I just chosen to spend my time being a land flipper and a real estate agent and not a forester. So I have a really good consulting forester. Yeah. Yeah. Trying to do that on your own wouldn't really be worth it in my mind. Yeah.

Seth Williams: Does it ever seem like more trouble than it's worth? Like the kind of thing was like, yeah, if the perfect deal falls in my lap, I'll do it. But like, I'm not going to go try to do this stuff. Like there's just so many different obstacles and weird things that can harpoon a deal. Or do you have reason for more hope? Like, no, this is a systematizable thing. I can go out there and make it rain with this strategy.

Luke Harris: Yeah, no, I think it absolutely is. We definitely do kind of your standard land flips, but my forester is always sending me referrals and it's deals that he's looked at and the person doesn't want to sell the timber. They want to sell the whole thing together. And then I go out and look at it or we just make an offer on it if he's already looked at it. So that's referral-based. And so you get deals without spending money on marketing. You can pay almost market price for properties, which makes it easier in that regard. the future of the timber market is a little bit uncertain, but it's absolutely my focus. And it's the number one kind of profile of land deal that I do. But if you're not making it your specialty, you might get one here and there that could be good. But Like anything, you got to focus and put the time in to really get good at it.

Seth Williams: So let me just throw a hypothetical example at you. Let's say you're looking at a property. It's big enough. It's got the right kind of trees. The market value of just the land by itself. Let's say that's $100,000 and you can get $50,000 for the timber. And this is like a deal that your forester refers to you. So what is your first offer to that person? Are you offering them like 50% of the $100,000 value or are you just going straight for the full value of it? Or like, how do you even start the conversation and throw an offer out there?

Luke Harris: If we definitively know the timber is worth $50,000, other factors like the land and how saleable the land is, all of the things that go into a standard kind of land flip would affect our offer. But just for the sake of simplicity, if I know they want $100,000 and maybe it's worth $100,000, for something like that, I would be comfortable paying $70,000 for it if I'm truly getting $50,000 out of the timber and I own this nice property outright for $20,000, that's about what I would offer. That fits the profile of the number of deals that I've done.

Seth Williams: If it's not totally certain that there's 50 grand worth of timber value, or maybe there is, but you can't harvest it for whatever reason. So like there's some question marks there. Then what would you offer me? Would it be like 50,000 or lower or higher?

Luke Harris: Yep. And obviously that would be dictated by like how much cash do I have in the bank to spend on it? How comfortable am I leveraging it and everything? But yeah, for example, my Forrester sent me one yesterday and I called the guy and talked to him. It was 60 acres. He said there was a million board feet of pine on it from an inventory in like 2011 or something like that. So it's probably more than that. But white pine around here is very hard to sell right now. And he said that the market usually heats up in the fall because it gets the stain over the summer. And so... I would not be willing to pay more than the timber is worth, especially because any number of things could happen in the timber market before October, whenever the timber would be saleable. I want a quick turnaround where I'm going to get my money back out of it pretty quick, or at least the vast majority of it. So yeah, I mean, there's just so many variables that play into that. But if it's uncertain, like that property, say that example I just gave you, I would probably be offering more like what the timber is worth, $50,000 or maybe even slightly less. at times around here in the last couple of years, the mill just stops buying white pine altogether.

Seth Williams: Yeah, so you don't even really care about the land value. It's just what the timber might be worth.

Luke Harris: No, I definitely would be factoring in the land value.

Seth Williams: Because the way you worded that was you'd pay what the timber is worth. You didn't mention the value of the land. So what role would the land play, if any?

Luke Harris: My acquisitions guy has created an AI prompt for comping that has worked very well and very accurately. And obviously we all know as land flippers that comping is very challenging. And so this is something we should probably write an AI comping tool for. But I mean, there could be like 50 variables. And right now I'm just using kind of my gut to make these decisions, which isn't always the best way of going about it. But I look at the comps and everything and I feel like the land, as is you said, is worth $100,000 with timber on it. We shoot for a land flip to pay 40% of what we feel like market value is of the property. We used to be doing more like 50 in the last year or two. We've dropped that to 40. So if the timber value is completely uncertain, then I really probably wouldn't be factoring that in much at all. And I would just treat it like a regular flip, like in the example of that white pine one, but there is a certain amount of value there. And it's really kind of about a risk tolerance thing. Like, what is your risk tolerance? How willing are you to assume the risk that this white pine won't sell at all? And how much value are you attributing to a, a future payout in maybe three months or something like that?

Seth Williams: That whole risk tolerance thing. Like if you're an actuary and you're trying to quantifiably measure the risk that this isn't going to work out the way you plan. And like this thing you mentioned earlier on about how that one sawmill bought all the poplar that they needed. And like, yeah, we don't need any more. So the value of that is now gone. Just the fact that that risk exists. You could make a decision and literally the next day it can totally get sabotaged. Like, what makes you comfortable enough to do this? Is it because that's not really that common? So it's like, yeah, it probably won't happen. How do you weigh that risk and be like, if that happens, we will be okay because of dot?

Luke Harris: I mean, I tried to factor in other exit strategies. So the very first timber deal I ever did could have been a subdivide deal. So if there's multiple layers, then that reduces my risk and gives me another out. Yeah, in that Poplar example, the more you know about the market and the more comfortable you are with it obviously kind of reduces your risk. So, a lot of things come into play. Like I said earlier, how much cash do I have in the bank to be able to take a loss like this? And what other opportunities do I have at a given time? But yeah, just knowing what's happened in the past. We could still sell poplar right now. There's just a lot fewer. It's probably like worth 60% because there are other mills in the area, but very often 10 mills would be probably even quite a bit for one area that would be cash buyers for timber. you still will have other buyers. So that kind of helps mitigate your risk. But depending on the situation, and again, it just comes back to really knowing the market, knowing all of the factors, the players in the market just helps me get more comfortable with it.

Seth Williams: Is it possible to get the contract signed with the sawmill before you buy? Or is it like, no, you always have to have that margin of risk where you buy it. And it's like, boy, I hope we can get this deal done.

Luke Harris: The short answer is yes, they usually don't want to do it at all. I've gotten to where they will go out and take a look at it and give me a number. They won't typically sign a contract until I own it, but I can usually get a number from them because they know I'm serious and I've kind of performed and brought them deals in the past. They're willing to put some effort in on the front end. And yeah, a lot of these deals now, it's within a week or two of me taking deed to the property. We already have a buyer that's kind of lined up. Man, it helps. That's one of the benefits of this business model is the cash conversion is just so much faster than it is with your typical land flip where you're waiting three months or whatever for it to sell is get your cash out almost instantly if you set it up right so

Seth Williams: Fascinating conversation about the timber thing appreciate you prior to all that feedback you, turn it a little bit to change the subject. So you decided to become a licensed agent, right? How long ago did you decide to do that? And why did you decide that was something worth doing?

Luke Harris: Probably for the last three or four years, it's been in the back of my mind as something that I might want to do. At any given time, I'm always trying some new strategy. there's the entitlement, the DPA stuff, some new marketing strategy that I'm implementing. And there's always something. And being a real estate agent was always kind of on my list of things. Some of the factors that played into it, I've continued to try to get more and more local, which is hard. Most of us lane flippers are, operating from a computer.

On the other side of the world, maybe I live in a rural community and, do deals right around the area where I live. And I like that model and I like the relationship model as opposed to, just pouring money into marketing. Once you develop a local network and people see you face to face and you run into each other at the diner and they come over to your house for supper. And I just really like that kind of a model. I don't know. It just feels better to me and also reduces your marketing costs a ton. And so the real estate agent component obviously fits very well with that model. And I love the land flipping, and I know I'm always going to be doing land flips. But so much of the time I run into people where they want more, but they're in a pinch and they need the money. And if I was an agent, I know I could probably sell this property for them and make a commission in three months or something like that with no risk on my part. But before I was licensed there was not a whole lot I could do except pay this low price that was less than what they really needed maybe or wanted and so my hands are no longer tied and I can help these people get more for their property but still come in I've only been licensed two or three months here now there's been a handful of times where they just want to be done with it it's like an estate and they've tried listing it before and they just don't care for example there's one, Hanover County, Virginia here.

There was title issues on it, I guess. I told him, I think I could sell it for a hundred grand. I'm probably going to list it for over that. I think we could actually cash out about a hundred thousand. I told him I can list it for you and probably list it a little over that. And we put the list price, we put what we estimate it's going to sell out in the contract, but I can offer you 30,000. And he's like, I just want to be done with it. Let's do the 30,000. Did consults with an attorney and everything and having those disclosures very clearly in there, buyer is a licensed real estate agent or not representing, If we list it, this is what we list it for, but we're paying $30,000 and we have listed at $100,000.

Seth Williams: So what is the radius of the area where you can work? How far out can you go from where you live?

Luke Harris: I was thinking of getting licensed in North Carolina and West Virginia, but right now I'm only licensed in Virginia. Early on, my very first listing actually was five hours away on the other side of the state. So I've made several trips over there and I think I've gotten five or six listings that all in this one kind of area, the Northern Neck in Virginia, and have some really nice listings out there. But I'm really going to cut that off. I found the opportunity. It's a lot easier to get listings than it is contracts as a land flipper. And so I'm really probably going to have like a two-hour radius here. I'm starting to kind of cut down on my driving, preferably within an hour or Agent, you have to go out a little bit further, depending on how picky you are with the deal. A lot of these like house agents will just be in one county or one small area. But with land, you just have to get used to driving at least a little bit is kind of what I found. So I think my radius is going to be a couple hours out, probably ultimately.

Seth Williams: So I know it's only been a few months since you've done this. And maybe your answer will be totally different a year from now. But like what percentage of your overall business do you foresee coming from the agent side versus just your own buying and selling of land?

Luke Harris: At one point, I was aggressively wanting to grow and have a team. I had a number of people on the team, and I expect I will kind of slowly go down that trail, but I'm not pursuing it super aggressively now. But I do expect I'm going to have agents under me, be my own brokerage probably before long. Right now, I'm working with another brokerage. I expect I'll always keep the Countryland Group company, the Countryland Buyers, I guess, to be specific, is the side that does the acquisitions. And there's people in the Countryland Buyers team that are up leveling. And, I'd like for maybe one of them to largely take that over. We'll just see where it goes. And maybe half and half, probably for me, I'm really going to focus on being an agent right now. So the stuff that I'm directly involved with, I'm handing off more and more on the countryland buyer side. And so I'm not doing any acquisitions, even a lot of the operations stuff I'm not really doing. And I'm actually going out on appointments and talking to people. So as far as my time right now, it's like 80% agent related stuff for sure. So maybe that's a good way of looking at it.

Seth Williams: Have you noticed any like disadvantages or drawbacks to being an agent in this business or has it just been all upside since you made that change?

Luke Harris: Yeah, I mean, some of the other things I've tried have just not panned out very well. But being an agent has been surprisingly... Very little downside. the big thing everybody brings up is you have to, disclose, like if you're buying a property yourself, you have to make all these disclosures. Honestly, we act very transparently in our acquisition side anyway. And It just kind of helps us up level in regards to all of that and be as transparent as we want to be anyway and give us just very clear standards and all of that. So that would be maybe the only downside that I can think of. And, there's that conflict of interest between being an agent and, for example, the ACF with the Association of Consulting Foresters, they are not allowed to buy timber. So there is a kind of an inherent and it's the same way on the real estate agent side. If somebody finds out, oh, you buy land too, and you're an agent, they're like, I don't know if I really want to work with you. So I guess there's that side of it. Fitting neatly into one of those categories or the other could benefit you. But my mindset going into every appointment I go into is how can I help this person? And so that's where I'm coming from.

Seth Williams: So now that you offer both of these things, has it significantly changed the way that you do your marketing to find deals? Like, has your messaging changed? Has the results gotten better since you've changed anything? Or just tell me about that, if it's made any difference at all.

Luke Harris: We're still primarily doing Google Pay-Per-Click and SEO right now. I actually had a billboard go up today for me as an agent. So yeah, I am doing some different types of marketing that I've never done before. I'm going to be doing, yeah, neighbor letters. It's different branding and different wording in the neighbor letter. But the idea is, let all the neighbors know there's a listing next to them in case they want to buy it. But also if they want to list, it's a great way of letting them know to get more listings. So I'm definitely using direct mail, which I'm not using a whole lot. We have dialed our direct mail in quite a bit and we're still getting deals from it. When I switched to becoming an agent, we cut quite a bit of our marketing. We still have one acquisitions guy that's kind of running that whole thing. But yeah, the marketing, the changes, I guess, that I'm specifically doing, I'm going to try some Facebook ads, which apparently are really cheap. There's a really good marketing lady with the brokerage that I'm with that's helping with a lot of this stuff. but I'm spending a lot of time getting like t-shirts and like, pens and notepads and stuff. And I have a little thing on my car. I have like decals on my truck. My goal is that everybody in my county knows that I'm a real estate agent and just sees my name everywhere, which is kind of a different mindset than, oh, I'm spending five grand on direct mail in this one area and see what my ROI is on that. I'm trying to just inundate it so that everybody, even strangers see me around town and they know I'm a real estate agent.

Seth Williams: Yeah that's interesting so i'm actually revamping my buying website right now for the land business and i'm debating on how much i should put my face in my name just my whole persona on it because i am who i am in the land business for a long time it's like i wanted anonymity like i don't want you to see my name or my face on my website it's like i kind of want to conceal that because i'm worried you're going to hate me or get mad or say bad things about me or whatever but it sounds like you're taking the opposite approach, which part of it, I understand being an agent, that's just kind of part of the gig. Like you want your face to be out there, but are there any concerns about that? Like what if you put your face out there and then you make a really low offer to somebody and then they hate you and tell the whole world, Hey, this is a bad guy. Don't do business with them. Like do those worlds ever like conflict with each other in any way?

Luke Harris: Yeah. I mean, when we were doing tens of thousands of blind offers to people, we would get a ton of bad Google reviews and stuff. My goal whenever I meet with somebody or talk to somebody is truly, how can I benefit you the most? And not only that, but now I'm an agent. So any land flipper likely has that mindset when they're going into a call, but I have the ability, my hands are no longer tied. I can get them X amount. So I have these two options and it's truly which one is best for you. I'm 100% transparent about it. And I don't know if we've ever gotten bad reviews You know, and before I became an agent, we did, the six month option and we do double closes and assignments. So we still kind of had that, where it was like, we can get you this much, if you're willing to wait longer, or if you want to just get it gone now, then you can do this lower offer. So we still had that in the past. But being an agent takes it to a whole nother level where I'm really significantly able to add value. So, yeah, I guess the short answer is I'm not concerned about that. I'm sure people are always going to get mad about something, you know.

Seth Williams: Part of what you do as an agent is you are the boots on the ground guy for other land investors. What exactly are you willing to do for other land investors and why are you willing to do that? Is it because you're hoping they're going to list it with you or is there some other motive behind that?

Luke Harris: Basically, I'm trying to get listings right now. I obviously know the land flipping world inside and out. And, for example, like I was going to Eastern Virginia. There's a property up near Charlottesville. I just was driving right by there anyway. I stopped and looked at this property for a guy for free with the hope of maybe getting a listing. So depending on the situation, I might charge up front for some of that. And it would be like a full report. I know what I'm looking for as far as timber is concerned. So if you want to get into the timber world and you have anything in Virginia, that's absolutely something I can help with from my on the ground look at the property. But yeah, basically what I would be offering is a CMA. We all know about CMAs, kind of get a look at the comps and see, what I think as a local agent properties are worth. And then an assessment of, the things that you can see on the ground that you wouldn't necessarily see, which I can't tell you how many times I've done deals that if I had visited them in person before closing, I probably wouldn't have done them, or at least not at the price that I did not.

Seth Williams: Final question. If you had to rebuild your business from scratch today with your current knowledge, what would you do differently?

Luke Harris: I have five kids now. And when I started, I had no kids. And through 2020, I was doing like the Desert Square game and I built up about $40,000 a month in terms income coming in. And it was amazing. And I built my house out here during that time. I was only working like 10 hours a week and I was able to just build a beautiful little house next to the river on a property we bought through a direct mail campaign. And I was working very little. So I was able to full time, actually swing the hammer building the house and everything. Yeah. I don't know if I would change a whole lot, but I guess my thought process in saying all of that is. I might've slowed down a little bit and not pushed so hard and spent so much time working. I probably would have blocked out more time, and not been so aggressive about trying to grow. Now my mindset is more like, these are my work parameters and this is the time I'm going to spend with my family and the business is just going to have to grow within those confines.

Seth Williams: So that's a tricky thing to figure out. I hear you. And I think, I think you're probably right. But like there is another side to that too where like you don't push hard enough I feel like I have always pushed hard but like the world changed on me so it's like the pushing hard didn't really help it doesn't help if you're doing the wrong thing you know so it's frustrating to figure that out and get on top of that and make sure you're doing it right I don't even know if it's possible honestly I feel like you're going to have some regret in one way or another kind of annoying to me, cool well people want to find out more about you is there a website that you go to I want to work with you. Anything like that? Yeah.

Luke Harris: Americas.land. If you go to the find an agent section, that's where my profile is. If you click on Virginia on the map, Americas.land. You can just call me or text me anytime. 540-613-5405 is my phone number. I'm on Facebook and Instagram. I didn't used to be a big social media guy, but now that I'm an agent, I'm trying to be everywhere. Yeah. Country Land Luke is my Instagram thing.

Seth Williams: When you say America's Got Land, is that America's Got Land dot com or what is it?

Luke Harris: Americas dot dot, not G-O-T. America's dot land. It's a pretty cool brokerage. If anybody's thinking about being an agent and you're in the land space, I researched high and low. In my opinion, for my situation, they were the best one to go with. They opened in October of last year and they already have almost 100 agents. So even if you need land help from other agents in other states, check them out. There's a lot of really knowledgeable people that have been in the business for a very long time. The package they offer attracts agents that know what they're doing and don't need a lot of support.

Seth Williams: The reason you would be part of this is because if the state requires you to be part of another brokerage and they are a brokerage, is that the idea?

Luke Harris: Yep, I looked at hiring my own broker and starting my own brokerage, but I went the route of working with some people that have been in the business for a while in a land-specific brokerage.

Seth Williams: What does it cost, out of curiosity, to do this thing with them?

Luke Harris: For $100 a month, you get all of their resources, which are actually pretty substantial. So they use Acres, which I had never really heard of before, and I haven't really heard of in the land-flipping space much, but it's a pretty cool platform that's a pretty cool platform. That does a lot of the stuff like land ID does even better in some ways. The automation and stuff they have on the back end is pretty cool. So that's $100 a month to do all that. And then they have a cap on their split. This is all advertised, I think, on their website. There's probably videos explaining it. In fact, I'm not aware of another land brokerage that has a cap like this. They all just take whatever, 30% of your commission all the way through however much you make. But once they make $35,000, if you're a broker, you make 100 percent if you're an agent you make 95 percent which is completely unprecedented in the land space

Seth Williams: Nice that sounds like a great resource if somebody wants to go down that path yeah if anyone wants to hear another episode where i talked to a land flipper turned agent episode 239 with mason mcdonald he had some pretty smart insights stuff that i'd never thought of before and at the time when i talked to him he had also only been at it for a few months so i follow up and see if it's still going well. But I do think there's some often overlooked advantages to being an agent. I never would have said that like 10 years ago, but I've just heard enough rationale to be like, huh, maybe there's something there. Could be worthwhile. But Luke, again, thanks for coming on. It's great to hear the update from you. Glad things are still going well. People want to check him out. Go to americas.land. You can also check out the show notes for this episode, REtipster.com forward slash 276. I'm going to have links to all the stuff we talked about. Luke, thank you again. And to all the listeners, we will talk to you next time.

Luke Harris: Appreciate it. Thanks for having me, Seth. It was great chatting.

Seth Williams: Yeah, of course.