This episode responds to consumer sentiment hitting its lowest level since the Great Financial Crisis trough (over 15 years ago) by implementing defensive capital allocation strategies. With a $200 billion hedge fund partner pausing all deals and anticipating one-third fundraising reduction, the episode outlines recapitalization plans focused on exiting two million-dollar properties to reset the balance sheet while aggressively cutting prices on smaller recent acquisitions to free trapped capital.
Key Takeaways:
- Soft Data Precedes Hard Data by 1-2 Months Consumer sentiment (soft data) at GFC-level lows signals coming economic weakness, even though actual purchase activity (hard data) won’t confirm the trend for another month or two (position defensively now rather than waiting for confirmation).
- Two Mega-Exits Can Reset Entire Year Strategy Landing two ~$1M property sales recapitalizes the business so completely that all other portfolio assets become irrelevant to annual success, enabling break-even exits on problematic smaller deals without material impact on overall returns.
- Break Even Beats Holding in Deteriorating Markets Properties purchased 3 months ago that wouldn’t be funded today should be offloaded immediately at break-even pricing to recapitalize before consumer weakness translates to actual sales data (cash position matters more than small deal profitability in contracting markets).
When institutional capital pulls back this aggressively, retail land investors must front-run the coming credit squeeze by prioritizing liquidity over margin on non-core assets.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, Vacant Land Funding Partner. So to update many of you all, pretty much anybody who’s been in email contact or some form of written contact with us, you’ll be getting an email here this afternoon. Been meaning to set up a new weekly email.
based on requests of us for the last couple months here. It’s just other priorities and so forth as any entrepreneur can understand just kept getting in the way, but finally launching this one. So calling it serious news, super concise, value packed into the email. Think of a mozy minute.
style, you know, type of content, basically, you know, what’s top of my mind and any kind of key insights that I think are relevant to share on a weekly basis. And then, you know, maybe any other events that are happening or other things that that we’re up to. So you should be getting that here shortly.
but yeah, I was trying to figure out, okay, what’s kind of best format and cadence for this. And, you know, I used to do a lot more email marketing for other, businesses that I was involved in in the past and, you know, try to keep it plain text and easily readable. And again, everybody’s attention spans are so short nowadays. So, just trying to be very mindful of that. So, you know, picking, picking the tactics from.
you know, some of the best email copywriters out there and trying to emulate those formulas. So hope you enjoy that when it hits your inbox. And if you have any kind of feedback regarding that or other topics you want to hear me write about, know, feel free to reply back or let me know in another way.
And today’s topic was just kind of providing further context on some of the market shifts that are ongoing. I know I talked a bit more about that earlier this week regarding one of my core partners, the $200 billion hedge fund that he’s at. They were pausing all deals and…
You know, we’re just being even more mindful even over the past few days to on how we’re updating our funding strategy. You know, we’re not going anywhere. We’re still funding deals. It’s just setting up for the long term and recapitalizing in order to cherry pick more distressed assets. Yeah, I’m just paying even more attention to macro level data at this point. You know, obviously things are changing.
super quickly. So, you know, I was seeing your report even earlier today that consumer sentiment within the US is actually at its lowest level, even lower than the trough of the GFC, you know, over 15 years ago at this point. So, you know, not great signs there. You know, we have to be careful consumer sentiment that’s a, you know, that’s soft data. It’s not
necessarily reflective of actual purchase purchases being made and know, true consumer activity that’s, you know, going to be hard data. That’s basically impossible to track, at least with with current methods on like a real time basis. So, you know, we’ll start to see that over the next month to two months, roughly. But you know, I’m not surprised at the direction the sentiment is.
going just given all of the uncertainty within the larger market. But again, it’s not always reflective of where the hard data is going to be at. So we have to be mindful of that. Nevertheless, I am betting that the hard data is not going to be particularly robust in a positive sense.
When it does start to come out, so I’m trying to be ahead of this market as much as possible here And so you know on our side again, we’re just more risk off. We have you know, two roughly million dollar exits that We’re really gunning for one is already under contract to close in the next three to four months from very well financed developer You know, even if we just landed those two deals going well like for the rest of the year
that would be an incredible win. it would reset our capital in such a major way that like anything else in our portfolio, like they’re solid deals. Obviously you want them to be profitable, but they don’t matter nearly as much. And so some of these smaller deals, two in particular that we bought over like the last three-ish months, I wouldn’t have funded in this current environment.
And so I want to offload them ASAP. So we were just doing some price cuts earlier today. You know, even if we break even on them, doesn’t matter. I want the cash out, recapitalize ASAP on some of these deals and just get ahead of the market because I think it’s going to be even more negative from a consumer sentiment and just, you know, purchasing activity.
perspective even over the next two or three months. I mean, just look at your own data. I’m talking to some other very well-informed land investors. Typically, right now is the absolute peak buying season, right? Spring, it just isn’t really panning out quite as much. We saw that nice bull run in mid-November to mid-January or so, offloaded a bunch of portfolio.
And you’d expect that really to continue. Maybe some of you are still seeing that in certain markets, know, great assets are always going to move. but, know, in terms of like really consistent activity, and moving things quickly, like usually that this is kind of best time of year across most of the country. And we’re just, not quite seeing that. So I’d rather get ahead of the game, get rid of some assets that.
aren’t going to be huge value drivers anyway. And I think have the chance to really underperform the longer that we hold them. So I want to get those off the books here ASAP. Something to keep in mind, maybe you have a different opinion on that, sharing how we’re thinking about this internally.
So that’s just something that I want to note. Also like.
Until we get some more of this hard data again, we have to be careful understanding just sentiment and
kind of the thought processes across the entire US. So, you know, I try to look at different, news sources just to get a flavor of the bias across the political spectrum and really understand, okay, because not everybody can, kind of get their news from, from different places that are going to have their inherent inherent bias. Like it’s just, it’s just how the world works nowadays. So
I like to account for opposite sides of the spectrum on where are people getting their news from and what type of thought patterns might be kind of incepted into them. So, if you look at something like CNN, for instance, you’ll see a lot of kind of the negative tariff for economic coverage.
That’s more of the headlines there. And if you flip over to like Fox news, more of those stories are buried or they’re kind of spun in a, you know, more anti China. Hey, like we need to fix the bad actors, get them in line and try to kind of brush aside some of the impact from the U S perspective.
So, you know, those are just two examples there, but like, you know, just check for yourself, right? Like you can really see if, you know, one person was only getting their news from like one of these sources that it can really directly impact the way that they’re going to be thinking. And, you know, us as land investors, most of our properties are going to be in, you know, more conservative.
red States on average, not always. and so the folks buying and potentially selling may still be feeling a bit more safe or bullish about the economy, which is good for us in the short term. But you know, if that, some of that hard data starts to turn, some people start losing their jobs, real earnings go down, late labor market shakes up a lot more prices start.
going way up for basic goods here, that can turn in a hurry, regardless of what geography you’re operating in. So a lot to pay attention to. Hopefully this is helpful for your own business. Again, we’re setting ourselves up for decades of continued success here. Being very, very mindful about where we’re allocating risk at the moment.
Capital is just going to be tighter for everybody regardless what industry that you’re in. you know, we’re we’re being very, very mindful of that and, you know, walking the walk accordingly. So with that in mind, again, we’re still open for business for really solid deals. Don’t don’t get it twisted as far as, you know, thinking that we’re just
You know, being on pause, no, that’s not the case. It’s just we’re adjusting our risk stratification here. So, serious land.capital for any of your funding needs. Actually got a lot more activity even over the last couple of days. People are still, yeah, they’re finding deals. It was a little slower earlier this week. Now we’re kind of back in the running. There’ll be a lot more to review on land daily diligence this coming Monday. Zero cost review of your land deals and then landpricer.ai was having…
lot of in-depth meetings about that this week. I’m bringing on a CTO to get the 2.0 version of this product ready for public launch. I know it’s been super delayed, but you know, I need to make sure that it is a very, very solid product prior to releasing. So I’m going to be emailing a lot of you about that here shortly as well. Probably podcasting about it again soon.
especially how I’m structuring the deal and so forth for the CTO. So that can help you in your own partnership agreements. Subscribe and share. Take care everybody. Bye.
