This Land Strategy Turns $8K Lots Into $50K Deals

All right, everybody, welcome back to the Real Estate Investing Podcast. I am excited to have Andrew Short with me today. Andrew, welcome to the show.

Hey, thank you, Ron. I appreciate it. Uh, it's been a long time coming for us to finally get this coordinated. So happy to be here.

It has, and I'm excited to hear more of your story. I know a lot about what your business is currently doing in terms of volume, and you are one of the higher volume people, I would assume, in terms of texting, in terms of your business volume. So I'm really excited to kind of, from a high level, talk about it. But before we get into all that, let's talk a little bit about your story, how you got into land, uh, because I think it's going to connect with a lot of people.

Sure. Yeah. So, excuse [clears throat] me as I'm getting over a little bit of a cold here still, but yeah. No. And, you know, how we kind of started out is, um, first of all, I'm, I'm a ragtag guy that elected not to go to college. Um, had a, had a great, you know, time in school. Did very well in school and was accepted into some great schools. Um, but ultimately just decided that, man, I think that the, uh, the path less traveled would be the better one to go for me. I, I come from a family of entrepreneurs. Um, so I had that support behind me to take either direction that that I wanted to go and kind of went through the school of hard knocks. You know, like many people in the early 20s that don't have a degree, I was, you know, bartending and waiting tables. And my, my goal was, I did it at a lot of yacht clubs and country clubs because I figured, hey, if I'm going to be in this type of environment, I might as well, you know, pick a place to network. And kind of through that experience, I got to, you know, be around and speak with a lot of high-level bankers and, and people in real estate and all types of different backgrounds and, and pretty much everyone in there is self-employed or has some sort of self-employment nature to them. So, kind of going through that, you know, I always wanted to be in finance. Um, and without a degree, it was very challenging, huge barrier to entry to get into that space. So, after doing a lot of networking, um, and communicating with different folks, I was able to land myself a job as a loan officer, um, which is kind of like that bottom tier, uh, of getting into the finance world, but I said, I'll take it. Um, had a very successful time in that. Uh, ended up going into, after about a year and a half, um, on the loan officer side, ended up kind of transitioning to more of a capital markets, um, stance in the space, and then also was dealing with like broker dealers and working with securitizations, kind of more on the wholesale side of mortgage, which opened my eyes up a lot to how money moves. Um, did that as the market started to kind of cool off a little bit after the 2020 boom. Um, I had built a really close relationship with my business partner, James Balm, and he was in the house flipping side of things. Well, this seems pretty manageable. There's a lot of, you know, very clear, uh, financing available for house flipping. You know, hard money lenders are, are out there all over the place. So, we started to basically apply my background in, in finance and money movement with James' background in, you know, housing and in real estate. And we started to flip houses in South Central PA, um, was where our core market got started. After getting through many, many of those, uh, types of projects and starting to, you know, go vertical actually on some of our projects, we figured, hey, if we can flip a house and, you know, do our best to do an inspection, but I'm sure quite a few people who will be listening to this have flipped a house before and you can do the best inspection you can, but the second you peel back that drywall, you know, you might face mold or asbestos. There's just so many variables that can come up even with a great inspection that we figured, hey, if we can kind of deal with those variables and still be profitable, maybe we try to go vertical on these. And we just go completely away from the house flipping and try to go new construction. So, that's what we started to do. And, and kind of through that process, we began our direct to seller marketing just on land, um, on just single family infill lots in the South Central Pennsylvania market. And we were doing just neutral letters. We weren't even going blind on these because to us as builders at the time, it, it really wasn't a focus on, obviously you can only pay so much for a lot, but we really were focusing more on what our final product was worth and working ourselves backward from there to get to a lot price that was suitable for us. And, you know, through that process, though, you know, some sellers, we kind of started to go through this process of asking the seller for their number first. Um, and sellers would throw us a number and we'd look at it and go, "Well, as long as the thing perks, you know, and we can get a septic on it and a well, uh, we should be in good shape." So, after we got through several new build projects, we really took a hard look at our numbers and realized, hm, we're not even trying to negotiate these landowners and anywhere on an average basis of 30 to 40% of our new construction project was coming from the basis that we bought the ground. That really opened up our eyes because at that time, we had great controls already in South Central PA to kind of clear our own land, and we were really doing our own land development by proxy of building these houses. And after just getting through several of those and looking at that kind of discrepancy in numbers and the timeline that went along with getting from purchased to new build to resold, we figured, man, we could probably cut this timeline and at least half if we just went in and got more aggressive on the acquisition of land, the negotiation on land, our kind of marketing strategy. And that just led us into this, you know, transition where we just went all in on land around 20, middle of '23, we started to make the transition. 2024 we were fully in land and then '25, uh, was a phenomenal year for us and we really got our bearings down. So, that's kind of how we got into the land space is from a background of housing and new construction and trying to double dabble in the, in the direct to seller marketing space and just this great realization that, man, what an inefficient market that, that the land space is. And in any inefficient market, there's a lot of opportunity, as much as there can be a lot of challenge, right? So, that's kind of how we got into the land space and, and we've been flying with it ever since.

It's not the first time I've heard this story. A lot of times it's like, uh, house wholesalers, people who kind of run into land with like they have, they're buying a house from someone, then they're like, "I also have this piece of land. If you want it for $5,000, you can have it." Then they make $50,000 on a piece of land. So it's funny how often land deals are just ran into. For your situation, though, like you had to really analyze the numbers and kind of see like, okay, this makes no sense that I'm building a house with more risk, more timeline, probably tighter margins just in terms of financing, hard money, all these other things you have to deal with. Like, what was, how were you determining, like, I was when you were looking at your numbers, like, I could have made $30,000 just with this land flip instead of building a house and making 60, 70 grand. What was, what were you looking at? Were you looking at like what other builders would be buying? Like, what was determining that market value? I'm just curious, uh, from your perspective.

Yeah. So, you know, when we were looking at, so you're asking when we're qualifying our, our why we're going to be doing the land and how we're going after these prospects, like how did we kind of build our fundamentals around what makes for a good deal?

No, I'm actually saying when you made the decision to go into land from building houses full up, because like some people, a lot of builders probably don't know what the market value is of land is. They're just like, I can make money on this if I build a house on it, and it makes sense. How did you determine like the market value of this land's $50,000? I'm buying it for $30. Let's just keep doing this.

Yeah, this is a dangerous game, and we see a lot of wholesalers, um, kind of mistake this process, which is, you know, what a home's post-build value is, does directly correlate to what the underlying ground is worth, but there is a lot of caveats in that. It's not such a linear equation like a comping a 32 to a 32, uh, you know, type of home. It's not so straightforward. So, what, what we kind of did is we built an analysis around this really interesting concept that I, I mean, I thought it was very interesting that there's this, this product, and just like a house, you know, with granite countertops versus vinyl countertops and, you know, laminate flooring versus hardwood flooring, there's these, these things that you can do to a house or to a piece of land that really change the underlying asset itself. So, we looked at, okay, if the ground is in completely raw condition, there's no perk, there's no clearing done, there's nothing happening on this property quite yet, what is the cost to actually get the property to shovel-ready? And that's kind of how we built our model around it is, okay, if the raw ground's worth $25, but the retail cost to perform the land development on a project from survey to perk all the way to septic design and land clearing to kind of flip that lot back on the market as a shovel-ready lot, what is that cost on a retail basis and how can we control that cost on a retail basis to use that difference as margin? And that means that any dollar that we got under the market value of the raw ground was money that we were just baking into our post-development value, uh, because we were able to actually perform those, those, um, you know, land development activities on our end. So, we brought all that in-house. So, how do we kind of get there? It was not looking at, okay, there's a housing development. It's got a $500,000 house here and a $600,000 house here. We must use this 10 to 20% rule and it, it, the lot has to be worth between $60 and $120,000. We did not do that. We instead just looked at market drivers, right? Like, what is a raw piece selling for? And there was this little market in South Central PA, um, in southern PA that we used that was very consistently the same. A raw piece of ground was selling for $7 to $8,000 for a half acre. And this is really how we got started on the land side. There's these little pieces of ground, half acre, three-quarter acre lots that we could pick up from sellers at $7 to $8, $9,000. And we went, well, nobody's ever actually hopped into this little pocket here. And there was a ton of inventory. And nobody's ever hopped into this pocket here and performed land development activities. So, we started buying those things up, I mean, in super high velocity. I mean, they were just such cheap lots and we went, well, wonder what we could force out of these things. So, we started to perform those land development activities. And we realized we could take a $7 or $8,000 lot and turn it into a $45 to $50,000 post-developed lot and sell it off. And it was only going to cost us $6 to $10,000 to get it there. We went, man, this is a really incredible model. So, I don't know if that's a very clear answer, but how we kind of look at it, um, and looked at it at that time was it's just cash velocity measurement, right? How many risks do we have in the deal? If we can derisk this project entirely by the time we're at the settlement table through proper due diligence, we're buying at a, at a position of equity. And I can tell you, very rarely were we buying houses at a position of equity that we were flipping. I think some folks use this ARV number where you know you're like, I'm getting such a great deal on this house. But in reality, if you're buying something that needs improvement, even throughout that process of improvement, you're really not getting a ton of value out. If you take a, a crappy house and you just fix the bathroom and relist it on market, but you didn't fix anything else, you're really not going to get higher value. Whereas with land, every action that we took on that property yielded a positive like net equity result for us, whether just so perks done, value add, right? Septic designs done, another value add, right? Land clearing done, another value add. Driveways, culverts, and the whole nine yards. And you go through it. Everything we did, we were able to mark up or tax, if you will, in some sort of way, especially what we were controlling. So, that's kind of how we started to look at is how do we, how do we determine the value of this underlying piece of ground? Well, the value is just what the market's willing to pay, but the value is not what we're willing to do to it. Nobody, nobody's really was focusing on that type of activity on these infill lots down in South Central PA. So, we just started to gobble them up and basically realized that if we put $10,000 of of land development into it and the retail cost of that for a regular consumer hiring a builder to do this land development process would be $25,000. Well, that gap was our spread.

Um, so that's kind of how we were really able to dive into this space and determine how we were going to make, make money and make it in higher velocity. It's very interesting, Andrew, like how you think, like you definitely think against the grain, like as far as like people say ARV, like screw ARV, you're saying, um, or what, you know, what I mean? How much of this was like just who you are as a person? You're, uh, how you were raised versus like, you were very intentional, like working in yacht clubs, being around the wealthiest people, and the, the wealthiest people is only 1%, a tenth of a 1%, versus you hear all, all the other house flippers talking, the top 20%. Like, you really wanted to surround yourself with the top people. Just talk about your mindset and like going against the grain, being willing to adjust, being willing to go against, like the popular narrative or the popular strategy. How much, where did that come from?

Yeah. I mean, um, sheep moving herds, right? And I think that that's okay and there's, there's power and safety, um, in numbers and being able to follow a very standardized, traditional thought process. For me, you know, fortunately for me, and I think unfortunately for a lot of the, the people that I've worked with throughout my career so far, is I'm not going to bite on the first answer. Um, it's not that I think that I need to or, or I'm capable of reinventing the wheel or somehow, um, creating better strategies that are already great strategies. It's just, I think that the human nature is to, to kind of find the path of least resistance, which oftentimes isn't even a, an equation of trying. It's an equation of what somebody has told me is easiest, what, what the gurus are telling is easiest and how we should. And I'm thinking, you know, this is a really big space on housing or in, in land to just be following the status quo. And that's kind of my nature has always been maximization, right? Not to the extent of detriment, but to the extent of how can we do the most and get the most without overexerting ourselves and overexerting our efforts on a project. Um, so for me, you know, Ron, it's just been my mind just works very simply when it comes to this. How much does the money cost? How much does the property cost? How much work has to go into it? And, you know, we saw from the beginning when I first got into land, and this got me even more fired up when I got in, you know, we have a lot of incredible relationships that we've built throughout the last two years with great equity partners, private partners, you know, hard money partners when it comes to transacting these. And one thing I was told by about 90% of the equity partners that we had initially started working with, and I've converted a lot of them, is stay away from residential. Residential is very finicky. You should really be focusing on recreational ground because there's always buyers for something recreational. And while that might be true, um, there's way more buyers looking for a new construction project every single day than there are somebody that's has $100,000 or $200,000 or $300,000 to just go spend on a property to shoot a deer or to put a camera or to put a camper or whatever the case might be. So, for me, it's, yeah, the against the grain. I guess I'm, I appreciate that you look at it that way and that some might look at it that way, but for me, it's more about, let's find an inefficient space and let's find the most inefficient thought process within that space and capitalize on that. And then the thought process that I had coming into it is there's a lot of people that are kind of leery about getting in, oversaturating into the kind of, uh, infill single-family lots aspect of the space. And there's even more people that don't understand the real value of opening up the vision and, and seeing through the vision. And I just know that for me, when we're selling a property, I don't trust buyer agents. I trust my seller rep, but I don't necessarily trust buyer agents. And when these buyer agents are bringing their customers, you know, to one of our properties, you, you can't rely on a buyer agent who has a focus nine times out of 10 on selling houses to come in with their client and say, "Hey, look, you know, it's going to cost you $50,000 to clear these trees off." And then they have no vision. They can't see it. They're saying clear over here when they don't understand the septic areas over here. And those types of inefficiencies in people's thought processes just simply by them not pursuing the full knowledge basis of how these transactions can work, but more importantly, what the consumer market is looking for and what drives their decision-making process. People want to think as little as possible. So, I found this space really interesting because just by doing some very, um, clear visuals on a property and just doing very, very simple, streamlined, you know, parts of due diligence and parts of land improvement, we could really open up the floodgates and, and sell property. So, where a lot of, you know, we've heard this year, you know, a lot of folks saying, "Oh my gosh, my residential lots are taking 120 plus days to sell." Our average sale time on a single-family residential lot this year was 62 days from list to close. And that is 100% because every property that we touch, we're pushing the maximum out of it. So, my against the grain thought, I think, is is just more of original thinking than it is against the grain thinking and just looking at the context clues and going, no matter what business you're in, we need to find the path of least resistance as far as risk, but most resistance as far as what other people think about the project. And that's kind of driven us to a place now where, you know, we have a ton of trust with our equity funders. Our equity funders are, you know, our private partners and hard money funders. They're all like, "Well, where's the next deal?" Because we've done such a good job of capitalizing on projects, underwriting the right deals, and also forcing the most value that we possibly can out of it, which always will sell your properties faster and bring you a higher yield. So, my thoughts, you know, since the beginning, even when I was in the finance world, is this isn't that complicated. Just fighting yourself on what you know you should do is complicated. Um, so we definitely had times in the beginning where, you know, because we were going so intensely on putting in the money on land development, we oftentimes had to, you know, we could get a funder on the deal, but we couldn't get a funder on the land development side, which means that we were rolling our own cash into deals. Well,

you know, when you're making $15, $20,000 a deal, that sounds fantastic, but if you've got six new projects on the back of that deal that you've got to put $10, $15,000 into, I mean, you're in a deficit really quick. Um, so we just, we just really buckled down and rolled profits for six or seven months straight into new acquisitions, new land development projects, and we really started to kind of separate ourselves from the pack where we're not scared to take on a delineation for wetlands. We're not scared to take on an alternative septic system, and we're also not scared to renegotiate these terms with our sellers to make sure that everybody's clear and understanding as to why this transaction needs to go the way that it's going to be going. So, how has the transition looked from houses to land? As far as like, are you still in residential? Like, talk about like your type of land transition, um, from when you started, how it's kind of, I'm sure you do multiple, a lot of different things right now. Um, but talk about what that has looked like over the last, I guess, two and a half years or so.

Yeah, so we still do, um, dibble dabble in some housing stuff. You know, it's still a skill that we have and, you know, there's a lot of land hacking that can kind of occur, um, with residential structures already on the property. So, we have one right now in South Central PA where, you know, it's 7 acres. It's got a really pretty decent home on it. We're going to go in and use our, uh, contractors to flip the house. We're splitting off two additional lots from it, and that deal is a 2.5x deal. Um, so we still will dibble dabble in the housing side, but the transition for us was really simple. I mean, it really was a no-brainer when we got to a certain point because again, we were spending four to six months often times just inside of the flipping aspect of a house. Um, you know, on that side, we didn't do a lot of cosmetic flipping. We really tried to find places that needed to be flipped. Um, and, you know, you're four to six months in those projects before you're even ready to list the property. And then you're just hoping that you're listed at a time where the market's still moving. You've got a lot more interest rate sensitivity on that side of the business as well. So, the transition was, was really clear for us. It was just a matter of, we can either be in an environment where the demand for the house is arguably higher than the demand for the land. Um, but what are we comparing the two demand pools with? Are we, are we comparing it to a completely unimproved piece of land and a fully flipped house? Are we comparing it to a fully flipped house and what you would consider to be a fully flipped piece of land? And that's what just kind of led us to being able to realize that the transition [clears throat] wasn't hard at all. Actually, this was, I wish we made the transition a lot sooner. Um, because it's, it's just such an astronomically easier business to get through and to deal with. Um, you know, I hear of different stories throughout the land space as I'm sure that you do. And like, man, I'm in such a pinch with this property. And, you know, most of the time when I hear that, it's just improper due diligence. You know, I, I just had somebody call me this week, you know, Andrew, I'm stuck on this property. We thought we'd sell it for $100,000. Now I'm down to $50,000. And I said, well, where did you go wrong? You know, he's like, well, we didn't perk it before we bought it.

That's why I love land. That's what made the transition so simple is that there are just simple steps that you can take prior to the acquisition of the property that you cannot take prior to the acquisition of a house. Right? There's just certain things. You can't look at a house that's a flip and go in and say, "Hey, I'd love to rip this wall down before I buy it just to ensure that everything in here looks looks kosher." You can't do that there. But I can do that on land. I can remove a tree while under due diligence because I can say that that tree is in the way of my septic, you know, testing area. These are the great things about land that made that transition super simple for us. Uh, it became much more technical process than it did this kind of like looming technical process where you can have some things answered and other things not. So, we made that transition very cleanly. Um, and, you know, the marketing was probably the most challenging part for us. Um, you know, I've always been great in acquisitions on my end. You know, my, I did acquisitions for our company for the better part until we hired, you know, new help inside the company. And the marketing was the most challenging aspect of it for sure. Um, you know, it's, it's, it almost felt like at first that we had a decay in, in the value of the, of the marketing, um, versus when we were just going for houses. But that, that flipped because we could only do but so many houses at one time due to subcontractor bandwidth. Um, you know, those guys are in those projects for weeks, if not months on end, and you can't just pull them to go do another one, whereas with land, I can have them in and out of a, even a dense piece of ground within three days and move them right to the next project. And then there's guys that are better on the forest mulch or better on the mini skid or better at putting in culverts, and we could really take kind of this whole team of people and have them even disperse across several projects at one time. And we realized, man, in the amount of time that we can do one house, we can do 10 of these pieces of land. Um, so that's, that's kind of how we made that transition and why it was super simple for us.

It seems like your box of types of deals are is pretty wide and pretty big in terms of the types of deals you're doing. Can you explain or like there are types of deals like you're like, absolutely not messing with? Um, but in terms of like types of deals, it seems like you're pretty wide in terms of the types of deals you're doing. You're trying to make deals happen opposed to trying to really like throw deals away.

Yeah. So, we, I would say that the, the, the type of deal that we do the least is a recreational deal, primarily because our company is not built off of, um, this kind of concept of buying low and selling high without doing any sort of of work. It's a very impossible model to actually build a model around in, in my opinion. Um, you know, you, you, I've had wealthy people sell us ground for cheaper than what they should have, and I've had, uh, poor people sell us ground for cheaper than they should have, educated, not so educated. So, it's really not a, a demographics thing when you're building that model. Uh, so for us, we really try to focus on properties that there's value-add potential, whether that be through minor subdivision, um, you know, challenging, like we just had one that went under contract today. I'll give you an example. We bought this property for $17,000. The seller had been in and out of two contracts prior to us coming into the agreement, and they, they said, you know, there's this wetland on the property. It was only 1.6 acres. Um, so there's this wetland on the property, and we had the Army Corps of Engineers do a report, and it, and it showed up as, you know, 0.8 of an acre. Basically, half the lot was wetlands, but where the wetlands were positioned meant that based on that report, we'd have to cross that wetland with the driveway, which introduces a whole another step of kind of like wetland remediation. And that would, you know, even take us and go, well, it's not really worth worth a deal. But this, this property was worth $80 to $90,000 if we could get through this. So, I was looking at the wetlands and the hydraulic reports and said, this wetland report doesn't make sense. And look, thank for everybody that's in the service, but the Army Corps of Engineers people is not who you want to be using for a wetland delineation. I can promise you that. They always are way higher on their delineations than any other private company that I've ever used. So, we went ahead and I looked at the reports. This was one of those types of properties where the, the wetland was caused by improper runoff from the development that was built around it. This is like the last lot in that development. And if you know, like I know, most of the time the last lot in the development, you're not getting a deal. There's, there's a reason there's still one waiting there. But anytime I see that kind of hydraulic runoff, you know, from waters and soils, to me, that wetland when they delineated, I also looked at when they delineated it, which was like in June, which is good rain season over here in, on the East Coast. We should probably have this thing redelineated. So, we, we got it under contract. I had it redelineated in November, where it's colder, where it's arguably tougher to delineate when it's colder. And some delineationists will tell you that, you know, there's only certain time periods that they can really do a proper delineation. Um, but we went ahead and had it redelineated. That delineation came back only 11,000 square feet of wetlands. So, some of this business, guys, is strategic, right? You, if you don't understand the context of soils, if you don't understand the context of what's creating these challenges, then you're not going to have the context to work backward from there and go, well, is there a path through it? Sometimes there's not a path through it, but oftentimes there is. And it just takes a little bit of a deeper technical analysis. And we just went under contract, bought for $17,000, $6,000 into the deal with surveys, delineations, perks, and septic design. 5 days on the market, under contract for $77,900, cash deal closed in 30 days. Do they all work like that? No, they don't all work like that. But there are a lot of deals out there that do work like that. If, if land flippers are able to kind of change their mindset from how easy can I just buy this and resell it to actually becoming land professionals. And I think that that's what has given us a real edge in the space, to be honest with you, Ron, is, you know, I'm happy for everybody that wants to enter into an efficient market. It's a free market. There's a ton of deals still to be had out there. But when you actually put some thought, you actually educate yourselves and you educate your team on what it means to be in land, if you want to be a land flipper, understand that you're not going to have a ton of respect from agents. You're not going to have a ton of respect from other professionals in the space because there's nothing interesting that you're doing. You're buying low and selling high. Fantastic. There's a lot of businesses that work like that, and it's no harm, no foul. But for us, we went in and we said, "Well, how can we actually build credibility in the space and actually be known as problem solvers?" And now, to this point, we have agents that bring us deals because they're like, you know, man, you're, you're like one of the only teams that we've ever spoken to that's actually willing to go in and put in the work on a small lot all the way up to a big lot and figure it out. So, we do everything, Ron, from single family infill, examples like that, to cleaner deals, of course, I prefer them to be cleaner, all the way to minor subdivisions, major subdivisions, um, which we're working through a 200 lot subdivision right now. Uh, another 128 lot subdivision that we're going to be working on. We just put under contract last week. Got like a 12 lot subdivision that we're working on, all the way to preservation and conservation and use utilizing tax credit systems in states like Virginia, um, to offset tax burden for us because we are in a space that is kind of challenging. There's no depreciation while we're holding these assets on our balance sheet. So that, that kind of creates a challenge on a tax basis. But there's so many ways in the space to kind of get to these solutions that we're not a master of all things by any means. But in the land space, shiny object syndrome is a little bit easier to control because if you understand the foundational elements of what you're looking to accomplish, it's, it's like the, like on every single property, how you deal with the same issue on this property is how you'll likely deal with the same issue on the next. So, while we have a lot of buckets that we buy in and transact in, we're not so worried about the difference in type of deal as much as we are our certainty in that, that area, that geographic region, and with our knowledge base to be able to transact any type of deal that comes up in that market because the more niche the deal gets, the less competition Landpad has to compete in that space, which means that there's going to be a much higher yield for us, um, on our marketing dollars and on our time.

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Yep, absolutely. That's, uh, going back to that wetlands real fast. So, are they after that delineation, are they just going to be able to put a driveway around that now with it being, I don't know.

So, it was, you said 0.8 acres initially, and it was down to whatever, two?

Yeah. 0.2. Yeah. Huge difference. Huge difference. And that was all about doing a delineation at the right time of year. Um, I just recommend everybody, if you're going to delineate and you have the ability to delineate when it's cold, delineate when it's cold.

And that's just going to be a little bit of a wet driveway parts of the year, I guess, um, during the spring when it's raining and stuff, opposed to not being able to, because obviously putting a driveway through wetlands, like you said, like a lot goes into that.

Um.

So, what we can also do with that, Ron, is, you know, create a stormwater management plan now for this property to make sure and ensure that into the future, when this new house is built, that there's never that, that wetland never gets larger. That's the, that's the main thing is that if this were to go on for another 20, 30 years, it's, it's likely that the property could be toasted. But this is about creating long-term solutions for a piece of ground, and stormwater management plans are a great way to do that.

Wow, that's cool. Um, I, I'm sure a lot of people listening are like, "How are you getting these deals?" You're probably very, uh, niche targeted with your marketing, and I know you're very wide and you send a lot of marketing out in a lot of different ways. Let's get into that. The, and you said this was the toughest part of getting into this business was the marketing. Let's talk about what your marketing, how it's evolved over the last couple years, what it looks like today.

Yeah, absolutely. So, we do everything from, you know, texting to mail to, to calling, uh, agents. So, really any, any avenue that we can, um, we try to participate in on the marketing side. Our first initial struggle was thinking that, um, somehow we were going to blind offer our way through, um, residential lots. It's a little bit of a different space when it comes to that. Um, can it be done? Has it been done? Absolutely. But we, we do place a high emphasis on targeting. So, we don't broad brush our marketing. We have a lot of data. You know, we, we're obviously a great client with you guys and pull a ton of records every month, and we always have surplus, but what we do is we pull that data out of Landportal and we reagregate it on our end. Um, we take the basis of the, the filters that we're using in the Landportal. We found our, you know, hot bucket, if you will, of what we're looking for, and we've kind of trunched this out for a lack of better terms into, well, what's the, what are the key components of each, each? We look at every single piece of marketing we do as it is an expense until it becomes a profit, right? So, for us, it was really important as quickly as possible to figure out how do we trunch this data? Meaning that if I'm going to go into an area, for example, like, um, Harrisburg, Pennsylvania, I need to know that there's a stark difference between 30 acres in city limits versus 30 acres outside of city limits, the utilities. But what I'm seeing a lot of land investors or a lot of land flippers doing is they are going in and putting out blind offers for geographic area based off of this average price per acre without consideration for the fact that these are not one-to-one properties. They're, they're just not. And where you're offering somebody, you know, 50% of the as-is value, respectively, if that's your model, you could very well be offering somebody 20% within the same zip code of that model. And there's a big difference between those two numbers. One's already low, and one's astronomically low. And the difference in those two properties is your ability, which our company has done. But it's comes down to being able to identify and take your time with the marketing. This is not something that I would recommend anybody rush through is really understand your areas because I promise you that where you're not getting conversions, it's, but you know, it's a great area to be working in, it's, it's because you're broadly targeting every property in the same bucket as if it is the same type of opportunity. So, we've taken our time to go, okay, what, what is a, and every market is different. Um, you know, what does a 1 to 5 acre look like in this market, a 5 to 15, a 15 to 30, and then a 30 plus? And we try to look at those and determine, well, where's the outliers? Where the outliers exist, we're going to move those into their own bucket. We're going to build a model around the outliers because all those outliers are going to have something in common. It is never a circumstance where two like-to-like properties on the same road sell for, one sells for 50% higher than the other if they are like-to-like. And so anywhere where we're seeing that type of discrepancy, it is a very clear and very obvious indicator there's something else going on with these outliers. And nine times out of 10, it's either zoning, different zoning classification, or it's, it's annexation or non-annexed lots or properties. Those are where we have made our money. Um, is our ability to hop into our model and really everything from a 1 to 5 acre all the way up to a 30 acre, determine what is the fundamental difference in pricing mechanics behind a single family lot or a larger property with and without public utilities. Just water, what does that mean? Just sewer, what does that mean? You know, is there fiber at the road? Is there gas? So, we have a whole underwriting process now developed around what is the value of these, these services, these utilities that are being offered and how can we go in and maximize those. So, we like to focus on highest and best use of a property irregardless of where it is. And that's kind of how we build our marketing funnel is by taking our time, becoming professionals at what we do. That way, when we're putting out our offers and we're having these conversations with sellers, that we're able to really structure the conversation not just of, well, here's what we've done and here's who we are, but rather from a place where we are educating these sellers on their property. We don't do any blind offering. We might do range at times, um, where we range offer, or range offering in an area typically where we're able to offer between 80 to 100% of the as-is value due to value add that we can kind of milk out of the property. Um, but we take more of a focus on our end of not trying to decrease. I would rather have 20 acquisitions guys on my team dealing with a bunch of calls every day and they try to find a shortcut through less overhead and easier conversions. I would rather have to work for the conversion and have our guys become more educated, thoughtful leaders of our company, you know, shepherds of our deals, if you will. I'd rather have them there than have them just be laying up contracts every day and having to go back and rewind these agreements because we, we, our blind offer was wrong. We were too, we were too high or we were too low, or whatever the case might be. Um, so that's kind of how we work through it. So, a lot of marketing. I mean, it's not for the faint-hearted. Um, we do push out a ton of marketing. Um, you know, between mail, you know, SMS, and everything. You know, we're talking to, we're getting in the door anywhere between 250 to 300 leads a week. Some weeks it's higher, some weeks it's slightly lower, but that's about our average. So, we're pumping it out and, and of that, of those totals, you know, maybe we're pulling out six agreements a week.

Um, now, what we're, what we're putting under contract and what others might put under contract could be slightly different. We do leave money on the table. We try to focus on deals that are shorties with great market velocity, and we don't take any sort of property that leaves us a little bit on edge about, oh man, like if it's, it's odd, like if our company cannot determine a way to provide value to the deal. We're very, very remiss to do that deal. Because if it ends up going on market and it's sitting for 90 days and you're looking for that thing that you could do to get more out of it.

There's just nothing more that you can do to get it out of it. You're sitting on a lame duck now, right? It's like the property is going to sell, but there's nothing that you can do to make it sell faster.

And that, and LandPad, is like our biggest fear is to have an asset that we can't do anything to further improve it. So, there are some properties where we know what we could do to get the most out of it. We feel the area is strong, but we don't do the most to get it out of it because we feel that the area will support it either way. But we've had those examples where we're in it 90 days, we take it off the market, we go in and finish the project, and then it sells within a week, you know?

So, that's how we're focusing on our marketing: a keen focus on understanding the market you're in. We spend a ton of time re-evaluating markets, consolidating our markets, and shifting our markets. Not every area will always be the same. Sometimes you have too much inventory in an area and you want to kind of back off there and pump the brakes and go to somewhere else.

Um, but I'll say this, and I think that anybody listening should really take this into consideration, which is it's better to model one market a day for 365 days in a row than to try to model 365 markets in one day. Your business will get farther if you really understand what you're doing. Because there's something about how you speak and the credibility that comes when you're talking with your consumers, when you're talking with agents, that you cannot fake and that you cannot make up unless you know what you're talking about.

Take the time, understand the markets, understand the areas, whether you're targeting recreational at your target price, or whether you're targeting, you know, flipping lots for single family or subdivides. Just know your markets, guys. And knowing your markets is more than just the data that you're using, but it's knowing the municipality. What are their goals? What are they looking for? How's the growth been? How many building permits are being issued in a month, in a year? How does that track over the last two to three years?

Sometimes this data is not publicly available. Sorry to tell you, everybody. Sometimes you have to pick up the phone, you have to call the municipalities, you have to figure out who to talk to to get these answers. If you, the way that we look at it is, if our mind leads us to an area and if the data leads us to an area, then we have to do, and we're obligated to do for the company, everything that we can do to get the best understanding of that market, even if that means picking up the phone and calling planning and zoning and calling these different municipalities' health departments to determine what the demographics of the area look like, both from the people bases and from the economics.

Yeah, that makes a ton of sense. Going to, like, you talked about always wanting to be able to improve land. Is there like a checklist of like, okay, this is the easiest thing we like to do, there's a lot of value here, like what is like the, not easiest, I don't know if that's the right word, but the thing that like, okay, this is something that we can usually make some money on, it helps the land go faster? What does that look like from like the simplest thing to like, okay, this is the most complicated thing down the list?

So, perk testing is something that you should do. It is not necessarily something that provides additional value more than it does baseline your floor value. Okay, so a property that can perk versus cannot perk, that is more of just a factor of how are we going to baseline our value now? Um, you know, and then from there, so when you do a perk, it's not really that you're pushing more value out. It's just that you're making sure that your property is not worth less than what you're comping it against.

Right now, where we've seen the highest value add, the most impactful part of our business on the land development side has been land clearing. By far, hands down, that is the biggest needle mover out of everything. Um, and the reason for that is the general market, the general retail consumer lacks vision as much as they lack an understanding of how to see that vision through. So for us, when we're looking at de-risking a project, there's kind of the fundamental de-risking and then there's this kind of quasi de-risking, which is like, okay, nobody's going to tell us that this is the answer, but what do we know about how people make decisions? We know if we can take away as many thoughts about how to make decisions for people on a piece of ground, then, you know, people will come up to it a lot and they'll go, "I don't know if I want the house here. If we want the house here, and we don't know how much it's going to cost to clear the land, and we don't know, does it make a difference if we clear up this hill or does it make a difference if we clear down the hill?" Guys, there's your clients on residential lots, they're getting decision fatigue by the time they leave your lot if you're not doing these things. And that decision fatigue plays a large role in their decision-making process.

So, land clearing, hands down, if your intention is that somebody's going to, whether it is a half-acre lot or it is a 10-acre lot that you plan, if you're thinking somebody's going to build a house here, you ought to do something about where they're going to build the house. Take that thought out of their head because what they can always do is come to your property, go, "I maybe wouldn't have cleared here," but they see what a cleared part of the lot does look like, which then leads them to think, "Well, I would rather clear here." Which means we've given them the vision. We've now provoked the vision for them where they see what's possible, even if it's not perfectly what they wanted. Now, they can go make that decision for themselves somewhere.

Septic designs are a big deal, too. I would say we get a pretty immense amount of value out of doing those. And having an actual septic permit issued. I'm sure that somebody that's listening to this podcast is going to go, "Yeah, I had that lot that was a half an acre in a neighborhood and I got it perked and I listed it for sale. My buyer wanted to do a septic design to make sure they could get a permit and it came back in the well radius left it, so we actually couldn't even get a septic in there."

Perking is not a guarantee of a septic installation by any means. Do we worry about septic designs as much on a two-plus acre lot? No. Because a septic design in most areas is what you use to get the issuance of a septic permit. And what we more so look at the septic design as, especially on smaller lots, is a guarantee of septic installation. Perk testing does not guarantee a septic installation. So, we would, I would say that, you know, that's a really high ticket item that you should be doing regardless of the size. We do it on every lot that we do where it's permitted. Some states, it's kind of nuanced with how these designs and transfers of permits work, but where we can, we always do that. Um, it just again, it's just adding more surety. That's not everything that you do is going to have a monetary return that is noticeable upfront. If you spend eight grand on land clearing, you might get 16 out of it or you might get eight out of it. But what you will get every single time is a higher velocity of deal. And when we look at money and we look at velocity of cash, I'm less concerned about getting a high return on my land development as I am how fast can I get my money back in the door so I can recommit it somewhere else so I can roll into the next deal.

And we've seen this across the space with a lot of folks that we've talked to, which is this shortcut mindset of, you know, "I don't really want to spend the seven grand. I'd rather roll that seven grand into another deal." Well, you can roll that seven grand into another deal when you sell this deal in 60 days versus 120 days, right? So, land clearing, if anybody takes anything away from it, if you're dealing with a parcel that you really feel confident that this is somewhere that somebody's going to build their home, whether it's their forever home, whether it's a mobile manufactured home, whether it's anything, you should definitely clear, in my opinion, no less than a third of an acre, but probably upwards of six to ten of an acre is what we focus on.

That makes a ton of sense. Um, going, you talked about it earlier and I don't want to brush over it because I think it's really important. A lot of people when they're getting into this business or like, um, they don't have a big focus on getting deals funded. They don't have like the way you are talking about your funding relationships, your money partners, hard money partners, everything like that. Like you obviously have really good relationships. You value those relationships with them. Talk about the importance of that. Building real relationships with funding partners. Obviously, like you're getting started, like get some deals. Like, I don't think the money matters that much at first, but like, once you scale up to two, three deals a month, like you want to work with your funding partners, you want to get cheaper rates, make more money when you can.

Yeah. I mean, best advice is, you know, don't step over dollars to pick up pennies. Um, there is there's a misunderstanding I've heard quite a bit since I've been in the space. You know, "God, these equity funders are charging like absorbent amounts of money to be in these deals." Sure, you could look at that until you look in your pocket and realize that you're not the one with the cash. If you had the cash, you wouldn't have this problem. And that's something that we were just very starkly honest with ourselves about in the beginning, which is, sure, I had the cash to transact some deals, but at the volume that we were trying to get to, we didn't have that much cash. I didn't have that much collateral. I didn't have that much leverage.

Um, so when we got into the space, yeah, I was a little bit coming from the house flipping side, which I see as a much higher risk space, in the hands of the wrong operators. Um, but you could borrow money at, I mean, at that time, 10, 12%. We were borrowing from our hard money funders. I come into the land space and I go to get my first funding request in, and obviously there's very few and far between private funders or hard money funders in the land side of things. Then there are houses on that side. It's like a cockroach business. Over here it's like, where are you all? There's nobody here.

Um, and I would just say, you know, you have to think about who's taking the risk. And being a solid operator is the only way to negotiate terms with your equity funders all the way to your hard money funders. They're funding the deal, but really, that margin that they're doing is also there to hedge them against the risk of a poor operator, of a poor due diligence process, of a deal that could go south. Um, because it is possible, and we've seen it happen plenty of times with other folks.

So, we do place a big emphasis on funding and I never tried to nickel and dime our funders. If you wanted 20% of the deal, if you needed 40% of the deal, or if you needed 50% of the deal, I looked at it as my business as a business of volume. And I would rather have 50% or 40% of something than of nothing. Because at a certain point, my business would break loose enough where I could start to hedge that borrow rate down. I could hedge down how much I needed to borrow, who I needed to borrow from. I could start to create unique structures with our funding partners.

So now what we're doing with a lot of our equity funders is we're actually partnering on the deals with them. You know, a lot of equity funders want to take title, but we're coming in now and saying, "Well, look, I'm going to cover the risky part of the deal. I'll cover all the due diligence. I'll cover the subdivision process. I'll cover this, but I want to take title with you and we're going to structure this a little differently." Because if you are willing to take all the risk and offer me a 40% split, well, I'm going to take part of the risk with you. It obviously can't be 40% anymore because I'm taking part of the risk with you. And this has really turned some of our equity funders' heads around where they're going, "Well, that is a different structure and it is a different risk profile." And so, we've started to negotiate not just by saying, "Hey, I'm Andrew Short and I own LandPad. Look at all the success we've had." I go and saying, "Look, let me partner with you on the deal. Let me bring in some of my own cash, help you de-risk the project. You can go and reallocate that cash into something else. I have less cash in the deal because you're bringing the financing to the table and let's work together on the deal."

So, I think a lot of people get caught up on, "It's going to be like this forever." That's up to you as the operator of your business if it's going to be like that forever. And I can promise you guys that the equity funding space is full of a lot of very reasonable people. If you think they're unreasonable, it's most likely because you don't have a full understanding of the risk of the deals and what it's like to have hundreds of thousands of dollars, sometimes millions of dollars of cash sitting out at one time. And these equity funders are intelligent people, obviously, and they're looking at different ways that they can make their money go work for them in much more passive environments. They have to make it worth their while because ultimately, if the deal doesn't perform or you don't perform, they have to step in and manage that deal now.

So focus, I would say, on less on how much it cost you and more on what your business needs to do to have more volume so you feel the weight of that cost a little bit less.

And you want your funders, you want them coming back. Like you said earlier, like they're always asking where the next deal is. Like a bad situation where a funder or a money partner feels like you didn't do everything you could do to make it work. Like even if something goes wrong, if you communicate well, like obviously ideally you don't want anything to go wrong, but it can. Um, but like if someone who lends you money feels like you didn't do the right thing with their money, you didn't try your best to do that. I think that's where like bad reputation can really snowball. I know you don't have that with your company. Um, so but, uh, that's where I see a lot of newer people go wrong. They build a bad reputation. They underperform.

Not even underperform, just low effort in making deals happen. I think that's where there's huge issues.

I agree. And I think a lot of that low performance comes from this really selfish confirmation bias that says, "Well, if I'm giving up this much money, I'm going to move on and do something else. I got it funded, the deal's listed, we'll just see how it goes." That's a really bad attitude. And I think it's why a lot of people drown out of the space within 12 months because it's an attitude problem, both internally inside your operation and with how you're perceiving the value of your partners in the deal. And it is incredibly valuable. If I were an equity funder, I would be charging very similar rates because I understand how much I can get out of my business or in my other passive plays that we have going on, from solar to preservation to these other kind of more passive cash flow plays, whether it be on a tax side or lease side.

Um, that I'm not, I think that the issue is, Ron, is that so many people are putting their eggs in one basket as if you have to operate in this business like everybody else is operating. You don't. You can operate your business just however you want to. But the critical element to that is how much time are you spending educating yourself, and how much time are you spending on refining your process, understanding your numbers? I hear all this stuff about return on ad spend and I hear all this stuff about all these kind of ancillary functions of a business, which are critical. But guys, they're not critical if you're running an operation under a million dollars. It's what's critical is that you get to a million dollars, right? If it's working, kind of push more out of it. Go make it work more. But there's a lot of focus, I think, really early on from young operators on just the wrong aspects of their business. How much does my borrow cost me? How much am I spending? How much am I getting back? Yes, these are obviously important measurements that you should be tracking, but the difference on an operator that's doing 200 grand a year is very nominal. It's very nominal, right?

So, I would say more so focus on what you're not doing for your business. So, you have a problem. Like I always, we, my team has a goal every week. When are we going to reach the point where we max out all of our funders? When are we going to finally get that no? Not the no because the deal isn't the right deal, but because the money well is dried up. And we're pushing every week to try to max these funders out, to max their mindsets out as well. How can we, as a company full of strong operators, restructure the mindsets of some of our funding partners into deals that they ordinarily wouldn't want to take on, into the fact that now they can go, "Well, if we're going to take this on, I mean, LandPad would be the company that we do it with." And that's something that is earned. It's not given. We've worked really hard here, I mean, incredibly hard here. We've taken what we do incredibly seriously as well, on the reputation side, as much as what we do on the internal side of the business. Um, it's just no playing games. This is not a hobby. This is something that can be very, very lucrative, but it can also put you under very quickly as well if you're not careful.

And by going under, it's just not a matter of a bad deal or two or three. Reputationally, this is a very niche, very small space. You do wrong by one, you're doing wrong by many. Um, and I think that that's just the focus that we've had from the beginning. But I think we also come into it, Ron, with a little bit of a different professional background where this wasn't our first job. This wasn't our first go at something. You know, we've been in everything from tech and software to finance and house flipping and new construction. And the consistent theme amongst all those is people bet on strong operators. That's it.

100%. Um, ton of advice right there, Andrew. As we finish out, is there any, and you just gave so much advice as far as how you treat funders, everything like that, like don't nickel and dime funders, get focused on getting 10 million, but is there any one piece of advice you would give to someone as we finish this out? Uh, just starting, six months in, something like that. What is there just one quick piece of advice for someone like that?

Be honest with yourselves about what you're looking to accomplish and what you're willing to do to get there. I think that there's a lot of shiny object syndrome in this space. I think it's very easy to watch a video on YouTube or on Instagram or on Facebook and go, "Well, if they can do it, I can do it too." And by definition, that's true. But the willingness to be honest with yourselves about the journey that you're about to embark on. And more importantly, like, what do you want to get out of it? What is it that you want? And if money is your answer and somehow you're under this convoluted idea that it's just going to be easy and it's just going to come to you. I'm a big believer in the space that I think about anybody. I think you could put a chimp in a seat and that chimp could do 100 grand a year.

But there's a real difference between building credibility and reputation and transacting honestly, you know, versus being dishonest with yourself about what your goals are, what your priorities are. You can't on one hand be asking a funder for half a million dollars of their money and the next hand, three o'clock, be at happy hour at the Ruby Tuesdays down the road from you. You know, that's not how this works. You know, be honest with yourselves about what your expectations are for your business and what your north star is. I see a lot of people really lacking this north star. And this north star, in my opinion, cannot be financially driven. Do you have a family? Do you want a family? You know, what do you want for yourself and your life? If we get one shot at this thing, what is it that you want? And be honest with yourself about that. And then more importantly, once you've determined that north star, be honest with the people that you work with about your goals and your objectives and what you're willing to do to make sure that you accomplish them.

All of our funding partners understand that one thing that LandPad is is aggressive. I play no favoritism. There is no one person that I like more than the other. I like my company the most. I like our process the most. And what I really need to see happen with our equity funders or hard money partners or whoever they might be is, you all get the email at roughly the same time. It is not a battle of who is best and who is fastest. It has nothing to do with you. It has everything to do with the expectations that we have here at LandPad to put a button in something and move on to the next. If I had to sit out there looming and waiting for answers one at a time, one at a time, it'd take me a month to get a deal funded sometimes, right? So, this isn't about finding the best rate or finding the best offer. This is about making sure that you're giving everybody a fair shot and an honest shot at participating with you to the degree that they want to. But my number one piece of advice is more operators getting started need to be honest with themselves. They need to have a little bit more self-reflection and find your north star and go and get it. And understand that that journey to get to 100,000 is going to be relatively simple. To get to a quarter million, maybe be kind of simple. Half a million, it gets a little tougher. But to break that seven-figure mark in this business and then to get to multiple seven figures in this business is going to require a lot more than good marketing, smooth talking, and a couple good conversations. You're going to have to learn how to become a great operator with a deep understanding of land on the overall.

Man, Andrew, I love your advice. I love your passion for this business. I think it um is going to spread to a lot of people listening to this podcast, listening to this video. Um, guys, thank you so much, Andrew, for hopping on. If you guys are watching on YouTube, hit the subscribe button below. Other than that, we'll see you guys next.