What I’m thinking about: The feeling of delivering on a brutal self-imposed deadline…and the underwriting clarity that comes from reviewing 2,000 land parcels in 84 hours.
This wasn’t some arbitrary challenge. We needed significantly more data (FAR more than initially expected…as a reminder, building a great product is hard, more news on this soon) for Land Pricer to reduce pricing variance across different geographies.
To test our hypothesis and start building the machine-learning algorithm, the initial plan was 100 target properties, each with ~20 auto-selected comps for review. Simple math: 100 x 20 = 2,000 parcels, inclusive of comps.
I massively underestimated the complexity. Dug myself into a hole thinking this would be straightforward, then quickly realized I’d have to grind through an entire weekend to hit our deadline.
But here’s what nobody talks about enough: When you actually deliver on those grueling self-imposed deadlines, the proof you build in your own capability is irreplaceable. That confidence compounds. You know you can execute when it matters.
And the tactical lessons? Absolutely worth the temporary burnout.
Here are the main ones:
Metro Proximity = Pricing Chaos
The closer you get to major population centers, the more pricing variance explodes. (Caveat: I was prioritizing reviewing 5+ acre target properties for our algorithm, so price per acre is more reliable. Infill lots can be more efficiently priced in urban areas, but price per acre is not helpful, as I’ve remarked many times, and lost money on.)
Medium/large acreage near metros introduce too many variables: proximity to interstates, re-zone and development potential, utility access variance, commercial/industrial utility, amongst other items.
The above factors can obviously also play a role in more rural areas, the range of variables tended to be wider (e.g. less ‘raw land’), and the effect on pricing sharper.
If I found fewer than three truly comparable comps (out of potentially ~20+ that were collected in the area), I had to discard that property from our training data set entirely. Well, I didn’t HAVE to, but that’s the price of following my own crazy-high standards. Sloppy data leads to sloppy results.
~30+% of US Land Mass Barely Trades
Here’s something I didn’t fully appreciate until this exercise: While ~97% of US land is vacant, huge percentages of the country see almost zero active trading.
Nevada is a perfect example. You’ll find sales near Las Vegas, west toward the border with CA, and up near Reno/Lake Tahoe. The entire rest of the state? Virtually blank, or the activity was so minimal as to make any investment more speculative in nature.
(Speculation is the enemy and downfall of many a land flipper. The data either supports a sales price within the next ~3-12 months, or it doesn’t.)
Same pattern across a large portion of the country. We think we have the whole US to work with, but the actively-traded land market is far more constrained than most operators realize.
Even in “active” states, you’ll find pockets with one or two sporadic sales annually, often with significant characteristic variance. Nearly impossible to comp accurately when data is that sparse.
State-Specific Utility Requirements Are Non-Negotiable
In certain areas, specific utility confirmations are table stakes for any sale.
In much of Washington and Oregon? Confirmed water access (via community well, or documented well depth) were mandatory for virtually every SOLD comp I reviewed. Without that, properties simply don’t move.
Anyone who has done any business in TN knows how tricky the process is for soil test approval and septic suitability (via state reg bodies). You may be able to get an offer contingent on soil test results, but good luck closing without it.
Even having been in the land industry for years now, some geographic-specific reqs (to SELL, not to list) aren’t glaringly obvious until you start reviewing hundreds of comps, back to back to back, in that area.
Why “Typical Flipping States” Exist
There’s a couple of reasons the same states dominate land flipping: data consistency and land availability.
Northeast and many Midwest markets? On average, significantly harder to comp.
Notably, the county-maintained data, and data linked through the MLS, tends to be more difficult to parse and access.
Also, the density of metro areas (see the above section) lends itself to tricky pricing.
Yes, even if the the micro and macro fundamentals are strongly supportive of upward pricing trends in markets like Connecticut, fat chance of doing significant or consistent volume in a state like that. There just isn’t much land available to trade, and a lot of the good stuff is already improved.
The regulations for improving and developing land in many NE/Midwest markets is also typically a much larger hurdle.
The typical flipping states have more active trading, more consistent characteristics, more reliable comps, and can support a ton of volume…even in a nasty RE market like we’re in now.
I don’t see this trend changing any time soon, particularly as the long-term organic and migratory growth potential for most typical flipping states remains strong.
(All that being said, if you do find a hot asset in the NE or Midwest, and it’s a potential funding target, we would be more inclined to pursue it than anywhere else in the US right now. Multiple things can be true at once.)
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While this 2000 property review sprint was super painful during the process, I feel absolutely locked in on underwriting, more so than I’ve ever felt before.
We were already at the top of the industry (don’t take my word for it, check our reviews)…but now I’m confident reviewing any type of land deal in the country. $50K, $500K, $10M deals, doesn’t matter. Put it in front of me, let’s roll.
(Between the wedding ceremony and reception yesterday, I was reviewing additional parcels to stay sharp. Focus wins.)
This is why we’ve had our most profitable year to date (in the middle of the worst real estate market since the GFC), while many operators struggled or went out of business. 75% of the cash in our account right now is reinvested profits, with limited cash drag.
We spend every single day getting better at underwriting, in some form or fashion.
Volume builds expertise. Expertise protects capital.
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