In this episode, Chris provides a transparent “post-mortem” update on a premium 32-acre subdivide project in Louisiana. After investing significantly to create turnkey home sites in an affluent parish, the market slowed aggressively post-listing. He breaks down the specific challenges of moving high-end inventory in a buyer’s market and the “dispo” (disposition) tactics his team is using to pivot.
Key Takeaways:
- Breaking Negotiation Rules: Why Chris authorized his realtor to anchor the price first, breaking traditional sales norms to re-engage hesitant buyers.
- Pricing Psychology: The argument for making fewer, larger price cuts to avoid the “death by a thousand cuts” perception that creates listing stigma.
- Data-Driven Decisions: How the team uses the Reventure App to analyze underlying market fundamentals, specifically looking at “overvaluation rates” versus “home price forecasts” to determine if the asset is safe to hold long-term.
- Market Resilience: Understanding why affluent, highly educated counties (parishes) tend to remain resilient even during broader market crashes.
Watch the full episode to hear the raw breakdown of how Serious Land Capital navigates difficult deals and decides when to hold firm or cut prices.
(Podcast transcript below)
Welcome to Get Serious here at Serious Land Capital. We funded over $6 million worth of land deals and have industry leading 41 % operating margins. So today I wanted to give an update about one of the larger subdivide projects that we’ve been working on for, I don’t know, almost a year since we underwrote it. I’ve talked about this a number of times on the podcast, but it was this roughly 32 acre
property in Louisiana that we split into three child parcels and did pretty significant value add improvements, made them turnkey home sites effectively, full gravel driveway, culverts, clearings for homes, whole nine yards with utilities at the street outside of sewer. So,
Beautiful, beautiful properties. Like we just keep hearing that again and again and again. Um, price pretty high, right? So, uh, it’s beautiful part of the state’s most expensive part of the state. Um, you know, we invested a lot into it. Very premium area with, you know, how is this that can be north of six 50, 700 K, um, potentially more. Uh, so high price properties looking for premium buyers here. Um,
Market really, really died. That sounds poor grammatically, but, market got, super slow pretty much as soon as we listed these things. that’s, that’s just part of the game. Sometimes you got to adapt and, you know, we’ve tried all these various Dispo tactics. pretty much anything you could possibly. Consider from a Dispo perspective, which is, you know, something I wrote about,
couple of weeks ago in serious news is just, you know, when you have to consider how your firm actually creates value from a land investing side, like we are a service business, like the value is created on the acquisition side. Dispo is super hard right now in most markets, gets a ton of attention, deservedly so, because a lot of folks are not that great at it. But ultimately, like there’s only so many levers you can pull and the
biggest lover that will work 95 plus percent of the time is pricing. So if your pricing was off on the acquisition side, like you didn’t create enough value. And again, people could push back, you know, if you really want to steal man, this argument say, you know, some of these firms that do, you know, deep cold texting campaigns or, you know, radio ads, or they’ll bring out people to the property and do like, you know, huge.
seller finance, special offering over a weekend or something. Those firms can do very, very well with moving land. But again, you have to consider that you’re gonna need that budget for it. Whether from a time perspective or a monetary perspective, like doing marketing like that is expensive. So it’s not feasible to do that unless you’re by price.
was good in the first place. Like it still all comes back to what your initial price for the land was. So that is where the value is created. regarding this Louisiana property, fortunately things started to heat up a bit more over the past few months. We started getting more routine site visits, even one per week heading into December, which is a typically slower, dispo season. at least in that particular area of the country.
historically. So we were starting to get some real serious looks and figuring out, some of these buyers, like they’re looking to just potentially purchase the full parent parcel rather than the, you know, one of the individual three here. But, you know, no firm hits and, know, we basically gave our realtor permission. Hey, like, you know, just find a way to get us a written offer in here and you can like
you know, indicate to these buyers, hey, the seller is very open and considering it off. You may be surprised what we’re willing to accept. And like we’ve been holding this one for a long time here too. Like we’re aware of the game. Hey, we’re still far from breakeven. Like we still have a lot of margin to work with. But naturally somebody’s going to purchase a parent parcel. Like we’re open to more of a discount to move all the acreage. so, you know,
that would just be something we’d be willing to consider where the absolute value coming in, yeah, it’s probably gonna be less, but can we just get out of this asset that’s already proven pretty difficult to move in a very limited buyer pool? Especially as the market got a lot tougher? Yeah, of course. And a lot of the traditional negotiation strategies will focus on
You know, the, the, person who says the number first, like that’s, kind of puts you on the back foot, like that. That’s a weaker position to take because, you’re setting, setting an anchor. you know, to me, I’ve really heard it both sides, but, know, particularly on, on the, Dispo side, when you’re trying to sell something, you know, usually you want the buyer to say a number.
first, because you’re not sure. Maybe they come in higher and anchor themselves higher than something you’re willing to accept. So that’s like the typical pathway to go down. to me, when there’s some level of difficulty and you’re operating in a very difficult buyer’s market, it’s just worth experimenting a bit more and just seeing, can we
you know, for any of these buyers, any of these leads are just so high value. Can you get them to work with you at all? And can you break some of your typical rules just to see if you can get the conversation going? So I was telling our realtor, Hey, like, here’s a number that would, would work for us. You know, it’s 200 K off of, you know, what the total list value is across the three.
parcels, it would still be quite profitable for us. But hey, like it’s a larger discount. They might not even have this in mind. So can you go back to the buyer to say, hey, you know, seller is thinking if you could get them around like an 850, 850 K or just, you know, throwing that number out there, you know, they would be very interested in considering that.
cause you’re not sure where the buyer is. they, you know, embarrassed to potentially send a number? Maybe they’re thinking, Hey, it’s just not going to work out. again, especially some of these buyers who are very busy, you can’t get ahold of them. You can’t, you know, always get routine site visits out there. Like that that’s always going to be the best case. Cause then you can have your realtor kind of work the sales process and get them to name something. and just kind of figure out where their heads at.
But in those cases where it’s like, Hey, I have a decent lead here and I just can’t like routinely get ahold of them. You’re just trying to get an answer. Like go ahead and throw out a number, just see, you know, to, see if you can build any alignment. So we tried that, and got this, buyer who was, you know, kind of backing off a bit, like back in the game. Cause like the original pricing is like, yeah, this is going to be too high for us. And he didn’t even think we’d be open to something lower for that, especially if it’s going to be buying all of them. It’s like, Ooh, yeah, this is much more interesting. So.
It worked to our advantage, even though it goes against like traditional, salesmanship. So sometimes you have to be open for these different tactics, and, try, know, you have to be very, very aggressive in this market. you can’t just like sit back passively, to get anything to move from a Dispo perspective. So that brought this buyer back in the game. We’ll probably know more over this coming month here, but you know, still no written offer.
in, you know, in the door for that. So again, just something to consider from, from that side. And, you know, especially around the holidays too, you know, we attempted another price cut, like price cuts are another consideration where, you know, we’ve experimented with both methods. Like you can either do like smaller, more.
Um, consistent price cuts or, you know, more infrequent, larger price cuts. would usually, um, encourage the ladder. Like we tend to have better success with that too. mean, the, the risk of doing larger price cuts is you go below the threshold that a potential buyer is, is going to strike at. Um, and so you kind of shoot yourself in the foot from that perspective. Um,
But on the flip side is you incur less risk of just having, you know, kind of these black marks of just multiple price cuts. Cause if you do that so frequently, you know, the buyer pool starts to suspect something is wrong with the properties. have to be balancing that, bad again, like put yourself in, the, the, shoes of the consumer sometime and like actually, you know, review your own psychology for how certain listings look.
when, and your own thoughts, especially like for a property you’re not biased about, but just like, you know, just take a look around sometimes like, yes, you know, when there’s a bunch of price cuts, something it just feels off, right. versus, okay, a lot of time has passed. We’re just going to make a cut here and, kind of keep going from that perspective. So, to me that, that is generally a strategy that tends to work better from us. Not, not always, but something we prefer and like, okay.
Hey, over the holidays, things tend to be lower or slower. Let’s just do one larger price cut again, see what happens, but we’re not going to do anything else until at least the end of January here and kind of hold firm to that. So you can already plan out. All right. Let’s see if this works. If not, here’s the action we’re going to take there versus like a constant reactive process of, day by day, what are we going to do here? If we were to cut again, et cetera, you know, just try to be more proactive with your approach.
on
you know, your strategy to move properties, especially again, when it’s so difficult to do so across most markets. And another piece that I have mentioned before, and you know, it’s just a requirement for any property that we fund at this point, is just utilizing the Reventure app, specifically for properties that have some type of residential utility to them. You know, Reventure is set up for homes.
primarily, but land is correlated with homes in pretty much any market here. where data is stronger for home sales or lack of inventory, what have you, in parts of the area of the country, like the landmark, it’s probably going to follow most of the time, again, specific for residential.
usage, if you have rec or industrial commercial, like it’s going to be a different story. Even so I would still consider, you know, the hotter markets from a resi perspective, probably good for other types of land, as well. Like they’re usually going to be correlated together as well. And so, you know, like I was looking at this area of Louisiana, where we have this property and we had already purchased property, but I only found out about Revencher long after it.
but the underlying data is still very encouraging. And so that’s why.
You know, when you have a difficult to sell property, it’s like you have to, you have to, again, balance, like, where do I think the market is going? how much risk am I undertaking here? Like, what am I carrying costs on the property? Is it a solid asset? Can I afford to hold this for longer? in order to, you know, just be patient and find the right buyer. And like, we’re getting some site visits coming up here and there, like we are definitely in a better spot than we were before.
plus when I’m looking at the underlying data here, the key points are, encouraging. Fortunately, like it is the most premium parish and parishes a County, in all of Louisiana. so the home prices are the average home value, is the highest, like by a long shot, throughout throughout all Louisiana. It’s like, it’s definitely not the richest state, you know, deep South, right?
no, no one is surprised by that, but yeah, this particular area, I mean, it has beautiful land, a lot of beautiful homes. you know, if you’re going to work in a, you know, county or state, what have you like the higher the value, usually the better. like even in bigger crashes, like the, GFC and so forth, the more affluent and educated counties, and states tended to be more resilient, through.
even larger crashes. mean, there, were some parts of the country. mean, a lot of parts in Texas, for instance, like during the GFC that were basically flat, like they didn’t really lose, much value at all. mean, you can go look at all this historically. and some areas where, know, absolutely crushed like 50 % plus, drops in, in pricing. So, you know, is that a hard and fast rule? No. but.
It’s something that is very encouraging. Like, yeah, the higher the education rates, the higher the value on average, like the more affluent, it’s going to be more resilient. So we saw that and we were looking at, you know, there’s a whole bunch of different data points. Again, I highly recommend this app if you’re in the land investing space is, you know, it has a home price forecast. And in this particular parish, like they’re estimating, you know, five-ish, five to six-ish percent.
bump in home prices over the coming year. And interestingly, you would look at the overvaluation rate. That’s another one of the most important. It’s like, okay, in relation to incomes, how overvalued and you kind of calculate that based on the average mortgage, which is related to the average home price around there. And like, okay, you’re taking a percentage, which usually is around like,
30 % of somebody’s annual income, which you can get from the demographic data for what an affordable mortgage would be. And so they rated this particular parish as like 8 % overvalued. So while the home price forecast and the overvaluation rate aren’t necessarily one to one, you could, in my opinion, at least, just the way that I’m doing the math here, like you can kind of link them up where it’s like, okay, even if I’m 8 % overvalued here,
If I’m anticipating five to six ish growth over this coming year, even if I subtract that growth from the overvaluation rate, then I’m probably only losing two to 3 % of the value. So like I’m in a pretty stable market here. Of course, yeah. Whatever your current data is not always going to protect the future. lot of things can go down that can just shift that, but their data has proven reliable over several year period.
And we can reasonably say, yeah, this property is probably still going to hold up a lot of value. It’s definitely not going in that, know, it’s not like, 20 % overvalued and, you know, anticipated even, you know, drops in the home price forecast. Like that would be a really negative sign there. Or if like inventory was just skyrocketing without as many sales. But in this case, it really hasn’t been.
It’s a pretty balanced market overall from the home side, again, from land. think, yeah, there’s more inventory than we would like. And that really shifted on us like after we bought this. So again, kind of speaking to their super, super slow market. Nevertheless, those fundamentals are really encouraging for us. So we are again, utilizing.
those type of data points. And there’s some other ones that are interesting too. I’ll probably talk about more of this as we get more used to the tool in the future. But especially before we purchase anything now, it’s like, I want to understand where the resi market is going and where it’s at currently before we do anything. Since I really don’t know how to grasp that data quite as reliably through other sources. So something to keep in mind here.
hopefully this is helpful as far as how we’re considering, you know, a really tricky asset when it comes to Dispo. I know pretty much any investor is, having some trouble with that at the moment here. If you’re not, congrats to you. it won’t last forever. there’s always going to be more trouble that arises in the future. If you do this long enough, this is part of the game. So, this is how we’re figuring out this one.
Serious Land dot Capital. If you’re looking for land funding, actually got a number of good ones that we’re probably going to pull the trigger on even over the holidays. It’s been a little busier than I thought. pretty exciting. So, we could be moving hundreds of thousands of dollars of capital into more deals here shortly. looking forward to, to another strong year knock on wood. If we do our job right. 50 K plus purchase price, minimum subscribe and share everybody take care now. Bye.
