This episode reveals Serious Land Capital’s 2026 tactical adjustments centered on liquidity advantage over maximum upside in an anticipated worsening market. Chris lowered vintage preferred returns from 16% to 12% while accepting reduced promote percentages, front-loaded $20K+ in expenses to prior vintage profits, and expanded into on-market subdivide sourcing, transactional deals, and selective JV partnerships—all designed to maintain maximum dry powder for striking exceptional opportunities when desperate sellers emerge.
Key Takeaways:
- Lower Preferred Returns Remove Perverse Incentives Reducing from 16% to 12% hurdle rates eliminates pressure to deploy capital into questionable deals just to beat cash drag—accepting lower promote ceilings protects against unconscious risk-taking in bearish markets.
- On-Market Subdivide Sourcing Requires Zero Monetary Overhead Setting Zillow digest alerts for parent parcels with 1.5X+ child parcel PPA potential costs only time, not capital—making it ideal for lean operations seeking geographic diversification without marketing spend.
- Transactional Deals Become Bigger Play as Double-Close Regulations Tighten Regulatory pressure on title company facilitation of simultaneous closings will force wholesalers toward hard-money lenders who can spot balance sheets for business days, creating income opportunities with lower market risk.
- Front-Loading Expenses Into Profitable Vintages Feels Better Psychologically Investing $20K+ in necessary infrastructure before starting new vintage prevents feeling behind from day one, reducing temptation to chase deals just to “catch up” on sunk costs.
Listen to understand why liquidity advantage matters more than profit maximization when most investors are bleeding out in extended downturns.
(Podcast transcript below)
Welcome to Get Serious today. wanted to go over some of the tactical adjustments. Some more experimental than than others that, you know, we’ve either already started to push forward with or, you know, are going to be part of our larger strategy going forward over the coming year here. And I’ll kind of the rationale for
All of them, all of this is, you know, kind of coupled to my 2026 macro predictions, you know, which I wrote a newsletter about earlier this week. I think a good chunk of you may not have gotten it because, you know, one of those new strategies, again, businesses is so much constant experimentation and refinement as they try to use a new email delivery system.
to try to get in front of more eyeballs and it seems like it put the email in many of your junk drawers or whatever for your email system. So I got a lot of those responses. So I’m betting a lot of folks didn’t even see it. So I won’t be doing that again. And some of those are just one-time experiments that you can quickly shift and go back to what was already working well in the past.
should have been one of those. If it ain’t broke, don’t fix it. But I thought it could do a little bit better and it just clearly backfired. But it also goes to show our overall philosophy and this is also something Hermosie shares a lot too, is like most decisions within business are not irreversible. Like if you’re not planning on selling a significant chunk of your business or anything, you’re
taking on a new partner or firing somebody in a key role or something, then it generally makes sense to just move faster to just make a decision because you can have an anticipated plan A where that decision is going to work out. And then also, you run a pre-mortem on it and anticipate, if this doesn’t really work, maybe it only works halfway. Okay, what’s still our pathway forward? But either way, if we just waste all this time deliberating without trying something that
we think is a decent chance of helping us, especially if it’s not substantially affecting your operations that are already working. But it’s possibly something that could be additive, or at least you’re hypothesizing for it. And you can quit kind of
quickly reverse course if needed, then why not try those decisions? So we’re just generally more open to that because again, the market is always evolving, the game is always changing. So you can’t stay steady with what you’re doing that got you to this exact point forever because inevitably you’re gonna have to adjust to the underlying market. So I just like to…
to try to make a lot of those decisions faster if they’re not inherently irreversible. So I’ll just run over a number of them. Obviously you saw like more minor examples changing the email delivery system. That’s one that I kind of clearly backfired immediately. So some other ones that, you know, we’re going to be attempting both as we attempt to, you know, grow this business to the heights that we think we can achieve here.
but also operate within still a pretty bearish economy. Again, you saw my 2026 macro predictions. Some folks think real estate writ large and maybe the economy are gonna be turning more around next year. I am in the other camp there. think we’re setting up for probably at least another year. That’s gonna be as tough if not tougher.
based on the trends that I’m seeing. Again, I hope I’m wrong because it’s super easy to adjust to a bullish economy. you know, as entrepreneurs, we can operate more within a risk on environment versus risk off. everything that, well, not everything, but most things that I’m seeing would point more towards a cautious approach and more of a risk off setup.
So that’s what we’re trying to adjust our tactics to. And so a lot of that would center around a strategy of like, okay, how do we still minimize our overhead spend? So it still gives us a lot of optionality to strike on very interesting deals when the opportunity presents itself, but reduces our chance of locking up liquidity unnecessarily or into more questionable assets or potentially just having too much
cash burn on items that may be helping us but are not providing as critical of a return as they could be because we’re having to be so cautious from a risk allocation standpoint for actual underlying assets. So in most, you know,
economies anyway, whether it’s bull or bearish, like it generally pays to operate leaner whenever possible, like preserve margin whenever you can. But, know, I think especially in this case, that is what we’re trying to operate on. we’re also, you know, we just
We kind of pay ourselves out and pay out profits on a yearly basis. And we run a vintage effectively because it’s myself and a core partner. so, like we don’t have salary roles within it, but it gets paid more on a promote basis. there’s, I, this is probably another podcast in of itself, but we have core equity into the business that equity earns a preferred return. And then anything that profits beyond that preferred rate.
comes in at pro rata, profit, according to equity owned within the business with an extra promote earned by myself as being the core day-to-day operator. so when we’re having like a very good vintage, like we did over this past, this past one was a year and a half.
But now we adjusted our timeline just based on when the business was made to now end fully in December. It also makes more sense for tax purposes. And so we’re trying to front load a number of our expenses too based on the profits we had earned through 2025. And so we can stay even leaner throughout this following year here. So we already had a discussion within this past week of front loading probably 20 plus grand worth of expenses.
that we think are very worthwhile to go after, but like it maintains those expenses within that tax year and utilizing the significant profits that we have gotten from this previous vintage. So then when we start another vintage, it’s not like we’re immediately going into the hole. So it also feels better psychologically from that standpoint. You don’t feel as much of a need to catch up with, you know, potentially chasing more questionable deals. So
That’s something that we’re doing. then while I’m on the structure of how we do the business too, is that sometimes the numbers will change vintage to vintage, like the preferred rate of return can change depending on the federal interest rate and just generally the cost of capital. Typically, if the Fed interest rate decreases, then preferred returns in equity.
funds or arrangements will typically decrease as well, but it’s not necessarily hand in hand because cost of capital could still be quite high even if the Fed interest rate lowers here. So you have to account for and just overall market risk and so forth. So, you know, compared to the previous vintage that we had done, the Fed interest rate is lower by about a point and a half. And
expected to decrease some more over the coming year here. So I was then proposing, okay, let like, you know, it just probably makes sense. Let’s let’s lower the preferred return within the business. And that also helps reduce the pain of cash drag because you know, if you’re just sitting on certain amounts of cash within the business, that amount of cash, the equity in the business is earning that
preferred return. like this past one was 16%. I was saying, okay, it probably makes sense to go back to 12 % for this coming vintage. then so that’s kind of your hurdle rate. You have to be earning, you know, whatever that preferred return is in order to earn, you know, profit and more or the promote where like my upside could get substantially larger once you get past that hurdle. But it also has to be worth
the while and the risk for my core partner as well too. you know, more of a trade off that we’re almost surely going to do is like, yeah, we can lower the preferred return. So the hit on cash drag is not as substantial. But we would also lower the total promote percentage that I could earn too. So, you know, my partner’s returns would probably be more
similar based on the performance of the underlying vehicle, but like my ceiling probably wouldn’t be as high. To me, I’d prefer that trade off in a more bearish economy because being, you know, you always have to consider incentives, conscious or unconscious here. And if like, you know, regardless of how good at underwriting we might be, if we’re sitting on, you know, several hundred thousand dollars or more within the bank account and knowing that it’s earning a higher preferred rate of return.
you are incentivized to be putting that money to work so you can out earn that, that return and, you know, beat down that cash drag some more. You know, and so that could be, especially in a bearish economy, more of a perverse incentive for chasing questionable deals, which is like the last thing you want to be doing in, a market like this. So to me, it’s like, yeah, I’d rather protect against that as much as possible.
Okay, let’s lower the preferred return. Even if my ceiling time is high, fine. I just think that perhaps our number one advantage is just having more liquidity than virtually anybody else within this industry so that we can strike at those great opportunities. And so even if we’re maintaining more cash in our account, then we might typically have deployed in more bullish economies. We’re not getting penalized as much from that standpoint.
That’s the bet that I’m willing to make. And I think that’ll serve more strategically for us. So in addition to that, of course, we’re maintaining our same route of business. It’s just continuing to go up market. We won’t do sub 50K purchase price deals here. And our deal flow, I have noticed, has increased a bit more. Our brand recognition continues to get better. Newsletter is…
Definitely helping in the number of eyeballs, you know, also guest posting on REtipster. The organic outreach from SEO is very solid as well too. So all of that is definitely helping driving more folks to us. And again, the fact that we’re like, we’re still in this business, we’ve, you know, collapsed ourselves, which again, you can just kind of look around the industry. It’s not, not everybody’s being allowed if they burn out, but it’s just, you know, some folks can do.
can still perform and a number of them can. So we’re still here. We’ve shown that we can operate in difficult market. And so I think that is continuing to funnel more folks to us to go after. And definitely had some interesting deals that we might pull the trigger on over these coming few weeks here as well. So that’s still gonna be our typical business. We’ve also…
already started implementing more of an on market approach, particularly for subdivides. And you have to be just so cautious about this. I have been trying to send out that subdivide, the five step subdivide process that I wrote about a couple of weeks ago, just to help people analyze more. We also use it internally, obviously. because subdivides, they’re
just more of a bull market play on average. Like if you’re introducing more inventory when so many markets are just suffering from having too many sellers and not enough buyers here, like you have to be so insanely careful before you attempt to do a minor subdivide project. And so like the opportunity just has to be right. And so we’re utilizing our strategies for…
setting digests on Zillow for our criteria. And I can get into that, you know, the actual tactical numbers there, but you know, we’re looking for, you know, value add, minor subdivide opportunities in particular areas that we think are more ripe for going after. And I want to keep just doing more and more of these. Like we started off a bit slow because I wanted to fit this into our daily workflow.
and get my team used to it. And so then we can become more efficient and then, hopefully can, you know, do 20 to 50 of these daily, you know, and anticipated properties and, uh, to be actively reviewing there. Um, the hit rate, you know, we’ve made one offer so far and it was still like a pretty low ball compared to the underlying price. You know, that’s the thing is even some of these properties with subdivide potential. Um, you know, most of them are.
still unfortunately priced too high relative to the market even for the parent parcel. So, and there might not be as much appreciation for underlying child parcels. like, you know, sometimes we can only make a, you know, in offer around like half of what the seller might be looking for, which is just usually not going to fly, especially for on market properties.
but to me, more of a sweet spot would be obviously, yeah. If there’s a subdivide opportunity where you can make an offer at the list price or close to it, and still have roughly two X upside. Great. but, you know, more of the threshold that we’ll look, look for is like at least a 1.5 X PPA increase on child parcels. And so then if you’re looking for a net two X, then all of sudden you only need to,
offer 75 % of what that list price for the parent parcel might be. So it’s like a bit of an easier pill to swallow potentially. And still get the upside that you’re looking for on the back end. So I have a feeling this is going to be a more substantial part of our revenue over the coming year. Again, this is a longer term play, right? So we’re continuing.
to expand it week over week. But I think it might take a year for us to really figure out more of that acquisition mechanism, especially in light of other land businesses struggling. I never want to cap our own growth relying on other businesses to always bring us deals.
You know, it’s a great model. It’s worked obviously very well for us to become the industry leader within the space. But, you know, I know there’s so much other opportunity out there that we can do this effectively along our normal side, normal line of business. Like it’s not extra product line and stuff that we’re already doing underwriting deals that we’re already very familiar with. So that’s just another avenue that I think will pay off well for us.
down the line. And again, it’s, it’s, you know, very cost effective, right? To like, I’m just, again, want to be very cautious about incurring any extra overhead that we don’t need to. And if you’re just understanding how to properly source on market deals, you know, it’s a cost from time, but not from monetary perspective. So, we, we, we can afford to take that on and it’s not like we’re doing, having to do a whole bunch of mail or text and so forth.
And we’re also going to be leveraging our realtor relationships a lot more too. Like we’ve already put out the word more to, you know, realtors we’ve had better relationships with and trying to get, Hey, you know, some potentially off market deals in the area or maybe things that are coming onto the market that could make sense for value add or subdivisions. And so, you know, potentially have some realtors a bird dog for us as well too.
in the markets that we go after. And again, our advantage is that we’re so comfortable underwriting anywhere in the country. So it’s like another play where we can have full geographic scope to go after. Additionally, from that, I know this is getting a little long here, so I’m gonna quickly review these other ones. Each of these again could be their own podcast worth, but I think transactional deals are gonna be a much bigger.
play for us to, especially in light of the continued regulatory pressure on double closes that may force that strategy to just not be utilized anymore over the next two to five-ish years, for instance, and to where if you want to do a double close, you’re just going to need to…
be able to purchase the property either outright from an equity play or still find a way to line up another buyer. But, you know, the title company might not be able to just do that.
uh, kind of borrowing the funds from the C buyer to pay for the A to B transaction there. Um, again, there just could be more reg pressure on, on those mechanisms. And so then like us coming in as transactional funders, um, to where, yeah, we can spot, you know, our balance sheet for a business day. Um, I think we’ll be a more
viable opportunity. And, you know, we’ve made these mistakes in the past where we just did not DD the deals enough for transactional. So now we’re just like going to have to go much more in depth and like basically do a full equity underwriting for transactional deals. But again, I think in a bearish economy where you’re taking less inherent market risk,
but potentially being able to write bigger checks for still substantial income, it is going to be a bigger play for us. also trying to meet some other, JV partners and so forth that might be both, you know, willing to inject, you know, a million, million plus and so forth. Cause I just want to make sure we have the most liquidity available to even do some of these, you know, much larger deals and potentially earn like 40 to 50 K on one transactional deal. So.
that’s another avenue that we’re making a bigger push into, some other potential JV partners more on like the entitlement side too, especially in very interesting markets in the Northeast and Midwest, in, particular, not exclusive to there, but, you know, macro wise, I would prefer that, we’ve had some interesting discussions there and they might be smaller checks to start out with, like even 20 to 50 K sub a hundred K. but still like, less than a year long hold.
you know, probably 40ish to 50 % returns on our money over that period of time is what we would look for for that. those discussions are ongoing. And then I think I might’ve remarked on this before, but some other avenues where we might not be buying the property outright from a seller, but we could be spotting capital to do value add in partnership with the seller and then just earning
a pro rata return on our capital. So the cash on cash returns could still be very significant with less inherent risk of having to buy the property outright or potentially there might not be 2X margins on the underlying land, but the cash on cash returns could still be very significant, potentially two plus X on…
capital injected into the deal itself from the underlying structure that we might have with the seller. you know, all of these are a little bit more unique and creative to go into. you know, this is, you know, again, some of these decent chants are not going to pan out. Some may be, you know, better cash cows here.
And then also, you know, we’re trying to, you know, source land for, you know, potential larger development, based on some of the partners and mentors that I have within the space here that have deeper relationships with builders. So like we could eventually get deeper into the land banking space. think that is a, kind of an end goal that we want to get to as far as where we want to take this business. So, that’s another avenue, even a couple of things that might.
be a little outside of land specifically based on some masterminds I’m gonna be attending over the next few months as well. So I know that sounds a bit more of a grab bag, all of this put together and you have to be cautious as a business owner of like expanding too much in different directions and risking too much, especially again in a more bearish economy.
but like all of these strategies are, you know, pretty much centered around something that we already do very well. like, you know, myself and my team, like we’re very comfortable operating in these different avenues just because like our underlying skillset, is, is kind of the main entree that’s being brought to all of these particular, tactics.
that can be utilized and so we just have a lot more tools to pull out. Like we have a hammer, we have socket wrench and so forth that can be utilized for deals that might not quite fit what we’re always looking for, but it gives us another avenue to potentially work with a lead that we don’t want to pass up on otherwise.
and potentially some other deals where it’s like not like a full 2X on, you know, the underlying.
purchase price. But if some of these investors are willing to contribute a little bit of equity into the deal, but take a secondary position to us and helps de-risk, you know, the, the, the overall purchase, if we still feel like it’s a pretty solid asset, that is something we can also do as well too. So again, tons of tools that we can utilize that we feel more comfortable with. And, probably a lot of other investors might run into a lot more trouble just cause you know, don’t have the, the
Necessary experience so like cautious out there especially in this economy But I just wanted to give you a more of an inside look on What we’re planning to do so if you have any comments you’ve any deals that might fit some of these paradigms that that we’re trying to do I’m all ears And looking forward to next time subscribe and share everybody SeriousLand.Capital for any funding needs Land Daily Diligence Facebook group Take care. Bye
