Will Growing Competition Ever Kill the Land Investing Business?

With all the new excitement over land investing in recent years, sometimes I hear from new investors who are concerned about competition.

“Do you think all the new players in this space will saturate the market and make it impossible to find the deals?”

“With all the new land investing courses out there, do you think this business will be sustainable in the coming years?”

“There are so many new investors flooding the market with direct mail, do you really think there are enough motivated sellers to go around?”

First off, I'll start by saying these are all valid questions. I remember worrying about the exact same things several years ago when I was getting started.

In my mind, I knew the land investing strategy was very special, not only because raw land is a very easy type of property to deal with, but also because one of the primary reasons this business model works so well is because so few people recognize the opportunity and pursue it.

I remember having this nagging fear in the back of my mind. I used to think to myself…

“Oh man, I've got to make a killing in this business while it still works. It's only going to take a few dozen more people playing this game and I won't be able to find deals anymore!”

I figured if hoards of new investors flooded the market, I wouldn't be able to make low-ball offers and get acceptances anymore, because every seller would already be tapped out. After all, this is a fragile business model that could easily get thrown out of balance, right??

Well… not exactly.

After seeing how the world of land investing works over the past decade, every year my eyes have been opened wider and wider to the incredible size and scope of this unique strategy.

The market for vacant land is a MASSIVE animal – far larger than most of us give it credit for.

In case you've never heard the numbers, I'll share them with you here…

As of 2013 , there were 3,007 counties, 64 parishes, 19 organized boroughs, 11 census areas, 41 independent cities, and the District of Columbia for a total of 3,143 counties (and county-equivalents) in the United States. (Source)

Of the 2,791 counties that have been accounted for by CoreLogic, there are well in excess of 145 million parcels of real estate in the United States. (Source) This doesn't include the hundreds of additional counties that still haven't been reviewed by data companies like Black Knight and CoreLogic.

Of course, these numbers are mind-bogglingly huge, and it's far more than any single investor could possibly reach on their own – but let's take this a few steps further…

The Market for Land

When we're talking specifically about vacant land, these numbers (i.e. – the property owners we're actually going to target) start to shrink down a bit.

After doing a quick (and very un-scientific) search on ListSource – if we select all the properties in the U.S. that are classified as “Vacant Land” or “Agricultural”, there are more than 23 million parcels that fall into these categories.

And keep in mind, this number STILL doesn't come close to showing us the full quantity of vacant lots in the country, because this doesn't account for all the properties that fall into other zoning classifications (like Single Family Residential), with an improvement percentage of ZERO (i.e. – properties that are zoned for a specific purpose, but haven't been improved yet).

Unfortunately, the ListSource filtering tool doesn't allow us to filter properties this way, but when we back into it (by filtering our list for ALL properties, in ALL states, with an improvement percentage of 1% – 100%) – we can see that there are easily another 20 million vacant lots (and probably more) we could add to this list of potentials.

If you take every property in the ListSource database (138 million), MINUS all the properties with improvement values between 1% – 100% (96 million), we're left with approximately 42 million parcels (or 41,826,180, to be exact) of vacant land, or vacant land equivalents.

Running the Numbers

Again, the calculations above aren't perfectly precise – but the point is, if there is anywhere close to 42 million vacant parcels in the U.S… that's a lot of real estate.

To give us some perspective, let's think about how many units of mail are sent out in the average direct mail campaign.

If you're using a delinquent tax list, it doesn't take more than 1,000 letters or postcards to keep the average land investor VERY busy for a week or two. If you filtered your list properly, you should be walking away with at least two or three solid deals from a campaign of this size.

Alternatively, if you're using a more general list of land owners from a data service, and you're sending out a few thousand blind offers at a time… even if you do DOZENS of these campaigns over the course of a year, you're hardly even scratching the surface of what's available out there.

Heck, let's go crazy. Let's say you send out 100,000 mailers in the span of one year (an insane amount of direct mail that most land investors could never process without a full-time staff). Your marketing budget will be in the tens of thousands and at a minimum – you should be raking in hundreds of thousands per year. This is the kind of scale that will catapult a land investor into millionaire status fairly quickly.

And even so… reaching 100,000 land owners with your direct mail is a drop in the ocean of land opportunities. If our assumptions are even remotely accurate, that would be approximately 0.002% of all the vacant lots in the U.S, and remember – these are markets you can continue to hit again and again in the years to come.

And let's not forget, most successful land investors are operating at a MUCH smaller scale, and don't do more than 10,000 – 20,000 direct mail units per year.

In fact… of all the land investors I know, I couldn't name more than a few powerhouse players who come anywhere close to 100K units of mail on an annual basis.

The true number of potential investment opportunities is FAR in excess of what any single land investor (or for that matter, a thousand land investors) could cover on their own.

When Competition Emerges

The funny thing is, even with all the opportunity out there – I've occasionally heard from a small handful of land investors (mostly in the southwestern U.S.) who have seen evidence of other land investors working in their territory.

For example…

  • Some land investors have received occasional blind offers from other land investors, offering to buy the properties they own.
  • Some land investors have received calls back from the recipients of their blind offers, saying things like,

“Take me off your list! I've already gotten 5 of these offers in the past few months!”

  • Some land investors have reported that their response rate in some areas has declined significantly. For some mysterious reason, fewer people are responding to their direct mail campaigns and accepting their offers.
  • Just recently, I was talking with a seller from a blind offer campaign who had verbally accepted my offer, and then emailed me a few days later to say…

“Would you believe I just received another offer for this property last Friday? After 15 years of no offers, this seems very coincidental, so I’m going to do some checking on the property on Monday.”

When I first started hearing about this (and even experiencing it myself) – I was shocked. In all my years in this business, I had NEVER gone head-to-head with another land investor for a deal I was pursuing. This kind of thing was simply unheard of.

For a moment, it honestly made me wonder… could this actually be happening? Is the market really getting saturated with land investors? Have we reached the tipping point??

No. Here's Why…

After doing some more digging, I discovered a few important details.

In every instance where someone was “bumping heads” with other land investors – at least one (and usually more than one) of the following issues were coming into play:

  • The land investor was using the exact same (or very similar) data service as several other investors in the area.
  • The land investor was using the exact same (or very similar) list filtering criteria as several other investors in the area.
  • The land investor was using the exact same (or very similar) blind offer template as several other investors in the area.
  • The land investor was sending direct mail in one of the same few counties where several other investors had boasted about having success in the past.

When I took these factors into account, I realized what was happening.

We had a lot of land investors who were essentially using the exact same (or very similar) cookie-cutter approach, while focusing their efforts in the same, small handful of counties, in the same region of the country, at the same time.

They weren't taking the time to discover their own new markets, apply their own creative approach, come up with their own list filtering criteria or use a unique letter template in their campaigns. They were all copying the same material and going through the same motions.

Now, if they weren't ALL doing the exact same thing in the exact same areas, it would be fine to simply go through these motions… but when you put hundreds of people on the same dance floor, with a finite amount of space to move about, it's inevitable that at some point, they'll start to bump into each other.

Why It's Still Okay

Even after I recognized that a few select areas in the country were getting a little more attention than the rest, I realized it was still okay. The sky wasn't falling.

In my experience, this kind of “competition” has been exceedingly rare in the land business, and even in the few unique cases where I've sent offers to a county at the same time as another land investor, I was still able to close deals.

Just because two or more land buyers may have some overlap in their direct mail campaigns, this doesn't automatically mean everyone is going to walk away empty-handed.

Why?

Because when two investors are doing independent mail campaigns – they aren't necessarily going to hit ALL of the exact same people. Chances are there will be some variation in the way they've filtered their lists (even if only a little) and the types of offers they're sending out.

For example…

  • Person A may be filtering their list for all properties between 1 – 10 acres.
  • Person B may be filtering their list for all properties between 5 – 20 acres.
  • Person A may be sending their mail only to out-of-state owners.
  • Person B may be sending their mail to all absentee owners.
  • Person A may be structuring their offers based on acreage.
  • Person B may be structuring their offers based on assessed values.

In all of these situations, there will most likely be some overlap, but there will also be a lot of NON-overlapping recipients too. The chances of two or more investors filtering their lists in EXACTLY the same way (even when they're using the same strategy) is actually very, very low.

Competition Doesn't Spell Doom for Land Investors

I know – competition sounds like a horrible thing when you aren't used to dealing with it… but honestly, even if a TON of new land investors enter the market (which I'm not counting on, by the way), it's going to be fine.

Look at house flippers and house wholesalers as a prime example.

There are a lot more people working in the space for improved properties than there are in the space for vacant land. Many of these people are applying a very similar direct mail strategy and have a MUCH higher likelihood of stepping on each others toes – and guess what… they're still getting deals too.

Direct mail works well for a lot of different real estate investing strategies, even the highly competitive ones. Land just happens to be a property type that very few people are pursuing… but even if there were a lot more folks in this space – it would still work.

Just because a handful of counties get more attention doesn't mean the proven direct mail marketing strategies will suddenly stop working. It may require a stronger push and a bigger reach in each new campaign over time, but is that really such an awful thing?

Let's not forget, most direct mail marketers would be drooling with envy if they saw us getting a 5% – 20% response rate (and sometimes even higher) on every campaign. Land investors have always had it good (maybe even to the point of getting spoiled), and the opportunities will still be plentiful, even if we have to step it up a notch.

Remember What Has Always Worked

There's another important thing to remember here. If you really want to avoid competition – it's totally possible. You just have to follow the same timeless principle that has always worked.

Look where nobody else is looking.

How can you do this? There is one powerful skill that can help with this a great deal.

Learn How to Find Great Counties

There are thousands of good counties that are still largely overlooked, even by the land investing community. There is fertile ground all over the country – but for some reason, I see A LOT of people incessantly hitting counties in the southwest U.S. (Arizona, New Mexico, Colorado, California, Nevada, etc.)

I'm not saying these aren't great places to do business, because they are – but the opportunity is so much bigger than this.

It's important to take the time to understand what attributes make a great county for land investing (hint: it's a very dynamic thing, with a lot of factors to look at). If you can become a true professional at this, you'll find that there are many markets that fit the precise profile of what we need to see, some even more so than the southwest.

When you know how to identify a great market, you'll find that these lucrative counties are everywhere. Just because a lot of people have had success in one small section of the country, doesn't mean you need to limit your reach to those areas as well.

Abundance vs. Scarcity

Will growing competition ever kill the land investing business?

I think the obvious answer is “no” – but at the same time, it's also important to recognize that this question is coming from a place of fear.

For people who have never worked in this business or seen any success at it, it's easy to fall into the trap of fear, skepticism and the “scarcity mentality” – which holds many people back from true greatness in this profession.

While some people are sitting on the sidelines and asking “What it?“, there are a lot of people actively closing deals and raking in a lot of money. They aren't putting fear in the driver's seat. They understand what needs to be done and they aren't wasting time – they're doing it.

When you realize just how freaking huge the vacant land market is, you'll come to grips with the fact that this opportunity is FAR larger than the potential for houses – because there is still a TON of land available, with a minuscule number of people actively pursuing it.

Case in point – I still get constant submissions on my buying website from motivated sellers who don't have any other offers on the table. These people are desperate and they're seeking me out – I don't even have to send them any mail! They aren't being tapped by any other land investors, which is verifiable proof that there are still an untold number of motivated sellers ripe for the picking – all you need to do is find them and give then an “easy button”.

The Price of Success

As I explain in this blog post, there's one last thing to remember in all of this…

Many, MANY people who try their hand at land investing don't stick to it.

It's not because the business model doesn't work (there are plenty of people who have proven otherwise). It's because land investing requires a lot of careful planning, good decisions, a significant amount of work, patience and perseverance, and even a little bit of luck.

Land investing isn't for wimps and just because a person buys a course or completes their first direct mail campaign doesn't mean they're going to stay in this business for the long-term. In my experience, the number of people who pay for education and/or get excited about this business is no indication of how many legitimate land investors are actually working in this market.

It pays to be patient and persistent in this business, because there are many people who don't have the stamina to make it through the initial obstacles (and believe me, the biggest and most difficult challenges happen in the very early stages).

So, am I concerned about competition? No, not really.

If my business was completely dependent on one or two of the highest traffic counties in the southwest… then yeah, I would probably have some concerns – but luckily, I've never spent much time looking in those areas, because I recognize that the world is FILLED with opportunities… and there's no sense in feeling constricted to one region when there are deals all over the place.

Join the discussion 21 Comments

  • Annabelle Dilworth says:

    You call land “property” but as you later clarify it’s really listed in county records as “vacant land.” —- isn’t land a commodity and not property? Later, you did start using the term “parcel” which is correct.

    To me, it would make more sense to call these types of buyers you are pitching to that you call “investors,” to call them speculators instead which is really what they are or would be?

    Well, I guess housing is often referred to as a commodity, too.

    • Seth Williams says:

      Hi Annabelle – thanks for those questions! When I use the word “property”, I’m referring to real estate in general. I suppose a better, technical term that covers all types of real estate (including houses, land, and anything else affixed to the ground) would be “real property”. Sorry for any confusion on that.

      And in a sense, I suppose most “investors” are also, ultimately the same thing as “speculators”, because there are never any guarantees that an investment will produce the desired results. We’re essentially speculating about what will happen in the end, and we all have to be prepared for the worst case scenario (however likely or unlikely we think it may be).

  • Glenn says:

    Great article Seth and great point.
    Opportunities always comes down to a numbers game no matter how you slice it.
    Your analogy of the crowded dance floor was perfect.

  • Joe McCall says:

    Great article, Seth!! We just made over $15,000 last week flipping land. This is something new and exciting for me. You’re right… It is hard work, but it is worth it. I will never be worried about competition.

    • Seth Williams says:

      That’s awesome Joe! I’m so glad to hear the business is working for you. As someone who knows how to make a real estate investing business work, I’m not surprised you’re seeing success. 🙂

      Keep it up man!

  • Allan Foglio says:

    I think that your article has some new ideas. Thanks for sharing this article. You should add more details like this.

  • Nick Raineri says:

    Interesting post Seth, looking forward to what the future holds!

  • Red says:

    Seth, thank U for your time, I’am a 20 year military person, helped foreign builders in TURKEY, and again in GERMANY with AMERICAN type construction. After retirement (1972) I built Residential and Commercial Properties. For the last 10 years, I have been buying burnout, foreclosure, Lot’s & etc. Building or Rebuilding, selling the homes with Owner financing. Over the years I have mentored several young builders, taught Home building in the Local Technical school. Is there a way to pass any of this experience on. I would not be able to do a blog as U have.

    • Seth Williams says:

      Hi Red – thanks for reaching out! A blog would be one solid way – but if you aren’t able to do that, you could also start a podcast (or something similar) and simply talk about your experience and lessons you’ve learned. I’m sure there are probably other ways too, but anything you do online will be a lot more scalable and can run on autopilot (whatever that’s worth).

      Good luck!

  • Jack Butala says:

    Its no supprise the Seth hits the nail on the head again with a comprehensive reivew of this topic.
    Jill and I get this question multiple times a week: “Am I too late to the land flipping game?”
    With 148,000,000 /- properties in the US alone to review, I think there’s enough to go around.
    We all have a specializization within us. We choose, subdividing, others in our group choose vacation lots, quite title, infill properties or plain and simple mass mailing everyone with a written offer.
    Great work on this topic, Seth. I’ve sent hundeds of people to this specific entry to your “should-get-an-award-for-it” blog.

    • Seth Williams says:

      Thanks Jack! I’ve appreciated hearing your perspective on your podcast as well. I think this is one of those areas where people can either choose the path of fear and uncertainty, or they can get to work and make things happen. There’s always opportunity for those who are willing to do the work. 🙂

  • Steve Kish says:

    Seth, timely article for me to see. I just recently communicated with a seller that had accepted an offer, but we were not able to move forward due to title issues. The seller has decided to go thru the legal process to correct the title, but it had been a few weeks before I learned that. In the meantime the seller said she had received two other offers that are basically the same amount (I had used a % of assessed to do the offers). She said since I had contacted her first she would work with me on the sale when things were ready to move forward. This was off a small tax delinquent and out of state owner mailing (the low hanging fruit in this business), and I am just getting ready to do a much larger mailing expanding my list criteria.

    • Seth Williams says:

      Thanks for sharing your thoughts Steve – I’ve experienced this before too. I know it’s frustrating, but like you said… encountering competition doesn’t mean you won’t get any deals.

      Keep sending out those offers! I’ll be curious to see what happens as you increase your numbers. 🙂

  • Angela says:

    This may be slightly off topic but once you have a piece of vacant, unimproved land, where’s the best place to sell it? I talked to one owner who says he’s going to sell his Nevada vacant properties on Craigslist with a land contract so people pay him monthly. When I looked on Craigslist there were a multitude of people trying to do the same–with plots in the boonies of Nevada, just like him–no electricity or most likely water. Do lots like these sell? I’ve seen ads in newspapers for land in Arizona, small down payment and $395 a month, etc. Years ago I knew someone who bought land in Arizona like that and she couldn’t keep up the payments. She was never going to build on it (she was a teacher in L.A.) and was advised to let it go.

    • Seth Williams says:

      I’ve found that the best places to list these properties are free sites like Craigslist and Zillow. You can list them on paid sites like LandWatch too… but frankly, I’ve always had better results with the larger, free listing sites (I’m guessing it’s because the free sites have higher traffic).

      You’d be surprised at the kinds of vacant lots people are happy to buy. Land out in the boonies can sell pretty quickly, not because it always makes logical sense, but because a lot of people love the idea of owning land, even if they don’t use it (and yes, when you offer seller financing, that will open up the doors for a lot more buyers as well).

  • Pamela says:

    Seth, I just discovered your very helpful website. My husband and I have several absolutely beautiful lots (no house on any of the lots) located in a beautiful, sustainable preservation community just south of Charlottesville, Virginia. The lots have been on the market with several local agents for the past 5 years with no luck. We do have a website and have tried Zillow. I would really appreciate any advice for me! Thank you!

Leave a Reply

Pin It on Pinterest

Share This