Epic Real Estate Investing - Breaking Ground: Innovations in Land Investment with Seth Williams | 1294

Episode Date: February 29, 2024

Are you ready to unearth the hidden potential of land investment? In this episode of Epic Real Estate Investing, Seth Williams, the mastermind behind REtipster.com, takes you on a journey through the dynamic world of land investing. Adapting to Change: Seth delves into the ever-evolving landscape of the real estate market, highlighting the crucial necessity of adapting your strategies to stay ahead in the game. Beyond Mailers: Discover how Seth revolutionizes deal-sourcing methods, advocating for a diverse arsenal including cold calling, text messaging, and email marketing, to uncover lucrative opportunities. Mastering Due Diligence: Learn the art of thorough due diligence as Seth reveals the key factors to consider, from zoning laws to environmental issues, ensuring you avoid potential 'landmines' before sealing the deal. Strategies: Explore the intricacies of land subdivision with Seth, as he breaks down the various types and offers invaluable insights into their considerations and processes. Faster Sales, Bigger Profits: Despite the challenges in finding deals, Seth sheds light on how properties are selling faster than ever, ultimately benefiting savvy investors like yourself. Resources for Success: As the episode draws to a close, Seth generously shares a wealth of resources available on REtipster.com, empowering aspiring land investors with the tools they need to thrive in this competitive market. Don't miss out on this enlightening discussion that could transform your approach to real estate investing. Hit play now and embark on your journey to land investment success!  P.S. Whenever you're ready to go deeper and further with your real estate investing, looking into my partner program to help you get your first deal might be the move... take the first step here for free 👉 https://epicearnwhileyoulearn.com/ Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. The market is kind of always changing, you know, and it's probably the biggest challenge for me as an educator is to help people understand, like, this is what you should expect, because within six months, it's all going to change again. Hey, strap in. It's time for the epic real estate investing show.

We'll be your guides as we navigate the housing market, the landscape of creative financing strategies and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one, One help. Meet us at R.Ei.a.com. Let's go. Let's go. Let's go. Let's go. Let's go. Let's go. Let's go. Let's go. Let's go. All righty, welcome to the Ethic Real Estate Investing podcast. And today is a, an impromptu, part two from our last interview and engagement with Seth Williams from RETiTipster.com. I had intended the last time we spoke to

talk about land, but he told me about his storage facility. And I got all into that. And we never even talked about land. So I thought we'd come back and talk about land. So Seth, welcome back. Thanks for agreeing to do this. Hey, Matt, yeah. Thanks for having me back. You bet. All right. So land, it's become a little bit more common now. And there's more people talking about it, more people teaching it. I've even lost a couple of my students over to the land investing. They preferred that type of strategy. And so they seem to be doing very well with it. But you're one of their very originals that I remember talking about it in the space. So how did you get into land and how did you choose land over single families.

Yeah. Well, it's funny story. I actually wanted to do single family. I wanted to buy rental properties and flip houses and kind of do what you do. And I was just terrible at it. This was back in 2006 and 2007. And I had read Rich Dad, Poor Dad, and it told me I was supposed to be doing real estate. But it didn't really tell me anything about how to do it.

So I just wasted hundreds of hours looking on the MLS, trying to find deals. And it didn't go well. Fast forward to 2008, you know, the market had started crashing. And around that time, I discovered a couple different things. First of all was how to actually find some off-market deals with direct mail, which was just an amazing revelation at that point, just realizing I'm not limited to properties that have a for-sale sign in the yard. Like, I can offer on anything.

I didn't know I could do that. Right. So just figuring out how to do that with direct mail, but also going after vacant land specifically. And like a lot of people, you know, when I first heard vacant land, And I was just like, what? I don't get it. It makes no sense. Why would I do that? And it doesn't make sense if you're going to pay full market value and try to flip that. That would never make sense. But when you combine it with this idea of buying it for a fraction of its market value, it starts to make a lot of sense.

Because you can make money pretty easily on almost anything if you buy it for a fraction of what it's really worth. So I started sending out postcards to you vacant landowners and got my first deal under contract for $331. bucks and then I sold that 11 days later for 1,900 bucks. And it wasn't a ton of money, but it was like, oh, I did that. Like by myself, I didn't, I didn't need a real estate agent. I didn't, I just listed on Craigslist. And it was just a matter of doing more of that and doing bigger versions of that. And it's been an awesome business for years.

And you're right, it definitely has, the dynamic has changed a lot. Back when I started this, like, there really wasn't anybody else doing it. And when I made an offer, like, there was nobody else behind me. Like if the person didn't accept my offer, they weren't going to sell that thing. But that's not the case today. Depends a lot on the market you go to and how much you offer,

but it's definitely more competitive now. And there's a lot of different ways to reach people beyond direct mail now. And it's continuing to change. I feel like every month there's some new thing to figure out. So it's been kind of challenging since the pandemic, just figuring out what does normal look like?

It's this moving target that seems to be different every other month. It does change. quickly. You know, what's interesting is when I think right around the time where we first touched base, I had sent out 20 letters. I'd got the, I think, Jack Bosch's program. And we were in the same mastermind. He just gave me access to it.

And so I started going through a little bit. And I sent out, I think it was 20. And I got like four calls. I got one deal. I bought this piece of property. Yeah, it was. And why I didn't do more again? Because I never sent out another letter again.

which is just like what us entrepreneurs do. Once we find something that works, we go to try and find something that doesn't work. And we just, here we have what, three, I don't know, maybe six months ago now.

I just finally flipped it. I bought it inside of my fund for like five grand. I think we sold it for 20. Wow. And it was just like, oh yeah, we have this thing over there. But it was just kind of like

something I went and did. Okay, I bought it. Okay, what's next? Yeah. And so, yeah,

that was fun. And so there's a lot of people doing it now, right? Yeah. A lot of competition. I mean, whenever there people are out there making money, it's going to be competition.

But I always feel like, and you tell me if this is accurate as well for your business, I always feel like you can count on humans being inconsistent and you can count on them quitting. You can count on them dropping their guard. And if you can put systems in place where you are consistent, consistency always wins because something's got to break on the other side at some point. Do you see that same thing? Absolutely. Yeah, for sure.

Yeah, if there's a way to put any kind of automation in place where something happens on its without you having to like be there and push a button or think about it. That's going to help a lot. For sure. All right. So you kind of mentioned it a little bit. You know, you can buy land off market and just by sending letters and postcards similar to how we

buy houses. But how do you pick a spot? Because there's a lot of land out there, a lot more land than houses, right? How do you pick a place where you're actually going to go and get to work? Yeah. I mean, there's all kinds of different ways to go about it. I've heard different explanations, some that I don't fully agree with, but I think one way, I guess, well, first of all, you got

established. There's opportunity everywhere. I mean, every market has vacant land out there you can buy, but you sort of have to start by figuring out what kind of land do I want to buy. Like, do I want to buy just literally anything that's land? Or am I looking for a certain size or a certain use or a certain value, certain location by certain national parks or whatever? So the clear you can get about what you actually want, that's going to help a lot, not be able to save a lot of wasted time. So, for example, once you know you want properties between 10 and 20 acres with a value of, I don't know, $20,000 to $50,000 or something like that, you could pick a handful of markets, maybe five of them, and get on a website like Zillow or Realtor.com or something like that. And you can start searching and get very specific about exactly that type of property with vacant land of that size range in that dollar range in that market.

and make note of how many properties there are for sale and how long they've been on the market. Are these things selling like within a week or a month or a year or five years? Just take note on that. And then also do the exact same search in the same place, but do the sold properties over the past six to 12 months and get an idea for, okay, how many of these exact same properties have recently sold? And generally, you want to see the ratio of sold properties being maybe just a little bit higher than the ones for sale. And it kind of depends on how far back in time you go.

But that will kind of give you an indication that first of all, there's activity here, like things are actually happening. But it's not just a bunch of properties for sale. They're selling to, and they're selling at a reasonable clip in terms of how long they're sitting on the market before they sell. And you can do that same kind of ratio measurement in however many market you want. But once you just find a few where it seems like, you know, the properties are getting listed and they're getting sold, then you're in business. And I think it is possible to pick a market that's too hot.

Like, say if there's 10 properties on the market and there's way more of them selling, it might indicate like maybe it's going to be really hard to find deals here because they're selling so fast. But you wouldn't want to see that there's a bunch of properties listed for sale and they're not selling. Like, they're just kind of sitting there. So, yeah, that's one way to do it. And again, it depends on the understanding the profile of what you're looking for. because say if you end up searching for just like all vacant land and don't get specific at all, it's hard to really know what you're looking at because you could be getting sort of the right answer.

But if you later decide, okay, but I want to go after properties over 20 acres, that's kind of a different picture you need to be looking at. So the sooner you can get clear on what you want, that's going to help a lot. Well, how do you decide what you want with vacant land? Like, is the sole purpose just to flip it? Is that the whole game? or is there something bigger there? Yeah, I mean, historically, that's been my game,

although I think with where things are at, and this is myself included, a lot of people are changing their tune a little bit because, and I guess when I say that, I'm talking about buying land with the intent to either subdivide or change the zoning or give land entitlements, so the person has the right to build something specific on that property.

And the reason people are shifting to that is because it's a lot easy, to pay a much higher price for the land. So you don't have to look so hard. Like people accept your offers a lot easier. And even when you are paying a lot more, you can still make more money because you're taking a property that's worth $500,000 and making it worth $800,000 or a property that's worth $20,000 and making it worth

$50,000. So it just gives you a lot more profit margin to work with. And in a sense, you're kind of creating new land. I mean, not more square footage per se, but you're creating more parcels, more opportunities, more opportunities to sell stuff at a higher price. So like buying the case of soda and then selling the sodas individually. Exactly, exactly. And it's kind of a totally different business model when you think about it

because no longer are you making these offers at a fraction of market value, and no longer is it simple because it's not simple anymore. Like there's a lot more stuff you have to research before you even get into that, like how easy is it going to be to subdivide this stuff, and what kind of approvals do I need, and what's it going to cost me to do it, and how long it's going to take, lots of groundwork you have to lay before you even go into it with doing that.

And also more opportunity to screw things up and lose money. Whereas a simple land flip, it's kind of hard to lose money when you're buying it for 30 or 40% of market value. I remember, I think I purchased mine for 25, 30% of value. Is that still a realistic number, is a realistic target? It's harder.

I bought one like that last year. It was, let's see, I think I got it for like 15%. of market value, but it was landlocked. But it was a desert square, so it's pretty easy to get to, but it had that issue with it. So I think you can find that, but when you find it, there's probably going to be some kind of issue with it. It's not commonplace. Like it used to be 10 years ago.

It used to be a very, very normal thing. Now I think most people are starting at like 40% of market value and going up from there. You know, some people are just changing the business model altogether. They'd rather just pay more and also make more and get a lot of. lot more involved with each deal. So they're kind of doing fewer deals, but making more money per deal. So if you're paying more and you have a different exit strategy is now, is it much more of a cash intensive game or are there creative financing strategies that can still be used? Yeah, it sort of depends on like your budget and how much you're offering. Like I know pretty good

friends with a couple guys. One of them is doing this in Arizona and like a typical acquisition price for him might be like $20,000 to $40,000 and then selling it for $80 to $100,000 after doing a minor subdivide. This is where he buys like 40 acres and splits it up four or five ways. And for that kind of thing,

I mean, I have that kind of cash. I wouldn't really need a loan for that. I know several other people, though, doing a very similar thing in Texas, but the price is more like a half a million to buy that kind of land. And then they would sell it for like six or seven or eight hundred thousand.

So for that kind of thing, they are getting bank loans or sometimes maybe even doing some kind of a seller financing arrangement. There are banks that will finance this kind of stuff all day long. I think a lot of times they're like the smaller banks that are willing to

put more thought and understand of the deal, but that kind of thing used to be unheard of when I was getting into land. Like banks just didn't want to touch land, period. But yeah, for whatever reason. Maybe it isn't even a new thing. Maybe I just wasn't even aware of it, but there's a lot of banks that will work

with stuff like that when you're essentially improving the land at somewhat. It is a new world, so who knows? I don't know if this is comparing apples to apples or not, but for that example that you just gave, like, versus Arizona versus Texas, say, take something for $500,000 and turn it into $8,000. What's the timeframe to kind of pull something like that off, like from acquisition to exit?

Yeah. the conversation I've had, I think, I think it's like maybe three to six months for that kind of thing. And it's also important to note there's a difference between a minor subdivision and a major subdivision. And there's also an exempt subdivision. And sometimes these terms are thrown around interchangeably. But in Texas, in a lot of areas of Texas anyway that I know of, say if you take a 40 or 80 acre parcel and when you split it up,

If the child parcels, the end result that you come up with, if it's over 10 acres, then you don't have to get anybody's permission to do that. Like, you can just chop it up however you want, as long as the child parcels are, you know, that size are larger. So it makes for a much faster process because you don't have to wait for anybody's permission to do it. Like, you just do it and you're good to go. That doesn't mean it's totally cut and dry.

Like, you would still have to verify that there's water available because if there's not, it's going to be a lot harder to sell it. So it's not like super simple all the way through, but the other route, if you were to do a platted subdivision, takes a lot more red tape to get through that, and that could take you easily a year to do that and cost a lot more money.

So understanding what constitutes a minor subdivider and exempt subdivision, meaning it's exempt from the plating requirements, that's a big deal. So any new market where you're working in, I actually have a video I did where I used to Claude, the chatbot, where you can take subdividing ordinance,

for the state and the county and the city and plug it into there and figure out what are the exemptions to plotting requirements? Like, what does it take for me to just cut this thing up and not get anybody's permission to do that? If you can understand that, that'll make life a lot easier in terms of trying to

intentionally go after subdivided projects that aren't going to require a ton of oversight. We'll be back with more right after this. Boarding for flight 246 to Toronto is delayed 50 minutes. What? Sounds like Ojo time. Play Ojo? Great idea.

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Let's get back to work. when you make your offer on if that's going to be the extra strategy we'll say we'll kind of put the flipping thing aside real quick but to do that how long is a traditional i guess or customary due diligence process and how much of that can you get done in the due diligence process so before you actually make the purchase yeah i think it does require if you're doing like a major subdivision like chopping it up into a bunch of different little parcels or a minor and it also depends on like what is the due diligence you're trying to do like what questions have to be answered.

But the people that I've talked to you about this, if it's a major subdivide that requires all these approvals, I mean, it could be 120 days-ish to get all these questions answered and figure out who is your end buyer going to be? And are they willing to commit? Do they have the money and this kind of stuff? Whereas if you're doing a minor subdivide, it could be more like 60 days,

maybe even less than that, depending on how quickly you can get answers on, is there water available and that kind of thing? You know, you mentioned a little bit about zoning. Environmental comes to mind. You mentioned something about landlock. Are there other landmines you kind of have to watch out for besides those three? I mean, like with regard to subdividing stuff? Yeah, well, just when you're making a purchase of land,

I'm going to speak a little bit more generally now. So you take over the land and all of a sudden you find out, oh, the city's not cooperating and they won't allow me to zoning. Or there was an environmental disaster. and now I've got to clean that up before I can do anything. Like those types of landmines. Are there anything like specific to be concerned about? Yeah.

So environmental stuff is typically just relevant to commercial and industrial properties, not residential, which I've always kind of found surprising. Like even as I tell you that now, I'm like, am I sure about that? Is that really true? But every time I've ever asked that question to anybody, that's been the answer. If it's residential, environmental doesn't matter, period. So that's just what I've heard. But, and I know in the commercial banking world, that was also the case.

Like, if it's commercial, then you have to get environmental studies. If it's residential, you don't. And most of the properties we're dealing with as land flippers are residential. But yeah, there's certainly other stuff to be aware of. Like I know perk tests are one weird thing that comes up in many states around the country, Michigan included, like Washington, Florida, Wisconsin, these are all issues. It basically just means if you have a property that's in the middle of nowhere, It doesn't have access to a sewer, and you want to put a septic tank in, you need to verify that the soil can drain, you know, water can drain through it at a fast enough rate.

And in a lot of areas, it can't, which means you can't put a septic tank there, which means you can't put a dwelling there, which means the property is suddenly worth a lot less. So, like, that's another little landmine that you have to watch out for lots of other stuff, too, like flood zones, wetlands. I've got a blog post on AriTipsure called 21 Warning Signs to watch for as a land investor. And it details a lot of these things. And also how to actually get the answers really quick, like from your computer without having to spend a bunch of money. But certainly, that's actually one of the things that is a little bit harder for land people than it is for house people, where even the land, I think ultimately is simpler. There's still these weird things that house investors just don't have to think about because those questions have already been answered. And that's why there's a house there.

Yeah, what I found most difficult when I was reviewing it, and this could be subconsciously the reason I didn't continue now that I'm thinking about it, is just coming up with value. You know, with houses, you know, you find here's a three-bedroom, two bath on this street, one down this street, just like it, sold for this, so ours is probably worth kind of close to that. Yeah. With land being such a disparity between sizes and everything, especially when you get in the middle America. Is there a formula, a quick and dirty math, a rule of thumb type thing to determine. property value. Yeah, no, it's a totally valid concern. And honestly, like, even appraisers don't know what they're doing. I've seen real estate, you know, professional licensed appraisals on land that are completely off. And the reason is, like you're saying with a house, there's very concrete data

you can use to reasonably ascertain what the value of a house is based on what it would cost to rebuild it or similar sales cops nearby that are like the same house. With land, a lot of that data just doesn't exist, period. Like, there is no cost. to rebuild, and it's not making income, so you can't make a judgment by that. So really, all you have to go on is sales comps. So you've got to find other similar properties that sold recently. And a lot of times, there are no similar properties. Like, you've got a one-of-a-kind piece of land.

So sometimes you can find, like, cookie-cutter infill lots where it's like there literally are 100 other ones like this. And those are a lot easier to figure out. But if you have a one-of-a-kind property, I mean, there is an element of winging it a little bit, but you can also find comps. That might be a different size, but they have some similar parallels and figure out, okay, well, based on the size of that one, and that one was bigger, I can sort of take a multiple of that and put it into mine. And even then, once you understand that, you're still making an offer that's like 40% of what that number is. And that's part of the

importance of making really low offers as a land flippers that helps, like a hedge of protection against that uncertainty. Got it. Yeah. Yeah. The negotiation part can save you from a lot of stuff. So, we talked about it just now or was the last time we spoke, but I was really kind of gathering that because there's so many more people doing it now, like the business has changed a little bit.

If someone were coming in brand new, says, okay, I want to go do this. I heard some people talk about it. I heard Seth talk about it. I'm going to go invest in the course because I want to do this. What is that, like the typical traditional thing, the way people get started? What does that look like?

Yeah, I mean, pretty much every course out there, including mine, suggest to start with direct mail. Because even though it does definitely take more mail today than it used to, it's probably the easiest marketing medium to figure out and to implement and get the list and just make sense of it and create a scalable system for sending it out mail. The difference is you basically have to send out more mail now than you used to. And even when you do send it out, you got to consider, okay, what am I saying in this mail? Am I sending them an offer on my first piece of mail like a blind offer? If so, that offer probably has to be investigated a little bit more, probably higher than it otherwise would have been five years ago. Or if you're sending like a neutral letter,

there's different things you can say, different options you can give them for contact in you. You can implement QR codes now. I mean, you could back then too, but they're just more commonplace now. And in terms of when they do respond, I mean, you could send them to a three-minute-long voicemail greeting, but that's a little bit harder these days. I think you'd want to make that greeting a lot shorter or send them to a call center

where people are picking up the phone to gather a lot of this information. What a lot of people are doing after they have direct mail figured out is they add something else into the mix, whether that's cold calling, which I can't believe I'm even saying this these days. Five years ago, I never in my wildest dreams would have imagined that that was a viable option

or something that I ever wanted to do, but it's working for people. And I think if you have the right strategy and a good call center that can totally work. Or there's texting, there's email marketing, there's ringless voicemail, there's lots of other ways you can hit people from a different angle where they might not respond to direct mail, but they will pick up their phone and listen to this.

So hit them from more than one way. Right. And then so that's how we find the deals, and then the basic strategy is just flipping the properties, right? Yeah. I mean, if anything, there's sort of pros and cons no matter how the market is, but over the past few years, It may have been getting harder to find deals, but they're sure selling a whole lot faster, which is really nice.

And I think we're getting, it's kind of reversing a bit now where it's basically they're selling slower than they were. I know when I got into this back in 2009, I mean, I was doing all this in Michigan and it was the worst of the worst. I mean, everything was selling slow. But I was still able to do it, you know, just by making really low offers and being patient and waiting maybe six to nine months to sell a property. whereas nowadays, given what people are used to, that seems like a really long time for a lot of people where it's actually kind of just normal. And there's ways to speed that up by offering

sell of financing and advertising it the right way. But yeah, it's kind of just, this is what I mean, where the market is kind of always changing, you know, and it's probably the biggest challenge for me as an educator is to help people understand, like, this is what you should expect, because within six months, it's all going to change again. Totally.

Well, that's real estate overall. It's a buyer's market or a seller's market. You know, either they sell fast or people buy fast. And you might have a small little window where you can harness lightning, you know, but it doesn't last too long. Yeah. Yep. Very good. Well, cool.

Thanks for coming back and touching on this because I wanted to talk about this a little bit more. We could continue to go and go and go and go. But I'm going to kind of reserve this for the people that really are interested in are really serious about learning more. The best way for them to reach out to you if they wanted to learn more about land investing would be what? I've got a ton of stuff on RETiPster.com, probably 60% of our content has something to do with land investing. If you go to the homepage and scroll down, you'll see there's a little category on the homepage for land investing, and that's where you'll find a ton of stuff. I've got a course, the land investing masterclass.com where there's a whole course on it. But again, a ton of stuff at RETPestier.

Or if you go to landflippingelifcycle.com, that'll also take you to a blog post that's almost like a little mini course. There's a lot of stuff there too. land flipping a life cycle? Yep, landflippinglifcycle.com. All right. Very good, Seth. Appreciate it, buddy. You bet.

Stay in touch and we'll do this again. All right. Sounds good. Good to talk to you, Matt. All right. Take care, buddy. And that wraps up the epic show. If you found this episode valuable,

who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you. and so do I, health, peace, blessings, and success to you. I'm Matt Terrio.

Living the dream. Yeah, yeah, we got the cash flow. You didn't know, home for us, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.