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The Ground Game Podcast
Welcome to The Ground Game Podcast, where land investing meets real talk! Join your hosts, Justin and Clay, both 7-figure land investors and seasoned entrepreneurs, as they dive deep into the world of land investing, team building, and personal growth.
The Ground Game Podcast
Episode 25: Is Land Investing Dead?
🎙️ Welcome Back to The Ground Game Podcast! 🎙️
Episode 25: Is Land Investing Dead?
In this episode, hosts Justin Piche and Clay Hepler tackle a pressing question in the real estate community: Is land investing dead? They explore the current state of the market, share personal experiences, and provide insights on how to adapt and thrive in an evolving landscape, ensuring your land investing business remains successful.
Key Highlights:
- Personal Updates:
Justin and Clay kick off the episode with lighthearted stories from their recent family adventures, including Justin's thrilling skiing trip with his kids and Clayton's quality time with his son, setting a relatable and engaging tone for the discussion. - Understanding Market Dynamics:
The hosts delve into the changing landscape of land investing, discussing how increased competition and market fluctuations can impact deal flow and why it's essential to stay informed and adaptable. - The Importance of Professionalism:
Justin and Clay emphasize the need for a professional approach in land investing, highlighting the significance of systems, processes, and a business mindset to achieve consistent success. - Data-Driven Decision Making:
They discuss the role of data in empowering both landowners and investors, explaining how better access to information can create pressure on pricing and negotiation strategies. - Building Relationships:
The hosts share insights on the value of networking and building relationships within the industry, which can lead to new opportunities and collaborative ventures. - Value-Add Opportunities:
Justin and Clay explore the importance of identifying and creating value in land deals, encouraging listeners to think beyond simple flips and consider long-term strategies for growth.
This episode is packed with practical advice, personal anecdotes, and actionable insights that can help you navigate the complexities of land investing. Whether you're a seasoned investor or just starting out, this conversation is essential for anyone looking to understand the current market and thrive in the world of land investing!
Tune in now and discover why land investing is far from dead and how you can position yourself for success!
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Clayton Hepler (00:00)
and welcome to another episode of the Ground Game Podcast. This is your co-host, Clay Hepler.
Justin Piche (00:09)
And this is your other co-host, Justin Piche, and we are here to show you how to win the ground game.
Man, what episode is this? I was just thinking that. Another episode, but it's got to be like 24, 25? Have we made it that far?
Clayton Hepler (00:28)
W-h-h-h-h-
We're getting up there, dude. I heard a stat that
some absurd, it's kind of like the stats, 90 % of car wrecks happen within a mile of your home. It's like 99 % of podcasts don't make it past episode 10, so we're in the 1%, man.
Justin Piche (01:02)
Yeah, I mean, that's a lot. We've done quite a few. All right. I logged into I logged into Buzzsprout. OK, I can tell you how many. All right. So last episode was 24. So this is 25, man. We've almost made it a quarter of 100 episodes. We have made it, I guess, a quarter of 100 episodes. Crazy. Love it. Amazing. Well, man, so I had last week with spring break, went skiing.
Clayton Hepler (01:21)
Yeah, what's new?
Justin Piche (01:31)
for first time in a couple of years. I love skiing. Like it is one of my favorite things to do. I am not to brag, but I'm a very, very good skier and so is my wife. And it's just something we've always done together. You know, since we've even yeah, even before we were dating, like when we were just like friends, we went on a ski trip together. And when we started having kids, we went the first year when my daughter was young, we flew some of our friends out and my friend's wife watched our baby while we went skiing. And then the last couple of years, we just haven't
Haven't done it. And so my oldest is five and a half and my middle is three and a half. And so we brought them out to the mountain. We went up to Oregon, visited some of our best friends and went skiing on Mount bachelor and it was awesome. I mean, it was just so good. And the kids like killed it. My daughter was so good within a couple of days. She was doing blues and she's just crazy. She has no fear. Both my wife and I were talking. We're like, man, she needs like a, she needs a big wipeout to just humble her enough to stop like
rushing the mountain and like going with no band and down the mountain like she does. So that was really good. It was fun. Got back late last week. And then here's my other funny story that I told you about. want to tell you about. Dude. Okay. this, so we went to the Houston livestock show and rodeo on Saturday, which we go every year. It's super fun. they have like this whole big carnival and festival area and they have this whole
Clayton Hepler (02:42)
Yeah, we were texting, we were texting.
Justin Piche (03:00)
portion of NRG Stadium, which is where it is in Houston. They have this whole portion with all these animals and all these things to do pony rides. You can see the animals. There's like a cow giving birth and you anyway, it's really interesting and fun and cool. The kids love it. And then you go outside and they've got like Ferris wheels and different rides and things for the kids. And they also have this thing called mutton busting. Do you know what mutton busting is? man, you Yankee. Mutton busting is where they put kids.
Clayton Hepler (03:21)
I don't.
Justin Piche (03:29)
that are like five or six on the back of a sheep, like a full grown sheep at one end of the pen basically, and then they freaking sprint to the other end of the pen and the kids hold onto the back and they get scored based on how hard the sheep was to ride and how fast they go and how long they hold on and all that kind of stuff. there's 30 kids, there's a whole thing inside the rodeo, it's like a rodeo event and if.
Parents can register their kids like back in October for March timeframe and get their kids in. We didn't do like the official thing. You gotta like, it's so much forethought and planning and then they compete and then there's like a grand champion. But they offer, you can just pay like 20 bucks to get your kid into one of the heats. And so we did that. My daughter was in the noon heat, whatever the day was, the Saturday, the 14th. dude, she killed it.
I was giving her pointers. I'm like, all right, keep your arms straight. Grab the sheep from the bottom, kind of twist your hands into the fur and then lock your, like lock your ankles and feet around like the midsection and keep your head off of its head, like on its back and like hug your head tight. And she got up there, she's wearing like a dress and like, she's like, looks all cute, but she's wearing this little vest and this helmet she gets on, freaking crushes it, doesn't fall off. The sheep like.
crashed into all the other sheep and she flew off. I got the whole thing on camera. I posted on an ex. She won. She won. She like won this. There's 30 kids in it. She won her mutton busting heat. And so, so we're like, we're like, and she loves being successful like any person does. And so we're leaving the rodeo and she goes, dad, is mutton busting a sport? I'm like, kind of. It's like a rodeo event for little kids. She goes, can you
Clayton Hepler (05:02)
my gosh. my gosh.
Justin Piche (05:22)
Can I take button busting classes? Like, can I do this more? I want to ride more sheep. my God. She might be too big next year. She'll be the right age, but she might be too big. You to be under 55 pounds. And she was 50. She's like right at the, you know, a little bit under the limit. So we'll see. We'll see what happens. But it was hilarious, man. It was so funny.
Clayton Hepler (05:28)
We'll see you next year, we'll see you next year, honey.
That's so much fun. Yeah.
Yeah. My, my, well, my wife went to a bachelor party Thursday, Friday, Saturday, Sunday. And so I was doing dad duty last week. and you know, it's just amazing to see my little 11 month old son. He's just like, he's such a smiley little baby. which I'm like a super serious guy. And so it's, it's, it's, he's like very happy go lucky. Everyone's like, your kid is so smiley.
Justin Piche (05:46)
What about you, man? What's been going on?
Clayton Hepler (06:13)
And when other kids come over, he's always like smiling and just really, really happy go lucky. And so dude, it was just awesome. Like spend the whole day with him. And, you know, on Friday, I was like taking calls, but not really because I was just fully present with my like 11 month old son. He's almost 12 months old. He's a year, right? That's a big, big birthday. So that's coming up in April. But no, man, I mean, that's that's good. Got a new acquisition guy.
Justin Piche (06:37)
Yeah. Yeah.
Clayton Hepler (06:44)
He's coming in, he's grooving, he's grooving in pretty well actually. Really quickly learning the ropes. And then, yeah, I we'll probably, I'm sure we'll talk about it today, but getting, I'm hiring a, like a data analyst, director of marketing to help, you know, a couple episodes ago, we talked about using, recycling, optimizing our data for higher return on ad spend, lower cost per lead, cost per deal.
And it's that time in my business when I'm going to hire someone that's fully dedicated to recycling, repurposing, and reusing data to get better returns on ad spend and target properties that are better to acquire. And so I'm super pumped. I'm super pumped about that. that's what we should have our final candidates here over the next week and bring someone on so that they can start to run our marketing department.
Justin Piche (07:24)
Thank
Yeah.
Clayton Hepler (07:42)
and with an emphasis on data.
Justin Piche (07:48)
Yeah, that's great. That's great. Back to your son's first birthday, though. Are you guys going to do a smash cake and like do the whole American thing of just smashing a cake and watching him throw it all over the place?
Clayton Hepler (08:00)
Dude, tell me more.
Justin Piche (08:04)
man, this is a thing. It's a thing. I don't know if it's a thing up in Pennsylvania, but it's definitely a thing down here for your kids first birthday. Generally speaking, most people are not like feeding their kids sugar or like cake or things like that when they're under one year old. Most people don't. Some people do. Yeah. Second and third kid. It's like not as big a deal, but for the first kid, generally they're not having anything. They're not milk and like veggies and regular food, you know, by the time they're one, but then on their first birthday, you bake them a little get like a little cake.
You know, and you can make it healthier. My wife did one for our youngest for her birthday in January. She like baked some kind of healthier cake option, but they just, you just give them the whole cake, sit them on a high chair. Everybody's crowded around watching them. You sing them happy birthday. You give them the cake and they just dive in and just like eat the frosting and the cake. And it's just hilarious. Totally a great tradition. You should, you should do it. Smash cake.
Clayton Hepler (08:52)
Smashcake dude, I love it. I'm sure honestly to be fair like I'm sure my wife
I'm sure my wife has thought about it like like like you know so she definitely thought about it and For me I'm along for the ride in that way so if we do a smash gate, that'll be awesome, dude I'll send you plenty of photos
Justin Piche (08:59)
Yeah, I'm sure she has to know about this stuff.
Yeah. Just yeah, you should totally make sure it happens. In fact, you may impress her by seeing it saying something like, hey, honey, I was thinking in order to make our the first birthday like super special, we should do a smash cake and get it on camera and everything.
Clayton Hepler (09:26)
I don't even know, I don't know if she listens to the podcast, so it'll definitely surprise her. But if she does, close your ears, honey. right, so today we're gonna talk about is land investing dead, right? I've been seeing these posts in Facebook groups and people talking about, my gosh, like I just,
Justin Piche (09:34)
Yeah.
You
Clayton Hepler (09:55)
had someone that submitted a deal to me. And I like to get to know people, right? And so I get on a call with this guy, talking to him today. He's like a really good guy. I've been in it since like 2020, the good old days, right? And he's saying, you know, just deals are different, deals are changing. And I think it's on top of everyone's mind. I had this conversation, man, I forget who it was.
Justin Piche (10:06)
you
Clayton Hepler (10:23)
Might have been Ajay, but Ajay, you're listening to this, I'm so sorry. It might have been you. You're memorable human being. And so we were talking about how the evolution of the space, but there's just still so much opportunity. There's still so much opportunity, and that's what we're gonna talk about today. But Justin, is land investing dying?
Justin Piche (10:31)
you
Okay.
Yeah, I mean, great, great question. The answer is definitely no. And I think people know that, you know, is land investing dead is probably like a like a engagement title type of a thing. The answer is no, it's not dying. But like every industry that matures, it's certainly harder and it's certainly changing. And there's we've talked about this on previous episodes, but there's a level of professionalism that and systems that you need to have in this business to be successful today that you did not have to have a few years ago.
People always get lucky. There's ways to get lucky without having a good system, without having good processes in place and get lucky on a few deals. But to create consistent deal flow that you can count on and rely on, I think it just requires more energy, effort, and focus than it used to. And I was actually having a conversation earlier today with someone who reached out about coaching. we weren't talking about is lane investing dead? That didn't necessarily come up.
I asked him, how's your business going? Tell me about your business. What does your deal flow look like? What does your marketing flow look like? And his biggest frustration was the consistency. He's getting deals, a few deals, a deal every month or two, doing a consistent output, but at relatively low marketing level. And immediately, I can see based on his team structure, the amount of marketing he's sending and what the deal flow is, immediately, what are the inputs he needs to change to just really
get some consistency and lead flow to have more opportunities right off the bat. But it can feel like it's dead because people sell you still gurus, you know, sell you and I'm not going to name any kind of big land investing programs that people, a lot of people have come into this industry through, but they'll sell you like it's easy. It's an easy side hustle, right? You can use all of our services and generate all your leads and get all your data and we'll price everything for you. And it's just a lot of people don't get the results.
that they want because they don't understand the level of work and energy and focus that's required to actually produce those results.
Clayton Hepler (13:02)
It's sort of like the selling the 90 day fit body bootcamp that you can get the body that you want in 90 days. And anyone that's a real personal trainer knows that it's a lifelong pursuit. so business is this very dynamic thing. And what works last year is not going to work next year. That's not a good or bad thing.
I think it's just all about continuously involving, using your land businesses, this vessel for your personal wealth building and giving up and saying, this is dead is really not the best way to approach the problem. And also like some people will say that and maybe those people are also negative in other parts of their life, Justin, right? Maybe they're
They're fatalists in other parts of your life. So, you know, it is working. It is working, but it requires some things that are for a lot of people, not what is advertised. And so I think there's this dichotomy to be managed between this is what I was promised when I got in and this is the reality of the situation. And so the land investing that I was sold might be quote unquote dead, right? The one that was working in 2017 is quote unquote dead, but that doesn't mean it
Justin Piche (14:11)
.
Clayton Hepler (14:27)
It can't be at this incredible thing that like you and I, it's changed our lives significantly, changed our family's life. And so I want to talk about the changing landscape, right? Well, what's the difference between when you started and then when, like what it is today, like what has caused this changing of the land market? Because it's not just like just competition or
just whatever, there's a multitude of different factors. What would you say those factors are?
Justin Piche (15:05)
Yeah, I mean, think the first thing that pops into my mind is like, what's the major change is that other adjacent industries have become more complex and more competitive. House wholesaling, house flipping, even multifamily to some extent, those industries margins have compressed. And so there's a lot of experienced operators.
that know how to close land trends or know how to close real estate transactions that understand off market marketing, lead flow, all those things that see land as this blue ocean with less competition and higher margins. And they're right. It is still that way compared to those other markets. And so we've seen pressure from more advanced, maybe operators coming into the space. So that's, that's one thing. It doesn't mean it's like the whole picture, but that's, that's kind of one thing. There is increased kind of competition to
would be the maybe advance of lower cost marketing channels and kind of more prolific use of them. Go Calling, for example, which both of us do a lot of, there's texting, there's RVM. All of those different channels are lower cost and can be operated at a higher scale. And so since people are coming into the space and doing them, landowners are getting hit with more and more offers. A third thing is the data has gotten better in terms of where are the best markets to invest, sell through rates.
We can see where people want to buy land. And so more people are coming especially into those markets creating competition. And because of that, landowners are seeing pricing for their properties more often. Less experienced investors may be offering higher or people who can operate with lower margins are offering higher and then they get anchored to that higher price. And so it just gets harder and harder to kind of negotiate lower prices on deals. Those are kind of some of the major reasons. Obviously,
there's economic factors, interest rates are substantially higher than they were in 2020. Back when I got started right before COVID, mean, interest rates were at an all time low. think I refinanced my house at 2.75 % interest rate back then. like money was just cheap. It was easy. The stock market was going well, money was cheap.
And then when people started working from home and getting trapped, you know, trapped in their house, they're like, man, I could really, since I'm working remote, I could really use some more space. And that created a huge like land purchasing boom. I mean, I couldn't not sell everything I bought. I could sell for a profit in 2020. It's like everything went off the shelf relatively quickly. made it feel easy. It was like, this is, this is great. I'm just, just so good at this business because I'm selling land so fast. but it was really just a product of the market. And obviously interest rates have come up. There's been some.
maybe economic tightening for a lot of folks. And yeah, those are some of the main reasons why I think that it's changed a bit.
Clayton Hepler (17:55)
Yeah, I think
that for me, the evolution has come down to data and data in terms of empowering landowners to understand the values of their land and also giving land investors all these, the ability to target landowners at scale. And so what that's done is that that's created pressure on both ends. It's created pressure from
Landowners now knowing the value of the parcel. so the arbitrage that was there, the information arbitrage is reduced. And then the other pressure is being able to do mass marketing with RVMs or like you said, texting or calling.
Essentially the feeling of there are more people that are interested in my land. Now, I hate to use broad statements like there are a lot of institutional investors or wholesalers or multifamily investors that are coming into the state. I actually don't know that. Right? You might know that. You might know that, but I don't personally, I haven't heard that many stories.
Justin Piche (19:12)
Yeah, I don't think it's institutional and it's not really the land flipping space. So let me, let me be clear. The, my, I'm really basing this off of a couple of calls that I've had recently with folks who are experienced operators in the multifamily syndication, like large fund type space. And maybe they're not institutional, they're sub institutional, right? Maybe they're running.
five, $10 million funds, maybe they have 70 or 100 or 200 units under management or something like that. Like medium players, people that you would say, oh, those are successful multifamily investors. I've had more than one call with folks that fit that description who are looking to get into the land development space. Not necessarily just flipping raw land, but looking for larger returns on lower risk deals that doesn't have as much competition. So maybe more of like the one to $5 million.
deal range, not necessarily your $20,000 or $50,000 land flip.
Clayton Hepler (20:04)
That makes sense. Yeah. But I would agree that there are, you know, that because I believe that some land investors got in in 2020 or 2021, Justin, and they weren't actually good business operators. seeing a pop. I get Instagram ads all the time of people that I've never heard of saying that land investing is this great thing. And kind of look at them and say, you know, how many deals has this person done? Right? Like,
Justin Piche (20:28)
you
Clayton Hepler (20:33)
Right?
Justin Piche (20:34)
I
see the same thing. I bet you are listeners too, because if you're on Facebook, then you're probably getting some sort of targeted ad for some land coach or something like that. And I definitely see people that I've just never heard of or never seen. And that doesn't mean that I know it. I certainly don't know everybody in the land space. There's all kinds of different sub communities and things, people that I'm not really exposed to. But it is wild. see people and I wonder how they even got into this.
Clayton Hepler (21:01)
It's easier
to make money selling education than it is to actually run a business. At least sort of like, you know, jumping from one business to the other. And I think another reason why people think, it's dead is because the playbook that was taught no longer works. The cheap quick flips in desert squares are compressed. Mass marketing, mass mailing without targeting is
what everyone else is doing. so you're not really differentiating yourself. And when there wasn't that much competition, it's easy to do that. Like, you you could just send mail to a zip code and make money. Like what Seth Williams said he used to do. And so, and I would say additionally, the buyer profile deals are taking longer to sell. It's a normal cash conversion cycle, but deals are taking longer to sell. And so people are also saying, well, I can't get my money back that quickly. Right?
So there's a lot of stuff here, man, I think that is contributing to the changing landscape, the reason why people are saying it's dead, but it's just an evolution. what is working, like I said earlier, what works last month or last year is not gonna work today. You just have to stay, adapt to the new conditions.
Justin Piche (22:19)
guys, this is Justin interrupting your podcast again to say thank you for listening. We really appreciate it. If you could take a moment now to.
Pause your podcast, give us a five star review and leave a comment that says Justin is the best. We want more of him. I would really appreciate it. You can also say that Clay is the best. We're keeping a little tally as people leave reviews to try to see who will win some random ego competition we have. But in all seriousness, we appreciate y'all and now back to your regularly scheduled programming.
Clayton Hepler (22:49)
in other words, what does this mean? This means that instead of being a hobbyist, instead of this being a side hustle, you just gotta treat it as real business. So many people reach out to me and they want to transition their hustle to real business. And that's what really, the consistency that you and I were talking about earlier and in general. People are asking, hey, how do I become more consistent? You become more consistent by focusing on your controllables.
Tracking KPIs, hiring the right people, tight management, defined outputs and roles, understanding how to target markets, documentation, SOPs, all the things that make a good business, whether you're building a rocket ship company, a nuclear reactor company, a cleaning company, a house flipping or land flipping company, all the things that make you successful, having the right people in the right seats.
SOPs, procedures, understanding your cost of capital, understanding all your KPIs and metrics, casting a vision and rallying the people in your company around that vision. Those are the same things that you need to do in order to be successful here. But unfortunately, that's not what's taught, right? What's taught is you can send a bunch of mailers to this specific market and you'll be rich tomorrow. And the things that we're talking about is one level up from that, which is
Justin Piche (23:57)
Thank you.
I that's a great way do it. I think it's important to have a
good conversation with people who are in about the
Clayton Hepler (24:13)
the things that are a little more painful to do, follow. Going through 50 applications versus just hiring on the second one, right?
Tracking your KPIs, knowing them, what's your cost per deal this month, what was it last month, what was it last year? You can pull that out. Managing your team, not abdicating responsibility, delegating and holding that person accountable and hiring those right people. Justin, what would you say is...
some other things you would add or maybe emphasize about building a real business.
Justin Piche (24:50)
Yeah, I you know, the number one thing that pops into my head is a limiting vision. You talked about setting the vision and
just a minute ago as a part of this whole process of tracking your KPIs and hiring your team and getting the best day players in place and so on and so forth. But if you are an operator who looks at this land flipping thing as a side hustle, you are going to get beat every single day by somebody who is investing the time and energy to perfect their art of marketing.
There's a scale aspect to this business that used to not matter as much when you could, again, send a bunch of mail out to a random county or zip code and get a bunch of calls because of how much additional marketing is going out from other operators. You aren't going to stand out with your 2000 or 5000 piece mailer. Like it's not going to be enough to generate consistent deal flow. And I think that's the biggest lesson that I see to kind of newer investors or people that aren't having consistent deal flow need to learn is that
A three to $5,000 a month marketing budget is not going to get you consistent deal flow. It's not operating at the level that you need to operate to actually turn this into a business. And it's hard because a lot of people want a proof of concept before they're willing to commit a certain amount of cash to their business. They want to prove that it works. They want to prove to themselves that they can do it. And I respect that.
it's wise to be cautious. I would not advise anyone to just say, Oh, I'm to throw $30,000 at marketing this first month and see if it works. mean, I'd rather say send 5,000 a month for six months. Know that you're not going to get a ton of deals, but you'll probably get a couple and that should be your proof to say, okay, well if I double this, will I get double the amount of leads and double the amount of contracts by triple it? Will I get triple? And the answer is probably yes. To some extent there's a diminishing factor. Obviously as people continue to come into space, more competition, et cetera, but
I think people need to get over that hump of taking a risk and investing in themselves and actually investing in their business. it can be scary. It's certainly a mindset thing. There's a fear aspect to it, but without overcoming that fear, you're kind of, you're, you're setting a limit on yourself that may, you may not be able to achieve what you're trying to achieve.
Clayton Hepler (27:10)
Right. And I would say one thing I was talking to a private client the other day, and we were talking about some opportunities for him to divest of some of the equity and some other ventures that he has. And we're all sold that real estate investing, like multifamily residential investing, you're going to get the 8%, 10 % return on your money, and you underwrite the deal, and it looks good, and looks good on paper.
and then you put your $50,000 down on your real estate. And man, you know what ends up, you gotta replace the roof in year two, in year three you gotta do the hot water tank. But the way that it's been marketed has been this is a sure bet. This is a sure bet. You're gonna get, it's real estate, it's six and bricks. And in my experience with real estate, it's not like that. It's the management company, it's the asset management.
quite a bit of real estate and it doesn't cashflow as much as I'd like it
we have these assumptions that we create. They're manufactured beliefs that we have, Justin. And if we just said, there's no ... People lose money on real estate all the time or business ventures all the time. They're just not the ones that are shown in the highlight reel.
And so if you said, Hey, I'm going to dedicate this amount of money, you know, $50,000, let's just say it's a lot of money for a lot of people, Um, over a period of a couple of months in order to get my set my business up to succeed. And you have the cash, maybe you have a W2 job. So that's your backstop. Is it worth taking that, that risk, that asymmetric risk that you could potentially build a business that gets to the level of what Justin and I have today or, even bigger than that?
Dude, I think it's worth the risk, right? Because you can't ever with, for example, a piece of real estate, you can't get to the amount of cash flow because real estate passive income, I hate to break it to you, is not passive. But you cannot get to the cash flow that you can create through land investing in the speed that you can create with land investing. So even if you fail, let's just use a return on investment perspective. Let's say you spend $50,000, Justin.
and you don't do that well and then you throw another $30,000, you don't get a single deal, you throw another $30,000 into it, you're $80,000 in a hole, okay? And you're investing, but on that 30, you find a deal that makes you 100K, okay? So you get all your money back on that 30, and you made a little bit of money, right? Your return on your investment, if this happens in a year,
You invest 80, you get 100. It's not amazing, but you make $20,000 on your 80. That's, I don't know, 25, 30 % return overall, something like that. Well, in real estate, you can expect, if you're really lucky, maybe 15%, maybe 20%, maybe. It's closer to, I think, low teens now with interest rates and the way that real estate is being priced currently.
So if you look at it that way, it really makes it, you're getting double the return or triple or quadruple in this case, it makes it almost a no brainer. Now of course, I'm not saying you should quit your job and go out and spend all this money and it's gonna be easy and you know what you're gonna make, it's gonna make it happen, but you're building a business here. This is not real estate. This is a sales and marketing business. And so your returns can be much higher than this in real estate. But people view it similar to,
they view rental real estate as the cash flow. Rental real estate's gonna allow me to quit my job. Land flipping's gonna allow me to quit my job, whatever. But in this case, you can see how investing in the money, taking that leap, like Justin was saying here, can get you to your financial goals much faster than residential real estate can, or another derivative of that.
Justin Piche (31:23)
Yeah, I mean, it's definitely a better compounding effect because the return on each individual project is typically significantly higher than buying an asset that cash flows waiting for it to appreciate or slightly improving it and then selling it, you know, several years later. I think the real kind of value is the is the in the act of buying and selling. Now, one thing I'll note and note about
land versus call it other assets that cash for like a cow or a commercial property or a multifamily is that land is not depreciable. So when it comes to a tax perspective, it's definitely not the most advantaged asset class by any stretch of the imagination. Your income is going to be realized. You're not going to have anything that you're not going have anything really to depreciate against it. That being said, you can add a ton of value to property, to raw land.
like at a much lower risk than constructing a building, for example. One of the things that I've been doing recently is some of these larger subdivide deals where we're putting in roads and power, you know, 30, 50, 100 lot developments. And the risk for investors, when I pitch a deal to investors is a whole lot lower than the same deal that, or same size deal rather, but it's some sort of construction project.
because the cost basis of the land makes up like 60 to 70 % of the total cost of the project. And then the other 30 to 40 % is the improvement cost. So even if like the project goes south, you know, we're not able to sell anything. We still have the actual asset value of the raw land that we purchased plus some improvements. There's a pretty significant, there's like a bottom that isn't that far below the total investment price of the deal. Whereas,
If you have a large multifamily project or even a small multifamily project, your land basis might only be five to 10, maybe 20 % of the total cost of the project. And the rest of it is all construction, which has obviously longer timelines for building it up. You're gonna have bigger loans, more interest rate risk, more economic and market risk than a faster land development project. I know we're kind of talking about is land investing dead? No.
There's obviously a lot of value add opportunities in it. I think it's still the best asset class to be in in the real estate space by a long shot.
Clayton Hepler (33:48)
And let me just add
the tax thing. So a guy posted on, I forget what Facebook group he posted on. I kind of put this really snarky comment. This guy was like, how do I optimize my taxes for flipping land? I'm like, dude, you know what you should do? You should lose a bunch of money and you won't have to worry about paying taxes. Right? Like, it was a little snarky. wanna be unbeknownst.
I was feeling this morning, I was like, you know what? I'm just going to... And the reality is what I ended up saying was, know, listen, you should be happy you pay all these taxes. Because if you're trying to go through this like... trust me, I've run the numbers. I've run the numbers on buying depreciable real estate and then using that to like shield some of my income and then reducing my tax burden and then just look at the returns that I get.
And to me, it's just so clearly putting all the money in the land at this point, right? Because the returns are so much higher. So you just do a little calculation of, you know, what's my return that I'm going to get on my real estate plus my tax, you my bonus depreciation, whatever it is. And then I ran this recently and then my return that I get from my real estate itself, it just, or from the land investing itself, Justin, it just absolutely murders that. So it's kind of a snarky comment, but...
Justin Piche (35:12)
Thank
Clayton Hepler (35:16)
I think as it relates to taxes, it's important to consider, because someone might hear that and say, well, I know, but I want to try to shield myself from taxes. Well, if you have a big enough tax burden, it's actually a really good thing. So I think another thing besides the clearly transitioning from a hustler to be a business owner in order to differentiate yourself is creating value, like you said, that's a huge one, right? Being able to create value, right? Working with...
someone that can help you take your business to the next level. Whether it's just hiring a consultant or you just go out and rezone a parcel yourself or subdivide a parcel yourself. You engineer the value through what Justin said, entitlement or subdividing or creating additional opportunities. And then also like understanding the markets, right? Being the go-to person. I think there are some land investors, I forget their names, but...
Two land investors do this in a certain state and there are some people that are only in Texas and they only do deals in Texas or Tennessee or South Carolina or Wisconsin or whatever, California wouldn't want to be that guy. And so you specialize in a specific area. You focus on value-add opportunities. You run your business like a business. Those three things will evolve your outcomes and help you become more successful as a land investor.
Justin Piche (36:22)
you
Clayton Hepler (36:42)
You won't ever think that land investing is dead because you're operating ahead of the curve.
Justin Piche (36:50)
I think it's clear land investing is not dead. We've said it a few times on here. If you're listening to this, you probably feel the same way. Obviously it's like, why would you be listening to two guys talk about land investing and business and all that kind of stuff? If you believed it was dead, you probably wouldn't be frankly, you would have given up on it already. So I think this is going to be a common belief that our listeners hold. But kind of to reiterate, right? Success in this business really does come from building a real business.
and investing the time and energy and effort into the systems processes and adding professionalism to it. Right. I've told this to a bunch of people. I and I have a strong conviction that purely flipping and not doing any kind of value add type of projects definitely will limit your ability to grow in this business. I think the value add is where a lot of the kind of money is a lot of the return on effort is. I'd encourage anybody who's not doing
some sort of value add or looking at the highest and best use of each lead that comes across their desk to start. Don't look at things through a single lens. What do you, what do you think as your, what are your main takeaways?
Clayton Hepler (37:58)
Yeah,
one thing I would add here is I remember, I'm gonna say, gonna hype up my co-host here. Don't forget, make sure that you rate and review me though. Just, just, just. One of the things that I really got that, you know, benefit from is finding other people in the business that are doing the same things or a couple steps ahead of you. And,
Justin and found each other early on. I'm sure he's learned a lot more from me than I from him, but you know. I'm sorry. right. No, so finding someone or a couple of people, a community of people that actually can help you bounce ideas, what's working, what's not, I think is a key thing that we didn't talk about. You got to build a real business. You got to be around those people. You got to go deep, not why. You got to understand the areas that you're marketing.
Justin Piche (38:46)
you
Clayton Hepler (38:57)
You have to add value. You have to engineer value in your land investing. But another thing that the bonus is finding those people that are in the trenches with you and sharing the best practices on a personal level. whether it's a best friend, whether it's a consultant, a coach, whether it's, I don't know, a group of people that you get down.
every week and you talk about, here's what's working, here's what's not, or bi-weekly or monthly, whatever it is. Man, that's been, for me, the unlock. Relationships are always the unlock. Relationships unlock value in subdividing. Maybe you can achieve a deal that you wouldn't be able to achieve. Relationships unlock value in understanding certain dynamics of your business. Maybe you're not tracking KPIs properly and you have this one sheet that you get from someone that helps you.
Justin Piche (39:32)
Okay.
Clayton Hepler (39:52)
streamline your KPI tracking so you can make better decisions in your business. Relationships allow you to get a perspective on, what's working in this market?
What's working in this market? Whether it's with a broker, whether it's with someone else that you're working specifically with, or understanding how they've cornered their market. Man, I think the relationships are always the key. It's always the key. I come back to it. And so being the type of person
that people want to bring opportunities to, being the type of person that is really easy to work with, there's nothing better for your business to keep it surviving and thriving than that. So in conclusion, that's what I would add.
Justin Piche (40:38)
Yeah, I love it. I love it. Man. So much going on. If for those of you who are watching us, you might notice that I am not wearing a backwards baseball cap or a hoodie. My wife, my wife talked to me the other day and she's like, you know, you're doing this podcast and you always look like such a scrub. That's not what she said to me, but that's what I heard. I don't know what exactly. can't remember.
She said to me she's like you're on all these calls with people all day and you're like look like You just got out of like a high school basketball game or something like that She didn't say that either, but I don't know ever again. So that's why I'm
Clayton Hepler (41:19)
Hey, I'm in her corner, I'm in her corner. I
agree with her. So, Juliana, you got a point for me. If you listen to this, if you got to listen to this.
Justin Piche (41:24)
You like the the air of
Yeah, so I guess I'll throw, well I'm not gonna throw them away, I got the hats right back there, I'll wear them usually, but when I get a fresh cut, I'm always down to, know, nowhere. I went to a wedding on Saturday, so that's why I got lined up on the sides here, so.
Clayton Hepler (41:36)
You're looking sharp man, you're looking sharp! Yeah, you're looking sharp, let's go!
wedding in sheep
racing.
Justin Piche (41:49)
Yes, why did I get sheep racing? That was my Saturday. It was awesome. The sheep racing was first.
Clayton Hepler (41:49)
Which was the first?
nice, so you smelled
a little bit sheepy when you went to the wedding.
Justin Piche (41:59)
I showered first. I showered first.
Clayton Hepler (41:59)
I'm glad man. I'm Awesome.
Well, hey, yeah listeners know listeners know at the end of the podcast most important thing guys, please write reviews, I mean like Every single week. I think 5 % Justin of the people that listen his podcast we review and subscribe and Yeah, man, it's maybe 1 % at this point If you're getting value the way that we grow we're not promoting
Justin Piche (42:04)
See you
I think it's less. I think it's like one.
Clayton Hepler (42:27)
other ads, other people have reached out to us to try to sponsor our podcast. And we like the sound of our voices so much that we're just gonna keep just doing, we're just gonna keep doing us on the podcast. But please guys, rate, review, subscribe, it really benefits us, it kicks us in the algorithm. Justin, anything else until next week, we appreciate you guys every single week dedicating the time to listening to us wherever you are.
and hope it's valuable in the way that you show that is really just, you know, given that, given that subscription and rating and reviewing and just leaving, leaving my name down there. Clay Hepler is the name again.
Justin Piche (43:10)
And downloads we got
we got six thousand six hundred and thirty seven downloads on Buzzsprout. So I don't know what that means, but somebody is at least downloading on their phone, even if auto download, that auto download tagged. No, man, that's it. Thanks, everybody. We'll see you guys next week.