This episode announces major defensive repositioning after a $200 billion AUM hedge fund partner paused all pipeline deals (over $10B worth) and warned of one-third fundraising reduction for the year. Serious Land Capital immediately raised minimum deal thresholds above $100K, tightened margin requirements to conservative 2X minimum, eliminated creative deal structures, cut podcast advertising spend, and shifted focus to holding maximum cash reserves while waiting to cherry-pick distressed assets.
Key Takeaways:
- Institutional Capital Pullback Precedes Retail Market Pain When $200B+ hedge funds pause $10B+ deal pipelines and forecast 33% fundraising cuts, retail land investors must front-run the credit squeeze by 30-60 days before these decisions cascade through smaller transactions (position defensively before you’re forced to).
- Sub-$100K Deals Now Require Conservative 2X Minimum Previously flexible underwriting that considered creative terms or adjusted profit splits is eliminated in risk-off environments, only screaming deals with conservative 2X+ margins justify capital deployment when exit timelines become unpredictable.
- Cut All Non-Essential Spend Including Proven Channels Even profitable podcast advertising (one deal already paid for entire campaign) gets paused when macro uncertainty demands maximum cash preservation (you can always restart with existing relationships, but you can’t unspend money deployed before a recession).
This isn’t caution, it’s wartime leadership—when the smartest institutional money hunkers down, retail operators must match or exceed their defensiveness to survive the coming distressed asset cycle.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, vacant land funding partner, update on the market as well as our own internal decision making here and I think should be pretty informative for your own businesses in terms of risk allocation, especially so obviously a lot going on in the markets and
back and forth and who knows where things are going to be going even over the coming days, weeks. I don’t know. There is some more firm data from some of the largest financial institutions in the world. Earlier today, one of my core partners at Serious Land Capital, works at a $200 billion AUM hedge fund and
they paused all deals in their pipeline, like over $10 billion worth, and kind of gave the internal memo, like prepare to be smaller for a while here. They’re expecting their fundraising to be reduced by upwards of a third throughout the remaining part of this year. And, you know, inevitably,
decisions made by these, you know, multi-billion dollar, hundred million dollar firms that, you know, or these senior lenders and LPs are kind of bailing out on deals or just pulling back significantly already. That all will trickle down to some of the, you know, smaller deals or even medium-sized deals that, you know, the rest of us might be
working in so really important to keep that in mind here and You know, we’re updating our own decision-making within our company as well To be even that much more rigorous about Deals that we are reviewing You know, we have that larger 50 acre Texas steel, I know I’ve remarked on
for quite a while that is under contract as of last week to sell for $863,000. I talked to the broker today. They said they’re still on board fast tracking it to understand whether they have very high likelihood of moving forward or not within the next 30 days. We should know a lot more. And if it does pass that threshold, it’s probably like an 85 % likelihood will actually close.
You know, you never know until the money is in the bank. I mean, these guys seem extremely serious. They’ve done a lot in the area before. So, uh, that is like a massive piece that would reset our cash position in a really substantial way that we’re going to be, uh, holding our breath for, um, for our own business here. And then obviously we have that other larger Louisiana subdivide.
that is currently in process. talked to that broker as well to, you know, him chatting with other brokers in the area. They think that we’re sitting on, you know, perhaps the most prime piece of land in the entire parish. So, I mean, that’s good to hear from our side as far as having a quality asset. So, you know, if we are entering into a much trickier market, you know, it’s good to know that our large ones, our two largest ones are
you know, probably our absolute best kind of prized asset. So those are the ones that we really need to perform well here. You know, in the meantime, we have three other assets that are in our pipeline and have, you know, one, especially it’s been in there for months, which has had a ton of title issues and it’s a bit more expensive. It’s like a little north of a hundred K purchase, but I still feel very good about
But we’re trying to delay purchasing that one off just for some other anticipated sales to happen earlier. So we don’t have to inject more capital. we’re just, you know, we’re de-risking here. So we still are going to plan to move forward with those ones based on the underwriting that we’ve done, but pretty much everything else that comes to us, you know, anything north of a hundred K purchase at the moment.
especially pending some of these other larger assets moving is going to be very unlikely to be funded outside of like absolute screamers of deals. And even for the sub 100K purchases, like if it’s not a conservative 2X or more, we’re just not, we’re not gonna do it.
And, you know, previously we’ve been more creative with terms. Sometimes if the margin was a bit more questionable, we might be able to adjust profit splits or have kind of a preferred return on our side to de-risk the property a little bit, or at least preserve some of the upside that we could get for the property. Now that’s just out the window for the time being. We’re reducing risk here.
And we need to make sure, hey, that our cash position continues to be strong and we can ride out the pain for, you know, an indefinite period of time who knows how long this could last and be able to cherry pick more distressed assets as they inevitably show up. so just to update you all as far as, know, our,
you know, current decision-making in light of, you know, rapidly changing events as well as decision-making from, you know, some of the smartest minds and, know, largest capital managers in the entire world. So we’re keeping, and we have, you know, like inside info in terms of what is going on there. So it’s something really key to keep in mind here. You know, obviously like this is never fun. Some people are always like, yeah, yeah, I can’t wait for like, you know, more.
recessionary period, or you can pick out better assets. When you’re in a risk off position, when you have to hunker down and be more choosy, that’s definitely not as fun. I would love to just keep rolling and rolling, turning over capital on more more deals versus being even that much more cautious. Already we were cautious company, investing maybe one out of every 50 deals coming to us. Now it might be like one out of a hundred or possibly even less.
Um, with an increased scrutiny from an underwriting perspective. So, you know, you can probably hear it in my voice, but like, it’s just, yeah, it’s, not, no one likes dealing with that uncertainty. And yeah, there might be some like crazy opportunities in the future or even over the coming months that could just be like absolutely killer deals. But, you know, being in a de-risked, um, you know, uh, risk off position like
I don’t know who prefers operating in markets like this. know, if you’re a real entrepreneur, you want things to rolling and let the optimism be flowing. I mean, we’re still very optimistic for the future of this business and so forth, but you know.
And we want to be doing this for years and decades to come here. So you have to be that much more careful not to over lover yourself and get caught in the bind from, you know, rapidly changing market dynamics and assets that might’ve performed even, you know, a month ago, a couple months ago that might be just that much more riskier and tighter on margin.
you know, currently and going forward here. So. But, you know, these things could rapidly change back in the other direction. We, you know, we assess our business on a week by week basis, sometimes even a day by day basis. So that’s currently where we’re at. And, you know, really assessing what, you know. What’s coming in and out, being that much more strategic from from our side and how we’re
timing up closes and so forth here. But you know, that’s just smart management. know, if you really want to be operating in multiple different environments, you just have to get used to different markets. you know, we started our land business kind of end of 2019, right at the start of COVID, right around that area, when markets were crashing hard in March 2020. So now here we are five.
you know, five years later, almost to the day where, you know, things are happening like that again. Um, you know, this one might be longer term, who knows? Uh, cause you know, who’s really counting on like that instant kind of liquidity injection that we got from COVID. I don’t know if that’s a repeatable circumstance here. Um, uh, that kind of, you know, produced a bull run real, real quickly after.
massive crash so that seems less likely if I were to guess at this point but who knows stranger things have have happened but you know we got through tough markets then even in shorter term there was you know kind of big bull runs 2020 through mid 2022 and then it became you know massive
inflation, high interest rate environment got a lot harder after that. We navigated and survived through that. And now here we are in yet another market shift. You know, we even had like a mini bull run in, you know, November through January of this year. And then, you know, things started to a lot harder once again. So, you know, you just have to be able to navigate and adjust your
your risk and your underwriting depending on the market. you have to know how to be both a peacetime leader as well as a wartime leader. Now we’re heading over that this is wartime that we have to navigate. So you have to be much harsher with the decision making. Be that much more careful with any expenditures going out. We’re reducing our advertising spend, like pulling back on podcast ads and so forth.
And as we again, kind of really hunker down and make sure we’re aligning our long-term interests with the ongoing health and cash positions within our company, particularly again, in light of some massive properties that we had bought fairly recently that we’re anticipating very strong exits from, and then we can reconsider.
going forward from that side besides continuing to inject more and more cash into the business, which we have, that gets dangerous really quickly here in a changing environment. hopefully this is helpful for you as you make your own decisions going forward here. This is where the resilient will survive.
I have a feeling this is going to be like the trickiest part of land over the last five years, even more so than like late 2022 or like 2023 markets really started to change and so forth. This this kind of has a different feel to it. It could be much longer term with what’s going on. I hope I’m wrong. I hope it’s more of a blip and we can all get back to, you know, just cutting deals and moving forward here. That’s when it’s fun.
But we are preparing for the opposite and We’ll update accordingly. So let me know if you have any other thoughts in the comments DMS emails, whatever If you are looking for funding and you do think you have one of those special deals that will still consider Serious land dot capital. We’re not going anywhere. We’re just gonna be you know that much tighter with with our review process land daily diligence Facebook group
just got off reviewing some deals on that as well. And also remember April 17th, Dave Dennison and I, and likely Justin Sleva will be coaching other land investors within hot seat sessions. That starts at 1.30 Central Time next Thursday. So if you’re interested in joining that, be sure to either comment on this or hop into my Facebook group and mention that you want a hot seat.
we will get to as many of you as we can here. those hot seats helped grow our business to where it is today, probably more than anything else. so highly encourage you to take advantage of that. That’s totally zero cost as well. And landpricer.ai, I know I commented on that over the weekend, actively improving that product all in the background here. Got to keep moving forward. Can’t bury your head in the sand. Can’t throw up your arms and you know, just whine about,
the problems of the economy and just wait for things to change, you got to take action where you can and adjust accordingly. So with that, subscribe and share. All my best. Talk to you next time. Bye.
