What a 1,000+ Acre Subdivide Taught Xing Gao About Land Development

214: In this episode, I sit down with Xing Gao, the founder of Elegment Land, to discuss his incredible journey from e-commerce to land investing. With over 20 years of experience in business consulting and real estate, Xing shares how he started his land business with $100 deals and scaled it to multi-million-dollar projects.

(Show Notes: REtipster.com/214)

We explore his methods for identifying profitable land opportunities, subdividing large tracts, and building relationships with local officials and banks. Xing also reveals how he integrates e-commerce principles into his land business, challenges with large-scale developments, and his vision for affordable housing solutions.

Whether you’re a seasoned investor or new to land investing, you’ll learn actionable tips and inspiring lessons from Xing’s success story. 

🙋🏻‍♂️ Get the REtipster Newsletter (It's FREE)!
Stay updated with top real estate investing insights and strategies

🚀 Land Investor’s Action Plan (Free 5-Day Course!)
Solve the 5 mistakes that keep investors stuck

⚠️ Land Buyer’s Survival Guide (Free 5-Day Course!)
Avoid the 21 most deadly land-buying blunders

👉 10X Your Income from Land Investing
Learn how to start and supercharge your land investing business

😀 Join the REtipster Forum!
Connect with experienced investors and get expert advice.

🛠️ All My Favorite Tools and Resources 🛠️
The best software, services, and gear I use daily

Transcript

1:19

Hey folks, how's it going? This is Seth Williams. You're listening to the REtipster podcast. This is episode 214. Today, I'm talking with my friend, Zing Gao. So, Zing has over 20 years of experience across real estate, e-commerce, and business consulting. He's the founder of Eligment Land, and Zing got into land investing as a side project back in 2019, and it eventually grew to be his main pursuit and source of income. And Zing is running an awesome land business today, And I know this because I got to spend a full week with him and a handful of other fascinating land investors in Italy this past year. And I've heard a lot of different bits and pieces of Zing's story during the time that I've known him. And it's pretty cool what he has going on. I learn something new pretty much every time we talk. And today we're going to learn even more. And I'm going to share with you some of his story. And hopefully we can all learn a little something from this. So, Zing, welcome to the show. How are you doing? Thank you, Seth. It's great to see you again. And I've learned a lot from your podcast and your website, REtipsters. So I feel that I want to give back to the community through what I have learned throughout this process. And it's pretty fascinating. Appreciate that very much. Glad I've been able to help in any way. And glad you were willing to come on here and share some of what you know, because I know it's a lot. I can tell from your voice, you're not from the U.S., right? Tell us your background. Where are you from? I was born in Guangzhou, China. It's a southern town in China, also the third largest city in China. My parents were doing a shipping business between U.S. and China. So when I was around high school age, they moved to U.S. To handle the shipping business. And I moved with the family together here. My parents now retire. But then China has the mandatory English lessons, starting from elementary school to junior high school. But the level is not advanced level. It will be entry level. So I learned most of the conversational and writing in high school. And then I stayed in the U.S. for college education. And then I went to UK for my graduate study. And then when I first started working, I worked in a consulting business with one of the big four companies. I got exposed into different industries, learning different business. And then a few years later, I joined an e-commerce company. The e-commerce company at that time, it was number three in China. So it's called VIP.com. Think of it as like a target online in China. And they specialize selling women's clothes, sneakers, cosmetics. Then I learned quite a lot of e-commerce business practices there. So while I was doing e-commerce work, I was also doing a side hustle. Side hustle actually was introduced by Seth Williams. October 3rd, 2013 podcast on BiggerPockets podcast. I was very interested in that. And then I was thinking what I can do with the land business was to think about how to enable my learnings and knowledge in the e-commerce space and combine that with the land business. That's essentially the foundation of the e-commerce land business. I actually know a number of people who used to be in e-commerce in some way, shape or form. I know that's a loaded term that can mean many different things. But have there been any like solid lessons or skills that you learned from that world that are directly applicable to the land business? And if so, what is that? I would say it's not a direct translation. It's quite different. First of all, the e-commerce business I work in, their consumers are not U.S. Commerce consumers. They are Chinese consumers. Although it's a U.S.-listed company, but the whole business environment is China, not U.S. So only the principles, the major foundation ideas I can bring over, for example, maximize exposures. But how do I do that? Then I need to learn about checking on multiple different selling channels, trend platforms in order to understand how that works. Google advertising obviously is very different from China. Say, Baidu advertising, and the consumer keywords would be in Chinese versus the U.S. Buyers, the keywords would be in English. So, I would say only the principal ideas I can bring over, for example, how the website should look, how the website should function in the back end, what kind of functionalities need to have, and what is a good way to display on both the mobile phone and also on the desktop. Those are the things that need to do a lot of testing and configuration in order to have it fit the U.S. buyer market. So that's quite different, I would say. It's not direct translation. I'm always fascinated when I meet somebody like you who grew up in a different culture and speaks a different language. Do you dream in English at this point or do you dream in Chinese? What is your default when you think or talk? What comes most naturally to you? I don't really recall any dreams. So that's a little bit difficult to recall. But then, for example, when I talk to you, talk to my other friends in the U.S., then I would think in English as the thinking language. But then when I talk to my friends in China, then I would be thinking in Chinese as the primary language in terms of my thinking logic. But sometimes I do get, sometimes, for example, when I say some of the things in Chinese, I got stuck, then English words pop out. And then sometimes I talk in English and the words I know in Chinese, I couldn't think of the English word, then I get stuck. So that happens. And you've got family in China, right? So my wife works for a U.S. Biotech company in China. So she manages the finance function for the whole China region. So that U.S.-based pharmaceutical company, they have the sales and marketing team in the U.S. And then, however, their research and lab is in China. So she's primarily based in Shanghai. And then my son goes to the international school in Shanghai as well. Is there any plan for them to move here or are you eventually going to move back there? Will you all move somewhere else? These days, my wife would come to the U.S. Every quarter, but her company is in San Francisco. So I would fly to San Francisco to meet her. And then I go back to China on an extended time, usually one to two months period for two times every year. Most of the time, it would be the summer vacation and also the winter break. So those are the times that we meet. But we don't have any immediate plans to move to China or move to Shanghai one way or the other at this moment. So we don't know yet. We will have to figure that out. Yeah. In terms of the land business, so it sounds like you first heard about it in 2013, but you actually started it in 2019. Do I have those facts right? your podcast was published 2013 but i didn't hear i would say i first start to get to know it maybe about 2018 so i was listening to your old podcast but after after your old podcast of course i was looking all over the place for for additional education and then so learn a whole bunch from the REtipster website and then your YouTube channel, your podcast channel, and some other educators as well. What did your first year look like? Did you jump in with both feet or like, were you like, I'm just going to do one test campaign and see what happens? Like, just tell me about that first 12 months or so of experience. Yeah, that was definitely just, I'm going to do a first campaign and see how that works because I'm not a huge risk taker. I would say I'm an educated risk taker. So I tend to go in when I see results, when I see initial wins. And so, for example, my first test campaign was something like, I don't know, maybe I can't remember whether it was 500 or 1,000 letters. I think I used regular postal mail, so just bought a whole bunch of envelopes and stamps and have a printer print out order using mail merge on my computer to print out a whole bunch of letters and mail, and then bought very cheaply, $100 per lot in Colorado, but then they all come with unpaid property tax. So that was the starting point. When I pay the seller $100 per lot, usually they have three to five lots altogether. So they get $300 to $500 check. So to them, that's good enough because initially I would think that they want to let it go to the county for the tax sale and everything. To me, that's a very low risk investment to test it out. I start listing them on Facebook. and then I didn't even build a website until I see, oh, okay, this really works. So at that time, the competition, I would say, is relatively low. I bought a $20 automatic poster to Facebook. So I signed up using my own personal account on Facebook. I signed up to a whole bunch of buy-sell groups that seems to be interested in buying and selling in Colorado. And then I start doing auto postings using that $20 auto poster tool for Facebook and then got quite a lot of them sold pretty quickly. I think probably in two to three months timeframe. Before closing, I would pay off the property tax and then have the clean title to the buyer. So that was my initial plan. 10 lots, $100, 10 lots. But the average cost maybe is more like $500, $600 per lot. And then I sold it for maybe $3,000, $4,000 per lot. So those are my initial deals. And after that, then I was thinking, oh, this seems to be really working. So let me invest a little bit more into it, both with my time and also with money and also technical knowledge. So I researched a whole bunch of potential e-commerce selling platforms, including Shopify. But Shopify didn't like the idea of selling real estate online, so they keep shutting my account down for a period of time. So I ended up with WordPress plus WooCommerce as a back end, and that's a full-fledged e-commerce solution. And then because it's hosted on your own server, so you can essentially sell anything you want as long as you don't break the law. But that would be a different story. And the website was built together with a little bit of social marketing. Then that would be the starting point. And at that time, I was looking into not only doing Colorado, but also looking into doing some deals in California very early on at that time. and also Texas. Colorado and Texas became the main market for my business. So that's how the initial deal started and how the initial systems were started. I'm assuming things have probably changed quite a bit since then, right? So what does your typical deal volume look like these days and like how big are these deals? Are they just straight flips or are you subdividing stuff or tell me what it looks like now? So later on, the business evolved a little bit. These days, We have two main, business lines in the land business. The first one is called the RV lots. So the RV lots are very tiny small lots that allow to have RVs to be parked on it and they usually come with utility connections from either the city or the other special utility districts in the county that serve those suburban areas. So they typically would have a sewer line, they have a water line, They have an electric company or servicing that particular region. And those RV lots, we typically sell, I would say, in between $20,000 to $40,000 per lot undeveloped. If it's developed, then it would be a higher price. So, developed means we have the land clear, maybe putting an RV pad on it, and then have the utilities. Not only the lines are available, but the connections are available. So it's a turnkey project to the RV buyers. So you would have the 50-amp hookups for the electric. You would have the water faucet to connect to the water. And then you would have the septic connection that can easily hook up to the RVs. So that's the first business line. And then the second business line, I would say it would be the wrench heads, small wrenches. The small ranch, it might have different definitions. So, for example, those ranches, we typically purchase a large acreage of land, I would say in a few hundred acres. So in Texas would be, for example, we have an ongoing project of 200 acres and the land is cut into three acres to five acres each while maintaining the agriculture extension. So this is a very attractive point for most of the land buyers is to be able to maintain the agriculture exemption because essentially quite a lot of times you are only paying one fifth of the property tax if you have that agriculture exemption. So the ranch we would buy in large acreage quantity. And then sell it in small lots into ranch heads. Colorado would be slightly different in terms of definition. In Colorado, we have 1,200 acres purchased, and then we sell them in 10 to 40 acres. And then in Washington, we have 1,000 acres purchased, and then we sell them in 20 to 40 acres. The price points for those, typically, I would say hooters around $50,000 per lot. So in Texas, it would be in between $40,000 to $60,000. And then in Colorado, it would be between $15,000 to $50,000. Because Washington, we sold out our 20-acre lots, so we only have 40-acre lots. So those go for in between 80 to 90,000. So those are the average typical deal size that we are selling at this moment. So we're going to talk more about this. That's pretty amazing. Thousand plus acres in Colorado and Washington. I think you said Texas was a couple hundred. Like how much are you paying for these massive acreage properties? And how are you paying for it? Like, are you getting a bank to finance them? Or do you have a funder involved? Or is it just your money? Like, how does that all work? Yeah. So it's a combination. So if it's in Texas, we typically go with bank financing because we have built up a pretty good relationship with the local banks here. So we would use our own money, and then we would finance quite a lot with the rest of them would be with a bank. So a bank, when you're in, you know, pretty good credit history and pretty good payment history with the bank. And then they sometimes specialize in doing land deals. Then you can get up to 85% of the purchase price for the land deals that you can use 85% bank financing for that. In Washington Project, we use primary investment money. So we have investors lined up that we will do profit sharing with them. And then in Colorado, mostly is our own money. The purchase price was very good. We got a very good deal. And then it was also early on before COVID purchase. So the price was very, very good when we look at today's value. When you've got a giant thousand plus acre property, what is the rationale that you use to decide, okay, we're going to split this up into 10 acre lots or 40 acre lots or three or five acre lots? Like, I mean, I realize the answer is you probably look at the market and that kind of thing, but like, what exactly are you looking at? Just to draw like a totally separate business in the self-storage business, when you're developing a new one, one of the things you want to look at is what types of units are not available right now? Like what doesn't exist? Cause you want to serve the needs that aren't being served yet. Is there any kind of a similar rationale or is it more? No, we've seen proven that these sizes of lots sell, so we're going to make more of those. How do you figure that out? Yeah, I think it would be an art plus science approach, not a straight answer. So let me start with the Colorado project. So Colorado recently, as a state, it passed a new regulation, subdivision regulation law, that unless you. If it's a new subdivision development, unless you can prove there's groundwater and then there's water rights available to be subdivided, then you are not able to subdivide it unless it's 35 acres and above. So in Colorado, you can no longer go smaller than 35. We got lucky that we purchased a piece of land that was prior subdivided. So the record already existed in the county as a plant. So a plant is a subdivision map saying, hey, this is already cut into smaller pieces. Each one would have its partial number, that kind of thing. It was before that, so it was grandfathered in. But I would think that Colorado subdivision is getting harder and harder to do. Colorado also recently passed a new tax sale regulation. So the cost of tax sale purchase of the land is, is jumping a lot higher compared to before. So Colorado is getting harder and harder to do this kind of projects. And then in Texas, it's a different story. So our 200 acres Texas project, we initially wanted to go with an easy route. Hey, in Texas, if we can just cut it into 10 plus acres, we don't need to go through the county approval because it's a state level that is, it would be exempt from county approval. And initially we did that. We cut it into 20 acres to 40 acres, but we are not able to find buyers. So we revisit how we should approach this, then maybe try to do a further, smaller subdivide when we see that there's no three acres to five acres listings out there in that whole county and also the surrounding counties. And this is a great opportunity to provide that land product to the market. So that's the time that we pay a second surveying. The surveying for 200 acres in Texas is not cheap. So we pay twice, essentially. And also we continue to pay because later on we add on electric easements. They have specific requirements. We need to add in water lines. They also have specific requirements. So we keep paying surveying fees. So the selling fees get jacked up pretty high for that project. But overall, it was a great return because we bought it for so cheap. So I think the key takeaway here is when you buy cheap, you have a lot more options that you can explore compared to buying it incorrectly. Then it's difficult because your exit options are very limited. These three deals we're talking about, the Texas, Colorado, and Washington, are these all completely done? like bought and sold everything or are you still in the middle of all three of these? So the... Texas one is, I would say, half done. We sold half of the lots already. And then for the Colorado one, we probably have four or five lots left. But then we also have some foreclosures. Some of the buyers just stopped paying. So we will have, seems to have a repeated property foreclosure from that. And then in Washington, we have seven or eight lots left. They are 40 to 50 lots each project, and the Texas one is larger, it's probably more. So we are all still processing those. One key takeaway is that we feel that one is there is a location and weather dependent. So because we have been running this project for two to three years, so we realized, for example, the Washington project. During the winter times, it would snow in and you can't get into the road. And at that time, we don't have any sales. So it would be a winter slowdown sale. Then we spend the time working on other projects. And then second is that if it's in a rural market, we typically see a pretty good initial sale. Because, for example, if no one is providing that acreage size in the market, then the demand is pretty high. But once the local demands are filled, then you will need to rely on the national marketing, finding buyers from maybe other states, other counties, other locations to that. The tail of the sales period would slow down compared to the initial first year, first 12-month sales. Sure. So it sounds like you're selling some of these with seller financing. Like what percentage of them sell with seller financing? and are you trying to make them sell that way or would you rather get cash or do you try to steer people one way or the other? We typically don't steer either way. We simply just offer seller financing. And I would say the market changed quite a lot. So at the beginning of those projects, I would say probably 40, in between 40, maybe about half would be cash and half would be seller financing. And then now, for example, this year, I would say this number is getting close to maybe 90% solo financing and 10% cash. So I would say the market changed quite a lot. Yeah. Okay. Are you asking a higher price? What kind of interest rate is required for these properties that you sell that way? We try to make it very simple. We just simply charge 10%. 10% was... Pretty high before the interest rate increase. But then our rate become very competitive after the interest rate increase. Now our rate is almost similar to a typical bank financing rate if the buyer wants to go through the bank financing. When did these projects begin? Like if you're midway or most of the way through, I'm like, how long has this been going on? How many years? In between two to three years that we have been working on this. When it comes to this the subdividing process, was there any genius behind how you decided to lay out the parcels or David Hansen, for example, episode 176, like he's got a lot of expertise in like figuring out the right size and the right mix and where to put everything based on the lay of the land and all this stuff. Was there a lot of thought that went into that or did you just hire a surveyor and said, hey, figure it out? Like, how did you? Usually we need to provide a lot of guidance to the surveyors because surveyors, one is the surveyor didn't understand your business model. And second is you need to look at profitability, in my opinion, is that what the surveyors is not able to provide. When we look at subdivide capabilities, the first thing we look at is the subdivide regulations for that county and also making sure that particular piece of property is not within the city limit. And I know a lot of land investors are not paying attention to the following particular point is, although sometimes the land is outside of the city limit, it's within the city's extraterrestrial jurisdiction, the ETJ. So the ETJ is an extension from the city, but it's outside the city limit. The land is in the county, but the city has a lot of saying when it sits inside an ETJ. Our Texas project kind of ran into that issue, but we got it resolved. It's that according to the city land use code, they have a saying on anything that's within one mile outside of the city limit. And our land, theoretically, is about five miles from the city limit, so we did not know. Until later, we checked with the local economic development office, then realized that our land sits right next to a county airport, but the county airport is considered part of the city limit. And the airport, from the airport extent, one mile would include our land. So the city was a little bit nervous with our development, but then we met with the county officials, we met with the city officials, and then finally the county said, oh, there's no problem. And the city officials, sometimes it's also the county officials, they agree that, yes, this would be fine. And then they they would divert the jurisdiction approval authority to the county and instead so that they kind of give up on their approval rights at the city level so but this is a very, important lesson learned point that we did not find out until we are we're pretty deep in the project for any of these three projects did you have to like build any roads or like add utilities to do any of that stuff or is it just a paper subdivide it would be a mix unless you sell to a builder, then the builder would buy everything and then you just sell paper supply. Ours is different because we sell to retail consumers. So we do need to have roads and access. So in Texas is our heaviest investment in terms of the project infrastructure. That particular project, I would say combining the land purchase price together with utilities installations. We spend probably more than 1.5 million dollars on it and i would say half of that is the infrastructure development that particular one we need to work with a local water company local electric company almost like listen to them and see what their requirements are in terms of the easement how it needs to be appear on the plat map appear as the, as the note section of the survey of the plat map to clearly say, hey, this much is for the electric company and the electric company is ABC company. And this much is for the water line and the water company is XYZ company. So it's almost like synthesize a lot of different requirements into forming that one single final document to be approved by the county and them because it's the end buyers, we need to lay out the roads and we need to have the electric company to build the electric pools, run the lines, and also the water company to run the lines. So that's a pretty heavy investment. When we look at the economics, when we are able to subdivide into three-acre lots versus five acres versus 20 acres. The per-acre price increase significantly in those price range. So we are able to do even better, even when it compares to selling at 20 acres, doing nothing about it. And this is the key part that, for example, the surveyor is not able to understand that the surveyor would not give you information about per acre price difference among different acreage range. And also the surveyor, they would know about the agricultural requirement, but how you would lay out the rows, how you would lay out the electric line and also the water line, they would need your guidance on it. So that's a lot of times this, for example, I would draw on Matt Wright how it looks and then... Take a screen capture of it and then send it over to the surveyor. And then they would complete the survey map based on that. So that's typically how we work. But then the Colorado project and also the Washington project, we only did a row. We didn't do any utilities installations for those. So those are easier, but also it's costly because they are a little bit further away from city center. And why not the utilities on the Colorado and Washington ones? They are too expensive to extend the lines there. So, for example, these days you can get pretty good solar panel batteries to run electric, and then you can do wells on the property to have water. And when people buy land in rural county parts, they would know to put in septic tanks is a pretty standard practice there. So those would just rely on self-sustaining utilities. And those are bigger parcels too, right? Correct, correct. The smallest one is 10. The largest one would be 40. I'm curious, and I know we're bouncing around between the three different properties, so it's kind of hard to keep it all straight, but if we just focus on the Texas one, for example, I think you said you spent about 1.5 million to buy it and do all those improvements and all that stuff. So what are you selling this all for? How much do you make on a deal like that for all of your time and effort and money that you have to put into it? Maybe a little bit more than three times or sometimes less. If who was around three times of our purchase price most of the time and then sometimes higher sometimes lower but this happens over the course of years and a lot of it sounds like it comes through seller financing so you don't actually realize all this profit for a ways down the road but that's awesome first of all but it makes me wonder and maybe you've sort of explained it already in some of the market research stuff but talking about 1.5 million like that's a ton of money especially when you're talking about development costs and like building rows and utilities and all this stuff. Like you got to be pretty confident these things are going to sell for the price that you need them to sell at. How confident can you get with that? And how do you get so confident? Like, is it just a matter of you only do this in markets where you know, land is hot and it just has a history of selling faster. Is there ever any doubt where you spend the money on it? It's like, I don't know if this is going to work. Cross your fingers. That's a very tough question to answer. Especially when you consider, and this is a very common risk for anybody developing anything is like the market can change, especially when you're talking about like three, four years from when you start this, when you finish it, like what if it starts hot? And then when you're wrapping up, everything just crashes and you can't sell these last properties. Like walk me through that. How do you get to the point where you're. Or are you just one who knows how to take risks and you don't let that slow you down? I would say a lot of the thinking is reflected in our way of handling that Texas project. First of all, we don't put in all the developments all at once. So for example, the Texas project, we cut it into three phases, essentially. So the first phase is, I would say, maybe only about 20% of the land. Then we go through initially we have the 20 10 to 20 acres subdivide and then we took out that 20 percent and call it phase one and then we use that to cut it into three to five acres and then we only do that small portion first and we our marketing energy our coordination project management are all focusing on that phase one and it turned out pretty good so that is a manageable size investment, in my opinion, to test out because at that time we were actively selling the 10 to 20 of the phase two and also the phase one, three to five. So we are able to see which one performs. And that gave us a lot of confidence to further converting the phase two into the smaller lots. And then we also have the one middle piece that is extremely difficult to subdivide. So that one, that particular one, we sold it for cash. That one is about 25 acres or 30 acres. That one we just sold for cash and we use that cash to reinvest into the project for the development of the phase two project. I would say it's a combination of phasing it in different phases and also cash flow management to provide that confidence and also being able to see, hey, all those phase one are sold pretty quickly. So that's the, I would say it's a discovery and reconfirmation phase. It's not saying, hey, we just know that it's going to sell. No, I would think that would be a gamble. not in my educated guess space. In addition, I also met with the county economic development office. So the economic development office, I did a presentation. I gathered the local real estate agents. I gathered the builders. So what I did is that I essentially just spent a day driving around to meet. All the surrounding counties and also this county to meet with the chamber of commerce to meet with the economic development office and say hey i'm going to host a land development project opportunity, for anyone that might be interested it could be a realtor it could be a builder it could be anyone, and then of the other local banks that they might be able to provide financing for our buyers And that's how I get a lot of local knowledge and market intelligence from that while I was doing a presentation. And essentially everyone was saying, oh, this market lacks three acres to five acres. This is great. This is something that this market is lacking and we need that. From that, we also happened to partner with a local builder. And the local builder constructed a manufacturer demo home on one of our road frontage lots. And that kind of builds up our confidence on that. That's awesome. That's a great idea. And on that whole note, when you're going through the due diligence process before buying a massive parcel of land that you're going to put a lot of money into. And you kind of mentioned a little bit of it. But what all do you investigate before you take title to it? Like the entitlement process, for example. Like, do you do that before you buy it or do you buy it and then do it? Hopefully it's going to work out or I guess I'll answer that question first and I'll keep going. Yeah. So I would say we always would know how we want to subdivide before we buy it. So using Texas, that example, even before the subdivide is into three to five acres, we know that we can subdivide into 10 to 20 acres. So that one is already no. And then when the margin is large enough, then the business risk is lower because then you can have a lot of error or margin that you don't need to worry about it too much. Before buying, of course, all the things need to happen. You need to know the county regulations. You need to line up bank financing. And I would also say the bank financing could potentially provide a second validation because the banks would also need to send their own appraisers to the property. So the appraisal report, normally when you're good in relationship with the bank, they would give you a copy. So the appraisal report, you can see double confirming your assumption. And then we normally already approach the county officials, city officials to talk about the subdividing plan before. Sometimes we even meet with the county commissioners, utility companies on the property before purchase closing. We also send the thought of the subdivide project to the surveyors to review. It's not asking him to produce a survey, but just double-checking, hey, does this design work? What do you think about this design? And when you work with a surveyor in a few years, keep giving multiple projects to that surveyor, they are very willing to help you with any questions you want to ask. Building local knowledge and the relationship and the local expertise, I think, is quite important for this scale of project. And also this kind of contradicting to a lot of the land educators out there that they would say, hey, this is, you don't need to go visit a property. For this kind of investment, you always want to go to visit a property. You always want to have your drone flying to every single corner that you can fly the drone to and walk the property because sometimes even the drone could not see some of the things on the ground. Um so that's uh that's quite different from traditional what land educators teach these days i would say i would almost kind of argue like i totally agree with you but what you're doing is kind of different from what land educators teach in that like you're not doing tiny little properties in the middle of nowhere these are giant value add projects you're like a developer so like the business model is very different from a typical land flipping course what that's going to teach you so even for example my i modify my my suv to accommodate that kind of visits property visits so i i have a hybrid suv uh so the hybrid part is able to power, uh a mobile signal booster that when you get to the suburban area that you don't have cell phone signals then you turn on the booster and hopefully you get one to two bars of cell phone signals. It's a hybrid, so you can power my laptops and charge my drones and things like that. There are a lot of thinking put into the logistics and arrangements of the tools or the utilities that you rely on. Maybe you answered this, but I just didn't catch it. So you do do your entitlements before you buy and take title? I want to clarify when you say do the entitlement, what does that mean in your context? Yeah. So land entitlements is basically the local municipality giving you permission to do what you want to do. So like taking the plans to whoever approves subdivis or like say, we want to put a road in here and lay the parcels out here, bring utilities in here. And them just saying, okay, you can do that because you could buy the property and they'd say, no, you can't do that. So, like, do you get that permission before or after you take title? We do the formal entitlement process after purchase closing because essentially you are not able to do that without being a property owner unless you get assigned with power of attorney in order to do that. So we do that. But what we do is that we run a, we will schedule called a preliminary meetings with the county and also sometimes city to see if they have general concerns of that and whether that would be likely to approve. So it's almost like a verbal approval, but not on paper. So only afterward, then you submit the proper surveys, submit the application, submit the application fee and supporting documents. Then they will only at that point formally approve it. Yeah. So you basically know it's not a formal approval, but like if there was going to be a problem, there would be a 98.9% chance you would hear about that before you bought it. Yeah, exactly. Exactly. me. Like when you look at all of the stuff you do before you buy in terms of due diligence and just the time it takes to plot things out. I don't know if you have to get the surveyor involved before you buy the thing to figure out the, the, uh, the subdivide and all that. But we just look at like the time, the money. I don't know if you're doing perk tests or geological investigations or any of that stuff, but like how much does it cost just to be able to say, yes, we're going to buy this? Like, how much could you possibly spend? And the answer is no. We're going to walk away from this deal after we wasted X number of dollars doing due diligence. For the ones we are seriously interested, we haven't walked away from any deal. I want to clarify a little bit more about how we spend on the surveying before closing versus after closing. So before closing, we will send the surveyors to do a boundary survey, not a subdivised survey. So it's just doing a survey around the whole boundary without any subdivide lots inside. And that part is before closing. But then before closing, we send the plan to the surveyor to review, to get his official opinion, professional opinion. And only after closing, then we will send the surveyor to do a second time to stake and mark the individual lots. So that's different, slightly different. On the initial boundary survey, usually it's not expensive as the subdivide survey, the planning process. Then the money we would be locked up would be the earnest money and also the option fee. Essentially, those are the three costs that we would be looking, option fee, earnest money, and then the boundary survey. At the purchasing of these three projects, at that time, we were relying on the MapRite's soil map to understand the soil composition. And then we walk and fly the drone around the property to check the topography. This will work in most of the Texas, Colorado, and Washington regions. But there is, for example, in Tennessee, this would not work because Tennessee, a lot of times you require a soil study to be done for the soil PERC test. So that's, I would say, it's state specific that is not going to have one single answer that fits all. It's a little bit difficult to get all the information in one single answer. Just thinking about perk tests in Washington, I know that can be a bigger issue there than probably, I mean, it depends on what part of Washington we're talking about, what part of all these states, really. And also the size of the land. When the land is large enough, you don't really care about the perk test. And like, are wetlands a thing you have to think about in Washington? Oh, we don't buy wetlands and flood zones, so we just don't touch those. But it's something you look at, right? Like you had to look at the maps to verify? Yeah. Okay. Were there any wetlands anywhere on that property or wasn't part of it? Yeah, there were multiple wells in that property. Not sure about the condition, and we try to understand it, but in the due diligence process, we don't go into individually testing whether each well works. We just count the wells and see visual inspection, I would say. So you're saying there were existing wells on the property? Correct. Why were there wells there? Was it used for farming or something? It was used for cattle ranching. Okay, gotcha. Yeah, that project has a very interesting seller. And the seller took on multiple roles throughout this project. That seller was the seller and then he was the old county appraiser. And then he's also our rancher. And then after he sold the whole property to us, he repurchased from us at retail price one small lot. So he became our buyer. And then he put a house on it. So he became a developer and sold that house then package to someone else. And then he got his real estate license. So he became our realtor out there. So he took on so many different roles with that. We are in very good relations with that seller. Oh, that's awesome. I wish we had like 10 hours to talk. I feel like with each of these projects, there's so much stuff we could explore to understand how each deal works. But it does make me wonder if you found three of these things, these massive subdivide projects that took millions to do and you're making a lot on them. If you wanted to reverse engineer the process, say if your goal was to do five more of these huge things in the next 12 months, could you do that? And if so, like how exactly would you do it? Like how much mail would you have to send? Like how much money do you need to have lined up? How would you find the banks? Like if somebody wanted to make a point of like, I'm going to be Zing and I'm going to be him times five. How would they pull that off? I would say it's possible, but not without challenges. Can I imagine? I think the finding the deal part is not the most critical, challenging part, I would say, because we use mailers, we use cold callers, we also actively look at listings, MOS listings, or LensSearch, or whatever. So it's a combination of different channels we would be able to find deals. How did you find these three? Was it MLS or was it like mail? So the Texas one is through a regular mail. The Washington one is also a mail. And then the Colorado one, it was just listed on MLS for a very long period of time. And then I gave a local offer, they accepted it. And that turned out to be ours. In terms of percentage-wise, the Colorado deal was like the highest ROI in terms of percentage-wise. Then the most challenging part, I would say, is related to the pre-development and also pre-purchase and also post-purchase. So pre-purchase is the due diligence part, and then the post-purchase is the project management part. When it gets to this scale, we have a very small team, so we are not able to manage that many projects actively. And also because we provide owner financing, so we have buyers defaulting, we have buyers requesting payment extensions, that kind of things. So the daily operation is a little bit hectic. In terms of the project management, I would say the project management is, in coordination with the surveyor, coordination with the utility companies, coordination with the local contractors to build the roads, to lay out the electric lines, water lines, and then coordinate the marketing side to have photos, drone shots. We also use 3D modeling to build a 3D model around the LAN so that people can actually visually see it, and video production for the LAN, and then doing all the listings in different platforms. At the same time, need to comply to MLS listing requirements. And after marketing, it would be the sales and closing. So we don't use LAN contracts. We always use a deal of trust. That whole coordination with the with the closing coordination, contractor coordination, utility company coordination, those are the part that involves a lot of time. And then managing the loans and managing the borrowers is the time that requires. So getting back to the question, I would say, yes, it's possible. But then you would need to understand different states, local requirements, regulations, and et cetera, in order to do that. And also during the time that you have the due diligence period, the most challenging part is actually getting some of the utility companies to respond to your questions and things like that and to keep following up on that. Do you think there's a lower competition for these huge thousand plus acre properties? And when you think about it, it's not something just anybody can go after. I mean, I guess they could go after it, but they would have to either have the money or have a funder who's willing to do it or have a bank lined up or have a seller who's willing to finance it. like there's a lot more to it than just buying a five acre desert square. So like it would make sense if there was a lot less competition. Is that accurate? I would say on the buy side is less competitive. Simply due to the size, but once you cut it up into smaller pieces, then you are competing on the same level ground as the other people selling in the nearby locations with similar property features. Most likely, your cost structure would be better than those other sellers. So that's the advantage of buying a large. And also, you don't need to buy as many transactions. We have very few purchase transactions throughout the year. And then we are able to continuously work on those large projects for a longer period of time. So your buying transactions will be smaller, but then your selling transaction, I would say, is about the same. But you probably have a little bit more of the branding recognition. We don't flood the market with all our available lots, But we put, say, different combinations, three acres, five acres, eight acres, 10, 20, 30, 40. So we come up with different combinations, and then it would have multiple listings on the listing platforms and MLS. And that kind of builds credits and credentials to the buyers that, hey, these guys are pretty big sellers in that region. So those would be the benefits. But in terms of pricing, I would say it's selling price. I would say it's probably about the same. Are you using realtors to list and sell all these things? It sounds like you are in the Washington deal, but what about the other ones? In Colorado, we don't need to use realtors. Marketing is effective enough to sell the lots. In Texas, I'm a licensed realtor myself. I just got the license earlier this year. So I'm using that to the maximum advantage. What I did not know is that I need to sign up for multiple regional MLS listing services individually to be able to get it listed in Houston area, to be able to list in Dallas area, Austin area. So I went through that process, a very interesting process. I don't know where in Texas this big project is, but does it make sense to list it on the other side of the state if it's on the other? My thinking is that when I look at the buyers, we get maybe for this particular Texas project, we have maybe about 30 to 40 percent that are out-of-state buyers. So I would think that the most effective way would be, one, hitting all the Texas major metropolitan. And then second is to list it with the national platforms such as Land.com, LandFlip, LandSearch, and attract the national buyers that way. And it would be a combination of both. I guess maybe I don't understand how it works but I would think if you could get it in the region where it is and then it shows up on Zillow or Redfin or I guess land.com, maybe that's a separate thing, but it's like if you hit those. Like, why would it make sense to go to regional MLS on the other side of the state and put it there if people could just see it on the national platform? Yeah, the answer to that is probably realtor behavior, I would say, because realtors, they don't look for, they don't look at, or very few of them would look at land.com, land search, land flip. Those websites are more designed for consumers. And even, for example, Refine and Zillow, realtors don't use that as much. What Realtors use is the local MLS because they can get the most accurate information there and then get the most information there. So for example, in the MLS, there is a box called Realtor Commons or Agent Commons, Listing Agent Commons. So that's where a lot of additional information that is not available to the public is showing only to the people looking through the MLS. So a lot of valuable information the listing agent will be able to put there that is not available to the public. So I think the realtor behave that when they have a buyer interest in something, they always look first to the MLS. And we generally require a few sales from the MLS that way. That seems like it would be a goldmine of information. I don't know how often realtors put comments in there or what they say exactly, but I can totally imagine you would see stuff there that could be game-changing in some cases, if there's some material fact about a property that you just wouldn't know any other way. Yeah. And the second part is because Texas is a non-disclosure state, only realtor is able to see the actual selling price. That is another piece of variable information that's just simply not available to the general public. There's actually going to be one of my questions was... What made you decide to become a licensed realtor? And like, has it ended up being useful? It sounds like it has been useful. The reason you decided to do it in Texas, is it because it's a non-disclosure state and because you have a huge deal there? Like, is that ultimately what pushed you to do it? Or why not just use an existing realtor and get information from them? We have tried using local realtors and developed some good relationships with local realtors as well. But it's quite different that when you have a full access to the MLS listing system inside to be able to do your custom search, to be able to look at this and that, the access to data and access to information or market intelligence, I think, is quite different from having access to a realtor friend. And the realtor friend is not going to be able to keep sending you, hey, I want to look up this quick search. And also, sometimes you don't even know what you're looking for. And a lot of the times you find the answer by trying different search and different conditions, different filters in order to find what you look for. So I would say it's quite different than just having. And also, what I noticed in the market is that most of the realtors, they are not specialized in land. One is because it's the lower value compared to housing. Because housing, if you sell a typical house of, say, $300,000 house, you get a commission check for $10,000. But then for land, not many land properties would be higher than $300,000. dollar value. So it kind of filters out a lot of realtors consider land as being a lower priority, not as productive in terms of commission earned. So they would not prioritize their time and energy on land listings. So that's what I see is slightly different than, for example, our listings on MLS would be like the highest quality of land listings for the regions that we were working. So that's slightly different. Being in Colorado, in Washington, you have no plans to become a licensed realtor there, right? Colorado, probably, yes. Another main reason is because I live in Texas. It's kind of a resident of Texas. So you kind of have to go with that state, maybe. But then Colorado has a reciprocal licensing agreement with Texas. Is that after two years of me being active in Texas, then I can apply to become a realtor with less requirements, less examination to become a realtor in Colorado. So I might do that. So that would be something maybe in the future. Sure. Okay. I don't know about Washington. I haven't researched that one yet. Has it been a negative thing in any way, shape, or form? I know sometimes I hear from new land investors who are realtors and they're worried that them having to disclose to people that they're a realtor is somehow going to hurt them or, I don't know, be a negative thing. Is that a concern or a problem ever or is that not an issue at all? I would say probably there would be some disadvantage on the acquisition side. If you use mailings or cold calls, there would be some disclosure requirements. But then there is also a positive side on the acquisition is that if you approach the listing agent as the buyer and say, hey, I am a licensed realtor representing a buyer, which is my company. Uh and and then they they take you a lot more serious because uh that well the way i have my initial engagement script uh is to tell them hey i'm a licensed realtor my license number is this and um i have a buyer interest in this property with the mos number and then with the property address etc and then i have the following questions i i go straight to a point like i no realtors want to waste energy in. And then by looking at the questions, they know whether that's a serious buyer. They know whether they are dealing with an educated buyer and then it's going to be a smooth transaction. It could be a tough negotiation, but their ultimate goal is to be able to sell and earn a commission. So the positive point is that the listing agent will take you more seriously. I was wondering, with these three big subdivide projects we've been talking about, is it ever distracting or does it ever make it difficult to work on those while also pushing forward the main acquisition machine where you continue to find new land deals? I know I found this when I was building my storage facility. It was just such a big thing on my plate all the time just to work through it. It was very easy to get distracted by that and just spend all my time on that and sort of drop the ball and keep other initiatives moving forward. Is it ever hard for you or do you have systems in place that just makes the acquisition machine continue to work? That's a part of the weakness I might need to improve on. The way I feel our business is running is that sometimes the acquisition focus is heavier and sometimes the marketing and sales focus is heavier. It's not, at this point, I don't think I'm able to balance it pretty well. That is like be able to keeping an eye on both sides, 100% attention at all time. That might be something that I need to work toward to improve on. Yeah. And even like the emotional investment that goes into a deal when nothing has even happened yet. You're just like doing the due diligence and like putting it all on paper. And you start thinking, man, if this ends up working out, this is going to be amazing. This is going to change my life. Like everything's going to be different. But they haven't even accepted the offer yet. So it's just, I guess what I'm asking is, how do you balance that or do you balance it? Like, is there a way that you can kind of mentally keep yourself in check and say, hang on, Zing, like you don't have anything yet. Don't get excited. That we do. I use Airtable quite a lot. So Airtable will be able to keep track of, all the potential deals and I build calculation formulas a little bit toward the end. Essentially it kind of helps me to rank it, prioritize it, and then I set status to different stage of the acquisition or different stage of the due diligence. So with that, it's quite easy to kind of have a mental knowledge about how to prioritize different projects. And to me, If you ask me that, I would say the number one top priority would always be marketing and sales, because without that, you don't generate profit. Do you mean on the acquisition side or on the disposition side? On the disposition side. The top priority would be on the disposition side, and then would be on the acquisition side. Because acquisition side is, in my opinion, is less market dependent in acquisition. You are not going to stop buying because Washington is in winter. It might actually be a good timing to buy in Washington because no one else is buying, so your offer price can be lower. During tax season, it might be a good time to buy as well because when property owners receive their property tax bills, they would think, oh, maybe I should sell it to have some cash instead of paying property tax. All my thinking is that acquisition, I can have much better control of the cycle, of the speed, how fast I want to run it. If I want to run it, I spend more time looking through MLS deals. I spend more time to get listings out, the mailings out, have more phone calls, and et cetera. It's a lot easier to control the speed on that side. But on the disposition side, in my mind, that is more market-driven and also location-driven. So that's why the priorities should be putting on the marketing and sales side a little bit more. What has been the hardest part of this business for you? Is there anything that, Like you just, you hang your head every time you have to deal with it or just, you can't stand this or is there anything coming to mind when you think of like, this is just really difficult day to day or month to month for me to deal with this particular aspect of the land business? And if so, like, what would that be? I don't have an answer about that. No problem. Maybe there's nothing. That's awesome. I didn't even think about it that way. I mean, that's probably to your advantage. I mean, maybe you're one who just doesn't get discouraged by stuff. Like when you encounter problems, like you just work through it. You don't just like fall into this pit of despair. It's like, oh, I can't do anything. Woe is me. It's more like, here's a problem. Let's methodically get through it. I think that's an awesome mindset to have. Oh, thank you. So like, what's your long-term plan for this? Like if you fast forward five years, where do you think this is going to go? Or where are you trying to make it go? This is something that I hope to achieve, but I don't know if it's going to work. So it's hypothetical. One is that I'm hoping that the land business side would be able to get to higher value properties. So essentially, our team could do a smaller number of deals, but then doing higher value properties. We are slowly moving toward that direction. So some of the listings are getting to $100,000 to $200,000 range on the selling side per lot. So I'm hoping to have that progression and improvement on the land business. I'm also exploring the potential house plus land package. So, for example, in our Texas project, we are partnering with a local manufacturer builder there to put almost like a demo manufactured home on our lot. And we have a second Texas project. The benefit for that builder is that he's able to sell more manufactured homes and is on a ready-to-sell location. So he's essentially selling a whole house instead of individual manufactured homes. And then he's also interested in going with us on the second Texas subdivide project. That might not be the correct term, but it's another, it's not second, it's another Texas subdivide project. That seems to be a pretty good selling point. And also with that, I'm exploring the potentially to bring manufacturer. Capsule homes, they will be considered modular homes in the U.S. And potentially import those into the U.S. market to sell. So the installation would be extremely easy because it's pre-view in the factory and then it would have a crane or a forklift to just put it on the land, connect the utilities, and that would become an affordable housing solution. So because when I talk to various different economic development offices. This is their major concern in the local government authorities that they keep emphasizing, hey, why don't you guys look into affordable housing solutions for our city, for our county, for this nation? That seems to be, could be potentially a good solution to provide affordable housing to the market. But there are a lot of things that need to work out, such as building codes, how to provide financing for the buyers, etc. So that could be a second business line I would be interested to explore. But it's very early on. And then the third business line might be listing service. My team has developed a pretty good process, mechanism, and also the system behind it to be able to take on outside listings, other land owners listings, to sell through our marketing channel. And I feel that that's a pretty big advantage compared to using a traditional realtor. All kinds of knowledge about selling house, but not necessarily selling land. So that could be a differentiator on providing the listing service to others. So those are three things that I have in mind in terms of growth. There's a whole lot we could talk about right there. I did have a couple other questions that I forgot to ask earlier on, quickly touching on those three big subdivide deals. So I know you said you got bank financing on one of them, the Texas one. The Texas one, yeah. Why not get bank financing on all of them? Like, why use investor funds at all? Like, is there something about the Texas deal that got the bank comfortable that banks would not be comfortable with on the other ones? Or is it just a lack of the relationships in those other markets there? So I would say definitely, yes, the lack of the relationship. And also, it also relies on the individual banks' risk tolerance and preference. So, for example, our main business bank is Chase Bank, but Chase Bank has a national level policy that they don't get involved into real estate transactions, period, with the exception of a typical house mortgage and also homeowners line of credit. So those two are the only two that they would get involved in any real estate transactions. And other than that, they don't do loans with real estate companies, no matter what. So it's almost like a national level policy. That's why a lot of people I know who use banks are using the local ones, because they just, you know, they seem to have a different set of glasses on when they're looking at deals than a national bank would. Yeah. And banks and mortgage companies, they are regulated at the state level. So each state, you essentially, unless they get multi-state licensing, then they could only work in certain states. So for the smaller banks, they are not typically multi-state operate. Then you would have to work with the individual local banks in that state. And then the Colorado project, I initially drove through the nearby towns visiting, I don't know, five or six banks altogether. together. Only one or two show interested, but then later decline, so we don't have good options, banking partners there. One is that they tend to do business with the local companies, and then they also tend to avoid doing land deals or real estate deals in those regions. They tend to favor, for example, loaning to companies in other industries. Washington is a special one. We just have some investors line up that interested and then we didn't really, spend the time to research on bank options so that was a different different approach i know going way back to like an hour ago when we started this conversation you mentioned doing rv lots and it sounds like sometimes you develop them and sometimes you don't is that accurate i'm just wondering like when and why would you decide to develop it versus not like why not just develop everything if that's what it's going to be used for i would say it's related to the investment we want to put in so for example uh some of the things can be do all at once in scale when is it makes sense so for example lot clearing uh so we we do multiple lots clearing all together that would be the ones that getting rid of some of the unwanted trees bushes then if it makes more sense to do multiple nearby lots all together at once but then the individual So the individual electric connectors, water tabs, and sewer connections is sometimes not necessary to have that scale of economy. What we do is that we would create differences of varieties. So one single lot that's unclear, undeveloped, is cheaper. If you are a handyman yourself, you can do it yourself to have everything done. And then a developed single lot with all everything done would be priced higher. And then we have a double lot unclear and then a double lot clear with all utilities. And those are the four combination listings that we always have to sell so that when we sell one, then we just get another one ready for that particular month. Think of it as like a housing model with different options. So that's how we approach this is some of them make sense to do everything. Some of them, they don't. Awesome. Well, Zinni, we could keep going for a long time. I have so many more questions for you, but this is already getting a little long. So I'm going to wrap this up for now. Maybe we can have another conversation someday. But in the meantime, if people want to find out more about you or connect with you in any way, you're not obligated to share anything. But if you wanted to, this is your chance. How would a person find out more about you? They can go to our website, len.elekman.com. So I have a hat here that says elekman. So it's len.elekman.com and then go to contact us section. And then that way I would be able to receive the message directly. Elekman, is that a native word or is that a real word? That's E-L-E-G-M-E-N-T. Yeah, I created that word because it's, so it's, element as the original word as in soil, in the ground, the floor. And then I added a G in the middle. So to make it this thing, and then it helps with our search engine optimization and no one is going to register this domain and no one is going to register this trademark, that kind of thing. So it's going to be a unique name. Yeah, you got a great looking website. Oh, thank you. It's great to talk to you, as always. I'm glad we were able to connect this past year at RubeCon and hang out in Italy. Had some great times together. Appreciate you doing what you're doing and sharing your knowledge of the land community. It's clear to me you know a whole lot more than what we got into here in this conversation. So Zing is a great guy. And again, thanks, Zing. Appreciate it. Yeah, no problem. The show notes for this episode, I'll have links to Zing's website and a handful of other things we talked about, the transcript, all that stuff. Just go to retipster.com forward slash 214, because this is episode 214. And also, Seth, yeah, we are going to see you at the R.E. Tipster Inner Circle. That's right. That's going to be in Grand Tetons this year. That's our next thing. Last year, we did Italy. Now we're doing the Grand Tetons. We thought we'd do something more domestic this year. It's going to be a lot of fun. I'm looking forward to that, too. Sounds good. All right. Talk to you later, Seth. Thanks. Bye-bye. Thank you.