Episode 55: Adapt or Die: Building the Optimal Land Business in a Changing Market

🎙️ Welcome to The Ground Game Podcast! 🎙️

Join hosts Clay Hepler and Justin Piche in this exciting episode of The Ground Game Podcast, your ultimate guide to mastering the art of land investing, team building, and land development. If you're interested in a raw, transparent look into what it takes to build a seven-figure land investment business, this podcast is for you!

In this episode, Clay and Justin dive deep into:

• Market Dynamics: Justin discusses the current cooling trends in the market, emphasizing the importance of maintaining a lean operation and low overhead during challenging times. Clay shares how his acquisition team is thriving despite the market conditions, highlighting the impact of having a skilled acquisition manager.
• Adaptability in Business: The hosts explore the need for adaptability in today’s market, discussing how to shift team structures and marketing strategies to stay competitive. Clay emphasizes the importance of professionalizing your organization and being open to new revenue streams.
• Personal Challenges and Accountability: Clay shares his friendly competition with fellow investor Andrew Haney, detailing their commitment to a series of personal challenges aimed at improving discipline and accountability. This light-hearted banter sets the tone for a discussion on the importance of personal growth in business.
• Direct Mail Strategies: The duo dives into effective direct mail tactics, discussing the importance of personalization and A/B testing to increase response rates. Clay shares insights on how to leverage local knowledge and technology to enhance marketing efforts.
• Lessons from the Field: Justin recounts a challenging deal in Florida, illustrating the complexities of land development and the importance of clear communication. He emphasizes the need for strategic planning and understanding market conditions to avoid costly mistakes.
• Building a Sustainable Business: The episode wraps up with a discussion on creating a business that supports your lifestyle, not the other way around. Clay and Justin highlight the significance of protecting profit margins and making informed decisions to ensure long-term success.

This episode is packed with valuable insights and actionable advice that you won't find anywhere else. So, if you're ready to take your land investing game t

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Transcript

Clay Hepler (00:00)
Hello and welcome to another episode of the Ground Game Podcast. This is your co-host, Clay Hepler.

Justin Piche (00:05)
This is your other co-host, Justin Piche and we're here to teach you how to win the ground game.

What's up, Clay? How is it going?

Clay Hepler (00:23)
Dude,

I'm looking at my shirt right now and I am blending into the background.

Justin Piche (00:28)
It is very similar color to your wall. guess mine is too, but I got some lights on the back that are making it appear a different color, but yeah, it's pretty close color, blue and blue. Yours is what, like a green, brown and green, brown type thing?

Clay Hepler (00:43)
Yeah. Yep.

Dude, what is going on?

Justin Piche (00:46)
Man, it's been an interesting few weeks. The market has seemed to cool, it just feels cool right now. Acquisitions, sales, it's cooler than it's been for a while, so it's obviously frustrating. I'm sure lot of investors are working to navigate this existing market. It's definitely a time that having a lean operation and low overhead can be ⁓ very beneficial to you.

like more beneficial than a fat team ready to rock and roll on contracts. So I'm contemplating in my own business, like what does that look like? You know, what does it look like to redesign a little bit potentially? ⁓ Overall things are like decent. We've got deals coming in. We've got notes selling, money's coming in, money's going out for deals. But we're not getting the same number of contracts we usually get for a given amount of marketing. I don't know what you're experiencing. Are you seeing similar things?

firing in all cylinders. Everybody kind of has a different experience. I mean, it's so market dependent, team skill dependent, marketing channel dependent. You can't like take somebody's experience and say, this is what I'm going to have. But I'm curious what you guys are seeing right now.

Clay Hepler (02:02)
Dude, our acquisition team is murdering it. My acquisition manager is murdering it. Now, Dispo, ⁓ are, we're not, I mean, we're not where exactly we need to be, but our acquisition team is just crushing. ⁓ You know, I think it's result of our acquisition manager, dude. He's like, you know.

He surprised me, he's really surprised me. And he's a land guy himself, he's done his own projects. And I've just been really surprised by him. He's been doing well. So, that's what I would say. You know what's interesting man, so speaking about what you're talking about, so I was talking to a really big land investor this week. Actually I talked to two pretty big land investors. One of whom I've never actually sat down to talk to.

And the other one is ⁓ someone that I've spent a lot of time, well, a decent amount of time working with ⁓ and just connecting with in general this week. And I was like, hey, like this guy actually does some serious funding. And I said, hey, like, what are you seeing in the market? Right? And he's saying, hey, he's seeing some guys just absolutely murder, absolutely murder it. ⁓

And then he's seeing some other people ⁓ leaving the business. A lot of people leave in the business because of bloat, because of undisciplined execution and ⁓ a lot of other things going on. Right? It was just a really interesting perspective. And the more that we talk about this, the more that I understand the importance of professionalizing an organization.

And like what exactly that looks like is different for everyone. ⁓ but like getting really good at what you do is, is the end game and being adaptable to the new market with different team structures, not, not being unwilling to shift, marketing channels or shift areas very quickly, ⁓ getting local, adding additional revenue streams.

I think those are all adaptability. I'd like to talk to you about adaptability, but first I need to call out someone who I know listens to this podcast. So I have right here a contract between Andrew Haney. Andrew Haney, I have my contract with you. And I just want the world to know that Andrew Haney and I, got a document notarized with him today. ⁓ And we are doing a challenge until the end of the year.

We have a series of ⁓ things that we're doing, series of commitments, and I just want the world to know that I cannot wait to I Beat Andrew Haney ⁓ because it's gonna be incredible how much gloating I'm gonna do on social media.

Justin Piche (05:14)
What are you and

Drew competing on? us in.

Clay Hepler (05:18)
I'm gonna

got, so, it's gonna be really good because Drew, I just can't wait to beat him. just, I can't wait to beat him. So, Drew and I talked this earlier this week and we have just a series of, ⁓ basically like our own version of Hard 75. So, we're doing a daily cold plunge. We're doing, I do, we're doing,

Justin Piche (05:44)
Do you have a cold plunge?

Clay Hepler (05:48)
tracking diets, no alcohol, no sugar, no like added sugar, journaling, before and after photos, tracking macros, reading, a couple other things here. Waking up every day at five, every day, not on Saturday, but every other day. So it's really about discipline.

Justin Piche (06:09)
Five every day.

discipline.

Clay Hepler (06:17)
Right, it's really about this one. And it's just kind of a thing that we're like, hey, the winner arc between Drew and I, and just want, Drew, I hope you listen to this podcast, dude, because I just can't wait. The winner is, go, go, go, go.

Justin Piche (06:27)
What, yeah, what, does it take to win? No, no, no,

no. My question is like, how do you definitively win this challenge?

Clay Hepler (06:35)
So basically we have ⁓ a ⁓ habit. We have a shared habit app, right? So it started yesterday, but I signed the agreement, the challenge agreement is on the way to Drew, notarized it today. it's, you know, I always like heard man, like when you put money on the line, something really matters. And I was never like, or gloating or

Justin Piche (06:42)
When does it start and when does it start?

Clay Hepler (07:05)
status or something like that. I was never really into that. ⁓ I just never did it. I thought it was ineffective, but I'll tell you man, there's a big price tag on here and whoever wins gets a big price. So ⁓ I just can't wait to win.

Justin Piche (07:26)
So if you

lose, you pay him. If he loses, he pays you. There's money behind it.

Clay Hepler (07:29)
Yeah,

it's a big check too. It's it's not $500, it's a big check.

Justin Piche (07:35)
Yeah,

it's it four figures or five figures?

Clay Hepler (07:41)
It's four figures. It's four figures. Yeah. Yeah. Dude, it, yeah, it's, meaningful. It's meaningful.

Justin Piche (07:42)
Okay, but a meaningful four figures like, I can go on a good vacation with this.

Yeah, that's exciting. I love that. Drew's all about that. Just like making serious commitments and backing it up with a handshake contract or something to make sure it happens. I don't know, man. I'm excited to see the results of this. So can I expect you both to have like six packs? Yeah, shoot me a picture. look at it. I won't share too many details, but I want to see it.

Clay Hepler (08:07)
Dude, I gotta send this to-

Well, I'm sending

it to, I'm actually sending it to Drew right now, ⁓ just to let him know my commitment.

Clay Hepler (08:22)
So I like this, man, I like this stuff, I think it's fun, and I just can't wait to humiliate Drew in front of his entire family.

Justin Piche (08:31)
Exciting. Let's talk a little bit about adaptability. What does that look like in today's market for your business?

Clay Hepler (08:41)
Yeah, I think it comes down to additional exit strategies that are, that provide additional ways to create liquidity. ⁓ I think it's about having that leaner team

I do, I think the most important thing is it's about just doing the right stuff in your business ⁓ and building the right business for you. Right. So there was another guy in the space that he's not directly in the ⁓ land flipping space. But I think there's just like really interesting balance between

having a business that is churning ⁓ like three to six deals a month of like consistent cash and then.

maybe one subdivide every other month, ⁓ one subdivide a month. That's a really interesting business to me. ⁓ Because you can have a lean team, maybe one setter, one closer, two setters, one closer. ⁓ You're not gonna be super marketing intensive. You're gonna hit probably 100K a month on that spend with maybe a 30,000.

base, maybe a 40, 30, maybe a 25, and then you execute with

a team of 10, right? So there's less management overhead and then you layer on the bigger deals, right? The more track, the bigger deals, right? So dude, that's a really interesting business to me.

Justin Piche (10:45)
Yeah, I like that kind of business. I think that that may be the better direction than just scaling to oblivion. When the market gets too tough, it's it's the overhead will kill you. You know, it only takes a few months at 100 K overhead to be like, OK, well, there goes 300 K and we we only made, you know, 100. Like that's that's not a good a good delta to be at for for for a business.

I mean, that's kind of what we subscribe to is like the adding on subdivides. Obviously we've got a bigger team, a lot more overhead than that, but I do like that business model. think there might be, I, you know, I've been thinking lately about like, what is the, what is the most optimum land investing business today?

It's definitely not a solopreneur and doing everything yourself. It's not the most optimum. You could probably keep your, you'll have your lowest overhead. And if you're able to do large high quality deals, it's just really bumpy. So it's not optimum in the same, because you may be able to make a lot of money, but it's going to be bumpy because you're not going to be able to get to some consistent, very consistent deal flow without outrageous amounts of ⁓ hustle work constantly. ⁓ And then a team like mine, which is large in this space.

A lot of overhead, get a, you get much more consistent deal flow and volume coming in, but with a lot of overhead, you're not as flexible when markets shift down. It's harder to bridge gaps of income or gaps of sales, but there's gotta be an optimum somewhere in between, you know, solopreneur and large team, lots of marketing where you're able to execute that six figure month, ⁓ keep your overhead low enough such that you can span three, four, five months without serious issues.

with a lack of income coming in from deals that just haven't played out yet or sub divides that are taking longer to pay out or a slow sales market or slow acquisitions market.

Clay Hepler (12:47)
Dude, you know what's really interesting to me? So I was on a live, I was doing a live yesterday, okay? And I was on Facebook, Instagram Live, and in the Lamine community, and ⁓ there was some guy that came over from Instagram Live, and he's been wholesaling houses, or wholesaling infill lots, which is like ⁓ a $5,000 rip, right? And the interesting opportunity here is like,

You build the business off your minimum profit per deal. What do I mean by that? Okay, so someone that's building a house flipping business is gonna be super different if they build a business in Kansas City versus San Diego. A wholesale check in San Diego could be 70 or 80. You can do two a month, three a month, and you're in a good spot, and then you could maybe layer on building and fill.

and layer on development, right? So I think that what the really interesting move in 2026 is like dialing in on your minimum profit so that you know, it takes me like three to five deals to get to a good base, right? Which is maybe I'm at 100K. So our minimum profit right now, or I'm sorry, our average gross profit's like 37, right? Now it's gonna come down, we got a couple of smaller deals, but.

It'll probably be in like 30 to 32 range ish maybe. So I need to do three good deals to hit 90K, 100K a month. And then I layer in a big subdivide, right? We just did one, we'll probably do 230 on it. Maybe once a month or once every year over a month. So that's another 1.2 a year. And then maybe 100, that's 2.4, 2.5 with high margins. And then it could swing really hard.

at other really big deals, right? Lower overhead, you might need an appointment setter and a ⁓ closer, one closer, right? You might need a marketing manager. You probably don't even need an executive with that type of business. That's an interesting business to me, dude. What do you think about that?

Justin Piche (15:06)
like it. Yeah. I think the stress level would be substantially lower with a business like that.

Clay Hepler (15:10)
Ha!

Right, right, right, right, right, right, for sure, for sure.

Justin Piche (15:16)
Yeah, I mean, I know this isn't there's no like serious clarity, but obviously for listeners like Clay and I wrestle with these decisions constantly. Like what do we want to do with our businesses? What do we feel like is the optimum? I definitely hate feeling like there's slop, you know, and the slop tends to be apparent when there's less when sales slows down. When sales are good and money is continuing to come in the door in excess of spend, which has been my business for years now.

It's easy to like let extra expenses creep in and not really think about them or worry about them. But when you have a few slower months, sell a lot of things on terms, capital takes longer to come back in. You're seeing kind of you're doing your, your, your quarterly cash planning and you're seeing cash get to a position where you're uncomfortable. That's when you're like, okay, well, where can we cut? What is unnecessary? What are we doing that isn't, we don't need to do right now or we don't need to do it all. It's kind of an exercise we've been doing. My team has been doing this last.

these last couple of months, because we've been doing a lot of systems expansion and adding features to our CRM and those things cost money. They take time, they take focus from key team members away from actually bringing cash in the door and focused on building activities, which are great and can help you scale and grow, but they're really only great when you're in a good market or you've got good deals flowing.

They're not great when money's not coming in quite as fast and you need to focus on getting the bottom line, which is sales, getting good properties on a contract on the acquisition side and moving through the process and closing them on the sales side to bring cash back in the door. So over the last couple of months, there was a lot of initiatives, improvements that we're working on the CRM that we've kind of pared down. We've already talked about kind of PPC marketing, I canceled and we weren't getting a great return on that. ⁓

And like the future looks good. I've got so many great developments, like big time payout type deals that are in process right now, but they don't cover the short term. They're all long term place. You you set up a two, three deals that are going to net you 400, 500 K, but it's not going to net you that much over the course of two, three, four years. Right. And that's a long time. That's a long time to wait. You've got to still keep your cash going in the, in the, in the interim.

Clay Hepler (17:26)
That's right.

Justin Piche (17:33)
So I got some planning to do with the leadership team to figure out, you what do we want the business to look like going into 2026, right? We're in the last quarter of the year. can, on the sales we have now and kind of, I guess really we only have about a month left before any sales we have will probably happen in 2026. So we'll know generally where we're gonna stand at the end of 2025 here in the next four weeks.

And that'll be a good time to make a decision for what do want the business to look like in 2026? Because I don't think it looks like, hey, I'm going to just make more gross profit. We talked about this a couple of episodes ago. Net profit and protecting margins right now is just vitally important. Growing your gross profit in the size of your business and the number of deals you do doesn't make any lick of difference. If you're not keeping your margins, you're protecting your margins. If you disintegrate your margins by adding bloat and overhead, that's just not a good place to be. It's just a really stressful place to be where

you're so much more susceptible to the market.

Clay Hepler (18:31)
Dude, I'm with you. I think that the optimal business is 15,000 to 25,000 pieces of direct mail a month. And maybe one channel, two, three cold callers, or four cold callers. Or if you wanna do texting, texting. I think that's the optimal business. Right? That's the marketing stack that you need. You get good enough at

direct mail. I have clients that are doing three to five deals a month that are just direct mail, right? And they know their markets and then they're doing like probably two to three deals, maybe one to three deals every month with cold calling. And like they have three or four cold callers and they have an acquisition guys, they got a lead manager.

And they just were like, hey Clay, want mine to tighten up a little bit. That's why we're working together. And I think that's the optimal business, dude. There's no, they don't have a dispo person, right? ⁓ Although that helps, right? But they have a, I think that he's got like eight guys around the team, maybe seven, eight. He's making money, man. I know he's making money, right? And he's got really good margins. I think that is the optimal land business. Stress to...

execution and exactly. And then it's like, okay, so if you want to make more money, then you allocate 10 to 15 % of your monthly budget or maybe 20 to focusing on those higher dollar value properties. By the way, I'm saying this, I'm literally doing this in my business. Like this is what I'm doing, right?

Justin Piche (19:56)
reward.

Clay Hepler (20:25)
We are getting better at direct mail. We are doing calling. We're leaning out the team a little bit. ⁓ And we're just making everything clean on the whole business. Now, in a business like that, the one problem relative to what you and I had, man, is like key man risk in individual positions. I look back at our financials ⁓ this week.

We had this huge drop in gross profit in a period of three months, and I was like what the heck our Transaction coordinator during that period of time was horrible. I Think the transaction coordinator is like one of the most important positions in the entire business Because a good transaction coordinator can take a deal that takes 45 days to close or 50 days to close and we could close it in 30 or 25

and there's so much value to that time value of money. Is there anyone else you think is like crucial key man that you wanna pay? I paid up for my new TC, she's amazing. But is there anyone else that you think top of mind is like that, that like person that is, yeah, right.

Justin Piche (21:27)
yeah.

Yeah, mean, AM obviously is like

critical, critical role. I mean, we subscribe to the Dispo team.

sales, Dispo, which I really like because it moves things faster. It allows us to save significant amounts of money on realtors and fees there.

But it really only works at a certain volume, right? Below a certain volume of deals, having an in-house sales team is too expensive.

Clay Hepler (22:12)
Yeah. Yeah. I think it also depends on the type of product, you know, deals that you're doing. And also like the in-house team, for example, could be just a Dispo manager in a like admin person versus like having multiple levels to it. ⁓ it just depends on what you're doing, but like, obviously there's a lot of value in having a good Dispo team. ⁓ but it is an overhead expense that can be unnecessary.

I believe. Cause you know, you want an employee theoretically to a single employee in a healthy organization creates 200 to $300,000 of revenue, right? That's like the tech company. It's way more than that, right? You see like these huge tech companies that are worth trillions of dollars. Well, one employee might be worth to them. 800 K, $1.2 million, right? But like a really healthy, profitable business. I think that's the range dude.

⁓ that I've heard, right? And so if your employees, if you are bloated, even though you might have margin, the optimal business is proportionate to the amount of revenue that each team member generates.

Justin Piche (23:25)
Yeah. I want to touch on direct mail for a bit. We've paused it recently. Traditionally, we've sent between 10 and 25,000 a month. I'm curious what your coaching students are doing in terms of how is, what type of direct mail, neutral, blind range, what are they, what are they doing right now? And the ones that are having success and what are you doing?

Clay Hepler (23:46)
Yeah, yeah, yeah, yeah, yeah. ⁓

So, ⁓ everything, right? The key thing for us has been the multi, like A-B testing, everything, right? But I think it's a commitment to a deep understanding of the area, what you're like, actually spending that extra time to get a higher return, right?

So I look at it as a return on time. So if my marketing manager who I pay X amount, let's just say 1500, that's not what I pay him, but 1500 a month. I don't know what an hourly rate is for that, but let's just say it's $8 an hour. Right, $8 an hour. So if he spent an entire day going through the list, combing through the list, and making more individual

Justin Piche (24:35)
That's like $8, $9 an hour somewhere in the range.

Clay Hepler (24:48)
types of marketing, will that increase the probability of someone responding? Yeah, it would, right? And so if you're relying on direct mail, right, I think about it as we wanna do really, really deep testing with direct mail because if we get one piece of direct mail, one deal is incredibly valuable. Our cost per lead for direct mail is exponentially higher.

So imagine, like, for example, one piece of direct mail could cost you 150 bucks, 250 bucks. So if I have one of my marketing managers spend two extra days on personalizing a list, you know, eight times eight, 64, 128, to get three or four extra leads, like, the return is just so there. Right, of course, if there's always the, what else is this person doing?

How do you know this is the right thing? It's just tweaking, right? It's just tweaking. ⁓ But that's how I think about allocating my people and specifically.

Justin Piche (25:54)
What do you mean, when

you said something real quick, you said something about personalizing the male. What does that mean to you? What are you doing when you're personalizing male?

Clay Hepler (26:02)
Yeah, so take it to the hypothetical extreme. If you got a piece of mail from your mother, you call her back. Right? Like so, we live not close to the mother continuum, but we can live on a continuum with the ⁓ seller. And so if I can get closer to the mother continuum, then that's what I'm always thinking about. Can I get close to the mother continuum? And if I'm closer, it's gonna increase the probability of this person selling to me.

And then what we talked about earlier is different exit strategies. Maybe I can offer different exit strategies to this person, right? So like theoretically, if you want to build a business off direct mail, it's incredibly expensive. And so you need to have diversification of your backend. So the way I look at it is like, are we going to get licensed in the States that we're sending a lot of direct mail in? Maybe, maybe. So if someone calls in and they want market value, we can send that referral to someone.

and have a broker give us a kickback that reduces our aggregate cost per per mail. All right. So things like that is like, think what keeps sustainability. This is what household sellers do, right? It takes a little bit more effort for us because we're in so many different markets, right? But in general, it's the same thing. And so that I've just ripped that mercilessly from that, that industry. So that's how I think about it. Does that make sense? Kind of.

Justin Piche (27:30)
Yeah, mean,

like trying to appeal to the seller on a more personal level. But how do you do that in bulk? Let's say you pull 20,000 records to mail to like, how do you get closer to 20,000 people?

Clay Hepler (27:41)
that are personalized. Yeah, I think that there's the whole talking about like using AI to find local landmarks, right? And then personalize that. Like that's something, that's like something. I mean, you can go even down to notating like the year that they purchased the property. ⁓ Just things like that that we're trying out. That, right? Like, so it's like, this person actually did the research.

Justin Piche (27:50)
Yep, yep, okay.

Yeah, I see that. Okay.

Clay Hepler (28:10)
So if there's, do we know what's gonna work, what's not gonna work? No, but like, if I send a picture of myself with a dog, is there's gonna be higher probability of someone who likes dogs to call me back? Yeah, probably, right? And so, how do I create that universal, like if I have a picture of Trump on there, right? It's gonna have really good connotations for some people and really bad for others. Now if, know, think about direct mail companies, how,

Justin Piche (28:23)
Yeah, probably, probably.

Clay Hepler (28:39)
on a granular level how good they are at this. They know everything about the person that they're sending mail to. They know how old they are, they know their demographic, they know their political affiliation, they know the blah, blah, blah, blah, right? And they craft different messages. So why not just rip off what the most successful companies have? So you can go demographic based personalization, you can do... ⁓

You know local based personalization. I love the lighthouse on West Main Street, right? I always went to Patty's You know griddle or the Waffle House down there is so good, right? That type of stuff local based personalization, right?

Justin Piche (29:18)
Yep.

That's probably the lowest barrier for most people. You can use AI and GPS coordinates to be able to add those personal touches to ⁓ Yeah. Well, hey, man, I'm about to have probably a big loss on a deal. To mirror your big loss, right? Wasn't yours about the 60k loss? Yeah, we're about to probably lose 60k on a deal, unfortunately.

Clay Hepler (29:23)
Yeah, yeah, yeah.

Welcome- wha- right! 60k man, 60k. Yep.

Justin Piche (29:47)
Not a deal we'd taken title to, but in due diligence in earnest. So maybe just a quick story. Yeah, story is beautiful, beautiful tract near Huntsville, Alabama, in the path of development, a little bit on the outskirts, multiple large developments within a mile, like multiple single family home developments within a mile of the property got under contract and put 30 K in earnest, but didn't didn't

Clay Hepler (29:53)
What's the story on it? Yeah.

Justin Piche (30:18)
wasn't able to convince the seller to give us kind of enough time. And it just took, it's just one of those things where it just takes longer to do everything than you think. And so we got our engineering, spent another like 25 ish on trying to get like the site plan, a non-variant site plan, all the constraints worked out. you deal with understanding utility situation? And that piece I knew I was committed to losing just by nature of doing the deal. But we're at a point now where it looked beautiful. I mean, it really did.

And we just didn't get the builder interest that we wanted or thought. And so it's at a point now where in order to continue to extend, I've got to spend some more money. And I just don't see the market shifting substantially in the next six months to 12 months to, and I don't, I don't see the value in purchasing those extensions. I don't see the value in sending good money after bad. You know what I mean? So I am probably going to end up defaulting on the contract and then canceling.

Clay Hepler (31:10)
Yeah?

Justin Piche (31:18)
Which sucks.

Clay Hepler (31:19)
Well, dude, I think

I admire the, you're approaching it, because, right, don't send good money after bad, but a lot of times people wanna just, they just wanna push a deal through.

Justin Piche (31:30)
Yeah. I mean, there's still like a chance. It's not like a for sure thing, but I just don't see, I don't see how it's going to, going to happen anymore. Um, and I think, I think this is like, I've had a couple of calls recently with guys who are in the entitlement space that have like, that's their main business and they're actually, they're interested. The calls I've had are people interested more in like the, uh, the horizontal developments for larger kind of rural residential lots.

Like the developments that I'm working on that are going through the ones where we're building the roads, we're building in power, we're doing water infrastructure, but it's not 300 lots, you know, quarter acre to sell to a DR or LNR or something like that. It's a, have the option of selling these retail and holding these for several years. So they're, they, yeah.

Clay Hepler (32:14)
What about that is more

attractive, Justin?

Justin Piche (32:18)
Well, I think that if you don't, you're not introducing so much inventory that it's going to take 10 years to sell out and you can offer a track where people want to live, where they can bring their own builder to a kind of a higher dollar client, you know, or even a development where you were mobiles or manufactured housing. People can bring in their own mobiles or manufactured housing and you build the infrastructure for, and it's not so many lots that it's going to take years and years and years and years to sell out of. I think there's a, that's a good spot to be in right now.

⁓ The ones where you're dependent on builder funds and builders building structures in order to sell those are not quite a good spot to be in. That's not to say they're not happening. Deals like that are happening. They're just harder to do and they're far and few between.

Clay Hepler (33:02)
It's interesting, I was actually talking to someone this week about mobiles, right? I think a really interesting ⁓ model for a lot of land investors is, okay, so we're talking about right now the need to get leaner, to focus on profit, profit margin, and one of the really interesting things that I've thought about is like adding mobiles to our dirt. So instead of being ⁓

buying it for, you know, selling it and making 50K, we sell it and make it 150K. And so you don't need to do more of those types of deals. It requires a local expertise which you can borrow from people that do it locally. And again, this goes back to my thesis that I was talking about about a month ago, which is like the future is local in this business. And being able to add that,

type of product to the market is incredibly attractive. And I was actually talking to a lender this week ⁓ who does a ton of lending and he's like, dude, I'll tell you one thing. I hate info lots, but mobile lots, if they're zoned for manufactured home, immediately buy it. No matter the, it. Because there is such a massive need for affordable housing, specifically mobiles.

And in a lot of areas, depending on how it affixes to the ground, it can appraise for just as high, relatively, as stick-built homes. If it's a certain type of federal guidelines. And so, I was like, man, that's another amazing way to monetize. So, exit strategy could be even this type of development. Right? So, the next question is, how do you finance it? Well, then you gotta get the right capital partners for that type of thing. But, dude, really interesting thing to...

put up your sleeve that you can leverage.

Justin Piche (34:59)
Yeah. I mean, those are the best selling lots that we've had over the last several years have been kind of on the outskirts of cities far enough away in the country where mobiles are kind of the preferred home type. And you get a lot, you know, maybe offer owner financing, but something in the three to five, seven acre range that somebody can pop mobile home on and those things just sell. They sell so fast.

Clay Hepler (35:23)
Yeah, I love it. Yeah, so I think that you add those, that level of skill set on to your, in your business and dude, it becomes like a really good fun business versus like scaling for scaling sake. I think there's this very weird death zone, which is like 100 to 250, like 100 or 300. The death zone is at that level cause you're working your butt off to kind of like get,

off the ground and then one to like two is a death zone. It's a death zone, right? Unless you're just bringing on a lot of big projects because you have to basically hire your management at that level. You can't just do it alone unless you're doing few deals, high development deals, which is quite risky, right? On a risk adjusted term basis versus the, you know, the flips. So yeah, man, I just think that that's the model.

so, so, what else is top of mind for you? Anything interesting, anything you're learning lately in the biz that...

Justin Piche (36:32)
You know, think one thing we're doing a lot more of that, you know, that we, I used to do this. When I first started subdividing, I started doing this, which was making offers on on-market properties for developments. ⁓ And my first two like large scale subdivides, which I've closed out of both of those this year, which were great successes, both of them really good returns for me and for investors. ⁓ And I kind of got busy, stopped doing that myself.

I now my project manager is looking at on market deals and underwriting several of those a week. And we're seeing some potential good deals that we're submitting offers on for on market. But as we just struggled more and more from the higher end development properties for finding people off market that are willing to sell even at market price or close to market price, the more I'm looking at on market potential developments for, for yeah, for doing deals. It's like the motivation factor is there.

Like they want to sell, they obviously do, they listed it with somebody, it's listed on the market. There may not be a significant discount to market or any discount to market, it may be marketed higher than market. So there's still a challenge of selling them on their offer. But the challenge of actually convincing them to sell it is overcome already, they're desiring to. So we're spending more time thinking about those and looking in specific areas for those now than we have in the past. ⁓ So I'm hopeful that's gonna be a significant like revenue driver.

for this year, next year, or next year, really, primarily, unless those deals aren't gonna pan, like, they're not gonna be in the money this year, but by next year, we'll see some solid financial results. And you know, that's like, having success in that area, it does make me think, obviously, like, the volume of cash coming in by flips is great, because it keeps the lights on, it keeps paying you, the cash flow is great. Those developments, on-market developments, though, the overhead for a business like that is incredibly low. It's just people in time.

And maybe you could build some systems and software to help you identify that. And that could be expensive and time consuming to build that. ⁓ But for the most part, it's just identifying the areas you want to be in and making offers. And that's like a pretty cheap business. mean, there's people I know that are doing seven figures a year net that are literally doing that. They don't do anything but on market subdivide deals. And sometimes I about that as like a pretty low stress.

type of business to be involved in. Because now we have the skill set. We have the team, have the skill set, we have the bank partners, we have the money partners to do larger scale developments. Should I be spending more time focusing on those? Probably. Probably.

Clay Hepler (39:05)
Yeah, one thing that I would say for the listeners as we wrap it up here is one thing that's really tempting is when you hear these opportunities to say, going to, I feel stress in a certain aspect of my business and I'm then going to take an action because I heard Justin, he's such a smart guy, is doing this successfully, right? What I would say is for those out there who have those thoughts right now,

Justin Piche (39:24)
haha

Clay Hepler (39:33)
Do not establish a marketing channel and shut off another one unless you know for sure that it's going to produce results. Like, and not just results for one month, right? Three months of results, right? Consistent results. ⁓ Because that is the Achilles heel of these small businesses, our small businesses, which we have ⁓ a spigot that's shooting out some water. It might be dripping, it might be dripping, but it is dripping.

Justin Piche (39:40)
Right, I agree with that.

I agree.

Clay Hepler (40:03)
There is water coming through. And if you're like, dude, I'm just gonna turn this other spigot on and turn this one off, then you have no water coming through, And that is a huge thing that anyone who's doing this tests the waters first, right, before you dive in.

Justin Piche (40:19)
Yeah, it sounds

easy to write. I say, look on market, make some offers. It's not. I mean, there's 30 offers to one contract and then you get a contract and you have to do everything you can to kill that deal as cheaply and as quickly as possible so you don't lose money. And there's an art to that. And there's a million pitfalls to fall into. And I have the experience now having done dozens of these to know generally what those pitfalls are. I know what I need to look for. I know how to find that information. But but still it can take.

tens of thousands of dollars and months of time to find that thing in the most optimum way. Like a perfect example, working on a deal right now with some partners in Texas and everything looks good on the deal. Sales price looks good, looking at 80 lots, 80 lots. Mobile home type lots, looks beautiful. We designed the site plan. We've...

calculated roughly, you know, 90 % confidence, our detention, our road requirements, power's bit of an unknown, but we kind of have a conservative range estimate for what that might be. On-site water, we've got a great estimate for. Off-site water, big unknown. It's been three months since we've had this property under contract that we've been trying to get the water study from the water company. And we've had to spend money.

tens of thousands of dollars on engineering work just to get to the point where we are now. And we still, I think we just got the results today. We haven't gotten them yet. The company that's gonna give them to them from their third party engineer just got the results today. Three months later, 20 something thousand dollars spent. I haven't seen it yet. We're gonna get it on Friday. And when we get that, the amount of offsite infrastructure we're gonna have to build is either going to say this deal is a go or it's gonna kill the deal.

Like that's the type of, that's what these other kind of on market or larger scale developments are, is a lot of time, risk. And yeah, if it ends up working out, I mean, the deal is gonna make a couple million dollars for me and partners. A lot of money.

But for every deal that works out, there's like five or six that don't, that you spend 10, 15, 20, 30, 50, 60 grand on. Yeah, so it's like, there's a lot of, it's not like the grass is greener on the other side type of a thing, for sure.

Clay Hepler (42:34)
Right, as evidenced by this.

Yeah, I think that you need a war chest or someone with a war chest because you'll fizzle out really quickly. It's the next evolution, which is why there is a mode, which is why it's less competitive. Anyone can get a texting account and text people. Right? But it's much harder to execute at the level that you're talking about, Justin.

Dude, anything else before we jump out here today?

Justin Piche (43:09)
No, I don't want to leave the listeners feeling discouraged. As Clay said, there's people in this business right now that are crushing it, right? And there's other people that are getting out. And then there's people that are having some down months and that are, know, folks. There's people all over the spectrum. No matter kind of where you are, it is still not only possible, but likely for you to be successful if you are able to focus on the correct things and build that business in a smart, conservative,

⁓ manner. And for people who are willing to put in a ton of work, right, and be the guy that handles a lot of stuff and kind of force for go hiring those expensive executive hires, especially in this market. I think that's probably a better place to be right now than hiring a lot of like high dollar employees and expanding. I feel like this is a market to like really focus on the bottom line and get tight, efficient, optimum, and not really focus heavily on significant growth.

That's kind how I'm feeling about the market right now.

Clay Hepler (44:11)
I think it's a great ad man. The last thing is this, I think the perfect business is a business that makes between 500 to 1.5 with like, I would say 750 to 1.5 with minimum employees with high CEO engagement. CEO's taking home 650 a year, 600 a year, and then they can leverage that to get into one big deal.

The surest path to wealth is having a consistent stream of income, right? For the average person, right? Having a really consistent stream of income, which is a consistent, reliable land flipping business. And then having your big home runs hit, right? So you stack up one, two home runs a year that maybe are half a million dollar rips or more a year. You don't need that many of those to really set yourself up.

especially if you're having that consistent income from your business. So that's where think the optimal business is. So that's one thing I would lean on. like, I think that the reason why there's discouragement is because there is a misrepresentation of the true expectations of what an ideal business is. And now that I think people are coming around to that, the people that ⁓ said, I wanted this, it's like trying to get your dream body.

Right? Everyone wants a dream body until you have to put the work in to get that. Everyone wants to try to challenge me in a challenge, Drew, until 75 days happens. My man, Drew, I hear you. I hope you're listening to this podcast. So that's it. That's what I got,

Justin Piche (45:42)
Hahaha.

All right, lead us out.

Clay Hepler (45:59)
Guys,

thanks again for listening to another episode of the Ground Game Podcast. This is your co-host, Clay Hepler, and I am wishing you guys a happy, successful beginning of your Q4 the way that you wish Justin and I a little happy, successful beginning of Q4 as you leave us a review on the podcast, a little subscription, a little like, a little comment. We would appreciate that, guys. Thanks again. We appreciate you being a loyal listener. Justin and I do. We really do. We appreciate it. And we will see you next week.

Justin Piche (46:30)
See you next week. Hey guys, this is Justin interrupting your podcast. Say thanks for listening. Clay and I are giving some business updates, talking about adaptability. If you're getting some value from this, please take a moment, leave us a comment, subscribe to the podcast, turn on automatic downloads. That's honestly the only metric that we can actually see on a week to week basis. But we appreciate you and back to your regularly scheduled programming.

Thanks