This episode examines the infill lot debate after another prominent land investor publicly abandoned this asset class following significant losses. The analysis reveals a more nuanced reality: the distinction between infill and rural lots exists on a spectrum rather than as a binary choice, and proper due diligence can mitigate many risks that have burned other investors.
Key Takeaways:
- Infill lot definitions lack industry consensus The line between infill and rural parcels is surprisingly gray, with cookie-cutter 3-5 acre subdivisions requiring well and septic falling into ambiguous territory depending on regional norms.
- Price per acre methodology prevents costly mistakes Small infill lots should be valued using comparable sales analysis rather than price-per-acre calculations, with septic permits representing critical due diligence factors that significantly impact viability.
- Mixed performance data doesn’t justify blanket avoidance The fastest-selling properties in the portfolio were infill lots with proper comping and diligence, while struggling deals included both infill parcels and the worst-performing lakefront HOA property that taught expensive lessons.
Listen to the full episode for the complete breakdown of specific infill lot outcomes and the detailed framework for when these properties make sense.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, they can land funding partner. Um, today was just, uh, reflecting on the new podcast that, uh, Pete Reese had put out, um, yesterday, think a turning profit. Uh, Pete is an excellent fixture within the land community built up a thriving business really, really quickly.
marketing all over the place, just, you know, hats off, for building a, again, national business, funder as well. And I noted that, you know, based on their experiences flipping in fill lots that the overall experience was.
bad enough for them that they are no longer investing in any infill lots or accepting funding requests for them. you know, for more detail, check out the, pot he put out with his daughter. so I thought that that was pretty interesting overall, you know, to summarize, he was just mentioning, yeah, it’s just, if you’re in an area that you don’t know intimately, just the chance of an untoward.
event happening, just something slipping past diligence and just reducing the exit value for the parcel. The risk was just too high. They had a few instances where they lost money on infill lots and because you really don’t have any backup solutions in place in terms of utility for infill lots outside of residential purposes, that it can really
diminish the potential value when any of these, these, you know, possible issues surrounding buildability comes up. You know, very rational from, from that side and, you know, unfortunate they got hit by a few negative circumstances and, you know, it’s, something we go back and forth with too, you know, the infill versus more rural lots. First off, the distinction is
not as clear cut to me. Like I was just, you know, before starting this podcast, I could go into, and that will be part of this podcast format is like going through all our various land investments and just going over the story of them, what worked, what didn’t. But I was just briefly reviewing, you know, which ones are in fill versus not. And to me, it’s not black and white.
you know, some are going to be very obvious and fill lots. Usually it’s like, you know, half acre, there’s, you know, full utility set up, you know, electricity, public water sewer, like that’s going to be much more obvious. but, know, would you consider, a subdivision that has pretty, you know, cookie cutter three to five acre lots.
that require Well and Septic to be in fill. That to me is a little unclear, depending what area of the country that you’re in, where that definition starts to become a bit more gray. So to me, there’s some of these lots that we’ve invested in that straddle the line a bit more compared to neatly.
fitting into one of those two definitions. So that to me is just kind of key to keep in mind in the first place here and that we might not all be operating on the same definition when it comes to types of land parcels in the first place. But you know, and I was looking over our results here.
To certain degree, it is a mixed bag. I some infill lots that we’ve done recently and over the years were the fastest sellers that we had in our portfolio and they were the easiest to comp. Really active market just flew off the shelf for precisely the price that we were thinking. And we felt we did enough diligence to account for any extraneous…
risk factors that could have prevented buildability on some of these. And yeah, they worked out really well for us. On the flip side, yeah, some were not as…
Uh, advantageous for us. know I remarked within the past few weeks, you know, just reviewing our current active portfolio, but yeah, two of the properties within our portfolio that are struggling the most are both infill lots. Um, you know, one, a lakefront property that again requires a well and a septic system. So, you know, again, our,
Utilities, know utility availability always defining Infill lots versus not again, it becomes a little bit more questionable, but you know, it’s planned subdivision. I would consider it an infill lot And I think it’s yeah, it’s roughly an acre Roughly an acre in size. Let me double-check that Live on
This review, where is this? Yeah, roughly an acre or so requiring those well septic system, but yeah, the market is totally dried up and we’re gonna try to list it considerably lower. Luckily we had a lot of margin to work with really as soon as March hits, most areas of the country.
As winter starts to end, tends to be the hottest time. You really want to when possible when you can line up sales or line up acquisitions to hit that spring market in many areas of the country. And I know too, just around the country, it’s been probably a more aggressive winter in terms of weather.
than we might’ve seen recently. know, you even as I’m taping this, like it’s just multiple snow storms all over the country, including places that don’t routinely get it as much, you know, around the, you know, Tennessee, Arkansas area and so forth. So, you know, that’s where one of our other infill lots is. And yeah, it’s just, you know, people aren’t going to be out walking land parcels when it’s, you know, 30 degrees or below and snow’s on the ground and so forth. It’s just, it’s a…
not as attractive as a prospect. mean, even here in Texas, near Austin for, you know, we’ve had some good weather here and there, but you know, for much of January, plus yeah, halfway through February, it’s on average been a bit cooler, sometimes significantly cooler. So I think that’s just been kind of the story of this.
this winter season that can be affecting some of the ongoing demand anyway. So like, not that worried about it and they’re relatively lower capital investments, but yeah, at the moment, if I’m looking at active portfolio, it’s two into lots that, are struggling more so than the other ones. And, yeah, I’ll definitely have to do a longer term story on one, but I mean, yeah, the absolute worst deal that we’ve ever been involved with was what appeared to be a trophy HOA.
lakefront lot and yeah, planned subdivision and we lost significant money on that one. again, by far our worst performing deal ever. so many lessons learned there that, you know, if, we’re really solid business owners, we’ll never make those mistakes again. Those scars are etched deep, but we, you we made it out of it. Survived. and,
you know, all this ongoing work is, you know, taking those lessons into place. And we’ve been having way, way better results lately, but yeah, that would be considered infill lot. was not a, a good exit there, but again, I’ll, you know, over a period of time, we’ll be going over, you know, our previous and existing portfolio, as well as deals that we had passed on.
or it got close to purchasing and so forth and labeling, know, infill or not, or, know, somewhere in between. But still on average, I’m not dissuaded even, you know, having some bad luck on some, some that, and not even necessarily bad luck, but just flat out bad decision making and take responsibility there. But, you know, also doing really, really well on some of these other infill lots.
I’m really not as dissuaded there. you know, Pete runs his own business. Again, he does excellent work there. But in my opinion, just based on our own track record and our comfort level in terms of diligence process, I would still be open to funding and reviewing further in Phil Watz.
Again based on past experience there. So just wanted to to comment on that And provide a little bit more data on our side here Hopefully this helps your land investing journey Feel free to comment on this is like where do you draw the line and what’s an info lot versus role? Yeah, and thought of it as in depth until this kind of came up and again, there’s just
Uh, what, I think would be a gray area. anyone has a definitive, uh, definition, uh, would love to, uh, to hear it. Um, but, uh, yeah, feel free to send all those our way. Any, any land deals around the U S seriousland.capital, um, land daily diligence, Facebook group. Again, we’re growing tremendously there. I was just posting a little bit more about it in South sorry, tipster group when people were asking for.
help on how we do diligence and I explained our process in a bit more depth as well. If you want to check out that post earlier today and landpricer.ai for the most simple and effective way to price land. Some of you will be hearing from me imminently about starting to test that. Hope you all enjoy the weekend. Bye.
