This episode examines a $43 million land development deal to reveal how core land flipping principles scale from small acquisitions to institutional-level transactions. The property, a 500+ acre tract purchased 30 years ago at $20,000 per acre, will generate $30 million in seller profit through a structured sale (half upfront, half at 12 months), demonstrating that seller dynamics, margin structures, and underwriting criteria remain consistent regardless of deal size.
Key Takeaways:
- Seller Profiles Scale Identically Out-of-state owners, retirees with no development plans, and distressed timelines apply whether buying at $1,000 or $40 million.
- Target Returns Stay Consistent The $43 million deal targets 20-25% IRR and 1.3-1.6x MOIC, matching standard land flip metrics at any capital level.
- Growth Follows Proven Playbooks Serious Land Capital is raising minimum deal sizes from current levels to $100K+, then $250K+, using the same acquisition and disposition systems that work on smaller deals.
Listen to hear how institutional deals mirror small flips and what this means for scaling your land business.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital vacant land funding partner. Uh, today just wanted to comment. I know there a few takeaways. Um, when I was in New York city visiting, uh, business partners, mastermind slash just socialization. don’t get to see each other that often. Um, jam packed weekend, a lot done and might’ve seen some of my comments.
You read the series news email that I send out Monday mornings. Um, but just wanted to comment on a couple of things as we look at the growth of our company, probably be able to do a few podcasts out of this. Um, so I think I’ve commented a few times. It’s just, you know, we’re over time, even since we started funding, uh, properties that were generally increasing the average purchase price that
of properties that we go after, both from an absolute value perspective in terms of potential profit is involved with each deal and a lot of deals require the same amount or similar amounts of work. so, it makes a lot more sense if you can get to higher value properties and.
Even though from a risk standpoint, there’s more dollars at stake in terms of work. It can be about the same, especially if you know that you’re still buying very qualified assets. And yet another thing that, you know, Hormozzi talks about a lot too, is just, you if you have a company that has a volatile client base, that leads to a volatile business. And so I’ve just been very mindful of that.
Yeah, I know there’s a lot of very, very solid land operators who have been in the industry for years and probably will continue alongside that. But because our business is volume based, while we do try to work with lot of repeat operators or people who are more consistent, it’s not always the case. And when shifts in the industry occur, I think this year started off really strong.
But now I don’t know anybody who’s like saying, this is like a incredible economy to run a business in at the moment. Just, yeah, a lot more risk inherent to doing any type of real estate deals and just any type of deals across any industry at the moment. Just a lot of uncertainty there. And so, you know, we’re seeing
within the industry, there’s always a high amount of churn just because it’s pretty easy to actually get into the industry, but hard to stay in it. But that’s affecting the rates of acquisition that we can pursue even accounting for our increased vigilance for potentially riskier assets here.
Like there’s definitely been a bit more of a slowdown. So I just, never want volatility within the funnel that we’re working in to really be affecting our underlying business too much. So, you know, we’re planning as we recapitalize our current portfolio and, you know, adjust underwriting criteria to take advantage of what we think could be more distressed assets.
and also just going over larger purchases. I’m trying to set up larger value deals for late this year into next year and beyond. And I really want to get to the point where it’s like most deals are like a minimum of 250K purchase price, maybe a little bit lower than maybe like 100K plus initially. And that will probably shift even higher shortly thereafter.
but especially as we’ve gotten a lot more, you know, horizontal development, expertise, minor subdividing and so forth. you know, the folks bring higher value deals tend to be a bit more experienced. Not always. but.
I think that finding those type of deals will be a little bit more of a constraint of the business to go after.
Sorry, getting a little bit jumbled here as I’m trying to collect my thoughts on where to take this. But the bottom line here is just we see a direction we can take this business in terms of deal size over the coming years and even decades that we plan on doing this. And it’s just, like I remarked before, trying to avoid the rush, trying to do too much at once and overlevering ourselves, just staying really consistent growth over time is the real goal here. And so far, like we’ve
And we’ve only been doing the funding business like for almost just about two years at the moment, even though we’ve been in land longer than that, like the funding business is its own entity. And so it has to be treated as a different kind of growth mechanism and a later start date than our initial just typical flipping business. So that’s something to be aware of as well when we have to consider, okay, like how fast we’re really growing.
at the point of inception from when we started funding. And, you know, while I’m of the opinion that, you know, you have to be very adaptable and like sometimes just the priorities of our business can change on a week to week basis, just, you know, what’s the macro look like even in the micro? What was our portfolio doing? We have to adjust priorities there. But I think
based on the industry that we’re in, we can also plan a route, you know, nine months, 12 months in advance for where we think we can head based on anticipated results and dollar size of deals that are available to go after. To where, you know, the sky is really kind of the limit here in regards to this. And, you know, I partnered with sharing
deal that the hedge fund that that is that was working on that was $43 million land property set up for development. But like all of the base kind of mechanics of the deal are like relatively similar.
as those much smaller plays, even if you’re looking at a 5K purchase price deal. Insofar is like, what does the seller dynamic look like? What do you have to do? What are the typical margins that you can actually look for on these deals? Yeah, it’ll take longer to turn around a $40 million deal, but the base mechanics are the same. And so when I was reading through the report for this one, the sellers had owned this line, I think it’s…
500 plus acre property that two guys they had bought like 30 years ago at 20,000 per acre. So that was like still a little north of a $10 million purchase. were probably, you know, must’ve had some wealth to even do that back in the mid nineties, certainly. And
their exit is going to be, you know, $30 million gross profit to them. Pretty incredible, even over a 30 year old, like that is, you know, generational wealth split between them. That is paid half upfront in cash and the remaining half paid after the 12 month mark of the closing date. So, I mean,
pretty darn incredible and they might have set that up to where
half those gains could be attributed to long-term gains. don’t know, there’s probably some tax benefits to doing it that way versus just eating the entire 30 mil profit upfront. In fact, I’m almost certain that that’s the way they structured it. So they could get some long-term cap gains on at least half of it.
actually would probably be, no, cause it’s a 30 year hold. it would be long-term, long-term cap gains regardless for, me. I wasn’t doing that math correctly. So it’s probably just more, it’s probably more for the purchaser that they’re getting themselves some flexibility with how much cash is needed upfront. But interestingly about the seller dynamic is that it’s all, it’s all the same stuff. You know, it’s these two, two older guys.
They’re retired, they live out of state from the area, didn’t have other plans for the property, they don’t want to hold on to it any longer and just looking for another exit. I mean, they’re not distressed sellers, right? Because they clearly had the wealth to, they could sit on this forever, probably could sit many more years if they wanted to, but they got a solid enough offer, okay, let’s move on it. But they don’t want to take it through to extract more juice by…
working with a developer and so forth to get a potentially even better return on it. So it’s all like the same stuff, right? You look for out of state owners, people who are retired, they don’t wanna do anything with the property, whether you’re looking for a thousand dollar purchase versus, you know, a $40 million one. So that just gave like a lot more credence to like, yeah, there’s really no end to where you can take this business no matter what.
the level of scale is, it’s just, know, yeah, the numbers get bigger, like base mechanics are relatively the same. And so that was just kind of really exciting to see and think about. And also like the returns that they were looking for on this property, you know, again, it’s going to take longer to exit. I think they were looking for like, you know, 20, 23 ish, 25 ish percent IRR, which is like very, very solid. And
a Moe multiple on uninvested capital of they were estimating between like 1.3, 1.6, which is typically what we would look for as well. And then probably the easiest number to understand is just like the total gross profit on the deal is probably 35 ish million. So they’re looking to not quite double the asset. I forget, I need to look at how much death costs are in there.
probably pretty significant, probably millions of dollars to do all of this, but you know, still another gross profit expected of, you know, 30 plus million dollars. you know, regardless of that IRR and Moic on that, that is just like really significant cheese right there. When you’re dealing with properties of this size. So.
It’s all like relatively again in line with what we would look for in properties that we’re doing at much smaller capital levels. And like this developer who had brought this deal over to the hedge fund, they worked together several times over the years and it was just slower growth initially. mean, it’s like initially like a $5 million deal and just larger and larger and larger until they’re at 40 million now because they’ve got a lot of reps, they built up a lot of trust.
So it just kind of, again, shows like you’re not necessarily rushing the process over time. It’s just, okay, you take a swing a little bit lower, can keep step functioning going up and up and up with no, you know, inherent limit in view there. So that is our plan is to keep going up the value chain over time.
I don’t know how long it’s necessarily gonna take there. Like I mentioned, yeah, we change things on a week by week basis, but I can try to estimate that even if things might take, maybe they’ll go faster, maybe they’ll take longer, who knows? Depends on a lot of factors, but I do know that there is a route for us to get larger and larger and larger, following relatively the same playbook as one that we’ve been doing for years at this point, we think we’re pretty darn good at.
So hopefully that is a helpful viewpoint for yourself and realizing, there’s not really any self-limiting beliefs you can get as big as you want within this industry. And there are clearly people who are doing super large deals like that. And it’s entirely within reach. That’s certainly what our goal is. So hopefully that serves as bit of inspiration.
For yourself, if you’re interested in doing some of bigger things like that, or maybe partnering with us as we reach for those heights as well. But if you’re looking for funding, not anything for $40 million just yet, but hopefully soon enough, SeriousLand.Capital and then Zero Cost Refuge or Land Deals at Land Daily Diligence Facebook group, just got off a call right now. And then LandPricer.ai, a whole bunch more progress. We’ve made a ton of progress even over the weekend when I was traveling.
solidifying our LLM models for our image analysis to cut down on engineering, well, user length of time per property. Very excited for more updates there. Subscribe and share. Take care, everybody. See you next time. Bye.
