Anyone else see increased competition in land flipping?

Morning everyone,

I live in South Texas and have just received a few mailers to my home address thinking it was still a vacant lot (from AZ and NY). Also, potential properties I’m closing deals with have said they’ve received multiple offers right behind me. Just wondering if the market is actually gaining overexposure/or becoming saturated, is it just the overall real estate market in general? I’m fairly new/recent to land investing/flipping and wondering if it there’s still long-term sustainability doing this with the increase of potential bigger buyers out there.

I’ve listened to Jaren and Seth on the podcasts and I’ve seen youtube videos saying that land investing/flipping is one of the best real estate niches to get into and that they find it crazy more people don’t do it. Looks like more people are doing it now, in my opinion.

Let me know your thoughts on the topic.

Thanks,

@terronjames I think it’s a legitimate question, and I’ve heard people asking about this for many years now. Part of what makes the land niche so great is the fact that it doesn’t have the same kind of intense competition that every other type of real estate does, but this also tends to generate a lot of fear about whether this low-competition dynamic will be “ruined” some day when other people find out about it.

I’ve actually got a blog post where I cover a lot of these concerns here, if you’re interested: https://retipster.com/land-investing-competition/

The presence of competitors in the land business has to do with which markets you’re working in. Some states and counties attract a lot of land flippers, and others, not so much. If you’re working in a market that is notorious for people finding land deals, I would expect to bump into other investors from time to time.

It’s also worth noting that “competition” can be a little subjective, and the existence of competitors doesn’t mean you can’t get deals anymore.

Case in point: Last year, I received five blind offers within a time span of 30 days on one of my properties in Colorado. Since that time (14 months ago now), I haven’t received any. So… is there a lot of competition in that county? If you asked me this back when I got those five offers, I would say YES, absolutely. But if you were to ask me today, I would say no, absolutely not.

Is there more competition now than there was a decade ago? I would say so… but it’s impossible to make a quantifiable, blanket statement about the entire United States. Some counties certainly get a lot of attention now, but others are still largely untouched.

There’s a lot more that can be said on this whole subject but at the end of the day, the existence of competition ultimately gives you a lot more data to work with, which can be very helpful in valuing properties and figuring out which markets to work in. Competition doesn’t spell doom for land investors, it just means we have to think a little bit differently about where we work, what kinds of offers we send, and we all have to get creative about how we’re going to stand out (i.e. - don’t just use whatever template you’ve got to work with, put your own creative spin on it and test out different variations until it performs).

@retipsterseth I appreciate the response and the blog post you attached was a great read. I do think that I’m just overthinking things and letting the “fear” take hold thinking about “what if scenarios”. I just need to keep finding deals, sending mailers where others aren’t, and try to set myself apart somehow. As always thanks for the helpful insight.

@terronjames I agree with everything @retipsterseth said for sure. And with that being said, I’ll admit it’s been awhile since I’ve marketed for land on my own as I’ve been focused more on my house flipping business this past year, but I can distinctly remember talking to quite a few sellers on my last round of mailers that would mention that they have “all of a sudden received a lot of interest” in their properties. So I would say it is definitely picking up, as well as just the growing popularity and marketing of various programs/coaches etc out there. I’m also seeing the rise of a lot more land flippers trying to market their properties for sale in our local facebook investor groups, so that’s also another indicator of increasing competition/general growth of land flipping that I’ve seen.

Seth, maybe you can chime in, but one thing I have seen in a very tangible way in the house business is that if we want to keep up deal flow, at some point, we have to adjust to the market and namely the increased competition - that is to say, I know me and several buddies in my local market just flat out have to be ok with buying at higher prices than what we’d typically want to buy at. There’s a line there of course where you still don’t want to go to the extreme on that approach, but we’ve had to make this sort of adjustment in that world at least. What do you think Seth? Are you and/or members here seeing that to be true about the land?

@tae_cho I think that those 5% offers that could work some times ago may be quite difficult to accomplish today but not totally impossible. I also believe that a lot depends on the Market you pick: FL, South West…there it might be way more difficult to find that 5%. North Dakota, Idaho or other States with those “hussles” that nobody wants to deal with (ex: non disclosure, judicial, no comparables etc) could be worth of a try if you have the stamina (and enough experience) and want to have more chances to beat the competition while still offering ridicolous purchase prices.
That said, whatever Market you choose i still believe Land to be a waaaay better solution than the residential one when we talk about competition (and, also, few other aspects😁)…

@tae_cho yes, I think there are definitely situations where you need to be willing to offer more than you would’ve in slower times when property values and overall demand were lower.

But as @Arturo said, this still has a lot to do with the market you’re in. In the less-popular markets, with less-desirable properties, you can still get away with the 10% offers… but on the same coin, those are the less-popular and less-desirable properties, so it will be more of an uphill battle to get those properties sold… so if you’re absolutely insistent on only offering those low, low prices, you’ll either have to look a lot longer or you’ll have to be okay with waiting longer to get them sold. You have to pick your poison either way.

@Arturo @retipsterseth

Definitely agree with everything said here. Historically, when I was a bit more active in land, I was never a 5-10% offer guy in the first place. I don’t say that with any bias either way, b/c honestly it was more lack of boldness on my end than anything else that prevented me from making those types of offers. I say that more just to make an objective statement and also to say that it wouldn’t ever be my expectation to get a property at that low of a price, and especially not in this current market.

It seems as though what you guys are both saying is that relative to how the market has appreciated values of property, it does not seem as though you are seeing that much more of a necessity to start increasing your offer price/percentage relative to where you have been offering historically. Good insight, thanks for your all’s input!