Ep 520: Understanding A Capital Stack In Land

Chapter 1: Introduction and Offer Strategies.)
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all right so D asked a great question when you're making offers you can do
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three different things that I can think of right now low cash your seller
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finance you can you can get spicy and do the option like you said uh number four
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is you can do a lease with an option they're all different things that kind
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of work off the same premise they're just a little bit a little bit different
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in their own way but they for the same thing so low cash we're always going to
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buy that if we can get low enough I mean if they essenti if we buy on our risk on day one of course we're going to buy it
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so that's always that's always a big thing but the seller financing gives us a win on the back end on the on the
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financing side of it and then the option it gives us the ability to buy it a lot
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of people don't like options just because it gives options might work better with off-market stuff with onm
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Market they have they don't want to do a long-term option yeah they already listed if they do a long-term option
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they have to hold it for that option period but if you find stuff on market and
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they're not so ready to sell you can do an option 100% I think it'll work now the lease works great as like a little
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Hail Mary hair Mary play is you can offer to do a lease where what's a lease
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a lease is hey I'm going to lease your your land for 1220 24 months I want a 24 month
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lease with the option to buy at your price what that is is essentially still
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our financing least the option to buy for 24 months and you'll have payments
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every month but that's okay if you have the option to buy and all the payments all the payments go to the price or it
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depends what price it is based off the purchase price and what you think it's worth so a lot of times it's just
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getting getting sellers to maneuver so it's just having those things so
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uh one thing I'm noticing is a lot of markets that are booming and this is for
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people that are doing stuff in other markets they're willing to wait for entitlements in most cases especially if they know they have something valuable
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and they knows they know it needs entitlements they're willing to wait for approvals or some something to that
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effect especially if they're knowledgeable but when it comes to for whatever reason Texas people that just don't get it they think that they can
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sell sell it and sell for cash and get their price and like I said it's it's teach their
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own but a lot of times they don't understand that to get their price in cash they have to wait in most cases for
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that approval there was a tweet literally yesterday on how to as a
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seller how do you partner with a developer how do you partner with a developer to essentially have something
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done with it so people are throwing out like a wait have the seller wait in second position and just carry the land
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be e owner I've talked to a lot of land peoplee I talked to a land developer at
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Atlanta he's one of my original early on land mentors when I first got into the game and he's done he did he did a
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couple industrial deals like that I remember he did he said he did like two or three two ended up working out great
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and he got equity for bringing his equity in the land and some developed it on it and then one went one went South
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and he lost his position in L because he do second second position Alan because so he he went second position has equity
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and then the the GPS essentially fumbled the bag and he lost his Equity position
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from the hard money lender slbank or whoever financed it so it is it's hard
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it's harder to get people to go on second position not saying it can't be done we have a deal right now that we're
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buying with seller financing that the seller's getting a promissary note they're not even in first second or on
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the property that's just a promiser note so there's people out there that are willing to do whatever it takes to get
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the to get the proper to get the deal done so there's nothing off off edge
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that's out of hand right you don't know what you can offer what what they'll take based on you just got to work the
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conversation and kind of work whatever you can get out of it but yeah there's there's a lot of cool strategies with
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that that you kind of you don't know if you don't ask so kind of have to ask with everybody and see what happens
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exactly okay yeah because I know we spoken on previous calls before for example I have this one agent she says
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Hey the seller's objection is hey what happens if they you don't pay and then they get stuck with the land that's developed but hey like said they get the
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best piece and someone invested money into the property so worst case it's better than what they are at right now
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kind of thing hey Anthony should we drop a little sauce on this part it's a little Saucy okay it's a little Saucy no
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no no objection so I guess I'm gonna I'm going to say it people do this with businesses and that's where I think the
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idea came from but but one thing on side note here is that other if you're from another industry like I was talking to
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my I got a haircut today as you can see I am shaving beards trimmed and everything my barber said that he's from
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car Sal so I was explaining the real estate type real estate transactions and it clicked for him because he's used to Car Sales so it's very similar but um
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you can use other strategies and other niches towards real estate a lot of
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times or a version of it you have to kind of understand the nuances but you can bring that same strategy
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over so the answer your question is you can
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provide usually if you're bringing in a lender they're always going to want first which is understandable but how do
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you remedy your seller taking second or another position so people do this to businesses
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is they'll leave them on as owner they'll leave them on as owner with Equity position but no decision- making
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so let's say you you you're buying this property and and you're getting a hard
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money loan to buy it and they need first because hard money Lo are going to do first every time is you can have your
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your second position private seller financing Equity be a part owner ask be second they don't
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take second ask them to be part owner and they're just a silent partner on the on the ownership and they get paid when
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you do so there's a lot of like I said that's that's the sucks a little bit is
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they're still in preferred position but not in second and they're not in first either so you have like a a valuable
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Equity position to offer to sell the owner via seller financing by offering them uh title title ownership as Equity
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partner okay yeah I appreciate that you I like that sauce like I said the goal is hey yeah make them feel comfortable
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but the goal is you know we can control it work on the property and do what we got to do absolutely absolutely I guess
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I guess we'll kind of delve into this this is this is good stuff that I think is um is your
Chapter 2: Seller Financing and Market Insights.)
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um this is kind of high level for maybe a lot of people here but uh if you any questions please hit the chat hit the
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chat but I want to talk about like um Equity positions so a lot of times when
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you're you're raising money you need to describe what type of equity position
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they're going to be in based off of the type of capital they're putting in so in in the in the financing in the
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financing world it's called your Capital St stack so let's talk about a capital
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stack a little bit it's a if you guys want to Google this you can probably find some articles but we'll talk a little about a capital stack but you
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guys to learn something it's good stuff so your Capital stack is you have your different Equity positions based off of
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your Capital needed to finance so if you have let's say we're doing a regular
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every everybody does houses you're doing a house flip when you're getting a house flip you're going to need a usually a
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hard money lender it's it's usually a they're getting first position they're getting the favorable position of the of
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the debt for Data Trust just case they need to for Clos and then you have
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owner debt and then other positions behind that so you might have for instance like a house might have the
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owner of the property might be John Smith the bank is Bank of America and it
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might go up or down depending on how you want to do it it might be Bank of America they might have a home equity
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lineup credit they might have a helck boom Another position you're and this is
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this could be like your Capital stack for this Capital stack is usually used for buying but you could take your Equity positions on the property so
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there might be IRS lean there might be different types of leans on the property that fall underneath your helck and all
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those other positions so you have you have to you can combine that as an owner
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to own property essentially um um but when you're buying as a flipper or an
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investor you usually have to have you usually have the owner your hard money and then your private money
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because usually most time you're using private money to maybe uh put the 10% down or like most Hardy money loans are
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you have to put down 10 20% down and it has to be a certain loan value and that's how kind of go so you need you
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need your owner your first lender uh loan position and then you might need
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your whether it's private money or your money technically you're a part owner on the on the equity stack and that's what
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you need to do a deal so with the bigger the deal you need different you need
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more positions on there to make the deal work so as you do bigger deals like
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we're doing you might have you might have the owner which we want to take title your first position might be hard
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money loan or a really big private lender or something and then you bring
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in another lender underneath him to entitle or develop and then whenever you have the
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opportunity to refi you wipe out those other positions so it it kind of work you have to use mean Anthony's kind of
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coing the word I've never heard anywhere but it's hybrid Capital you have to use hybrid capital a lot especially in
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larger transactions to do deals so a lot of times when we're asking for seller financing like for instance we did uh
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Anthony talks about his one of his first deals no idea how this works and how he
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did the deal but essentially he got a $220,000 property from the owner that
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the owner deed to him so now he's in ownership position ownership position essentially they're in first with
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$10,000 down which makes it his that that his uh private his private Equity
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that he's putting into the deal is $10,000 but then he was able to cut make a huge Roi on that $10,000 just by
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putting in that so you have to look at the what what is needed to raise money and and his $10,000 is in the riskiest
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position because if the deal goes bad or South you can't get that back because you have no you're in you're in a worse
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position than everybody else so you really have to relay and especially when we're raising money we have to Pro this
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is why we give such high rois I think Angie asked us last week of how much Roi we're giving to our lenders we give a
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lot of Roi to our lenders because they're not in a preferred position and that's why they're they're not in a
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preferred position of the capital stack and they're in theis iest place to be so I have a deal I'm doing now with a
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lender especially when you're having conversations with lenders you need to like what you need to like let them know
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what their security is so I'm doing deal with lender right now he's lending on the deal but he's also the buyer and
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then we're essentially first position or JB partner on the deal but for him I didn't really
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want to have a question of what his security was and if he's the owner he has to sign up on everything so a lot of
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lenders they like being in that first position but if if you're going to give somebody that ability to do that they
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have the ability to screw you over which is how we lost money last year we did that same strategy and we're doing it
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again but it's one of those things where you have to understand your position and whoever the owner is or even that first
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position could whoever the owner is could potentially screw you over on the deal depending on where you are on the
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capital stack hey I think you went a little too far man you went have to deep into the pool probably yeah why don't
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you talk about the different types of capital like private money hard money the benefits like the good and the bad about those and then why would you want
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to put that why why do you need that for bigger deals yeah yeah so the the hard
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money is great because it's usually just straight interest like a lot of people that do flips they're buying 12%
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interest with two points uh underwriting points so essentially what that means is it's flat fee it gets expensive the the
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longer you carry but it's it's very predictable um as far as your Capital
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but you have to fill out loan docs they're going to look at the deal they're going to look at you they're going to make you maybe sign a personal guarantee they're going to be first you
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to trust they're going to ask you to put a down payment it's going to be a lot more Hoops to jump through but it's it's
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a good Capital because it's very predictable and depending on your lender they have a certain lender lending box
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per se just like we have a buy box they have a certain lender box that if you fit in that CER they're going to lend to
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lend to lend to you and especially if you have uh a good track record or a good track record with them you pretty
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much have the the world at your fingertips and you can buy whatever ever you want because you have you're you're
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a preferred borrower from that hard money lender so it's a great position to be in we recently got a connection to
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that but we didn't have that at all starting so we had we didn't have that ability and then you have private which
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I think privates is is the probably the best part because private Capital they're not it could be
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as direct as they're still in first position they're still doing points in underwriting but it's more off your more
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based off your relationship and the ROI is very subjective I mean you you can make them
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Texas has a law where you can't give it over 18% we've paid our lenders over 18% because they're a partner in the deal so
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they get Equity so we'll put them in as a partner and we'll kind of push them their Equity over 18% and that's how we
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give them under 18% because they're private Capital but if you get a lot of that you have essentially a blank check
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to buy whatever you want and there they're following your discretion as the as the professional to buy good deals of
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course they're still going to underwrite them but they're usually going to underwrite them Loosely and it can get that private Capital can be as diligent
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as like hey send me the address and pictures and I want to go see the property before I lend on it or it could be as Loose as hey I'll just send you a
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wire and let me know when it's done but that's the that's the scale of private Capital go ahead let's talk about now
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how how to buy a big deal using Blended Capital right so you're going to have private money at 12% very predictable
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more institutional they want to take a look at your personal assets what you have how much cash you have in your account that kind of stuff and then you
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have private where it's just a handshake right they don't run your credit they don't look at your account they don't they don't look at anything they just
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somebody that just has money and they just want you to have it instead of them and then they'll just wait for a return there's no there's uh we set it up where
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there's no monthly payments we just pay upon sale of the property so that keeps us from being overleveraged uh when we
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deal with private so that's why we're willing to pay them a higher amount too a higher return because they're just waiting there the whole time they get
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paid and they don't call you and check on you they're not worried about the deal there's no 12mon running clock it's just going to sell when it sells and
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then they get paid out and then the last position is going to be having a seller carry right which is I think that's the ultimate strategy because if you go
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around let's say you lock up $10 million worth of ranches next week and you get 0% debt on all that well now you just
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took out like a $20 million loan right and you can't really you can't really do that with private hard money or anywhere
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um especially not traditional banking but you can grant yourself all that debt uh by dealing directly with the seller
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so now let's talking about buying a big property using the the the the three types of capital or three yeah one thing
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I want to say about the hard money is they usually want monthly payments so usually you're going to have to have
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good credit like said I talk about all the stuff about about about hard money but they're going to make you may make make usually make you make monthly
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payments and there's pivate lenders that will do the same thing but we trained our lenders to not do that because
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having that overhead I mean if you got 10 deals going on under ,000 $2,000 each that's a lot of overhead monthly just to
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cover that debt so Debt Service is a huge thing whenever you're borrowing which is why we try and work with
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private lenders with no Debt Service and they just get paid on the end which is the sweet The Sweet Spot to be in all
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right now how do you do how do you do a big deal with with private capital and Blended Capital so let's talk about
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let's talk about I want to talk about jet Road and if people are new here you'll hear about this I if you you
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heard it before but we'll talk about on like Capital side so we did a deal back in 20 22 I think it was like April 2022
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I had to look at the dates recently but April 2022 so it's been two two two and
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a half years since we actually took title but uh that deal was a million it was seven figures our first seven figure
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deal we did it was a milli 70 purchase now what we did was remember we're
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talking about Capital Stacks is we negotiated $200,000 down which is 20%
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down and then we had 24mon balloon on the 800 Grand but we like well who
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determines the payments well we just negotiated 2500 a month if you if you do the math on that doesn't make sense in
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any way shape or form we just said 2500 a month 200 Grand 2500 a month sell how
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much how much should that monthly payment should have been just for context 4500 it should have been 4500 if
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we did like a 360 equal payments or some like that it would have been like 4500 or something like that it
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would have been a lot more here I'll do it right now 360 800
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Grand it's oh it's it's 2200 so it's right around that 360m but we got two
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month seller financing so that's we're kind get 2500 a month I thought it was more but yeah 2500 a month so 200 Grand
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down that's what it costs this one had the seller financing wanted monthly payments so we have what we have first
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is the sellers in first we had to bring 200k of private equity and they're in
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the worst position underneath the seller financing and then they're pay we're paying 2500 a month 2500 a month and
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then it took that deal took us nine months to sell we paid off the we paid off the seller financing and then we
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paid off the private equity and that's how we end up doing the deal and then we ended up getting the the last tail end
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so us as investors you're technically the tail where your profit is and that's something we do with our lenders is we
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always make ourselves the tail we pay ourselves last on every deal that we buy
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with other people's Capital so we're always the taale of the last part of the equity which is ours so cuz we're in the
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riskiest position and I think that's the best place to be especially if you're borrowing because it it pushes your
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lender to be in good position it pushes your seller financing to be in good position and you can negotiate the
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seller financing where they they can carry with you over a three to five year balloon which I think you talk about a
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little bit with Bill is like having them do a fiveyear balloon when you do that you get to pay yourself in front of them
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and then you can kind of carry that hybrid capital of The Debt Service in between on that tail on the tail end of
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the receiving the capital so it kind of It kind of pushes them back but it's a great position to be whenever you get to
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their financing hey Daniel so how is all this pertinent now so now I'm out in the field I'm trying to buy $3 million do
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rent so I get my first deal ever and get a big home run why do I care about all this you care about it because everybody
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wants to be secure everybody wants to be in the most secure part of the deal because there's
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so there's risk involved any investment out there has risk well what is the risk the risk if you're first position the
Chapter 3: Lease Options and Capital Management.)
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risk is you have to foreclose the risk if you're seller financing are they in second position or they owner so you
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have to relay that risk to the seller and why they want to be in that position if there's private Capital hey if I'm
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putting 50% down that's that might be private it might be a hard money loan but that's risk that I'm bringing to
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drisk your position from seller financing so and every seller is going to be completely different on where
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their risk valuation is I mean uh we have a deal right now like I said we're
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trying to buy in the next in May there the the seller financing isn't attached to anything and it's for five years so
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we get five years of debt not even attached to the property so there's a lot
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of there's a lot of maneuvering of the capital Stacks based off of everybody's
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risk tolerance hey do you want to break that down for him or is it too early because again said you said a lot of
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blurry stuff on there yeah it's too early well we'll have to we'll have to read you guys into that one later but
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it's okay you guys you guys need to take a look at this deal and I'll tell you why we're gonna have zero into it and
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then we're going to get paid to buy it to the tune of like 20 to 70,000 to buy it at closing and then uh there's like
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monthly cash flow here or uh about 400 Grand uh inside the deal and it so zero
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zero out of pockets you got infinite Returns on this one so that's why we can pay back 50% or 25% or something like in
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the house world that'll bring your business down right you can't afford to to pay those kinds of returns back but in the in the land world that's nothing
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we could we could easily pay back 20 30 40 50 and for this reason we could get a deal like this where it's just infinite
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returns we have not only do we not have a dollar into it we're getting paid 20 to 70 to take
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it yeah that's that's a juicy deal that we'll probably cover another call or I might cover it at all I don't know I
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feel like I said too much already yeah but it's it's your you have to understand your position and your
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Capital position what your position is even as the wholesaler SL investor what
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your position is and where you want to be and what you can negotiate so for instance you want to jump into Somerset
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Somerset we kind of went unorthodox a little bit uh the neighborhood or the 44 Acres
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the the two 243 I think we we've covered that one a few times I was trying to stick to this uh this theme of a of
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raising capital and then and then how again like how is this most beneficial so I think on one side you're out
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looking for different land deals that you could pick up right so that if you're doing that every single day that's kind of like the core of what we do both big and small we we'd like to
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focus on a big one for you no matter what but also feeding yourself along the way with smaller deals but then also uh
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on the capital raising side and how is that valuable and then and you know what ways could it be more valuable even the
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land deals themselves yeah so that that's a great point so the seller financing is the Holy Grail of
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what we do in a nutsh show and a lot of people miss it because
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you we don't know a lot of people don't know how to properly position themselves especially with the seller financing but
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the seller financing with land is what makes the land game insane literally
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insane and we're we're barely getting to touch the ramifications of that but I'm
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telling you if you get seller financing on a lot of big Properties or even small properties you can you can get a lot of
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upside in a lot of different ways using the seller financing somebody just text me sorry yeah but that's the biggest
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part so I think asking for it one thing that we might be pivoting to is offering more more money down and having the
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seller essentially maneuvering Capital Stacks so we talk about Capital Stacks you kind of pay attention so if we can
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put a larger down payment down we can move the seller into not say a worse position but a a non-favorable position
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that they might not be open to if we put 10% down if that Mak sense so yeah okay so the sellers not they're they're going
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to be want first position because they want the most protected position we're offering something weak like five or 10%
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down there's like no there's no way I could do that I would never do that uh I got to get more down like okay well we could probably get you 30 down or 40%
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down or 50% down but the the lender would be in in first position not you
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and then now it's their call right do you want half your money now or do you want 10% yeah and that's that's a
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maneuvering technique is we make them choose their position and this is to to the to the our sellers they might not
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understand the capital stack as a whole they might not understand it but you as a buyer have to understand the capital
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stack because if you can offer a favorable position to your lender and it makes the seller take a lesser position
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now you got a win-win where you can give the seller what they want but they get a lesser Equity position on the capital
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stack and you can still make a win-win scenario because a lot of times they want to be in first first first first first but hey if I give you a large down
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payment you're going to be down here okay that makes sense boom now you got a
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deal so it's it's you have to you really have to understand that the where the capital is going who the security what
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position are everybody in and you can even tell the seller like hey I'm getting paid last time on this if
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they're if you're getting paid last you know hey I might do ABC with this and I'm going to get paid when you get paid
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you know and a lot of times like okay so he's going to do all the work on my
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unmovable property because remember these land sellers they have a asset that's very hard to move you got to
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understand that thing so they're already in a rough position as it is they might be the owner with no with 100% Equity
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but they still own a anchor that Can't Be Moved very easily so by you putting
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this man this different type of terms together you're now making that a movable object movable
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now um let me uh James says more skin in the game so investors believe in you on
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the tail end um any agents in here that can chime in and explain how the bypass the gatekeeper mentality of most
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agents um how to bypass the GateKeeper most
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agents um if you're doing MLS stuff I mean you have to you have to a
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lot of times you have to cut through what the what's their concerns the concerns is are they going to get paid
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and um when are they going to get paid because that's nobody does nothing for
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free so um Anthony says infect the agent and make them work for us that is the key
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point that we do so remember we talk about a large land or land in general is
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just an immovable anchor you offer them incentive a lot so many land Parcels get
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listed and never sold all the time so that means the agent's working for free and if agent works for free long enough
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he's not going to work on every land deal property he gets he's just going to kind of let it sit
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because five times out of 10 or whatever that ratio is he's working for free which is why agents are bad at land so
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what we do is Kyle kind of Kyle put it in there he says we double-side the commission and we're here to help we're
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we're a service provider and we're we're GNA pay you both sides of it I have an
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agent on my side but I'll give you both sides of the commission if you help me work this deal because you have the
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listing agreement with the seller um we try we try and get the agent on our side is the big is is the shortcut uh what's
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your typical threshold down payment to push them into second position and Real Deal examples um this is going to be
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deal basis every deal is different like I said we're buying a deal right now where they're not they're not even on
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the title they're getting a promisory note which isn't even on the capital stack that's how crazy that deal
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is they're not even on the capital stack it's just a sh handshake uh Andie says look up the
28:13
owner of record and call them directly if the agent works with you or call them asking if they want to sell not even
28:20
reference the listing so Angie has a good point is you can hit them up directly and say you don't even know
28:25
it's for sale because you don't even know what property it is um that's 100% fair game I'm tell I have
28:31
a Kyle has a deal he's working right now that the the agents being crazy so I
28:38
told him to send a direct mail piece whether he writes it out or types it out and just sends it directly uh pertaining
28:44
to what's going on um KY says we're the only uh we are the
28:53
only offers they have so if you have them double side they're going to do everything they can get the deal get it
28:58
done and they have monetary incentive to get the deal done 100% um have them have
29:03
a friend in their brokerage help you if they're not comfortable then it's just two friends working together to get paid
29:09
Kyle Dix who did this he actually has a deal right now where the that's exactly what he did he had another person from
29:16
the bdge work as our um work as our
29:22
lender on the buy side or our agent on the buy side and the seller the his friend in the same br which is work
29:28
representing the seller and it's just kind of they're they already work together so it's just hey we say this
29:35
then back to the seller and it's kind of it's a very cohesive relationship so there's no friction so you want to take away the friction as much as possible
29:42
whenever you're dealing with agents so the main thing is always are they going to get paid and what time are they going
29:47
to get paid and that's the biggest thing so the de the deal we bought in a potit that
29:54
was one of their concerns and they got paid at they got paid at closing and that was like 60 days from when we
30:01
actually contacted them so every deal is completely different but you have to understand what their concerns are the
30:06
seller and the agent if there's agent involved and what what everybody needs to make money on this transaction just
30:12
to let it go through because everybody every people want to gatekeep a lot of Agents they want to gatekeep and they
30:18
want to control the listing it's so funny so I have a Side Story for this so
30:24
when I was in Atlanta I started doing land back then when I lived in Atlanta I was hitting a I was hitting listings for
30:30
land and it was the same broker every time every time like the dude that had
30:37
monopolized all the land listings in the whole area he just had a he just had a a
30:44
listing agreement for a year two years on everything anybody that want to sell hey that's not a year listing
30:50
agreement and whenever it felt nobody bought it he just he like he wanted to be he wanted to like monopolize all the
30:57
listing so a lot of land Brokers and I'm sure you now that you hear this you're like oh I get it now so these land
31:05
Brokers since it's they they have a very difficult product that they moved they try and control as much as the
31:10
marketplace as possible that way if anybody comes ready to buy they can oh I got this over here I got this over here
31:16
I got that over there they try and push them to everything they got because they kind of have their finger on the pulse and everybody that wants to sell in any
31:23
given period in this any given area which is a good and bad thing for for instance the we just contracted two lots
31:31
last week it's from a broker broker had both Lots he's like hey I have this one
31:38
I like that one looks good he's like I also have this one that one looks good too so we just contracted both of them from the same broker two different
31:44
sellers I believe but it's one of those things where that's why they do it because if we're coming in to buy I have
31:51
that that agent kind of controls like I got this this and this which what do you want they kind of they you kind of pull
31:57
it on the and they pull out the watches I got I got the fake
32:02
Rolex like they they're uh they uh they got all the product they got whatever
32:08
you need yeaha says those are the typically ones with the cowboy hats absolutely absolutely so if you go if
32:14
you go to the listing broker and he's not wearing he or she is not wearing a a
32:20
suit or a pant suit or something they wearing a cowboy hat with suspenders that's us the
32:26
guy and they're Hit or Miss they're Hit or Miss um we met some good ones we've
32:31
met some bad ones but they're Hit or Miss but they're they're great resources because they have a lot of available
32:37
property in their listing rep in listing inventory that they're a good resource
32:44
100% to hit up I'll tell you something right now probably about four to five high level agents that list ranches that
32:51
are like two five million a million though the bigger stuff none of them do subdivides I don't know why it's very
32:56
strange I guess they're just they're waiting for that buyer to come along to write that check for five million or 10 million and uh subdividing is not even
33:02
on the radar for any of them so coming in and doing what we do it's like kind of that missing ingredient that that's
33:09
not really on the front of their mind yep and a lot of times the agents don't even know the agents don't know in most
33:16
cases me and Anthony did a podcast that we just released as agents are bad at land a lot of a lot of the ability that
33:24
we have in the marketplace is because agents are bad at land I mean there's no if they knew if they knew how to price
33:31
stuff right and they they were maneuverable they can get a lot more they can get higher pricing I guarantee
33:36
it Anthony if if if you hit an agent up and they're like yeah I got 60 Acres
33:42
with Frontage I'll sell Finance it to you but I want I want comps are 30,000
33:47
but I sell it to you for 35,000 an acre with some crazy ass terms we'd probably take it because they're they're they're
33:54
giving us everything they're giving us ability to subdivide they're giving us all they're hitting all the things that
33:59
we want and they're just listing it just like that nothing will fly off the shelves because they're positioning
34:05
their seller to create the product that people buy oh that's
34:11
crazy but U that's all it's all it's all agents do what think about a house agent everybody knows a house agent they're
34:18
like they they do all this market research and like oh I'm going to put I'm going to they have all these different like key strategies of how
34:24
they're going to sell their their their their customers property in under 30 days you know we we did a open house day
34:32
one and we had 10 10 offers over asking it's all strategy so imagine if that
34:38
strategy came to land and they pitched amazing terms for developers that
34:44
would fly off the shelves go ahead Angie yeah so I've got a question about do you have a strategy that you like to employ
34:50
when you've got especially it's an agent listing some land that does not have a lot of experience and you know they
34:57
probably went and told this person that their land was worth 50% more than it was so that they could get the listing
Chapter 4: Overcoming Agent Obstacles and Negotiation Techniques.)
35:02
and now everybody's screwed because it's overpriced so do you have a strategy for helping them to save face you're going
35:08
to go in there and you're going to make this much lower offer that's really much more in line with comps for you know the
35:14
land as is say for instance it's 100 acres and they've got it priced at the 20 acre you know it's 20 acres they've
35:20
got it priced at that price per acre so do you have any strategies for helping them to save face as they're going to go
35:26
back to their seller and say hey we've got an offer here for you know say 600,000 instead of a million but it's
35:33
really the correct offer because they basically misinformed their seller to start with and how do they go back and
35:38
you know say you know what actually they showed me some comps here this you know they can't really go back and say hey
35:43
these guys enlightened me they show me the comps and I just told you the wrong information to get this listing so um the the short answer it's
35:52
it's a lot of agent ego but the the long answer is Time Heals all
35:58
when they get beat up enough for long enough they'll understand that everything was right around that right
36:05
around that price range and a lot of times they don't like to see it but if every offer is coming a ride around
36:11
where market value is and like I said there's there's always that variation you're going to have the people that buy
36:17
High and the people that buy low and then people that buy in the middle so if enough buyers hit at different price
36:23
ranges you know what what where it's at you know and as based off the terms of what they negotiate so a lot of times
36:30
it's it's very it's very nuanced and it depends how open the the agent is the
36:37
agent on listing day number 30 may be like yeah we're open to offers but we
36:44
want our price but the agent on 180 days in might be like yeah we're open to
36:51
offers but I haven't no one's even called me in the last six months so what do you got you know it's it's a very
36:57
different conversation depending on where they're at in their listing like we contact we contacted properties that
37:04
were like under 30 30 to 45 days in and we threw some crazy offer and like no
37:09
we're just going to wait till we get our price because they're so early in the listing that they're very
37:16
optimistic and we still hit them with the offer because it's most time we're not we're shooting Fair offers in most
37:22
cases we're not like we're not I I try not to to to insult people in most cases
37:28
on their on their land on my land offer but it's it's usually very right across
37:34
the bow where it should be and a lot of times if it's too early in the listing they're not ready to hear it because the
37:40
agent might have in their head what they think it's worth and like no I can get a better offer and that's just them in
37:45
their mind early on in the listing yeah I can get that price I can get that price I can get that price and then 6
37:51
months later like I don't know if I can get the price anymore they have that doubt that fear of Doubt come comes in I
37:56
kind of feel offers and like yeah I don't know if I don't if this price makes sense anymore and they might just
38:02
be so hard-headed they're like we're going to get this price whether it's listed for five years or or 10 years you
38:07
know I don't know do you actually ever just send comp you know some like hey you know what these are the three
38:13
nearest comps I'm seeing we've done that we've done that before and then um I
38:19
like I I did that with somebody I did it with a deal that came in they're like oh that has a easement and they just they
38:25
the agent like picked apart that has this in that this is have a frontage I just sold this to for that much and I'm
38:32
like well why like where's the buyer for that why don't you sell them this like I I try and whatever the rebuttal are you
38:38
kind of rebuttal their um Jason said I did with a she got pissed so a lot of
38:45
times if they're not receptive to it you're stepping on their toes because they're the professional you know so
38:51
there's a there's a there's a a Grace you have to do when you're doing this and it really depends on if they the
38:57
agents open-minded I had Kyle had me talk to an agent about a month ago and
39:03
uh she hung up on me cuz she pissed me off but she was so so onrack minded she couldn't even
39:11
see past her bangs I don't know I don't know
39:18
but yeah it it it's it's depends on where they're at and I think it's the biggest thing is Time Heals all it depends on where they're at in listing
39:23
is my short answer makes sense thanks all right let me jump into the questions
39:29
uh Zach says FR riding subdivides anyone have any quick tips an estimating cost
39:35
of putting infrastructure for water roads looking at a property in San Antonio um this is that's a very hard
39:42
question to ask um James James Deng actually asked me
39:47
the question today so we're gonna put together rough
39:53
estimation based off of putting in water lines um putting in Road estimates that we've
40:00
gotten uh we'll have like a basic price per
40:05
foot and that might vary differently based on the county and how why they want it you know so this it's that's a
40:13
very hard question to answer as well as ground material yeah and grounded material what you're having to dig
40:19
through exactly exactly 100% so it's very it's very shooting from the hip type of answer but uh it's a very hard
40:26
one to answer so like let's say um let's say you have a road everybody's been on
40:32
the back road and it's usually two lanes with a double double yellow line and then you might be on some back roads
40:38
where it's like one and a half lanes and there's no yellow line like the farm
40:44
roads everybody on those so depending on where you're at in the county they might have different
40:50
specifications of withd and type of material that you're putting on the property so like for putting putting a
40:56
chip seal Road asphalt the freeways are are are cement so it depends on the
41:01
materials of the road and where it is in the county specification on what type of materials you might need curbs you might
41:08
need streets curbs uh water sewer so it's it's a very hard question to answer
41:15
um and a lot of it is you have to hey I don't know the answer to that but based
41:21
off of our experience it's usually in ax range whatever like I said we're going
41:26
to try and put some calculations to that to kind of arm you guys better whenever people ask that question but uh it's a
41:33
very hard question to answer Zach hope that
41:42
helps um let me go back to the top uh some agents are just waiting for savior like a 1031 buyer uh but won't work with
41:50
investors like the damn Lottery yes 100% uh there are land there are land
41:55
listings that they just wait for 1030 31 buyer to come in and buy him out is crazy um it happens all the time uh
42:03
Frank says in Florida drainage for storm water runoff becomes an issue also so this is 100% a fact so um we're and this
42:12
is this Frank kind of makes a pivot for us but um we want to focus on Texas only
42:18
and the reason why is we want to be the best buyers in Texas that know Texas
42:24
standards estimates all that stuff so we're really going to focus really hard on doing Texas
42:31
entitlements Texas subdivides only just because we want to be the best in Texas and if anybody has subdivide I want them
42:36
to think of the hyp mind um so we're going to really drill D hard into Texas
42:41
for land as a whole for subdivides so um but to Frank's point in FL in Florida
42:49
drainage storm water runoff is a problem because you you're in low-lying areas
42:54
with swamps so you really have to understand your Market which is really why we're really going to drill down into Texas a market because if we
43:01
understand Texas A to Z more than everybody else we can see things more
43:07
than the other our competitor buyer sees because we know more nuance and specific
43:14
things about Texas law and Texas um County regulations and
43:19
Texas uh deed and uh deed restrictions and all these things that come with land
43:27
that most people don't even think about because that whenever they're buying houses it's just a house but with land you really have to understand the a toz
43:34
part of it um when you're doing this stuff is because there's so much Nuance that comes with deed restrictions and
43:41
setbacks and pipelines and all the water run off and like it get it can get
43:46
pretty heavy pretty quick so we're really going to focus on
43:53
Texas uh Texas has 31 million reasons why by here versus elsewhere 100% 100%
44:00
And I hope that reiterates for you Jason as well there's a big reason why we're doing a lot of deals here and it's just
44:07
it's the ease ease ease of uh ease of fulfillment and we know what we're doing
44:13
here 100% good questions today very good questions per us everywhere
44:21
Su see see what I mean see what I mean and like I we've done Florida deals but
44:27
we probably shouldn't have you know we probably shouldn't have done those deals I'm not I'm glad that we did them but we
44:33
probably shouldn't have done those deals so we're really going to focus on Texas and Texas only and around and around the
44:39
Texas triangle which is Dallas Fort Worth Austin Houston San Antonio and
44:46
everywhere around that perimeter in some way shape or form so Tyler which is east
44:52
of that um we got a deal in the middle of the Texas TR triangle south of Dallas
44:58
we got stuff in San Antonio so we're just going to stick to what we know and what we do best that's where we're
45:05
getting the most um expertise and the most experience at and we we're getting
45:10
very proficient at it very very proficient at
45:17
it good questions also being high in demand right so if if you get something
45:23
in Oklahoma you know maybe if it's by Tulsa maybe uh Kentucky same thing or or maybe Tennessee like Nashville if you're
45:30
around these big cities like over a million people red States the the model probably still works but then we can't
45:36
really help you that much out there you know I kind of don't know what stuff goes for by Nashville so if you're in
45:41
Texas like it's super high in demand um very reasonable amount of time to sell it very developer friendly laws there's
45:49
a lot of reasons why you know Texas is is is people are investing here and and coming here quickly so somebody sent me
45:56
this today it's the 2024 Texas relocation report um this is from texasreal
46:03
estate.com um it pretty much talks about the migration patterns and this is on
46:10
texas.com I'll put it in the chat if you guys want to see it but Texas population continued to grow during this time
46:15
period overall 668,000 people moved to Texas from other states with a net
46:21
population gain of 175,000 residents more than 102,000 California is
46:27
relocated to the lonar state and then it shows like the migration so 102,000
46:33
people came from California Colorado Oklahoma Illinois and Florida and
46:41
Louisiana so I'll put this in the chat if you got check it out a little bit more but pretty much show the migration pattern so we're we're in a upand
46:47
cominging market where it's favorable to develop and there's a lot of opportunity
46:58
uh James says if you make an official offer they have to show to seller it's 100% correct um as much as we try and like
47:07
verbally send offers if you have question from a while ago sorry I didn't
47:12
see it till now if you if you want to make an offer then they have to sell it and they have to they have to send it if you write it officially on a track
47:19
people are moving to Red States especially Texas and Florida Texas is simply simple Florida has a lot of deal
47:25
Killers I'm assuming he uh uh talking about blood floodland insurance insurance is a pain
47:32
in the ass here for sure insurance I'm thinking of the species the endangered
47:38
species on Raw land yeah you got tortoises owls you got the whole and you
47:44
can't you can't just remove them like by hand you got to call the Florida Wildlife safety department it's like
47:51
danger species like eight to 10 grand to remove so if you got 20 acres and you
47:56
got 20 tortoises on on on that acreage then you got to pay like you know 200
Chapter 5: Focusing on Texas Market and Future Plans.)
48:01
Grand to remove the damn tortoises and and a lot of them to place them somewhere and then they'll migrate back and then you got to pay the another 10
48:07
grand to remove them again and you know I'm gonna start a business of move removing animals sounds like a revolving
48:14
check I think only the only the Florida Wildlife and safety can do it no one else can do it and that that's why they
48:22
yeah sounds like a racket to me and of course they're uh I underst staffed and
48:28
overworked 100% that's why they charge so much sounds like a racket man that's
48:34
a nice Boomerang you crate let's remove these Turtles and they come
48:39
back it's because of all those damn Californians and Texans moving
48:44
here absolutely absolutely we'll welcome the Texans yeah yeah so that's that mean
48:52
that's the biggest thing so we're really going to dig down deep into Texas moving forward and I'm excited man I'm excited
48:58
it's going to be it's going to be very very interesting um there's a there's a lot of uh there's a lot of movement in
49:06
the in the m in the marketplace of listings I saw a tweet that uh there's
49:12
just like so many houses going up for sale right now so I think the I think the Market's shifting right now and it
49:18
may be in our favor because if we're the only one buying we going be buying a lot of stuff it's G be good
49:27
it's going to be good and he got one more question who's got a good question for
49:34
us just a small question but again what determines from you us be able to buy like longer than the 50 minutes and the
49:41
one hour radius like you said Tyler had some people send me stuff in Waco but I know sell Finance is a goal but what
49:47
show what else it's a combination of if we can get seller financing or a Buy
49:53
price a lot of times what verifies it if we can get a assigned Loi from a buyer
49:59
potentially so we had a deal come up that it's it's two hours from Dallas
50:06
little bit further than where you want to be but it's priced the price was right and this is where like the further
50:13
from town you are the deeper you need to get that deal because the best way to move uh further out property is to
50:21
undercut the competition so you need to get a better deal the further you out of you out of town that's just the bottom
50:27
line because if let's say for instance the the land selling for 10,000 an acre
50:32
there I might want to get that thing for three to five because I'm gonna sell it for eight right you
50:39
know so you really need to get deeper deals the further you are out of town
50:44
just because you need to you need to provide a pricing deficit where people are like
50:49
that's a killer deal I need to buy that right now I don't know why it's so cheap so you need to make it so attractive
50:55
that people are going to buy buy it whenever you're father outside of town okay that makes sense and then just because the water source isn't as
51:01
accessible as our goal is when it's close to the city absolutely that's another Nuance like I said you got to
51:07
know what the well cost is because that's the cost that's going to have to go into the pricing a lot they're going to build or end up living on that
51:14
property right so the the stuff that's rural you really got to get a good deal
51:20
and if it's not if it's not a great deal we're not going to buy it because it's one of those things you have I can get
51:26
let's say it's 10,000 acre and if I buy it for five and sell it for 10 I can get the 10,000 an acre but it might take me
51:32
a year yeah and longer it sits in the market the more Capital it costs for the capital stack that we talked about
51:39
earlier it's all about your Capital stack so you need to build your deals around capital and you need to
51:45
understand how fast deals are going to move based off where they're at located where they're yeah like expected returns
51:52
too man yeah expected returns so for every dollar we spend we have to make back no less than two so if you're if
51:59
the lady wants a million and we the the max we're going to be able to sell it for is5 that we're not putting a million of cash out yeah so yeah we have to
52:07
think about that is a you know what is the seller going to carry what can we sell it for but two is a good one 2.5 is
52:14
a no-brainer that's our real Target is two5 but you know two Gets You Through the door so if you can't get that back
52:21
in a reasonable amount of time then it's not even worth it you know and and if the only out you have is De velopment
52:26
then it's probably not a deal right we're willing to put up the cost for the development Kyo in one today where the
52:33
seller is going to carry it until we're done with all the uh the engineering for the neighborhood we got financing too we
52:40
got solell financing too even financing and two extensions uh giving us a total
52:46
of a year and a half to close so the deals are out there it takes a lot how
52:51
many deal you have to go through to get to that one uh I probably made like 20 off offers or 25 offers or something
52:58
before but no here's the point I really want to dig at Kyle how long have you been negotiating this deal I mean I
53:06
joined the hive like probably 65 days ago and I this was like probably day 15
53:12
or day 14 I was within Hive so negotiating he's been negotiating this
53:17
deal he's been negotiating this deal for over 40 days with the agents back and forth multip times a day phone calls all
53:25
that stuff so it took really good negotiations to get this to get this
53:31
contract over a long time so that's that's the big thing all right I think
53:37
we're gonna end it here uh Anthony Daniel we all be interested in West Lao
53:43
Texas send it to me we'll look at it we'll look at any deal anywhere in Texas 100% if it's in Texas we'll look at it
53:50
and we're focusing on Texas only so I am excited to dig in deep and do some do do
53:56
some crazy crazy deals here in Texas and uh we're already making a name for ourselves in the Land Community in Texas
54:03
so this is going to drill down and get bigger and bigger so I'm hoping we just
54:09
get pocket listing sent to us this because they know who we are and what we're buying so if we're top of mind for
54:17
those properties that's how you get free leads and free free land hey I think it wouldn't hurt when you're talking to
54:23
Sellers and agents let them know that you are with us you're with Hive mine and they're starting to recognize us now the sellers are even starting to
54:29
recognize us the national Builders are starting to recognize us so we're becoming a familiar name so I would
54:34
start to use that as your front end so that they know they can go search our content and see if we're serious buyers or not yep go
54:42
Tanisha real quick I just want to add to what you just said that um you know you
54:48
guys are making a name for yourselves um in the land business um one of the deals
54:54
we contracted last week um that Anthony was assisting me with negotiating that was one of the things
55:02
the guy said that he Googled us on the Better Business Bureau and he saw that
55:08
we had um we had good ratings and so you know
55:14
of course Anthony went hard on him and he accepted the what Anthony wanted but
55:20
you know it's just I just want to add that they did say that they wanted to do
55:25
a future deals with us and so they were even though it wasn't the price that they wanted to sell it for they were
55:31
willing to do this one just to um establish some form of relationship so
55:37
there can be long-term relationship for future
55:42
deals there you go I didn't even know we're on the B Business Bureau that's news to
55:49
me that's funny I I I I I do I do a lot on socials to get us The Branding power
55:57
we that we have and it's only going to get better so definitely definitely dig into it um I worked really hard to get
56:04
that to where it's at now and it's only getting better so um I I'm excited to
56:09
see it working in some way shape or form and I don't know how it's working but it's working but if you if you dig into
56:16
the social side it can really help you out in the long run all right think we're good thanks for coming y'all I
56:21
hope you all learned a lot I know that the capital Stacks kind of hard to digest sometimes but if you watch some
56:26
videos about it you'll understand the financing side of it which I think can make you a better investor in the long run if you understand that side of it
56:34
sorry I was late said go Frank said sorry I was late oh you're good man
56:40
you're good at another meeting you're good man it happens B here we'll see you next week uh Mother's Day is coming up
56:46
don't forget your mother or your wife or spouse we'll see you next week thank you
56:56
[Applause]