This episode covers the capital raising process for a 30+ acre Louisiana minor subdivide requiring $335K for land acquisition plus $130K for value-add improvements (clearing, driveways, culverts). The deal structure includes a 15-18% preferred return with a 50% promote split between Serious Land Capital and the deal originator, targeting a 1.5X return for investors within nine months.
Key Takeaways:
- Diversify Risk Through Outside Capital Raising equity for deals above $300K allows firm capital to spread across more opportunities while maintaining promote upside and limiting downside exposure per transaction.
- Never Lose Investor Money Early in Your Career Protecting investor principal is paramount, especially when building a capital raising track record—sacrifice your own margin before allowing investor losses that could destroy future fundraising ability.
- Institutional-Grade Documentation Builds Trust Providing detailed investment summaries, comprehensive Q&A responses, and thorough paper trails before capital commits both accelerates fundraising and provides litigation protection if deals deteriorate.
- $330K in Under Two Weeks Signals Strong Deal Quality The speed of capital commitment from sophisticated investors (including those with institutional backgrounds) validates both the opportunity quality and the team’s execution credibility in tight capital markets.
Listen to the full episode to hear the detailed breakdown of preferred return structures, promote splits, and the risk mitigation strategies that enabled such rapid capital deployment.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, vacant land funding partner. I know the previous pod was just remarking on some takeaways from that Logan Fulmer DPA summit here in Austin over this previous weekend. know, hundreds of people all in an enclosed space, inevitably caught a bug from that. mean, what can you do? It’s a
almost guaranteed when when going to these larger events. So just kind of laughing, laughing it off. But yeah, not the most comfortable at the moment. I wanted to update you all on that larger Louisiana deal. I know I’ve mentioned it here and there across the podcast. For those of you who haven’t,
Listened in this is a minor subdivide in central, Louisiana a Bit over 30 acres that we’re planning on chopping up into three child parcels And doing some pretty significant value add to it clearing out Vegetation for home sites installing driveways culverts You know making it as turnkey as possible for a
new eventual buyer to build a home on it outside of installing a septic system and laying down a foundation for a house. as turnkey as possible outside of those kind of final issues there, but there are also utilities at the street besides sewer. So makes it
very simple to operate with and no key building permits involved. So that is our strategy with that one. And the purchase price for the actual land is roughly $335K and the value add is coming in at about $130,000. We’ve included some overage just in case.
The contracting costs come back a bit higher, but we’ve looked at it every which way. We think we have enough coverage on it. It’s unlikely. In fact, we’re already probably overestimating the final hard quote. And even absolute worst case, if we needed to add in a little bit more, it’s unlikely it would cost more than like another five, 10 grand. So we think we’ve been quite conservative with that. So.
Our firm, even though we can supply all the capital upfront for that, for these larger purchases typically above roughly 300k or so, we will look to bring in outside capital just to diversify the risk a bit more. our actual capital from our firm is distributed across a wider variety of
deals from a risk diversification standpoint, potential velocity of capital as well, opportunity costs, et cetera. All of those come into play when we make these decisions. Plus, as we continue to grow rapidly here, need for outside capital is just going to grow in general. That’s just the
so it’s a good, good problem to have, when, you have people interested in, in your business and willing to, commit, commit funds to it. Sure. working with other investors can come with, its own set of headaches, but, know, any growing business will eventually run into some capital constraints, unless you are, you know, just keeping your run rate.
tamped down enough to where you can just recycle your own capital again and again. For us trying to build eight to nine, eventually 10 figure type of business, no one builds that just recycling their own capital. At least I’m not familiar with that. And even if you could, it can again make sense from a risk diversification standpoint to lever up your own capital.
in order to attract others and still take home an extra promote for managing the deal. So you have additional upside on top of what other investors are bringing into the deal. So it can be strategic from us from that standpoint. So the way that we typically set up these type of deals is that we will have a preferred return. Usually, I mean, it depends on the actual underlying rates with
macro environment, but usually between 15 to 18 % or so like a healthy preferred return. So we want to protect the downside risk for our investors. And then we have a promote built on top of the remaining profits that overcome that preferred return hurdle. And we actually asked for a 50 % promote that is definitely higher than
A lot of other real estate or institutional type of deals that you might see where it promotes might range closer to 20 to 30%. We have to make it higher on these type of deals because we don’t source our own deals. It’s another land investor who brings us the deal. So we have to split that promote in half with the investor who brought us the deal.
So, you we have to divide up the pie a bit more generally, you know, for these larger deals. You know, even if your share of the pie, including our share, is going to be lower on average compared to when we’re just taking down the full investment without outside capital. But typically the absolute dollars will be a bit more attractive and we only look to raise outside capital.
that we are kind of, hell yeah, very excited about. We anticipate to be at least a double or triple. We’re not gonna be raising outside for singles. There’s just too much margin risk on something like that, so we have to be very, very confident that we can.
drive home significant returns to make it both worth our while and have extra downside protection on behalf of our Investors anytime you take other people’s money the risks go up higher Both from a reputation and a possible litigation standpoint. So always keep that in mind Make sure you have attorneys review all your docs and so forth and you know who you are raising capital from that’s a nother conversation
You know, fortunately we have built up a track record just within our own internal business. We have a very good public reputation. People who are trusting to put or are trusting us to put money in. Some are active land investors who have done these types of deals before. Others are more, you know, kind of quote unquote, friendlies, you know, longer.
longer term friends who might be less sophisticated in land, et cetera, but have done their own private investments. Some are also, you know, institutional investors, not on behalf of institutions, but they have an institutional background. So we have a really good mix of, you know, smart money overall that really trust us here. And that gives us a lot of confidence in this type of deal.
You know, this is the, you we have raised before and the deal that the seller walked at the closing table really unfortunate last year. That was also the day that the Microsoft bug happened. And so we weren’t even able to wire from Chase. just everything kind of blew up last minute. We returned all capital back to our investors. You know, no harm, no foul from that besides, you know, the time being wasted and we ate that cost internally.
This one way, lower seller risk. So we don’t anticipate there being an issue there. And it looks like we can get our investors a roughly one and a half X return on their net return on their capital within nine months. I think you can do it even faster than that. You know, those are those are hard type of returns to find in today’s
market and fortunately we were able to raise $330,000 cash for equity into this deal in less than two weeks. That’s a very good sign. Obviously when people are willing to trust you with their own capital that we’re on the right pathway for this particular property and for this type of structure.
going forward as well. a number of these folks who are in this deal, like, hey, if this one works, can bring a lot more to bear, tens of millions of dollars worth potentially. And that’s great. I don’t quite have that amount of deal flow just yet to justify that, but we can always solve that later on. But it is exciting to, again.
have worked so hard in order to develop this trust. know, also like we don’t take any shortcuts here. We answer investor questions in depth. know, I’m a crazy question asker. You anybody who submitted a deal to us will know the level of detail that our team goes into to ensure we’re de-risking the property as much as possible. you know, I can’t blame other investors for having a lot of questions too. We answer.
All those as thoroughly as possible and kind of accounting for that. We’re excited that that trust is there to participate alongside of us. Plus again, we have significant skin in the game for the deal on our own. That’s always gonna help if you are raising capital is how much you’re willing to risk.
on your own that always helps align incentives. And yeah, we have a separate LLC for it. We had an institutional grade investment summary going over all the key bullet points and numbers and so forth. So all of those are really, know, if you are looking to raise outside capital anytime for a certain deal or certain fund and so forth, the more you can just polish everything off the bat and have more
questions answered than might even be needed to raise, that’s only going to serve you better. Plus that is a potential assist from a worst case scenario litigation. The deal will go sideways. Some investors say, you didn’t inform me as well as you could have. You want to be able to point to a paper trail as much as possible. Hey, we discussed this all before, provided answers for it.
you know, this is true, whether you’re working with family, friends, other outside investors, like, you know, if, if things start to go bad in, in a deal, which, you know, it can, can happen, if you’re in the game long enough, inevitably issues will come up. but you know, people value how you handle adversity and, you know, if you can be as upfront as possible to solve the problems, ideally you don’t actually lose money.
their money because you know if you do, it’d be way way harder to raise especially if you’re early in your career with capital raising. So that is probably the number one rule out of all of this is don’t lose money do whatever it takes to protect that downside even if like you have to sacrifice some of your own or take a larger loss yourself in order to make your investors whole like especially early on like do
You have to protect your investors’ interests more than anything. So that is the level of rigor that we go for in advertising and probably why, or at least contributing, why we’re able to raise several hundred thousand dollars with nearly a snap of the fingers in a pretty tight capital market, especially equity, not messing around with debt or anything like this.
I used to be in venture capital before this. I we were doing like micro level deals. Sometimes it was just taking tens and potentially hundreds of phone calls and emails and so forth, even to raise 50 to $80,000 for some of these deals. So being in the right type of asset class is also going to assist with potentially raising capital. So hopefully this helps. I’ll probably have other…
input on this topic going forward as we continue to grow. I wanted to share some of those at the moment. With that, serious land dot capital for any of your funding needs within land. Land Daily Diligence is to hop on in about 90 minutes. Assuming my voice holds up here. Zero cost review of your land deals.
and landpricer.ai for the most simple and accurate way to price land. Subscribe and share this podcast if you’re getting value, we’re getting looking at the stats, even though we’re still less than two months doing this, a lot of views and so forth and really appreciate the trust you have and what we’re building here. With that, take care, bye.
