This episode addresses the 40% attrition rate among land investors since 2020-2022 and introduces creative deal structuring as the survival mechanism. Rather than chasing 2X gross margins exclusively, operators can partner with sellers on value-add improvements—injecting capital for subdivides or improvements while the seller retains ownership—to achieve 3-4X cash-on-cash returns on lower absolute investment.
Key Takeaways:
- Partnership Structures Unlock Stuck Deals Put cash down for value-add work (subdivides, improvements) on seller-owned property with contractual protection—achieve 3-4X cash-on-cash returns even when asset-level margins are compressed below 2X.
- Double Closes Face Regulatory Extinction High-level operators predict wholesale double closes may be unviable across most flipping states within 2-3 years due to bad actors creating regulatory pressure—transactional deals requiring title transfer are the future.
- Multiple Product Lines Are Now Required Limit yourself to one deal type and you’re leaving leads on the table—expand into transactionals, on-market value-adds, and seller partnerships once your core offering is operationalized.
Listen to hear specific paperwork structures for seller partnerships and how to de-risk capital injections when you’re not taking down the entire asset.
(Podcast transcript below)
Welcome to Get Serious. Excited to be jumping back into this one today. So I just wanted to remark on how creative you should be with deal structuring, especially in an environment like this. So to elaborate further here,
You know, we just see this industry changing so rapidly and you know, it’s difficult to acquire, difficult to sell. Like a lot of land investors are stuck in between those two places. And I think I saw Seth and Neil Clements talk the other day too, where I don’t know exactly where they got their data from. But you know, it kind of rings true just from an anecdotal, you know, viewing of the industry where like
40 some odd percent of land investors are just out of the industry since the heyday of 2020, 2022, roughly, which is just not surprising. It’s just tougher to operate and you just got to be smarter and again, more creative to compete at a higher operational level. as the industry has evolved, I think it’s…
Tricky and limits your business inherently to like only be looking at You know one particular type of deal, you know, whether that’s just like purely flips You know, you can have different product lines or transactional deal double closes Subdivides entitlements what have you and You know, I’m careful to recommend that until you really nailed one but like as soon as you operationalize one like it can make sense to expand your
Potential offerings and what you go after as you get more experienced and you can You know be a little bit more creative with your structuring so You know, you can work with more leads that come or come your way given how difficult it is to both get leads in the first place and convert them and in today’s market and so
You know, with that in mind, our typical setup has been looking for properties with roughly 2X conservative gross margin. I mean, pretty standard for the land industry. And we still find that. And we just closed another deal today on the sell side, rather, that had margin like that. you know, it…
It can be difficult if you’re just purely looking for those type of deals. And so, you know, as long as you’re aligned on a risk perspective, you can take a look at other ways to make the leads coming your way still work for you. You know, whether it’s through like a funding type setup like we do, or if you’re just direct marketing out or a combination thereof. I know I’ve talked about some of our difficulties with transactional deals and we got out of a deal that went, Hey, why aren’t we still ended up making like
pretty considerable profit on it, net, though it was just, you know, from a mental perspective, like it was so painful to go through that. But now like we’re open to doing transactional deals. Again, it’s just we have an updated process to where we basically have to consider them from a full DD perspective prior to deciding to pull the trigger or not. And a number of other folks have sent
Or are planning to send additional transactionals some like pretty sizable checks and I think that’s only going to grow over the future because it’s another podcast but you know, it’s talking with another very you know high level operator within land and you know see the writing on the wall double closes are just facing a higher regulatory burden and It’s really only heading in that direction so It could very much be
a realistic possibility that like over the next two to three years ish double closes just might not be a viable option across like much of the country, especially most of the flipping States and that like applies to household wholesalers as well as land. I think it’s just, you know, there were a lot of bad actors that, you know, gave the industry a bad name. And I’m like not that opposed to that happening. It’s like, it’s better for our business anyway. And I think, you know, just for sellers.
I think again, there’s so many people who over promise and say they can double close, sell a property, but they have no idea how to price on the best. they waste everybody’s time. They mess up market, they waste the seller’s time. It disturbs the, you know, dispo market anyway, because people have unrealistic expectation of pricing and it just, you know, bumps, comps higher than they need to be. The whole thing done properly. Yeah, it’s an effective strategy, but
You know, the bad apples, I think, just make it worse for everybody. tangent aside there, that that’s just something to keep in mind. And so, you know, even if double closes might still be possible from, you know, lining up a buyer, you know, you’ll need to be able to take title to the property instead of just, you know, running the typical wholesale double close model where there’s no title transfer to.
the middleman entity. So, you know, we’re trying to, you know, maintain our footprint within that product line as well. And then another one, again, we’re just, you know, more open to things that are on market or, you know, larger properties that are off market or potentially going to head on market in certain areas that we like, where there’s a potential for a minor subdivide or a
some type of value add where we can still get our 2x margin on the deal. So like this deal in North Carolina that we just sold earlier today, like I just want to building the relationships with the realtors that we have and say, Hey, like you guys get any type of on market property or, um, you know, somebody who’s off market, thinking about selling their land and, know, we can do minor subdivide value add type work, you know, 50 K men.
purchase price, upwards of a million-ish. You can send it our way and we’ll take it down. You get commission on both sides. We list with you, do the value add, et cetera. That’s something we’re very interested in. Or another strategy that I’ve heard more recently, again, from one of the better operators within the industry is even if that 2x margin isn’t available, which it’s rare, but it’s still out there, to be more creative.
You can engage in a partnership with the seller again that this is not like a brand new strategy It’s just a different flavor on top of it and you utilizing it more strategically To where you know, you’re not taking the property down in and of itself But you’re willing to put cash down to do some value add on the property And so the seller still gets paid the number that they’re looking for
But you know, we bump the potential margin on the exit pricing of the underlying parent parcel or possible child parcels To where we would be able to retain some of that some of that margin compared to you know, what an undeveloped or You know not improved parcel might might have gotten on the market and so then we don’t need a 2x margin on the deal because
you know, first the cash burden is just considerably lower to go after. And in fact, like you can still get more than 2X gross returns on your capital into the deal, not on an asset level basis, but just on a cash on cash basis. So like you could inject, you know, 10 K into doing some value add and get out, you know, potentially 30, 40, something like that. Just as an example here. So
you know, cash on cash returns are still very solid, even if on an asset level, the margin is considerably compressed. Hopefully that made sense there. So yeah, your paperwork would still need to be very solid with the seller. So, because you’re to have to put money down as a partnership, but you can, you know, structure it in such a way that if they don’t like uphold their end of bargain, you can at least get
your money that you put into it out of the deal to break even on the back end. So you can de-risk that and generally like the cash involved in the deal is just going to be considerably less compared if you’re doing six or years plus outlay taking down an entire asset. So that can open up more avenues to work on leads and properties that might not have as much inherent margin on that, but your cash on cash.
still be very significant and attractive structured that way. So it just opens up the lead pool even more to work again in a pretty difficult market, extremely difficult market, know, compared to, you know, compared. And so, you know, we noted to our realtor partners as well, too. It’s like, okay, yeah, you can find us those on market off market deals that have might maybe the 2x margin.
If we do value add, we take down the whole thing. again, you find other landowners who are willing to partner with value add type folks like us and can undergo this arrangement. And like the realtor that I told, like very experienced folks, you know, like, yeah, great info. They’ve done stuff like that before. They’d like to scale that out. So like find partners who, you know, have these type of leads to where you might not have as much, you know, direct marketing costs associated with it. you know, we’ve…
built up over the course of years, like very solid realtor relationship, especially if you show, you know what you’re doing in the industry. So like lever that and find these win-wins where everybody gets a piece of the pie. You know, the landowner, us, the realtors, like that’s what you have to do to be creative to win in this industry. Or if other people, know, land investors bring us deals like that and we can take a piece of the action as well to fund it.
directly, that can still make a lot of sense as well. So that’s just another lead source there. So just got to expand your thought process to succeed again in a difficult market like this. It’s like I feel like I’m barely brushing, know, we’ve been doing this for a while. I feel like again, we’re just at the start of our journey to really reach our full potential as a company here. So that’s just to give you some ideas. Like if you ever
think you’re just banging your head against the wall and you just can’t get those like you have you really exhausted all your options. Again, that’s something I, or Hormozi always meant like, why can’t you do more of what you’re doing or like, know, variations, different type of sourcing to still get the, you know, quality inputs that you need to continue to run your business and take it to the next level. So.
Hopefully that gets the wheels spinning here. There’s literally infinite opportunity within real estate, regardless of what the market is like. like, yeah, already some of these conversations have just been getting started here. I have some other more tactical updates. I’ll get into another pod. But again, hopefully this one’s helpful. If you have other comments or other sources that I might not be considering, things you found helpful, please share. I would love to…
see what you’re working on and, you know, potentially learn from and implement within our own business so I can share even more, vice versa. So with that in mind, serious land dot capital for any of your funding needs, 50K main purchase price and land daily diligence Facebook group to review your deals. Just got a whole bunch more in. Our website traffic is considerably up.
Over the past month here. So yeah, I appreciate the volume coming our way continued brand building It means the world for you guys to be listening and reading any of the content we put out here We put a lot of effort into it. So hopefully that that shows With that in mind subscribe and share looking forward to next time. Take care everybody. Bye
