This episode addresses the top three to five most common question about market selection by establishing the U shaped geography from Washington to Virginia as the primary land flipping territory, while emphasizing that underlying asset characteristics and purchase price drive opportunities more than geography alone. The framework prioritizes 12 month comparable sales within 20 to 25 mile radius over macro market factors, with Land Pricer requiring sold or under contract comps within two years maximum, and weights decisions based on sold to active inventory ratios combined with subject property characteristics relative to comps.
Key Takeaways:
- The U Shaped US Geography Hasn’t Changed in Decades Drawing a U from Washington state to Virginia captures most active land flipping states, with interior hotspots like Colorado, Arkansas, Tennessee, and Missouri filling gaps.
- Asset Quality Beats Geography Every Time Superior characteristics with screamer pricing in atypical markets produce better returns than mediocre deals in hot geographies, as proven by best performing transactions.
- Seasonality Penalizes Northern Winter Buying Upper Midwest and Northeast purchases heading into Q3 and Q4 face reduced site visits, snow covered features, and dormant foliage, requiring even better pricing to compensate.
- Rural Lots Offer Blue Ocean Blind Offer Advantages Higher rural prices and pricing difficulty create less competition for direct marketers compared to infill lots, though Serious Land Capital sees volume in both categories.
Hear the full episode for the complete market selection framework and specific geographic considerations beyond the basic U shape pattern.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, vacant land funding partner. So today I wanted to touch base on what’s typically the most common question that folks ask us, or at least, you know, top three, maybe top five question, worst case, depending on the week that we’re looking at. But it all comes back to
market selection. So, you know, lot of the phrasing of this type of question, hey, what markets are you seeing kind of the most activity? What seemed to be hotter, cooler, etc. Some type of variation like that, you know, everybody’s always trying to get an edge on the market. And, you know, that initial top of funnel question is, you know,
most critical for any land investor because if you don’t take a step forward to answer that question, it’s impossible to get started in this business right off the jump. So, no surprise, that’s where a lot of people get held up or start second guessing themselves or just give up entirely. it’s an age old question that’s always going to have evolving.
Answers, you know, lot of folks will come to us just because we see so much volume and you know, we operate nationally so The data that we have in terms of where Activity is focused within across Landon Street is You know arguably better than than anyone’s or certainly close to it I don’t know any other, you know direct
land, land flipping operator who’s just kind of, you know, direct marketing all across the country. It’s a hard thing to dial in. I think we’ll see it more over the coming years as techniques become even more dialed in and you might have some institutional finance backing some of these shops to do a higher volume approach. But I don’t think that is typical yet.
outside of maybe a couple of cases here. So the way that I’ll generally answer that is it comes down to the underlying asset more than anything. So actually I’m going to take a step back. and I know I’ve used this paradigm multiple times in the past, just bears.
worth rehashing diving in a little bit deeper. know, most of the typical flipping states haven’t really changed in years, even decades. So usually what I’ll tell people, hey, just look at the lower 48 states, draw a U starting at Washington state and ending at roughly Virginia on the East Coast. Those are going to be
on average the the most active land-flipping states where we’ll see most deals obviously you have some hotter states in the interior you know take your Colorado’s Arkansas, Tennessee Missouri occasionally to to kind of note there
but the vast majority will fit within that roughly U-shaped paradigm. of course, there are even other exceptions. I know a whole bunch of folks and us included that have done stuff in Wisconsin or Michigan, Minnesota, around those upper Midwest regions, very, very occasionally, kind of the Great Plains states, but much less frequently. And sometimes in the Northeast, we’ve done a number of deals in
farther northeast as well, but they’re just not going to be quite as common. So, you you might be listening like, well, you kind of mentioned most of most of the U S and that that’s what I kind of come back to is like, there’s, yes, a general paradigm that you can follow that really shouldn’t be surprising to anybody. But you know, the larger point here is that
the underlying asset is again, going to drive the opportunity. You know, some of our best returns have come in areas that are, less typical, but the underlying asset was such, kind of a screamer of an opportunity, that we were willing to move in, in an area that we were less familiar with. And, yeah, maybe the market itself was,
not as active in terms of a volume perspective compared to other areas. So, you know, that’s what I tried to build into the land price or model to is like, you know, focus on the characteristics of the property versus the comps as really the primary focus that helps nail down the price. And then we also take into account the
overall activity of the underlying market, know, from a…
you know, sold to active ratio, you know, across your sold or under contract and active comps within the area. And really the only time that we won’t price out a land parcel is if there’s truly, you know, no other parcels within, I don’t know, say like a 20 to 25 mile radius kind of depends on the area that you’re looking at.
That have you know sold or maybe gone under contract and you know absolute worst case within like the last two years You know biased to be more recent whenever possible and Yeah, some areas won’t even have active comms. So, you know, it’s it’s very very rare that will come across geographies where that’s the case
But it does happen occasionally. So in certain situations like that Yeah, I’m gonna be Basically saying yeah that this this is just too risky to even pursue overall and but you you notice that I included, know fairly broad range as far as possibilities. Yes, it is possible to go after properties that might have far less comps available
So long as you can back it up with more superior characteristics like the riskier the the underlying market the better my characteristics have to be for the Subject property to consider purchasing it along with purchase price Yeah, if you get like what seems to be a screamer of a deal even based off limited comps Along with positive characteristics that makes it more likely will take a swing at it. Whereas if I have a pretty starkly inferior
subject property, especially in relation to all other comms of market in a fairly inactive market or one where inventory outweighs sales significantly. And I have that all built within land prices as far as how we actually weight the different ratios sold active. Then I’m far less likely to pursue that particular property. So
Again, it gives us some wiggle room depending on always that underlying asset and price driving the primary decision making on the property. Other more general characteristics, again, you mentioning that U shape like most of those states are going to be fairly temperate or will have less
seasonality. Every area is always going to have some seasonality, but some areas less than others. The main seasonality I tend to be most cautious with is the northern states, upper Midwest, Northeast, during winter times you could have larger snow storms or it’s just freezing cold, you’re going to get less
chance of site visits or snow kind of covering the ground. It doesn’t kind of bring out the positive features of the property or the foliage isn’t in full bloom and so forth. And so it’s just, it’s a bit harder for any end buyer prospects to appreciate the property as much. situations like that I’ll be a bit more cautious with, especially as you head into, you know, Lake Q3.
in, Q4 of, various years, just because, you know, by the time you close and then you anticipate selling the property, it’s usually going to be kind of peak, season of lack of sales activity. So I that was kind of a double negative there, but, basically be cautious of buying right as you’re heading into the coldest, part of the year with, with kind of the highest,
weather variance So that that’s a general paradigm, you know, it won’t necessarily preclude us from purchasing a property It’s just I’ll usually want an even better price When when possible if we know we might have to undercut even further to to generate enough activity to make it worth our while purchasing in one of those more Seasonally oriented geographies across the US
Beyond that…
Yeah, the only other thing and this is a little outside of our purview, but you know, cause we again, don’t direct directly market out for properties here. But you know, know some people throw a distinction in, you know, can you acquire more deals or have a better hit rate going after more rural properties versus infill lots? Again, I’ve commented on infill versus rural in the past before. Sometimes there’s a bit of a gray area. It’s not,
a clean divide necessarily. And say on average, it probably is a bit easier to market out to infill just or sorry, rural, just because you’re potentially going to have much higher prices, know, besides like very premium and fill lots. So less folks might be marketing out to that it could be a little bit more of a blue ocean, especially if you’re using a blind offer strategy.
Rural lots often times can be a bit more difficult to price. You might have an advantage if you do that type of outreach. So just something to consider there, but I wouldn’t necessarily have enough data to indicate. Yeah, one versus the other, we’ll still, you know, on average, we’ll see more rural lots, but we’ll see plenty of infill.
as well to consider. So that’s just something to keep in mind as well. I have a few other comments actually related to market selection. Maybe I’ll touch on them just in relation to the overall macro economy because some of the geographies are going to have variation there. So I’ll probably comment on that another time. But
I think this is a good stopping point for today. So if you’re looking for funding, SeriousLand.Capital, zero cost review of your land deals at Land Dealtly Diligence Facebook group, just about to record one later today and landpricer.ai expecting beta invites to go out by later today. Very excited about that. With that, subscribe and share. Take care. Thank you so much. Bye.
