In this episode, the brutal journey of a $35K Tennessee infill lot purchase gets documented—nine price cuts over six months, resetting days-on-market through strategic MLS delisting, upgrading drone photography from winter to summer greenery, aggressive cold-calling of local builders, and negotiating broker commissions. The property finally went under contract at $30K (14% loss) after implementing the five-business-day MLS reset tactic.
Key Takeaways:
- Price per acre irrelevant below two acres Infill lot valuations depend entirely on subdivision comps regardless of features—the lakeview premium assumption proved false as market floor around $30K applied even to inferior half-acre properties.
- Five-business-day MLS reset in Tennessee Taking listings off-market for the minimum required period (varies by MLS, Tennessee requires five business days) resets days-on-market metrics and attracts fresh buyer attention with updated photography.
- Preferred returns only protect upside The first $5K profit structure before funding splits provided zero downside protection when market deteriorated—this arrangement signals inferior asset quality and is now avoided entirely.
Combined with the Tennessee auction property, these two worst-ever acquisitions nearly broke even collectively through aggressive damage mitigation—a miracle outcome given both tracked toward $60K-$70K combined losses.
(Podcast transcript below)
Welcome to get serious. I wanted to go over an update on really the last infield lot that we have in our portfolio. This really tricky one that we’ve had in Tennessee. I wrote about it in the serious news newsletter that goes out Monday mornings, but I wanted to cover.
In a little bit more detail, some of the story on the podcast today. I know I’ve shared various updates about this property and various techniques that we’ve done, but because we finally went under contract, actually, this is the second time we’ve gone under contract. Just the first buyer bailed within about 24 hours of signing a few months ago. This one appears to be much more solid. So I wanted to go over kind of key summary and takeaways of
where we were at here. So, the, kind of rehash of the situation was that we funded a, roughly two acre in Phil lot. was actually split between, two different APNs, but you know, they were, bordering each other. So it effectively served as one core lot. And, this was in deep rural.
Tennessee, I mean, we’re talking even two hours outside of Nashville, somewhere in between like Nashville and Knoxville area. you know, activity wasn’t great anyway. There was significant variance in the market. But we thought that, you know, while it wasn’t Lakefront, it had Lakeview. There was, you know, no one is going to be able to build
Uh, across the street in front of it. So, you you’re going to get, you know, kind of a nice sloped view of this, you know, pretty beautiful Tennessee lake. And so we thought, Hey, this is a bit more of a superior feature here. And based on comps at the time, again, this was late December of last year when it was in a bit of a mini bull run, we had a lot of cash exits around that time. So we were looking to deploy more capital. We had less acquisitions coming in.
And comps look like we’d be able to conservatively move it for, you know, 55 to 60 K buying at 35 K and we built in a preferred return into the funding arrangement that if the property didn’t sell for at least 70 K, which was what we’re going to list it for. And the realtors thought, hey, there was a chance they could do that. They were also more of mind. Hey, around 60 K is probably more realistic that we’d get.
the first 5K of profits on the deal before any funding splits came in. So that’s just a route that we could preserve some upside in cases where there was more variance in the market, though notably preferred returns don’t protect you from downside or just upside protection. So that has worked to variable results for us. I’m really
pretty opposed to doing any of those arrangements going forward, because that usually just means, this is a more inferior asset, which we have struggled with more routinely, especially over this last, you know, these last six to eight months for some of those. So I wouldn’t be too keen on operating from that standpoint anymore. And we had a really solid realtor team and very communicative. had
number of folks involved, one of the more solid brokerages in the area. But it wasn’t getting a lot of activity off the bat. then, within two or three months of listing, after I want to say one or two price cuts, we did get a 55k offer. I think I’ve mentioned this before. It’s gonna be cash closed within three weeks. Okay, this is great. But then within a day of signing, like I mentioned, they were out doing a site visit and neighbor.
In that particular Lake community said, hey, this property is just not buildable, even though they have zero proof of that. And it scared off the buyer. We weren’t able to recover them. And then there was just really minimal activity, a handful of looser potential buyers, but nobody that stuck. And so we were just cutting price again and again and again.
and after a record nine price cuts over the term of our original six month listing agreement, you know, sometimes it could be more of a broker issue. I really didn’t think there was, that was the problem there just because their communication was so solid. The marketing was solid.
It was just a tough market, plus it didn’t help that we didn’t realize some of the COVID boom reversal issue at the time that we had bought this property, plus the tariff and trade war situation happening was not going to be helpful either. And the variance in the market was just coming.
back to bite us in a harsher format than we were anticipating. And there were some more questionable comps when we first brought the property. And again, this kind of comes back to that lesson I remark on all the time and I’ve learned the hard way a number of times here is that anything south of two acres, price per acre really goes out the window. And you can actually expand that
within infill lots to cover whatever acreage that you’re looking at. If you’re looking at subdivision of three to five acre properties, then price per acre really isn’t going to come into play then either like the infill subdivision that you’re in is going to determine more of the underlying value on a lot by lot basis, kind of regardless of features. And sometimes
certain features can be extremely superior. Maybe you do have like the most premier waterfront property, you to keep that in mind. And so you want to find the relevant comps there, but in general, like for this property that we bought, which had relatively superior characteristic, Lakeview, but not Lakefront.
We thought, hey, we were going to be able to outperform the market a bit compared to what had been selling or what was on the market that just seemed more inferior. But in reality, we should have been much more conservative and just assumed, hey, we’re going to be selling this property closer to what the bottom of the market appears to be, which was around the 30K mark for certain lots that were even substantially smaller, close to like a half acre, maybe even an acre.
of land and in just a worse location. So we thought, hey, there’s, have enough data here that seems to imply, yeah, this 55, 60 K range, which again, we did get an offer at that level. It just, fell through unfortunately. And so we just had a price cut, price cut, price cut and get closer to the bottom there to get any activity. just our days on market was increasing people seeing all those price cuts. Like it was really black mark on the property itself.
Plus I tried to take more of the marketing into my own hands as well. You know, I team, we set up, hey, get neighbor letters out here, reach out to all, you know, local LLCs that own land. Let’s find all the builders within like a, you know, two hour radius of this rural area. And I cold called them, cold texted, cold emailed multiple times. Got actually a handful of them to go visit the property. None of them stuck, unfortunately.
But you know, really, really aggressive marketing for such a relatively cheap property for us. know, 35k buys, you know, amongst the lowest that we do. you know, now I prefer to do 150k plus purchase price and anything below 50k. Now it’s just, it’s a bit more of a question mark. But nevertheless, it’s like, okay, we have to still find a way to move this, this inventory one way or another. And like these just endless price cuts on the MLS just aren’t really moving.
the needle here at the same time. And so as we were coming up on that, you know, six month term for our listing agreement, we had used this technique successfully twice in the past of just, you know, if the broker was more of the issue, we could just have switched brokers. But in this case, you’re like, hey, let’s how long do we need to take it off the MLS in order
reset the days on market time. Or in some areas are longer than others. Usually it’s closer to like 30 days. In this case, the main MLS in central Tennessee was only five business days. And I also requested, okay, our initial drone photos, this was done in the middle of winter. There’s just not that much foliage. So, I hate throwing more money at deals that we were already gonna be losing money on, but it’s like, okay, like an extra 120 bucks to get fresh drone photos. Let’s go ahead and do that.
the better greenery. Um, let’s freshen this listing up and then, you know, reset the days in market time or just take it off market and, you know, try to get it back on so we can, um, uh, get some fresh eyes potentially on this property. And I also tried to renegotiate the commission on this too. That can be another tactic because it’s like, you know, ultimately the problem is, is on us. Like we’re the ones who funded the property. So
You can’t blame anybody else’s market assessment, but like at the same time, and you know, the real estate market change as well too, like the realtors, they were really plugging in, Hey, you know, Hey, this thing, like no way it’s going to move less than like 55 K. And then, you know, they kept kind of moving the gold posts a little bit. Yeah. It’s just slow market. You got to wait for things to come up. Here’s the median sales time. And like, we were just blowing past all of these, markers. And by the time, you know, we had cut.
our price down to what we bought it at, know, 35 K. It’s a 50 % drop in pricing, you know, cutting cutting a price in in half. Like it’s a brutal assessment, right? Like everybody was wrong on on the deal in terms of what we thought was going to get attention. So, you know, I tried to align a little bit more with realtors when possible there. Like, OK, can
You work with us a little bit here. We’re going to be losing money here. Just being upfront to buy at least a little less pain. And we got them initially down to, just like a raw 4%. But as I was signing the contract again, it was a little bit more handshake and it went back up to six. And again, with the NAR dealing like a little hard because you really can only define the sell side commission and buy side is just negotiable.
regardless, but that was a tactic I was trying to do as well. and so within a week, fortunately, or just about that, once we relisted, we actually got two offers, one in owner finance offer and I dropped it another 5k. I’m like, you know, if we’re coming back here, I, I looking at the other comps again, you know, it’s just going to be tricky to,
I’ll try to get anything more here. Like I need to get this off the books. Like we might be looking at a 10 to 15 K loss here, but you know, one way or another, this thing needs to sell. Plus there was actually a neighboring, like a lot that bordered our property that was also listed for sale. Another half acre that was listed for 25 K. And so, you know, we were down to 30 K for four times the size of the property plus better view.
So, you know, it did make sense for potential buyers to consider, hey, I can get that extra half acre and have extra road frontage as well. Just buying, you know, both of these listings at once. And fortunately, one of these offers came in, you know, the owner finance only wanted ours. since we only do, you know, what we’ll sell notes if we if we purchase. I didn’t want to do that.
when we had a cash offer in there and they came in at 25K, but the buy side agent had indicated, hey, these buyers will move up to full price. Plus they also want to buy that other half acre. But both of these offers were contingent on a state septic permit confirming a three bedroom conventional septic. So that is still a big question mark.
seems in our favor based on our understanding of the topography that that’s not going to be a problem. And again, this is a lesson I had learned in Tennessee. It’s one of the most stringent states in the country. Most buyers for anything residential are going to want a solid soil test at the minimum, usually a state septic permit confirmed. We’ve done this in the past.
take quite a while to do. we’re on a 60 day timeline. Fortunately, the buyers are covering all of that on their own. But all we had from a soil test perspective was this soil test from like the late 1960s. But, in this rural area, this planning and zoning department said, hey, that’s still going to be fine. But in reality, going back, especially for infill lots, because if you mess up septic part, like if it doesn’t come back solid,
And your data is just not that recent. Like I just wouldn’t have funded the property unless, know, we would have eaten the cost just like really confirm that just to ensure. Okay. We’re, a hundred percent certain that we are not wrong on this. It was just more of a rushed, a rushed judgment, trying to move cash. we thought, Hey, there’s enough here that we think it’s relatively low risk in the build outs in the, in, the area.
But you know, that’s still a contingency that we have to work with and presumably we’ll get the copy of that in case it doesn’t come back at three bedroom. So the realtor seems to think, okay, it’s going to be no problem to get that. But you you never know until it’s in. yeah, unfortunately, the buyer is covering all their costs plus we’re splitting title costs. So that helps a bit more. then, you know, and then they also request it at least for commission.
Byside they won 3 % and so we already had 3 % for the sell side. So Yeah, it’s still gonna cost us a bit but you know at this low of an exit It’s really just about a little bit of damage mitigation anyway You know each percent is like, you know 300 bucks. So it’s not that much of a killer but like all told You know including
Allocated overhead for this deal, which again generally for every deal that we do we have, you know, roughly three thousand dollars of overhead Attributed to each deal. So we have to hit that hurdle on top of whatever our purchase price Was and the various closing costs and commission etc for whatever the net is So, you know, this one’s going to be looking to be like a roughly 10k net loss I thought it was going to be trending closer to 15 to 20k based on how things were going
Again, knock on wood, the septic permit works out. But, you know, this has been a really nasty lot that we’re mitigating the damage is as best we could. And like I mentioned in the newsletter, you know, this lot combined with that absolute auction property in Tennessee, like they could have been a combined 60 to 70 K net loss. you know, the fact that they’re combined result, again, assuming this other one goes through.
It’s still going to be like just barely profitable net for us across both like feels like an absolute miracle considering I thought both of them were going to be significant losers here. So, you know, these were some of the two worst properties that we’ve ever purchased. Major lessons there. And again, in Phil, I talked about in the newsletter this property and then another nasty one in Texas we did last year.
almost 18 months ago, were our worst properties to date by far. And so it just has made me question doing infill lots really anymore. My bar is just so much higher because again, if you mess up on them or the market changes on you, like there’s no recourse. Like there’s only a residential buyer. That is it. There’s really no other option for the land. guess somebody could buy it for spec usage, but even that’ll be residential.
later on anyway. So just the risk is so much more significant there from a downside perspective. And again, our track record now is speaking for itself, even though we still have like a decent net positive on infill lots that we have done. You know, our two biggest losses to date are both infill lots. So just I’m more skeptical about pursuing those again, especially in these COVID boom reversal markets where
Demand for housing is just more questionable and probably going to be decreased for maybe another half decade, depending how things go here. But that’s just kind of the mode that I’m operating with. So those are just some additional lessons about what we learned on this one. Again, we’ll see if it goes through. But I just wanted to update you.
what we did for this particular parcel and You know at least how we handled getting under contract here and what actually worked Well that days on on market reset timer use it use it to your advantage. It’s worked three times for us so There’s definitely something to it With that in mind serious land dot capital for any of your funding needs zero costs review of your land deals land daily diligence Facebook group
and lambpricer.ai about to help on a meeting with my engineering team right now. With that, take care everybody. Subscribe and share. me a nice rating on the podcast platforms if you feel I deserve it so we can reach more ears. We want to learn. With that, take care. Talk to you next time. Bye.
