Land Investing in a Recession: Truth Bombs

245: In this episode, Neil Clements and I dive into what’s really happening in the land investing market right now. We’re seeing big shifts, land investors are quitting, wholesalers are down 90%, and many are asking, "Is this business still worth it?"

(Show Notes: REtipster.com/245)

We talk through:

• What’s changed in the last few months
• Why land deals are harder to come by
• How elite investors are adapting and still thriving
• Lessons from our private mastermind in Wyoming
• Whether or not we’re already in a recession
• The action steps you must take to protect your business now

Whether you’re feeling stuck, unsure, or ready to level up, this one’s for you.

📊 Manage Land Deals Like a Pro with Stride CRM
Built for Land Investors! Organize leads, track deals, and close faster

🔎 Land Portal: The Data Edge Every Land Investor Needs
Get the Data You Need to Find Deals & Make Smarter Land Buys

🙋🏻‍♂️ 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

...

Transcript

0:22

Hey, everybody. How's it going? This is Seth Williams and Neil Clements. You're listening to the REtipster podcast. This is episode 245. Show notes for today can be found at retipster.com forward slash 245. Neil and I are doing our quarterly market update for land investors. We kind of discovered about a year ago, we thought this was kind of a good idea because the market was changing a lot and things continue to be challenging in one way or another. This is a great opportunity to just sit down and discuss for your benefit and ours, what we're both seeing and what we think is happening and just observations of the things that we see firsthand and also just the anecdotal things we hear from many other land investors in the market. And this is something that can be pretty hard to zero in on because there are many different markets throughout the country. What's happening in one state may be different from what's happening in another, but there are certain macroeconomic and political things that affect all of us. And to the extent that we can, we want to try to address that stuff and not necessarily make predictions, but at least try to make sense of what we see happening so that hopefully you can identify and benefit from this as well. So Neil, welcome. How's it going? Hey, man. Thanks for having me again. It's always a super big blessing to be here. And I'm honored every time I get to do it. I'm honored that the community wants to listen to us banter back and forth about the economy and other things going on for maybe the next hour, potentially. But what I want to really talk about today, so in the Facebook group, the REtipster community, I've been seeing a lot of people talk about, is land investing still competitive? How many investors are left in the space? So I want to hit that. I want to hit some lessons from this mastermind, this awesome mastermind that you just through in the Grand Teton Mountains in Wyoming. And there's some pretty cool things to take away from that. I want to hit, are we in a recession? And if we are, clue about what I'm going to talk about, then how does that impact our businesses and what we're doing? And then lastly, I just want to talk about the action steps we need to take based upon this current economic environment that we're going into. So that's what we got going today. We're hitting a lot of different topics, but I think it'd be super valuable for y'all to tune in. How would you describe the state of land investing right now, just in a nutshell? What are you seeing? What's new over the past few months since we last did this? I would just say that. We're coming out of one of the hardest markets and maybe still in one of the hardest markets for real estate investors that I've ever seen. And that's just not me saying that. That's other people that I'm following, other real estate investors saying how hard it is right now to do this business. So the first thing I want to tell everybody listening is that if you're still here, congratulations, because it has not been easy. And the work that you did is what got you here. I heard on your podcast the other day, I forget his name, I'm sure you'll remember, but it was a CPA that you interviewed. And he said that 40% of his bookkeeping clients, and he mainly dealt with land investors, had dropped out of the business in the last 12 months. That really took me off guard. That was very eye-opening to me. Another stat that I saw is I was at a mastermind in Dallas a few weeks ago. And at the mastermind, Batch Leads, which is a leads provider, commissioned a study on their target market, which was wholesalers that they sell data to. And they did a study on 2021 wholesalers versus 20, 25 wholesalers and the number that are still left. And they found in 21, there were 90,000 wholesalers. And they found in 25 this year that there were 12,000 wholesalers left. And this was like a full commission study. They said it was like a $50,000 cost to even do this study. And so I believe the results of it. And what that means is that 90% of wholesalers left... And this isn't just land. This is real estate investing in general. 90% of wholesalers left the business in the last four years. So I guess my question, and Seth, you can speculate on this if you want, but if 90% of wholesalers have left the business, And potentially from the CPA sample size, 40% of land investors maybe have left the business. How many people are still even in this? It's one of those things that's hard to zero in on because it depends how you define still in this or like, what is a land investor even? Like how many deals per month or per year does it take to be considered in the game? And on that note, I don't know what the exact answer is because some people treat this like a money-making hobby. Others treat it like this is it. Like this is the whole thing and I'm going to make millions from this. So there's a huge range of what people consider active. But I will say in a lot of the discussions that I've had with people, the answer seems to be I'm either still 100% all in this and this is my only thing, or I'm kind of just taking my foot off the gas right now. Like I'm not really doing it. It's not that I'm out. I haven't quit in my mind. I'm just sort of sitting on the sidelines looking at what's happening, which in my mind kind of equates to I'm not doing it. Even though they haven't like mentally checked out, like they're still ready to jump back in at any point, but they've just seen how much more difficult it's gotten. And so they're like not really willing to take the risk. And I don't think there's like a right or wrong answer. It's just a personal decision on what you want to do. But in terms of, you know, the actual competition and how many people are like legitimately in competition with each other, I think it's definitely a lot less. But the ones that are still in it, they've all kind of come to this realization and acceptance that like, if this is going to work, we need to push really hard. Like, this is not something that you can just sort of passively, I'll send out 500 postcards this month and I'll get a deal. Like, it's just not the world we're in anymore. They recognize, no, we got to do like tens or hundreds of thousands at a time to get a few deals. So while there may be fewer individuals or players in the game, that doesn't mean the volume of marketing has necessarily gone down that much, depending on which markets you're in and whatnot. All the specifics of that investor, but that's kind of what I've been seeing and hearing. But what are your thoughts? No, I agree. I mean, it's almost like there's a saying that it's either life is like a heck yes or heck no, there's no heck maybe. And so I think that's kind of the same thing for real estate investors right now is that the heck maybes or the people who were just trying it out, it seems like they might have left the industry or gone and done other things. And the other people might've said, heck no, but the people who were still heck yes, are taking extreme market share right now. Their businesses are still growing. And we're going to talk about that here in a few minutes about what I saw at a mastermind that we went to that you put on. Before we get into that, though, I mean, I can't reiterate enough that if you're still in this game, like I seriously, I applaud you because it has been really, really difficult. And the business worked because you worked. And so I've seen some questions come up again in the community of like, is it a good time to start land investing? Will it work right now? Is it still a good investment? My perspective is that it'll work. This business will work if you work. But what a down market, which we are in right now, does for land investing especially. Is it increases the risk of land investing because there is no plan B. If you cannot flip the property, you cannot rent it, you cannot cash flow it, there is no plan B. And so it increases your risk. And so the hobbyists don't want to take that risk anymore. And then secondly, it just makes it so much harder to do this business for somebody coming in and just trying it out. And so, like I said, it's land investing works when you work. And also if you can continuously buy properties at 50% of market value, heck, even 30% of market value at some lower price ranges, this business will always work as long as you choose the right markets, the right properties, and you know how to sell properties. And so that's my perspective for anybody listening on this, is that this business works if you work. And if you can buy properties low, you'll survive. A couple of thoughts on that. So for those who want to get in here and just try it out, the difficulty I'm having with that in my mind is that that's how almost everybody starts this business. Like nobody really knows if it's going to work. Unless maybe you're a household sale, you might just kind of understand it and have a natural understanding of how things work. But if you've never really done real estate or never done land, there is an element of like, I am just trying this out. Like I need to prove the concept of myself first and then do it. So basically what I'm hearing is like, it's just going to be a lot harder to prove the concept or you just need to have a higher tolerance or threshold of trying it before you actually expect to see a deal. And it's a very different set of expectations than what has been preached by the gurus for so many years and that some of them continue to preach. Realize like people who say this is easy, they have something to sell you and they have something to gain from you thinking that it's going to be really easy. But just understand, like, it's just a different ballgame right now. Yes, it is. And let me define try. So when I say somebody try it out, of course, like you said, you have to red light and green light. Like you have to try something out. If you've never done it in the industry, of course, you're going to start new. When I say try, I mean, send 100 mailers and then never send mailers again for a year or hire a cold caller for a month and then say, oh, I gave it a shot. You've got to realize that this real estate investing game, like you've got to give it 12 months. Like you got to give it six to 12 months of consistent marketing. You've got to put some money toward it. And if you're not going to put some money toward it, then you've got to put some time toward it. The people who are trying it out, in my opinion, who are failing are the ones who are doing inconsistent marketing. So that's probably a better definition. Another thing to note, and I've actually had this with several people who have told me that this year has been like their best year yet. And two episodes ago, episode 243, Quinn and Trivoo, they were telling me how they've bought more land this year than ever before. But whenever you hear stuff like that, you have to understand, OK, what's going on? What are you doing different? because you must not be doing what everybody else is doing. Like there's gotta be some uniqueness to how you're going at this. In their case, what they're doing is buying entire land businesses from other wholesalers who are like getting out of a market or getting out of the business altogether. So they've got a huge portfolio of either notes or of these that they just wanna offload to one person. That is a unique thing that most land flippers are not necessarily doing. Some of them might be, but it's kind of like a little niche that they carved out for themselves and they've done it like 10 or 20 times now. So, you know, when you hear somebody say they're doing really well, I guess, first of all, realize it is still possible to do really well, but also realize it's because there's something unique there. Somebody's thinking outside the box or doing something different than what the masses are doing. 100%. And I'm going to go ahead and segue into Wyoming. I'll tell you all about the trip here in a second, but that leads perfectly into my first aha. So I was in Wyoming with Seth and like 12 other land investors last month in the Grand Teton Mountains. We got to hike, we got to mastermind. And I just say, Seth, I'm so appreciative of you and Dave because the quality of that room and the people that you brought together, like mostly high six figures, low seven figures land investors, the quality of that room was fantastic. Let's just say that. So I appreciate you and Dave for putting that on. And also the fun was awesome too. Had an absolute blast, built lifelong memories with that. But what I wanted to share is through our mastermind sessions and through our hot seats, there were a few different ahas that came out from this group that I really think is relevant for today's market. And the first one that I have is that the biggest land investors in the nation can struggle at times. But they don't die out. And that was a lot of what we went through in these hot seats, which if you don't know what a hot seat is, is somebody sits basically in the center of the room for 30 minutes to an hour. They tell you about their business. They open up their whole business to you transparently. You ask them questions, they ask you questions, and then they have topics they want mastermind on and they want feedback on. And so it was a continuous improvement. And the really neat thing that I saw is that exactly like you were talking about that investor that you met with doing something unique and cool is that the biggest land investors in the nation that we met with in response to these difficult times, they don't just die. They go to different markets. They create different marketing messages. They continue to lead generate for the business. And maybe like you said, they go business to consumer or business to business. Maybe they go from different city to city, county to county, state to state. Maybe they change from buying cheap lots. They double their price. We talked about a lot. Maybe they go to subdivides that to start that niche. And they just don't worry or fret about the market that's coming because they know and have the confidence that they're going to be able to do whatever it takes to survive. And so that's what I see from the investors that are winning and growing their business versus losing right now is that they're pivoting and they're growing their business. Number two is that if they do buy a dud property, and if they're going to lose money on it, they go ahead and take the loss quickly and they reinvest the capital. Because successful land investors realize that that there is no way to make money on every single project that you take on, that you're going to have some losers, you're going to make some mistakes. And so when you do have a loser, sell the property quickly, get out of it so that you can continue to have the capital and scale your business. So that's number two, consistently. And that was a huge aha. I think Dave Denniston mentioned that to me. And he was just like, you know, Neil, like get rid of the losers, move on, reinvest the capital. This business is about velocity of money, not necessarily making money on every single project. And I thought that that was great wisdom. That is great wisdom. I'm wondering though, what do we consider a loser? Is this just something that doesn't make as much as you thought it would? Or is this like you're losing a ton of money? Or how do you identify, okay, this is officially a loser, cut and run from it? Yeah, I think everybody has different definitions. And so whenever you ask me what a loser is, my average purchase price is probably three to 700,000 and try to double out of that. And so my time on market is very long, like six to 12 months. And so if I've held the property for say nine to 12 months and it's not moving, I've done several price reductions. I just can't get any momentum on it. That's probably a loser, right? And we're going down on price to where we're starting to lose money. That's a loser. As opposed to people who are buying cheaper lots, 20 to 50 to $100,000. Which probably makes up most land investors businesses. I mean, if you're holding that property for more than, I don't know, six months, four months, especially if you have funding or some kind of partnership there where you're about to lose your investment in it, then that's a loser. It's time to cut the price. It's time to get rid and it's time to reinvest the capital. Because the reality is, is that for most land investors, like I said, it's about velocity of money. And it's about getting the money back quickly so that you can deploy to get into an asset versus maximizing and getting every dollar from every property that you do. Different land investors operate differently, but in general, the faster you can turn money, even if you have to discount a property, especially in today's market, that's going to be better for your business than holding a long-term. Yeah. It's always such a weird thing because I know I've had this before where I just get kind of cold feet. Nothing's actually wrong. It's just going to take longer to sell the thing. And so I just start arbitrarily lowering the price just because I want to see action. I want to see the thing sell. I'm like, I didn't really need to. I just had to be patient. So that's why I think it's an important thing to just figure out, like, how do you define a loser and when is it appropriate to... Get out of there. Yeah, I hear you, brother. The last thing I'll say about the Wyoming trip is that successful real estate investors, again, like the upper echelon, realize that they need other people to mastermind with, to network with, and realize that they need a community of people that can help them get to the next level. Everybody in that room came and shared transparently. Everybody asked for advice. Everybody, even the big earners, the people with 6 million, 7 million, even approaching 10 million next year size businesses, which there were people in the room with that, they also had struggles. Everybody has levels. Everybody has struggles. And the craziest thing is that even some of the biggest people in the room had some of the simplest problems to solve. And the tough part is whenever we're running our own business, we have blinders on. We can't see and we can't take them off, but we need other people around us to actually take those blinders off, to speak into our life, to give us coaching. And that's what the inner circle did for me and really everybody else in the room. So that, yeah, man, that's, that's the takeaways. I mean, three huge takeaways on what people are doing in this market to succeed, what the successful ones are doing. And after the mastermind, like I just came back and I don't know, I don't know about you, Seth, but I was just like on a perpetual high the whole time we were there, had a blast and really appreciated everything that you and Dave did to put that together. And I came to you afterwards and I said, Seth, like, we've got to do this again. We have to do this again. We need to go to a new place. We need to do it in 2026, especially in a time like this where the community needs it. We need to come together and do this. And so I don't know if right now is the appropriate time, but do you want to share about the mastermind that we put together for next year that people can apply for? Yeah, absolutely. So Neil and I are renting a huge VRBO mansion in the Smoky, We're going to spend four days hanging out with a handful of other land investors. You can find all the details at retipsterinnercircle.com. I'll include a link to that in the show notes. Again, retipster.com forward slash 245. But it's going to be a very similar vibe, very similar idea to what we did in the Grand Tetons, where we're improving each other and trying to figure out how can we run our business better? How can we get unstuck? And the reason we picked Pigeon Forge, Tennessee area, there's a ton of stuff to do there. We're also going to be sharing meals together. We're going to be doing fun activities together. It'll be the kind of trip you can actually make memories from that you'll remember years from now. And if you've just started your land business like yesterday. Then this might be for you if you can actually do a handful of deals before then. But it's intended for people who are doing a reasonable amount of volume and they have a legitimate money-making business. We want to have it be a group of relatively experienced people who can bring experience to the table. Yeah, it's going to be awesome. Again, retipsterinnercircle.com. What you're going to see there is a little video, some information explaining it, but there's also a button that says apply now. The reason you have to apply is so that we can make sure we understand, are you a good fit for this or not? So you can start by applying. And if you fit the profile, Neil or I will reach out to you and talk more about it. Great summary, Seth. Thank you for doing that. Yeah. And I would just encourage anybody to apply. You know, not everybody who applies will get in. If you do run a business other than real estate and you've had success at that, six, seven figures of income through another business that maybe could translate to the land investing business, we might consider that as well. But in general, we're really looking to keep the quality of the room incredibly high. And that's what creates the good mastermind process. That we're able to put together is the high level of the room. We're asking high level questions. We're having high level people there and we're having a ton of fun while doing it. So anyways, I'm super excited for it. Can't wait to see y'all there. So let's talk about the economy, Neil. There's been a lot of talk about recessions and slowdowns. I've been seeing it all over the place. There's different indicators for this, of course, depends what you're looking at, but how are you reading what's going on in the broader economy right now? Like what data points are you paying attention to, to help you come to conclusions about what's going on right now and where we're at? So the real question is, so let's start with, are we in a recession? What do we do about it? Let's go under a few key economic indicators that we can look at to tell us how to interpret this so that everybody can interpret it for themselves. And then also, what do we do about it? And then if we are looking at a recession, what has happened in previous recessions so that we can learn from this. So are we going into a recession? First thing I'll tell you is that I'm not an economist. And it's kind of funny, there's a joke about economists anyways, that economists and weathermen are the only people who if they're less than 50% accuracy, can still like have a job and be highly respected in that economists only exist to make weathermen look good. So. I'm not an economist. And even if I was, my encouragement to you would be to do your own due diligence and listen to the why behind the stats and not just what I say. Because I'm going to say that I believe that we are in a recession currently, or that we are going into one very quickly. And the tough part about calling a recession, there's different people out there. For instance, I know like Robert Kiyosaki and brother, I'm not trying to call you out, but he's been calling a recession probably every single month for the last 10 or 20 years. And then an article will be written about him a year or two from now about how he successfully called the recession. And he suggests gold and Bitcoin and the whole nine yards, right? And so I'm not trying to fear monger and I'm not trying to just get attention by saying this. I'm merely just saying that it's so hard to call it because recessions are a lagging measure. So I remember COVID in 2020. And during that timeframe, we actually went through a recession. I don't know how many of y'all realize that we came out of it super quick because of all the money printing that we did out of it, the economic easing, quantitative easing. But in 2020, we actually experienced a recession. And it wasn't until like middle of 2021, a full year later, that they actually came back in to find this was the start. I think it was like February. and then this was the end of the recession in 2020. And so why do I say that? I say that because nobody actually knows when we're in a recession until like a year or two later. And so... You know you're in a recession by some of the leading indicators, not actually people telling you you're in a recession. So let's get into a few things that we're watching. So an article came out just a week ago that 22 out of 50 states are currently in recession. That's meaning that almost half of our nation are currently in recession and that's their economies. And if New York and California or California, which are both treading water right now economically, if either one of those go into recession, then our whole economy is in recession. And so the interesting thing is kind of like you said earlier in the call, Seth, is that there's macro level, high level of the whole nation that we're not necessarily in a recession now, but there are certain states, over 50% of the states, where you are already in a recession. You just don't know it. And so that was really interesting for me to see. The second thing is, is that just yesterday, the Fed reduced rates again. Historically, the Fed only reduces rates. Whenever they see recession coming or whenever they see hardship coming, right? They're trying to keep unemployment low while also not have inflation run off the mill and go crazy high. That's kind of their dual mandate. And so if they are lowering rates, that is something you need to pay attention to because you know that that means an economic downturn is probably already here or is about to get worse. And so in the Fed looks at things in a lagging measure, like if they're again, if they're cutting rates, you need to pay attention to that. The third thing I'll tell you is that you need to watch auto delinquencies. Auto delinquencies, meaning people's payments on their cars are approaching 2009 levels. Well, what happened in 08, 09? You know how bad that recession was. And so whenever we look at if auto delinquencies and people aren't paying for their cars, you guys get this. If people don't pay for their cars, they can't go to work. Like by the time you're not paying for your car, things are really, really wrong. And then once you stop paying for your car, then you stop paying for your house, and then things go really, really wrong. The last thing I'll tell you is that we got to look at the inverted yield curve. And I'm not going to pretend to be an expert on what that means, but the basic of it is bond timing. And so essentially short-term yields versus long-term yields are inverted. To be able to say that people or not optimistic on the future economy. And that in itself has never been wrong. And that curve inverted, I want to say about a year, 18 months ago. And it has predicted every recession over the past 50 years. And the recessions normally come six to 24 months later. And so my opinion on the economy is that our economy is a ticking time bomb. We're already mostly there to a recession, but you're not going to hear about it from the mainstream media, maybe until next year or potentially late next year. And so overall, just to give my summary, it feels like our economy is a car that's running out of gas. Maybe it's still driving, but we're driving real slow and it's kind of sputtering forward. You can feel it. It's like, I got to get gas. I got to get gas. I got to get gas. And I think what the Fed is trying to do is lower rates to pour that gas on the economy. So that's my economic update. That's why I believe we're going into a recession. And I highly, highly encourage you to review these stats for yourself and not just take my word for it. Yeah. So like, what do you think this means for land investors? I mean, given that land, I mean, if you're just buying land with nothing on it, it's technically a luxury purchase. And that's usually the first thing to go in a recession. What does that mean? Like, do we just need to insist on lower offers and expect longer times on the market before it sells? Or should we be fundamentally changing something else about this? I know these are huge questions and I don't know that we can really truly know the answers to them. But I mean, to your point, by just data to look at. And I feel like a lot of the data I look at is just kind of anecdotal. It's not really hard data, but seeing like a news article last night talking about how Amazon and Apple and all these huge companies are like laying off huge numbers of people like white collar, you know, well-paid workers. And they're going into a job market where like nobody needs them. Like it's hard for these people to find jobs now. And I, you know, I don't know that that's going to stop anytime soon. I don't know if the doom and gloom is true about like there will be massive job extinction, but whether it's due to AI or just due to a natural recession, it looks like that's coming and it's probably going to get worse. So I just think through that lens, like if people are losing jobs and they can't afford their car payments, like how is land going to be selling that well? What do you make of this? Yeah, I think that's what we got to be careful of. The other joke that I'll tell you about economists is that economists tell you something and then they don't interpret it for you. And so, again, that's why I'm not one, because I'm going to try to actually interpret what this means for you today. Right. So the one thing that I'll tell you is that certain parts of the country have already been in a real estate recession for two to three years. And so I want to be very careful to differentiate a real estate downturn versus an economic downturn because they are different. And so what I mean by that, if you look at housing, because we have so much better, the reason I talk about housing is we have so much better data on housing than we do land. Land is so, so difficult to pull together economic numbers and stats because nobody keeps track of it. But if we look at houses, we can have maybe a good indicator on where land is going, right? Land just lags behind houses a little bit. And so the number of homes sold nationally in 2024 and 2025 was less than 2008 and 2009. You have to go back to the early 1990s to get as many homes sold in a full year, like that small number, as you do in the last two years. And there's really no housing markets that have necessarily crashed during that time, which is really interesting. The other interesting thing is I don't think there's any land markets that have necessarily crashed. There have definitely been the some that have slown down and have slown down maybe 10%, maybe 15% in some different areas, some really rural areas. But I'm not seeing anywhere that I know of that has necessarily crashed on housing or land. And so if we've been in a real estate recession or kind of a hard market where it's hard to sell properties for two or three years, we could actually be approaching the real estate bottom. Because what happens is that economic recessions tend to happen differently than real estate recessions. So like Gary Keller, who owns Keller Williams, one of the wealthiest real estate people in the world, says that real estate leads you into a recession, meaning it starts before a recession, and then also leads you out of a recession. So it's more than likely that during this recession, if it does happen, which I'm predicting it will, that we could be close to a bottom of real estate or hit a bottom of real estate sometime next year because the cycles don't tend to last this long for real estate. And so what that means for investors is that we could be coming into a market. Housing rates have already gone down a hair just over the past three months or so, 7% to high fives. But the really neat thing for us as land investors is that as the Fed reduces the prime rate, that directly impacts our borrowers. Because the prime rate is what they get when they go to a bank, prime plus a margin or minus a margin. And so while everybody tries to say that the prime rate doesn't impact real estate or mortgage rates, Well, it doesn't impact long-term mortgage rates for houses, but it directly impacts land mortgage rates. And so the really neat thing for us as land investors is that we just got a quarter point drop yesterday. And that directly translates to our borrowers' affordability. Help me understand, why does it affect land but not houses? Because, I mean, you were a banker, right? And so at the bank, they're going to set the mortgages for land. They're going to do portfolio loans, meaning that they're going to keep the loans in-house and they're going to land based upon the prime rate, not based upon the mortgage rate because they're not selling that off to the secondary market. So they don't have to compare against treasury yields. They don't have to do the secondary market. They're holding it in-house. So they do it based upon the prime rate, which is what the Fed touches every time. Well, the Fed touches the Fed rate, but the prime rate is plus margin. The prime rate is what moves when the Fed moves rates. So it directly impacts our business. So if you look at between like June and now, which is late October. Our borrower has got a half point reduction in interest rate, and that's huge. So anyways, last thing I want to tell you about the recession or about what we're talking about here. So the really interesting thing that I've been harping on for probably every call that we've had, five of them now, I think, is where are the buyers markets, where are the sellers markets? And so we experienced the big, great migration to the Southern states, Texas, Florida, Georgia, et cetera, in 2020 through 2022. Well, ever since then, there have been some economists who coined it the great stay, right? The great migration to a great stay, where the people who were previously coming to the southern states are now staying where they're at. And the funny thing is that we've completely inversed where the hot markets were Texas, Florida, Georgia, maybe even the Carolinas, Tennessee. Now it's completely shifted to where the cold markets of that time, the great migration, are now the hot markets during the great stay. And so that means the Northeast, especially New York, Connecticut, New Hampshire, places up in the Northeast are incredibly hot where they were incredibly cold during the early 2020s. Also, California has rebounded in a big way. And so the irony of all this and the thing to pay attention to is I think the reason that Texas and Florida, that the real estate markets haven't crashed more than they have. They're very oversupplied. Texas and Florida have basically the top 10 buyers markets in the whole nation. And I even read a stat that it was like Austin, Texas has like three times as many buyers as sellers. Dallas, Texas has two times as many buyers as sellers. And this is for houses. That's bad. But we've only lost maybe 5% or 10% of value. And it's because the Florida and Texas economies are still in expansion. People are still moving here. We're still having jobs. And so while the real estate markets are having turbulence due to oversupply and overbuilding because of the early COVID timeframe, we're not necessarily seeing a real estate crash. And that's the really interesting thing. And the really interesting perspective I want to have for today is that just because an economic recession may be coming and might be already here, that doesn't mean that we need to worry a ton about, as land investors or real estate investors, what we do need to do is we need to be careful of the risk that we take on because if we buy properties, we have no other thing to do other than sell them. I mean, is a lot of this dependent on which markets you're in? I mean, what you're saying right there, I mean, that's true for Texas and Florida, but what about a random rural county in Indiana or something where there's nothing going on? That's a different story, right? That's what you got to watch. That's in theory where you're going to take the most risk, is where you have rural land that doesn't necessarily have agricultural value like the Midwest, right? Midwest agriculture produces cashflow. So you don't probably need to worry about that. But yeah, if you're going out and buying like desert squares or you're going to extremely rural places in areas that are in economic recession, yeah, you're probably gonna be hurting and that's gonna be a really hard business to run because your buyer pool is no longer gonna be able to afford what you're selling. And like you said, Seth, if it's a luxury purchase, then they're just not going to make it. And so I think we're going to see a lot more people go toward smaller lots. So even some strategies presented at the Wyoming Mastermind were RV lots that they call them, one acre lots less than 20 grand or five acre lots less than 20 grand, depending on the area. And I think that these smaller properties where you could place a mobile home or an RV will continue to stay very desirable. Additional commercial style opportunities where It's in a good corridor. The path of growth, I think, will stay incredibly desirable. Areas near urban centers, infill lots where people are building, I think, will stay incredibly valuable. But what you've got to watch is exactly what we said, which is big rural or desert squares or areas that might just not stay in demand. So that's what you got to watch. So like if you're a new land investor getting into this right now, you don't know a whole lot other than just, you know, the theory that's given to you in a course, like what's going to be your first move? How do you identify the market? What kind of property do you say yes and no to? Like, what would you just say? Don't do this, please. You'll probably want to go this direction instead. Any thoughts come to mind with that? New land investors need to be incredibly conscious, just like experienced land investors on can they sell the property? Even at the mastermind, we spent so much time, probably even more time on talking about how to disposition or sell properties than we did to acquire properties. And so you need to pay attention to be in markets and have good advice, whether it's from real estate agents or you're doing double closings to minimize your risk. Like you're going to have to have somebody help you to know that you have a good deal. Even Seth, with our land funding submissions from the business that you have here that we see through REtipster. We have to deny a majority of applications just because the properties themselves, first off, are a little weird in nature. They're not going to sell easy. And because they're not going to sell at the price that the investor thinks they will that they bring to us, we need it for a better price. But what it all comes back to is the front end. If you lock up an incredible deal that you're 100% confident is 30% to 50% of market value, and you know that you can sell that property, I would take the risk on it, personally. If that's too much risk for you to take, if it doesn't sell, it would bankrupt you, then find a funder, right? Or find a hard money lender. Find somebody to help take the risk with you. But it all comes down... Really, everything in this business comes back to acquisitions and buying properties low enough that are going to be able to sell at the end of the day. because there's a saying that there's a pig for every barn and meaning that any land will pretty much sell for some kind of price. You just have to buy it cheap enough to be able to resale it at whatever price that is. So when you said just a minute ago, make sure you know you can sell that property. How do you know you can sell that property? Like what exactly should give you the confidence to know I can sell it and at this price? Or is that even possible to be that certain about it? Yeah, I would just say that in order to be certain, it's not possible to be certain about it, but you can get to a pretty high probability by having good advisors, whether that's real estate agent, a coach, a funder, a hard money lender, you got to have somebody helping you. And if you're not comfortable taking that risk yourself, then you need to essentially split the risk with somebody else and split the profit. You know, something that I think happens with land operators or flippers who know that they're going to need funding is they almost kind of get lazy on the due diligence because in their minds, well, the funder is going to do it because they're not going to fund something that's not good. So I'll just submit this junk to them. And if they don't like it, that'll be my due diligence. I feel like that's just a really misguided way to go about it. Even myself, like when I put myself in the shoes of somebody who needs a funder, I can see the temptation to think that way. Because it's like, due diligence is a big job, there's a lot to look at, like I'm probably going to miss something. I'll just leave it up to them because they're really the ones on the hook at the end of the day. But I got to say, like, it doesn't make you look good when you submit junk to a funder and they immediately see the problems and realize, wow, this person is not a competent land investor. Like they're not to be trusted because they didn't even catch this stuff. If you really want to make yourself look good to a funder, and almost get them fighting over you, be competent, do the work, answer the questions that you know they're going to have. Don't get lazy because I think it's just going to come back to bite you in the end one way or the other. Yep. I would just say that if you're having trouble finding funding and you're having to submit it to more than like, I don't know, two or three funders, it's because you don't have a good enough deal. Because if you have a good enough deal, that solves everything else. If your property is on the side of a cliff, on the side of a mountain, but you've got it for 10% of market value, like probably a lot of funders will do that. But the problem that we're seeing, and this is all funders, even the ones that you've told me you've talked with, Seth, is that probably 90% of funding submissions are just throwing stuff against the wall and trying to see what sticks. It's just not the right way to run a business. Long story short. So Neil, help me understand, in your opinion, what mindset separates the people who thrive in markets like this from the ones who pull back? So I've got some really good observations for you here. So there's a really good book by Jay Scott. It's called recession-proof real estate investing. And I don't want to overstate, but I would consider it almost the Bible for what we're about to go through for different kinds of investments. And one thing that I want to tell you, we've already kind of mentioned this, but in the book, he talks about that successful real estate investors are real estate investors who are flexible, who are able to pivot their business strategies quickly. And so like, just for example, in my business, one thing that I learned at the Wyoming Mastermind, Denise was talking about manufactured housing. And so I've realized that in the Texas areas that I'm in, my one, three and five acre lots, like I'm selling off these properties, they're taking nine to 12 months to sell at market value in some of these rural areas. And the people who come and buy them are doing land home packages with manufactured housing anyways. And so why don't I just go get my retailer's license and essentially put a mobile home there or do the same land home package and make the extra spread, potentially $20,000, $30,000, if not more. And so- One thing that I took away from that mastermind and also what Jay Scott's saying here is that successful real estate investors find a way, right? We pivot strategies, we pivot markets, we find a way to fill the demand that is out there. And so that's an example of me trying to do that. And so, and you talked about that earlier. It's like the person that you met with who was going business consumer and then buying other land investing businesses, they're pivoting their business based upon strategies that are in time for our market right now. And how do you know what the market right now is doing? Well, you listen to calls like this, right? And you study Seth's podcast and you look through all the people that he's talked to. You buy his course, you study the business and you get to know other successful land investors and you figure out what is working and what's not working. So that's the first thing I'll tell you. Second is that in a buyer's market, you have to be good at selling and a seller's market. You have to be good at finding. And so there's a lot of people out there who might be able to find some good deals and maybe their marketing is hitting better than it ever did before. But the reality is, is that the market has shifted and maybe it's 10 to 20% less. They got to sell properties that heck in some rural areas, maybe even more discount to move the. You have to become good at selling your properties. And that's what we spent a ton of time talking about with the biggest land investors in the nation is how do we get these properties moved? Because the biggest land investors in the nation have inventory. That was another big aha I took is that they have inventory, they need to get it sold. And so that was, you know, second takeaway. Seller's market be good at finding, buyer's market be good at selling. Last thing I'll tell you is that the true mindset at is so many different investors are going to be tempted just to sit this one out. Oh, it's a recession. And last recession, my job got impacted or my parents had this happen or whatever excuse you want to say in the book, right? Things are hard. We've already talked about that things are hard because I've applauded everybody listening that if you're still in this, congrats. Don't sit this out. This could be the opportunity of a lifetime for you to build life-changing wealth, because what happens after a recession? What happens when you're here? It goes here. And the only last piece of advice I would give you is stop trying to time the market. Don't listen to these and think like, oh, well, Neil's going to give me some insight or Seth's going to give me some insight and I'm just going to be able to time this. And I'm going to buy it at the absolute bottom because I know exactly when that's going to be. I mean, that's like guessing when Jesus is going to come back. Like nobody knows, man. Nobody knows when the bottom of a recession is. Nobody knows when Jesus is coming back either. And so live your life as if you're ready for it to happen, as if you're ready for it to go back up, as if you're ready for it to go down. You've got to prepare for the worst and hope for the best. That's great advice, man. I love that. It's interesting how a lot of the success that I've had in life, I don't know that this is good or healthy necessarily, but like if I really get to the bottom of why I did well at something, it was kind of like motivated by fear, like... I don't want to have to ever be in a position where I have to go back and get a job. Like that to me is like worst case nuclear scenario. What has to be true so that I never have to worry about that? Like, how do I stay so far ahead of that? That's never something that even crosses my mind. Like, I don't want to go broke. I don't want to go homeless. Not that that whatever happened. I have a tendency to have these ridiculous fears. But I tell you, having that kind of mindset, it just, it kicks you into gear. Like it makes it so that you don't get lazy. And funny thing is, in the times of my life when things have been the easiest, that's when I've gotten the most bored and almost like borderline depressed. The human mind needs struggle. Like we need tension and friction. I think that's kind of what we were created for is to do good work and overcome obstacles and that kind of thing. So I think if you're coming up against obstacles and things that are hard and not necessarily fun, realize that like, it's actually a good thing. And it's better than having things just handed to you where you don't have to work for it and it just falls in your lap. There are some nice things about that too. But when life goes like that too long, like it brings you to a far worse place in my experience. So it's this weird backwards way of trying to look at adversity in a positive light. Like it's not bad. And like you're saying, Neil, like if you can actually succeed in this kind of environment, like you're going to do really well when things turn around and they will turn around. Absolutely. It always happens. Yeah. I love that, Seth. I was just going to say two quotes real quick and I'll let you ask a question. So what you fear rules your life. And so we know psychologically that what we fear determines our actions. And so if we fear, like you said, going back to a W2 job, then we're going to work really hard to run away from it. But in order to even do that in the first place, you had to get over the fear of what if I fail, right? Going from the banker to running RE Tipster, like one of the most successful real estate companies in the space, like congrats, man. Like you had to get over that though. And like, that's what I think a lot of people listening to this, I just hope that they take away is that the biggest fear that you have rules your life. And until you create so much pain of staying where you're at, or you have so much fear of like, gosh, I don't want to end up like this when I'm 60. I don't want to be working for somebody else. Like the biggest fear rules your life. And so you've got to analyze what your biggest fear is and create new fears. And that's an interesting topic, right? To dive into. The second thing. Is that enough is not a number, but enough is doing your absolute best in every scenario. For me, I personally think that's doing enough to the glory of Christ. And so I heard that said by somebody who's incredibly wealthy, probably 10 times, 20 times as wealthy as me. And the question was posed to him, like, why do you do what you do? Why do you keep on working? Like he's a probably even nine figure net worth at this point. And in his 60s, why do you keep working? Why do you keep doing what you're doing? And he said enough is not a number enough is doing my best every day And I thought that that was a huge huge amount of wisdom. Yeah, that's awesome, dude Totally agree with that. Well as we kind of wrap this up as life keeps going on as the economy keeps changing for better Or worse if somebody wanted to position themselves for the next 12 months What would be the top two or three things you'd tell them to do? Like what are the bottom line takeaways from everything we've discussed here? I'll run through them quick so So... If you want lines of credit, which again, the top land investors in the country are having lines of credit or private lenders. And if you want some kind of leverage like that, you need to apply for it now. Because what you don't realize is that once a recession is like being blown. Marketed from all of these different news companies, and you're watching it on every television show on TV, your private lenders are going to dry up your lines of credit from your bank. You're not going to be getting new ones. You're going to have to watch your renewals because they're going to be struggling too. And if you need any kind of private capital, you need to get it now. Okay. So apply for that now because it is going to dry up. Secondly, you need to get rid of your losers now. Anything you don't want to own for the next one to three years, you need to sell it now. You need to discount it. You need to get it off your books and you need to get that capital back to take advantage of the opportunity of a lifetime that we're going into. Third, you need to boost your liquidity and cash reserves, you got to have cash. Don't be the person who has a ton of equity in your properties and be basically cash for to where you can't continue to run a business or do anything like that. And the last thing I'll tell you, I guess the bonus number four would be avoid unnecessary risk and realize that as a land investor, there is no plan B. If you own a property, you cannot sell it like you're stuck with it. And so if you are not comfortable with that risk, or if the property you are not bullish that it's going to sell quickly, then you need to look at alternate means of partnering with somebody who is comfortable to take that risk. But just know that anybody who's going to partner with you on taking that risk needs the deal of a lifetime. This is not the market where you can get average deals funded. It just doesn't happen. And so that's my advice to you is shore up your ship, plan for the worst, hope for the best, and go out there and kill it on the opportunity of a lifetime that's coming to us, hopefully over the next 12 to 24 months. It's interesting what you mentioned there about how once recession is being blown out from all the different media outlets, like it'll be harder to get along, that kind of thing. I've never actually thought this clearly about this until you said that, but a lot of people talk about how buying and selling is like an emotional decision. Like people buy based on emotions. And I'll say from my experience in the banking world, bankers lend based on emotion as well. I don't want to say it's all emotion, but it's absolutely a component of that. I mean, I think bankers are, they pride themselves in looking at the data and what the numbers say and all this stuff. But I can't tell you how many times I sat around the table with other lenders making lending decisions and the ways that they would come to the decisions. We're talking about fear-based decision-making and like, yeah, but I heard this guy did this and, but this other similar company down the street, they went out of business and haven't you heard we're in a recession right now? And interest rates, it's just like totally emotional stuff. And I'm like, I doubt they would like readily admit this, but like emotion totally plays a factor in all of that stuff, which I think can work for you or against you. You know, if you have a good understanding of that and also how to affect a person's emotions based on what you say and the kind of information you deliver to them. So just, uh, it's not even that important, but it was just like an aha moment I had as you were talking there, Neil. Yeah. And you just need to, especially if you function off of a line of credit, try to get your renewals as soon as quickly, because those tend to renew on a one or two year term. Make sure you don't keep those out. And if anybody doesn't know what a line of credit is, it's essentially a big boy credit card, if that makes sense. It's a business credit card that instead of you having a piece of plastic that you can charge it with, you can email your banker and say, hey, I need $100,000, $300,000, $500,000, whatever size line of credit you get. I need that to be wired to the title company to close tomorrow. Or I need this much for renovation funds. Or I need to draw this much to do some more marketing. Whatever you want to say, It's a big board credit card. And those can be in the amounts of 100, 200, 500. There was a guy that I was in a room with who had a massive one, a $10 million one, and now he's doing residential. And so the more people I meet in this game, whether it be residential investing or land investing, the more that I realized is that there's so many levels to this thing. There's so many different relationships to make. There's so many different networks to tap into that the The biggest land investors in the nation right now are not taking this time and sitting this out and waiting this out. They are being more active than ever in today's market. And that's what I'll leave you with. Neil, again, appreciate your insights as always. You've got a lot of great experience and you pay attention to the things that a lot of us should pay attention to, but we either don't because we're too busy or we don't know where to look and that kind of thing. So it's great to have your wisdom condensed into this episode here. Again, if people want to check out the show notes. It's retipster.com forward slash 245. Neil, thanks again. And everybody will talk to you in the next episode.