Hey folks, how's it going? This is Seth Williams and coming at you today with a special podcast episode. This is our first time ever doing this and it's a bit of an experiment of sorts, but I've been hearing from people over the past year or so who have expressed some interest in getting a regular market update as it pertains to the land business. Things like where is the market headed and where has it been this past year and what are the hot and the cold markets and how are things changing and why are they changing and what do we need to be aware of in the months ahead so we can plan accordingly and either go out on a limb or stay conservative. We obviously can't give any financial or legal advice, but my friend Neil Clements is always keeping his finger on the pulse of the market. And he has almost sort of a hobby of sorts, analyzing what's going on and what it might mean for land investors. Because he is a land investor and he has a lot vested in this industry as well. I thought, hey, Neil, since you know so much about this, why don't we just talk about it on the podcast? You can share your findings, what you're looking at, what your observations are, what this might mean for us, or at the very least, how you are interpreting the data and using it to make decisions in your own land business. So some of these issues are very local and market dependent. Some of them are nationwide, some are global, but we're going to dive into it and just share some thoughts and observations on the data that's out there. So Neil, welcome. You have anything to add to what I just said there? What do you think? Awesome, Seth. Yeah, such a fantastic introduction to kick us off here. Super excited to be back. Thanks for having me. Always grateful to be here. You and I were sitting down a few months back and we're just kind of thinking about, what could people in the RATipster community use and the people who watch your videos that might not have been a part of the community yet? And everything that I'm studying. So a little bit of background on me for those of you who don't know me. So I'm a real estate agent. That's probably 10, 20% of my business. We also do land flips was the bulk majority of the business. We We also do single-family housing rentals. We do housing flips. We do short-term rentals. So I have my hand on a lot of different segments of the industry. And what I noticed is that in the housing industry specifically for single-family, there's so much data and so much insights and so many videos with people giving big opinions and coming out and sharing very good stuff, sometimes bad stuff, fear-mongering to get views. And, It's been a very tough year this year for land investors. I think that we're all seeing that even if you run a very successful business, inventory has been moving slower. If you don't want a successful business, then maybe you got out of it. I feel like every day I see people in the community talking about, hey, we're letting go of this guy, or I just got let go, or I'm moving on from this. I don't know if land investing is for me anymore. And my heart in this is just to provide a valuable resource for the people watching so that doesn't happen as much. And one of the things we'll hit today, which I think is a very common misconception, is that housing prices is the biggest impact on land values. Because for a vast majority or a huge subset of the land investing marketplace, that is actually not the case. And so that was a huge observation to me. That was a huge aha that I had this year as I was studying this. And so, yeah, happy to kick this off, Seth. Very happy to be here and go through it with you. Yeah. So I know we have kind of a little punch list of things to talk about or just topics to dive into, but I know one of the things that you pointed out last time we talked about this, which I thought was kind of interesting, it was almost like this idea of when you're trying to, value land or understand how a certain type of asset class within the land category works, you almost have to like start by segmenting it by acreage and maybe this changes a little bit but depending on the market but it's very true like when you talk about the land flipping business model but if you're if your presupposition is that you're talking about desert squares like everything you talk about all the rules of the game so to speak it's not necessarily relevant if you're actually talking about like giant acreages like 500 plus acres or whatever that might be. So understanding the differences between these different subclasses of land based on acreages has a lot to do with how they respond to the market, how the values work, what kind of buyers there are, what kind of offers you can make, a lot of this stuff. So when we start there, how do you classify the different categories of land based on acres? Where do you draw the line? Yeah, you're absolutely right. And through a few different resources and some studying that I've done, I've come up with four different categories for what I would call the different subsections. And what I'm going to use is a lot of my experience. I'm based out of Texas. Most of my business is in Dallas, Fort Worth, and then Tyler, which is North and Northeast Texas. And I'm going to kind of give you the various acreage ranges that I see in that sub market. It's going to vary a little bit based upon how urban or rural your business is. And I'll go through that a little bit. But if I look at the lowest acreage possible, so if we start small, we're going to start with infill lots. And infill, I don't know if it has an exact definition, but I'm going to define it as say one acre or less inside of a very urban type environment. You could even go rural, but it's your lots that are very close to downtown. And for infill, somebody's looking to put a house on it. I mean, it's common sense to say that you don't buy a quarter acre or a tenth of an acre or even a half acre lot to do ag on in most circumstances, right? And we're not talking about commercial properties with highway frontage or anything, just specifically infill lots that somebody wants to put a house on. And now those values are primarily tied to the housing market. There's no secret there. If the highest and best use is just to put a house on it, it doesn't have big acreage. Well, the good news for the people who only do infill is that you can directly look at how those values are calculated just by looking at the housing market. And there's several other podcasts out there and several other people hitting that just in a really, really good way. We're not going to spend a lot of time on that, on the stuff that we're doing here, just because it's already out there and it's already really high quality from other people. But simply, we can determine infill. If we look at the housing market prices, we subtract out the development costs, we subtract out the building costs, then we can determine, okay, what is the land worth? And then we can very easily value it. And so that's not hard to determine. Now, as we go up an acreage, as we start to get one acre plus up to five acres, and in some markets, even all the way up to 10 acres, again, depending on how urban or rural you go to, you start to get into what I call large lots. And on these larger lots, you're still looking at residential purpose. I mean, you can have some kind of ag use, maybe a small business use once you get above one all the way up to 10 acres, very broad acreage ranges, but you're typically not looking to run like a full-scale commercial operation on that kind of acreage size in a lot of circumstances. Again, with residential kind of focus. And so the value on those lots still are going to come primarily from the housing market, going to be a little bit less influenced because you're kind of moving into discretionary. And what I mean by that is nobody needs more than an acre. Nobody really needs an acre, right? And so you're moving into a little bit of a discretionary purchase. So you're going to move into a few other factors. And I'm going to hit that more once we go to 10 acres plus here. But that's the third category is we're looking at small acreage. So we moved from infill to large lots. Now we're looking at smaller acreage. Now we're looking at 10 to 50 acres. And this is where I want to spend a little bit more time, Seth, and we can dive into a little bit more. But Texas A&M, they have a real estate research center that has some fantastic knowledge and their database goes all the way back to like the 1950s, 1960s with not only Texas data, but and other states that surround it and some data there. And they actually commissioned a report earlier this year that studied 10 acres plus all the way up to about 50 acres, small acreage is what they would call it. And they came up with a few conclusions. And the conclusions surprised me. But as I did the research, it didn't. It was interesting. So the conclusion that they came to is that as you increase acreage, as you get more roll, and as you go, say, 10 acres plus, you're actually a lot less tied to the housing market itself because you become more discretionary. I mean, it's again, like we said, even on one to 10 acres, people don't have to buy that. That is a luxury to be able to have or a discretionary purchase to be able to have. And so especially on the 10 to 50 acres, the two biggest factors that they found, they I think looked at six to 10 different factors. And the two biggest factors that they found actually influenced the value of acreage is they found number one is that median household income, was the biggest factor as to the land values and whether they go up or down, which is very, very interesting, unlike the housing market. The second biggest factor that they found, again, was not residential home prices, yet was actually access to local capital and the bank's credit supply in a local area. Further reinforcing the fact that once we get above 10 acres, we're just in a completely different ballgame, a completely different buyer, a completely different subset of a person is looking for that versus the infill lots. And what their study was trying to show is that if we look at median household income, we look at credit availability, we can actually, we can predict the values of this small acreage a lot better than if we look at residential houses. So I thought that that was very, very interesting. I think you're probably going to keep getting into this in the next category, but it almost makes me wonder, and maybe this is just a totally different topic I shouldn't get into, but if there's different types of buyers that rely on different things to make decisions to buy a larger acreage. I wonder if that changes the selling process. Say I own an infa lot versus a 200 acre farm. Are there certain websites I should just not even bother advertising on because my buyers aren't there? Or is there a different way to advertise stuff? Do people care about different things in these different asset classes? I don't know. It's just something to think through? Yeah, no, I, well, and I can tell you the answer is yes. I mean, so even from the work that we own and the clients we work with, I can tell you it's a drastically different target audience that buys a one acre infill versus a 10 to 15 acre ranchette versus we got an 85 acre lot right now. And I can tell you that the people who want one acres, a lot of time, and the difference is also credit availability. And I think this will be helpful. So on the one acres, even up to five acres, if somebody is going to come and buy it from us, we know that they're putting a house there, right? There's no secret. You don't buy one to five acres. You're not going to do anything ag that's substantial. You're not going to produce anything. So you're not going to run crop on five acres unless you found something, some secret that other people don't know about. So with that, a lot of times people are coming to the table that I see with a one-time closed loan. And if you're not familiar with that, it's a conventional or an FHA, BA, USDA, et cetera. It's a government backed program essentially or a primary market product where you can go to any loan officer in the country and they can pretty much do like a one-time close on a land purchase plus a construction loan. Now, whether or not they want to put a mobile home, whether they want to build a house to live in, that is a lot of the audience that I find that I'm selling say the one to five acre lots to. Now you move to 10 plus acre ranchettes, all of a sudden the same lenders who were really giddy to lend somebody for one to five acres to put a house on it, they kind of dry up. Once you get 10 acres plus, because then a lot of times the land value might exceed the house value and a lot of lenders don't want to touch it or it's ag purpose. And so then you start to have people that you're now going to banks or you're going to like ag companies that do loans. And it's a much different loan. It is a lot kind of worse terms, adjustable rate mortgages versus fixed rate on 30 year terms. And the credit access is a lot lower. Let's say that, right? It's a lot harder to get a loan, in my opinion, for 10 acres plus than one acre to put a house on. Much different kind of person, much different borrower. And you're typically having to put, say, 25% down or more. Versus on the one acre, like infill lots, you can get away with a 3% or 5% down again on like a one-time close. So much different audience. Then you move up to the lot that I have just that I'm selling. It's 85 acres. And we've even split it into 240-acre tracks. Nobody's putting a house on that. It's a $600,000 property in the area that I'm in. And nobody's putting a house on it. And so one big thing that I learned on that property, it has really crummy grass. And it was previously used for cattle, but it's not good grass. And everybody in that area wants to run cattle on it. And some of the biggest feedback I've gotten is that it's not great for that purpose. I realized that there is a drastically different buyer audience for 85 acres than what I was used to on one to five or 10-acre ranchettes. So they just think, I mean, can you fix grass? Can you plant more? With effort. Yeah, with time and effort. And don't get me wrong, I'm not an expert in it by any means. And somebody maybe might be listening to this and throw in the comments that you're an idiot, they're just trying to negotiate with you. Hey, that might be the facts, man. I don't know. But the feedback that I'm hearing is that the property would take so much work to get the grass to a point where cattle could process it, where it would be productive, or even just for hay use. Whereas these other properties that I bought that was previously used for hay, the 10 acres, these people are eating them up. They want to run cattle on it. They're like, oh my gosh, this is the best. And what really kind of turned me onto that is I had a guy who offered to come and bale the hay for free on one of my properties. And in the other property, he charged me because he was like, it's really crummy hay. I'm just going to have to dispose of it. It's like, okay, There's a science to this. And so it's a very interesting thing. And so the other thing to know is that when you're marketing these different properties, you got to have different lenders, right? I mean, because the lender who again, lends on the one acre versus the 10 acre versus the 85, drastically different lenders. And you got to have new connections to be able to do that. Yeah. And also kind of is just interesting. Think of, I guess, in order to understand how to improve a property, if at all, you need to understand that highest and best use. I mean, if you have a policy of, we're going to brush tag everything, It's like, no, don't do that if you need it for hay, because you need the hay. That's part of what makes it valuable. So it's almost like you got to start by reverse engineering it based on what its most ideal use is. Is there some science to that? Is there some chat bot AI thing that can look at any property and be like, here's the official highest and best used? How do you make that determination? I think that you have to have a really good local agent on the ground. And I think that one of the mistakes that I've made in the past is, although I have really good competency in some areas that I'm working in, there were some areas that we branched out to that I just didn't. And even though it was, say, two or three hours away from me, I thought, oh, everything's the same, right? But you move up into a new county with a drastically different population center, a drastically different market, and access to capital, truly, wealth in the area. And I've learned some lessons this year, for sure. Now, fortunately, they're going to be profitable lessons, the best kind of learning at the end of the day. But there have been some properties that sat way too long, all because I didn't call a local real estate agent, get a perspective, and wanted to keep more of it for myself. And so I've learned a few of those lessons along the way. But it definitely changes your marketing. You're not... So again, just use that same property as an example. 85, I also try to subdivide it into two 42 or 43 acre tracks, they encounter the same difficulty that it's still ag, it's still too big for a ranch ad, it's still too big for somebody to buy on. And so a big thing for me has been like, I'm not going to subdivide just to subdivide. It's got to add value, it's got to be highest and best use. And how do you determine highest and best use? Well, ultimately, you got to have boots on the ground somewhere to determine that or know the market. Do you think these categories of land change much in other markets? And are you sort talked about the Dallas-Fort Worth area, that kind of thing. If I look in some Timbuktu, Wisconsin or something like that, does the same thing apply in most areas? It kind of seems like it would, but maybe there's something I'm not thinking of that would totally change the dynamics of this. I think that the same dynamics are going to apply and we'll get into kind of the bigger acreage here in a second. But the same dynamics are going to apply. But what I believe happens, because I was asking myself the question, there are some areas, even if I just stay in Texas, I can go out to desert squares pretty quickly. You know, I can go west three hours and get to some. And you mentioned desert squares earlier. That's why it's on my mind. And it's like, when you think of a desert square, well, like somebody's probably not putting a house there. So you probably don't have infill in that area as much. You're probably looking at large acreage and likely, I would assume more recreational. And so you're probably not going to do ag activities on desert square that I'm aware of. So when you look at that, you almost condense the markets. You'd say, okay, well, there's no infill. There's no smaller acreage residential demand. There's no loan products there that could be like a 30-year fixed. So now we've got to move up the pipeline. Who is our ideal buyer for a desert square? Well, I assume it's somebody who wants recreational land, somebody who owns land in the area already, whatever they're going to do in that area. Maybe it's next to what, federal lands, national park, et cetera. And I'm no expert in desert squares, but at the same time, it seems like they merge. And I even think about some other areas that you basically see infill disappear, where the average person, say, owns 10, 20. Potentially even in like far south or west Texas, you might even have the average landowner owning 30 to 50, and it might be on a mountainside. And so I think that you only get the low-end infill whenever you have immense demand and a hot market. Everything else is going to move up to higher end bigger acreage. The only exception would be maybe if you go to some areas of say like California. Texas, Florida, or New York per se, where you're extremely urban, then maybe you actually don't even have any large acreage at all. But then you just have to go further out. You can always get to large acreage. And so I think it's a scale. But I think the whole reason for all of this being so important is when I think about house flip, because we do some of those versus land flip. You know, on a house flip, if I make a royal mistake and if I just completely botch it or screw it up, well, I could always rent it. If for some reason I can't rent the property, well, I guess I could move into it if I really had to, or I could try to take maybe a small loss. When I think about land flipping, you can't do that, right? I mean, you can maybe do some kind of ag lease for a few hundred bucks a year, maybe in more prestigious areas than I work in, maybe a few thousand, but you're not going to be able to cash flow that. You're not going to move to it more than likely, especially if you're buying a desert square or something. So it's like, we've got to know what influences the market. We've got to know how to do highest and best value. And we've got to be watching these numbers on a consistent basis, because if we're not informed, we have everything to lose. One of the only industries that I can think of where there is no other use for this land, you can't cash flow it, you can't move to it. And if you don't flip it, some people could be talking about bankruptcy. So there's a lot on the line and we've got to know our stuff. Just to review quick. So we've got one acre or less infill lots. We've got one to five or one to 10 acres in some cases for large lots, 10 to 50 acres for small acreage. And then the final category, is that just 50 plus acres? Yeah, it's going to be large acreage. And again, it's area dependent, right? I mean, because some people might be listening to this and be like 50 acres. In my rural area, 50 acres, everybody has that. And that's very possible. But in more getting toward urban, like the closer you get toward urban, 50 acres becomes pretty hot commodity. But the interesting thing about 50 plus acres is that you open yourself up to a lot different buyer pool. Now, you're still probably going to be primarily ag in a lot of areas, but you're likely going to be tied a lot more to the value of crop and how lucrative of a nature is that. You're also going to be tied to running a business, operating a business off of that, and also for investment purposes. And so at this point, you're pretty much not residential. Nobody goes out and says, I want 50 plus acres for the most part. Nobody goes out and says, I want 50 plus acres to live there. Now, there's always the exception. There's always somebody going to say, well, I did. But for the most part, nobody's doing that just to be able to live there. You're going to put some kind of bag. You're going to operate a business. You're going to lease it to somebody. You're going to work that land, or you're going to hunt it, or you're going to use it for recreation. you're going to be doing something with that. You also have some other areas, like I look at the market where I live, especially DFW, one of the hottest places in the country for land and also for housing right now. And it's very interesting that I would say within an hour, maybe hour and a half, any direction from the Metroplex, it is not feasible any longer for somebody running an ag operation to buy land at current market value and be profitable. The prices are too high. The interest rates are too high. The monthly payment would be too high. So it is just economically not feasible. And so the people who own that land, maybe they bought it 10 years ago before it tripled or quadrupled in value or doubled in value. But now you're looking at the big builders coming in, like the businesses, the developers wanting to come in and scoop up these pieces of land or families just want to keep it because they've lived there forever, per se. Yeah. As markets ebb and flow, as they grow, as other places decline. You start to see development in some areas. You start to see some areas revert back toward ag. You start to see populations moving, shifting, as we saw in early 2020s until now. It's just really interesting the dynamics that we're experiencing in the market that I'm in. I guess moving on to the economic variables that affect these different categories of land. I don't know what the full list looks like. Maybe you have a better idea, but I'm thinking through, for example, agricultural land. I mean, you mentioned the value of crop, which is ultimately, I think, driven by commodity prices and like, what are crops selling for right now? What kind of supply and demand is there for that? So, I mean, maybe commodity prices affect ultimately the value of farmland per se, or like for infill lots. I would think things like interest rates, which impact new building and that kind of activity ultimately has a trickle down effect on info lots. Maybe just the amount of disposable income people have for people who buy desert squares for no apparent reason out there. I mean, maybe that affects that market. So, I mean, maybe I don't know if I'm even on the right track here, but like, would you agree with that? Or what other things, what kind of economic variables impact the supply and demand of land and ultimately the prices? I do think you're on the right track. One interesting thing that I want to dive into is actually interest rates. So, because I think a lot of people aren't familiar with how interest rates are determined for land versus how they're determined for housing because they're entirely different. And so I think it'd be helpful for us to dive into that. The interest rate that the bank charges when they're lending to people like us? Yes. Land flippers? Okay, correct. To land flippers versus land buyers versus house buyers. And everybody gets different rates. And so when we look at the housing market, for instance, so if you follow us backtrack here, my words are getting jumbled because my brain's moving a million miles an hour. The interest rates, when we look at the Fed funds rate, So the big news media that comes out and starts talking about interest rates are falling, or they knocked at a quarter point, or a few months ago, they knocked at a half point, half a percent, quarter percent. But you look at the housing market interest rates, the housing market interest rates, like within a week after the Fed dropped it a quarter point, the housing rates went up a half point. And a lot of people were thinking, it's like, why the heck did that happen? I thought that the Fed and the country, I thought that we just dropped interest rates, why did interest rates rise? Well, I'm not going to get too far into that, but I'll tell you that on the housing rates, whenever you go and buy, say, a one-time close on an infill, or you go to buy a house, your 30-year fixed products, those products are based more on a 10-year treasury, a return, right? The investors have to buy in the secondary markets. The 10-year treasury is what that typically follows, plus a margin, a margin to return to common state for risk. When we move over to land, and this is for land buyers, the people who are buying our properties from us, that is not, like we said, that's an adjustable rate mortgage that's likely coming from a bank, that's likely coming from an ag company. And those banks and those ag companies. They're not lending based upon the 10-year treasury, or they're not setting the rates based upon the housing market. They're setting the rates based upon the federal funds rate, which is the rate that they can get capital. And so they are adding a margin, Wall Street Journal prime, and they're saying off of that prime rate, we can go up or down, half point, full point. Half a percent, full percent, up or down, either direction. And so just in the last week or two, I've seen a huge uptick since that quarter point decrease from the Fed. I've seen a huge uptick in the amount of land pieces that we've gone into contract with. And I've seen other people say the exact same thing, like in the land industry that I've been talking to. And so one thing that I am really optimistic about about these rates is that the Fed funds rate is set to decline. We don't know how much, but we believe it's going to continue declining. Now, how that impacts the mortgage rates for houses might not be too much, but how it impacts the people that we're selling our properties to, it directly impacts them every time the Fed reduces the rate, which is huge for us. Because our borrowers right now are able to get a rate probably almost a full percent lower than they were 90 days ago. And so that's huge. And then if you want to talk about land flippers, land flippers who get loans from banks, they lend on the same thing on prime from banks. And so the best thing that could happen for us, right, not only in the loans we get for the land that we buy, also on the loans that the people who buy our properties get is for the prime rate to continue to go down, which it's projected to do. Anyways, I think that's interesting because a lot of people, I think, pay attention to the housing market. They pay attention to that data. They pay attention to the 30-year mortgage rate and they think, okay, it went up. Crap, I'm not going to sell it. It's going to be harder to sell when in reality, all that they need to be watching is the Fed funds rate and they'll know where their buyers are getting the rates from. Yeah. And given that there, you know, several months lag time between when you find a deal, you buy the deal and then you sell the deal or, you know, the deal just goes to the market. Is there anything we can be looking at? Like, say we see one of these changes on the horizon or it happens, like say rates go up or they go down. Like, should that change whether or not we buy a property? Should that affect, okay, I should lower the price based on that, or at least plan for X number of more months, because like, how do we actually take this data and apply it and like make it useful other than just like, well, it might be harder now, or maybe not. And maybe that's all you can do. I'm not sure. What do you think about that? Yeah, it's difficult. I mean, so one thing back in say 2022, that influenced my 2023, I'll just give you a historical example, because we don't know what's coming. We do think just based upon the predictions that the Fed funds rate will continue falling, and that's good for the land business, right? Overall, because our borrowers can get lower loans. But back in 2022, when the rates doubled or tripled essentially for housing and for Fed funds, everything just went haywire. The moment that they started announcing, okay, we're increasing the rates, we could kind of see the writing on the wall that if rates are increasing, what are they trying to accomplish when the government increases rates? They're trying to slow spending. they're trying to slow the economy and they're trying to drive inflation down and so if if we know that the government's trying to achieve that well we should expect them to take big action which they did and absolutely they slowed real estate there's no doubt about that they slowed real estate in a big way starting we felt that as soon as may and june 2022 and so when i think about okay how did this impact my business? Well, as I started doing my efforts in 2022 and into 2023, I knew we were in a market that's declining. And so the biggest thing that you want to do and say a declining market like we were in is you don't want to catch the knife. Kind of a saying like, if a knife drops, you don't want to catch it and get cut. You want to be so far ahead of the knife on your pricing that you never get cut. And so if a market is starting here and it's going down, Well, we need to go ahead and price down here before it gets there. And so a lot of the lead generation and the projects that we took on, especially in 2023 and late 22, we were being extremely conservative in our approach. We were offering less. We were going through a season of just constriction where we know that the government was trying to curb inflation, which for us meant they were trying to curb the values of our land and our houses. So we needed to be more conservative on the things that we bought. So we didn't go out and take big risks during that time, I would say. Fast forward to where we are now, I'm buying anything that I can. And my economic theory might not be everybody's. I probably don't share it with everybody, but I do believe and I am optimistic about the land prices and the housing prices going into next year. I believe in my market, we could be at a low, potentially even the lowest point. And now this is purely speculation, data-driven speculation in my opinion, but it is speculation still. But I'm buying anything and everything that we possibly can as long as it makes sense. Now, I'm not stretching my margins to say we're going to buy some stupid pieces. I'm not going to risk everything that we've built. But if a good piece comes along, I am definitely not hesitant to purchase it right now. On that whole thing, so you're saying you're buying everything you can at what prices? Like what is a stupid deal or what's a good deal? You know a little bit about our model, right? We subdivide. And on the previous call we did, we typically buy at, say, 60% of after repair value. And so right now, if a deal pencils at 50% to 60% of after repair value for after the subdivide, then we're still buying. We're even stretching potentially up to 70% or 80% on an as-is deal if we can get it off our books within, say, 30% to 60 days. And that's just based upon our market. Our market's extremely competitive, in my opinion. And we do have to offer some of those higher prices. But what I'm starting to see in the market is some desperate sellers again, which I haven't seen for a very long time. Now, there's not a lot of them, yet there are more than I would say that there were a few months ago. And there are definitely more than there has been for the past few years. Do you have any insight as to what's making these specific people desperate? Like, is it just one unique situation? Or is it like, oh, this is something that affects lots of people. And I'm seeing more of that situation. I'm trying to think if there's any commonalities. I mean, a lot of people that I'm talking to have loans on their property. And they're wanting to get rid of the properties just because they either can't afford the payments anymore, or they're wanting to get rid of the properties just because they're ready for something else. They don't live there. They haven't seen it. They're just ready to get rid of it and do something else with that capital. But for some reason, they just seem... I don't know. It's hard to quantify it. It's hard to put a big thing on it. But in general, they just seem more motivated and more ready. And the only perspective I think that helps us as land investors, even as house investors, whatever you do, is that properties are taking a lot longer to sell. And so in 2020, up until maybe a year ago, where land still sold super quickly, in my opinion, properties aren't selling is quick. And so when does the investor offer become a lot more valuable? Well, the investor offer becomes a lot more valuable when there's not a lot of other options. And so some of our scripting has always been, well, do you want to go on market? Would you want to wait six to nine months or would you want to get this done today? Previously, that might've been a fallacy. It might've just been that the people would tell us, I'll have this sold in 30, 60 days. And they were probably right. Today, I don't think that's the case. It really might take somebody... I think we're honestly, we're back to a normal market. And in a normal market is better for land investors, in my opinion, than a hot market where everything sells in a day or two. We have a better value proposition. Yeah, it's interesting. Do you think we're at a normal market temporarily? Or are we at a normal place because it's in the direction of some new extreme and it's just kind of there for now. Well, there's no secret. If you look at the housing market, there's no secret in the housing market specifically that we are headed back toward a balanced market in most places. Now, one interesting thing that this is more geared toward housing than it is land, but it'll impact the infill guys, right? But one interesting thing is if we look at migration trends, that's going to be one big area to look at for, especially like these Texas, Florida, Georgia, North Carolina, like some of the hotter markets that I see a lot of people investing in, we need to pay attention to migration trends. And the reason that that's important is because it's a lot of the demand in those areas post COVID and during COVID came from people wanting to escape a little bit more. I don't know how to say it. Governments that were a lot more restrictive to go to governments that were a lot freer during the COVID timeframe and afterwards. And I think a lot of their freedoms were their eyes were opened potentially. To and they decided okay I'm not willing to take this I'm going to move or they decided I'm going to stay and I'm going to see how it goes but, There's a huge migration trend into a lot of these markets, which flooded the housing and the land market and it went up a ton. The interesting thing now is that with some of the tight money and the high interest rates that are happening right now and some of the economic turmoil, people aren't migrating. This is one of the lowest times that people are moving, especially in the last five years, if not the last 10. And so when people stay put, these migration markets, the biggest land markets tend to suffer a little bit. And that's what we're experiencing. That's why some of our land is moving slower. And the ironic thing is that some of the areas that people left, New York, California, Oregon, Washington, some of these areas that people left during the 2020s, the early 2020s, their housing market at least is very low supply and very high demand. It's almost like pick your poison, right? It's always a catch 22. You could have a really hot market for a season, then you're going to go back to slow. You can have a really slow market because people leave, then you go back to hot. And I believe the land markets are impacted the same way with migration. So you asked earlier, where are we paying attention to? We got to pay attention to migration, especially in these markets where net migration was driving the values over the past five years. Got to pay attention to that. U-Haul has a great study. They know where people are moving, obviously, pay attention to those migration trends, follow them at least quarterly, if not annually, and just kind of see what these markets are going to do. I do wonder, and I think it's impossible to escape some speculation in answering this, but what role do you think competition plays for land flippers in how much harder it makes our lives? You know, like, and I'm sure, again, this probably varies depending on the market and the situation and the land type and all this stuff. But I don't know, if you had to make a wild guess, like, do you think prices are driven up and it's harder to get deals accepted because there's so many other land flippers now doing this? Or does it have nothing to do with it? It's just external economic factors are making people think the land is worth more. And that's why. It's because there's just some other reason why they're not willing to accept a lower price. Do you have any theories on that? Well, yeah, I do. I think it would be foolish not to acknowledge that the people who are coming into the space are maybe not sending great offers. And what I mean by that, maybe they're offering too much. And I do truly believe that, I don't even believe it, I know it, that there's a lot more land investors today than there were five years ago. There's a lot more land investors than there were 20 years ago. You'd probably be the first to say, heck yes, that's true. I've seen that. And with more people going out there and doing this and the most popular lead acquisition channel being mailing potentially blind offers, with people just blasting out blind offers, I think what it gives is a false sense of liquidity to these people who own this land. And a lot of these people, I don't even think have the capital to back up their offers, right? Maybe they can find it, but they don't have it on hand. And so a lot of the people that we're talking to, they feel that they are in a position of power because this is owners. They feel they're in a position of power because they get so many mailers and so many calls. Therefore, they believe they have a hot commodity and they believe that they could sell it anytime time for a huge amount of value and it inflates the market and makes it harder for everybody. I mean, how do you solve that? I mean, you can't, right? That's just competition. But eventually, I'm a true believer that everything in land flipping eventually will look like house flipping. And so if we want to know where is land flipping going to look like in five or 10 years with all the competition, it's going to be a mirror of house flipping. And what's the thing in house flipping? It's ultra competitive, right? I mean, it's hyper competitive and people know that they can sell it very quickly. And so I think ultimately you have to, if we're talking about how do we acquire properties in a hyper competitive environment. From what I've seen, you have to move from a passive lead acquisition method to a more active lead acquisition method, the more competitive the market is. Meaning you move to mailing, to cold calling, to texting, to more of a voice-to-voice where salesmanship matters versus just sending a number. I do wonder, this is going back a little bit, but market research has always been a really hot topic for land investors. Just looking at states and counties and analyzing ratios like the sold for sale ratio or sell through rate and days on market and all this stuff to kind of get this idea, almost like this crystal ball, like based on these numbers, you go here and things will go well for you. And there's probably something to that, but I don't know that it's the end all be all because so many deals are like deal specific. And you also have to know like, well, what properties are you going after? If you just look at a county and say, well, there's lots of transactions, so it must be good. Like, I don't think that's enough. And based on this stuff in terms of categorizing land by these different sizes and acreages and that kind of thing, what kind of market research do you think does matter? Is it just a matter of doing this stuff after you have first defined which of these classes you want to go after? And then you can start drawing conclusions or like, I don't know, any thoughts on just what you should be looking at? and what does and doesn't matter when you're trying to decide whether to go to a new market? I don't have a hugely sophisticated method to just be upfront with you. I don't, you know, I do believe that there are a lot of metrics that people have done a lot more data and research onto and specific markets maybe than I have at this point. What I primarily look for is very simple. And in my opinion is the biggest driver of any land business or any targeting that we do, which is simply demand, you know, and we could go into like, how do we measure demand, right? But if we don't have demand for buyers, then it's going to be very hard to sell the properties quickly and for a good amount of money. And so therefore, it's just not a place that I'm super interested in. And so in my mind, demand trumps everything because if you don't have demand, then it's just not a market worth exploring to me. And so, right, I mean, we talk about how do we find demand, right? How do we look at demand? Traditionally, I've only bought in markets that I can drive to. I know this market extremely well. And the way that I look at things is probably different than most people. But we've learned some pretty big lessons, especially when subdividing and going into areas that don't have demand. We tried to take a 30-acre property. We tried to do six five-acre pieces, left it on the market for nine months, sold none of them. And then ultimately, somebody came by and bought all 30 acres. And the irony of the feedback that we started receiving and what really opened our is that like, nobody wants five acres out here. What can I do with five acres? I can't hunt on five acres. And it was just so eye-opening, right? I mean, we talked earlier about like knowing your target audience, knowing your highest and best use. Man, that was it. Subdividing could actually make a property less valuable. Like you're worsening the situation by doing that. Yeah, exactly. And it was just like, man, like that was just so eye-opening. And we've learned a lot of lessons, learned a lot of lessons through failure. Like I said earlier, or profitable earning because we still made money on it. But it took a lot longer. And we learned what not to do in addition to what to do. But my biggest lesson there is like, it had to have demand. And we had to know where the demand was. And so the other thing that is also possibly true is that as you analyze markets, and I've seen other people do this through like sold for sale ratios and things similar, there could be a subsect of a market that you would call a hot market that is actually really cold. For instance, there's a county in Texas that allows five acre subdivides. And man, the supply of like 5.01 acres in that county is off the charts. There's so many of them and so many expire because they've flooded the market because these land investors know that it's possible. But there's just been such a flood of properties and these realtors know it too, that there's not enough demand to pick it up. And so it's just like, it's not only knowing that there's general demand, because I think that you could probably go to any major metro in the country, go a county to two, maybe three counties away, and you would find some kind of demand, right? I mean, because there's going to be some kind of hotness when you're close to urban centers. But how do we actually find the real ones that are in demand? Well, let's diving more into the smaller acreage subsets of an area to be able to figure out what is actually in demand in that area. And you might have just sort of explained some of it, but what exactly are you looking at to determine what that demand number is to say, yes, it's a good market or not, if that's really the only thing you're looking at? Yeah. Well, I come from a realtor perspective. And so realtor perspective would say, let's look at days on market. Let's look at months of inventory or the amount of inventory that we have to compare to. And let's look at the rate that things are selling essentially. And that's my primary objective is to be able to see that. And so So for instance, if we look at like a demand-based pricing, and I guess you could call this like sold-to-for-sale ratio. Or actually, no, it wouldn't be sold-to-for-sale. It's how many properties sold in the last 12 months versus how many are currently active, and you can determine how quickly they're going to sell, sold-to-for-sale. And so those are the things that I'm looking at on a daily basis for targeting different areas and trying to find them. But traditionally, I have gone into areas based upon proximity to my location, failed forward in those areas. And then kind of retroactively found out, oh, wow, there's huge demand for this product. Why didn't I research this before I did it, if that makes sense? And so a lot of my learning has been trial by fire instead of a ton of analysis on the front end. And that might seem odd coming from somebody talking about how do we analyze land markets, right? The whole point of what we're doing today on the podcast. But I truly believe that a lot of people's limiting factor or limiting belief is that they need to know everything about a market before they do a campaign to it, or that they need to just data the heck out of it. And while I do think that some preliminary data work could be really, really helpful to at least gauge is there demand for this product at all, I think that a lot of people potentially waste a lot of time and don't take action because they try to tell themselves. Well, I'm looking for that perfect market. And I feel like that most coaches in the land industry or influences in the land industry would say like, that's the biggest question they get is like, where should I mail? Where should I call? Like, where should I go? My advice would be like, do some preliminary data, look at where other land investors are having some success in and maybe go there or maybe go to a secondary or tertiary market near there, find a demand and go out and do a campaign. I mean, because a lot of learning that I've done is actually by doing and failing forward as I've talked about today. Yeah, for sure. Yeah. We're talking a lot about demand. I'm curious, why don't you look at supply? Does that not matter in your decision-making? No, it does. It does. And when you look at supply, I mean, that goes back into like for sale, the sold for sale ratio, right? So you're looking at how many sold. So like, I don't know, if 20 properties sold, then you have five on market, right? I mean, it's, oh my gosh, huge or vice versa, right? Five sold, 20 on market. So it's like, we do look at absolutely supply. There's no doubt because there are two, what do we call it? Two heads of a coin, right? Supply and demand. So you have to look at both. But in general, I talk about demand more because to me, it kind of all starts with demand, right? Because if you have demand in an area, you will typically find people willing to make the supply, if that makes sense. Yeah. I mean, if you begin with the end in mind, that end is demand. I mean, that's what determines when you're going to sell it and how long it's going to take and what price and all this stuff. So it makes sense to me. I had posted this poll in our Facebook group and that was totally your idea. Thanks, Neil. It was actually fascinating to see, I guess, back a little bit. So the poll was basically just asking people, we were to do this type of market update and focus at all on any key states in the country. Like which states would you vote for? Which ones would you want to hear the most about? And the poll or the results went in this order. Texas was number one, then North Carolina, Florida, Tennessee, and then Arizona and Colorado were tied for fifth place. And then Georgia was after that. And the rest of them were just kind of minuscule amounts of people that wanted to know about it. I actually thought it was fascinating just to see where people were most interested in, you know, some of them weren't really a big surprise to me, but I was kind of surprised certain ones weren't higher on that list. Just states that I hear about a lot, Nevada, California, New Mexico, look, those weren't really anywhere near the top. It's like, wow, I guess, I don't know. I don't know if this is indicative of how many deals are actually happening in these states or if it was just the 250 plus people that happened to respond to this poll. But anyway, it was just interesting to see that. It was really interesting to see that. And it's also interesting to see that, especially the percentages, and this is all a public poll, like anybody could come in and see this in the group. It's very easy to see. But like you said, I mean, hundreds of people responded. Some of the markets didn't receive any votes. and some of the markets received one or two, but by far the majority, I mean, even if you look at the top three gathered approximately 45, 50% of the votes, Texas, North Carolina, Florida, and then you add Tennessee, Arizona, Colorado, Georgia, really interesting to see that. I'm not surprised that those are the top ones. I'm also not surprised that Texas is the top one, not only because I live in Texas and I'm from Texas. I probably do have bias, but. The other thing I'm not surprised at is that, you know, Texas is a non-disclosure state. And so I think that a lot of people likely want to see that not only maybe because they work it, but also because it is a difficult state to gather market data on because of the non-disclosure thing, because we can't see comps or sorry, we can't see sold data. We can't see sold prices. And so I'm not surprised in that. But also just when I talk with people who are in land investing, I would say a majority of them fall into one of these seven states. Yeah, I was actually surprised. I mean, I wasn't surprised to see the people interested about with North Carolina, but I was surprised it was like number two, like almost number one. I was like, really? Wow. I thought they'd be like number five or six or something. But yeah, that's where it is right now. It seems like that corridor right there is hot, right? Southeast United States right there. Seems like a lot of people target that area that I'm familiar with. Good margins, good properties. So anyways, but no, our intention moving forward. So today on what we went through, very broad overview, right? We didn't dive necessarily into a lot of data. We didn't dive into a lot of statistics. And that was not really the objective of today. The objective of today and really my main goal with it was to give people a perspective or a foundation around how to determine what kind of acreage they have, you know, what size is it? And then additionally, where does the value come from? because that was very eye-opening to me. We went through the example of a one-acre piece versus a 10 to 15 versus my 80-acre piece. Just examples that I've lived in the last year, these were all in the exact same county, in the same market, and the buyer pool was drastically different. And just wanted to share some of these lessons and share some of this research because I think it's very difficult because nobody's talking about this. It's a huge need, but nobody's talking about it. So in the future, Seth, Do you want to tell us about like, what do we plan for the future of these? Like, what do we want to go through and what we're going to hit? For sure. Yeah. So for this little pilot episode of this kind of podcast episode, where we're talking about this, kind of the ideas, again, what Neil said, just to talk about some of the basics, but also to get feedback from the audience and see like, how much interest is there in this? Do people want to hear about this? Is it of note or is it kind of just like, eh, whatever, we don't care. So kind of gauge an audience feedback. So if you do or don't want to hear about this, definitely leave a comment or. Let me know somehow. But assuming there is at least some amount of interest in this, probably either monthly or quarterly, we would be hitting this kind of thing, talking about most notable changes that are going on, anything in the political environment that might play a role. Uh, any recent things that we're noticing in our businesses, anything that comes up, you know, do you have anything else that you would want to hit on as we do this stuff? I think hitting broad and local. And there's a few other guys out there that I feel like do maybe a really good job of this for the housing market. One example would be like Altos Research, ALTOS. I feel like those guys over there do just a fantastic job for housing. So if you're looking for somebody to follow for your infill lots. Highly, highly recommend those guys over there. I watch their stuff all the time. And my objective would be to show national events, right? So like we talked about politics, statistically, like what's impacting us nationally and go through a segment on that, yet also maybe highlight a key market, a key state or a key area. Because I do think that a lot of people probably follow national news and maybe some of this national data, I would think at a pretty decent level. But I think what people are missing is the specific land and sites around it nationally, and then also insights in their specific territories and what's happening there. I think that as land investors, we are so focused on driving revenue and building a business that we rarely take the time to do the data research and the research needed to know what's going on in our local market to be able to impact our business in the future. Because like we said earlier, we're risking a lot. There's no plan B with these land flips. There's nothing else we can do with these properties except for sell them. And so if something major was coming up, or if we saw something coming, we would want to make sure that everybody knew about it so that we could all pivot our businesses and know what to do. It's hard to make future predictions because you never want to be wrong and nobody really knows. But I do think there's stuff you can look at to at least give you a general direction of what way the wind is blowing, things to pay attention to as you're going forward. And kind of like you said in terms of the local versus national... Almost reminds me of like the recent election that happened not long ago, where some people feel like, you know, what's the point of voting for the president? Like my one vote doesn't mean anything, but it's like there's so much more on the ballot than just the president. Like there's so many local things that your vote does matter a lot more and it will affect you a lot more. So I think it'll help to talk about some of those local markets. And even beyond that, you know, if say your market isn't talked about still just understanding like, okay, that's what we're focusing on in Texas. When we talk about that, how could I look at those same things in my market to draw meaning where I'm at, but yeah, I'm excited. I think it'll be really fun and informative and cool to talk about this. Absolutely. Happy to do it. Thanks for your time today, Seth. And anybody listening, the best thing that you could do for us is to give us some feedback on what you want to see. I mean, we're not, me and Seth both want to know what you want to see. We don't want to put together stuff for us because we could easily just have a conversation offline about this stuff if we wanted to do that. So we want y'all to get as much out of this as humanly possible in the time that we have. And we want to deliver it to you in a concise manner and a digestible manner. So please let us know what we can talk about, what you want to hear about, and any statistics that you have would be super helpful. And if you want to see the show notes for this conversation, where I'll include links to a lot of the stuff we talked about, I'm going to say retipster.com forward slash market update. That'll be the link. So go ahead and check that out if you're interested. Neil, thanks a lot for your time. Appreciate you being here and sharing your wisdom with us. And we'll talk to everybody next time. Thanks.