This is episode number 2083. Jill and I are going to talk about how to make money in the modern construction industry. We’ve been talking about the four major career choices in real estate that you can make and this is the final one where we’re going to talk about construction and development. This is one of my favorites and one of the hardest to break into. It requires the most money up front but talk about creating equity for yourself. Each day on the show, we answer a question from our Land Academy member discord forum and take a deep dive into land-related topics at your request.

Importance Of Consistent Mailer Strategy

Stanley wrote, “Hi, Land Academy community. I’m having a very difficult time getting into a mailer schedule, as Jack says is necessary all the time. Please share how you all get this done. Thanks in advance.”

Getting into a mailer schedule should be like an auto-pay for your water bill.

I have one idea, though, that makes it better. I know what you do. If it’s hard for you and it’s time-consuming, then do a lot at a time. You know better. You could trust the data for a quarter. Maybe once every three months. It takes you three days to do it but you get into it. It’s 90,000 records or something like that. You pick the areas, download, scrub it, and get all ready. You can slot it in. You could send it all to offer to owners if you want and tell them, “I want 8,000 or 10,000 to go out every week,” or something like that. You could do things like that. At least make it easier for you.

Some people love Mailer Monday. I know people in Land Academy who do it every Monday and they have fresh things to look at and fresh ideas. They got real-time of how it worked over here. They’re going to pivot to this, maybe change this a little bit, or do more of that thing, and send out the next mailer. For a lot of people, it’s hard and daunting. It’s a big process. Do it less often but still have a schedule of that, whether it’s every 90 days or every month. Make it easier on yourself and get it done because you can’t get anywhere if the mail doesn’t go out.

Why Motivation Matters In Real Estate

Reading between the lines here, the real root of this question is what do you look forward to in life? I know for a fact, it looks forward to doing real estate deals. Jill doesn’t feel it in the right place in the world if she’s not reviewing a bunch of deals all the time.

It’s true.

I love that. It makes my life easy. All I have to do is send a mail out. I love real estate deals, too. I love that she wants to review real estate deals. It’s not even about the money for us anymore. If we don’t feel right in the world with us, do real estate.

I get in trouble sometimes like, “All you want to do is to get a deal done. What are you doing?” I’m like, “That’s how I am.” That’s a good point. You’re saying what’s important to you and then tie it to that.

If you think about it in your life, take a few steps back and forget about this mailer. It’s the stuff that you hate and love to do. Love the outcome or whatever’s involved in it. The feeling that you get when it’s over or while it’s happening, that’s what you’re going to do. Ultimately, you’re going to do stuff that makes you feel great. I love getting our land deal done and so does Jill. What is some stuff that you hate to do in your regular life?

Clean.

Do you do it?

No.

That’s a great example. She hires it out. Hire your mailer out if you don’t like it.

That’s a good point, too. I was thinking that at one point, do the part that you have to do, pick the areas, and do the trolling. With the minutiae of it, let somebody else do it.

If you’re old enough to remember when you had to pay your utility bills by writing a check and putting it in an envelope, or if you’re old enough to have to go there and pay your water bill and stand in line, that’s an outrage when you think about that. I hated it then. What do I do now? We have auto-pay. I don’t have to do it anymore. Your land career will never work unless you get the mail out and get it consistently out. Like you’re saying in the question, Max talks about it all the time and here I am talking about it again. You got to make it so it’s mechanical and you’re not thinking about it.

I have one other idea. If it’s holding you back, Stanley, think about getting a partner. What are you good at? What do you like to do? “I want to be in this business. I understand it all. I love everything. The data in the mail, I can’t handle it but I’ll answer all the phones, set up a team, and do this. I’m great at due diligence. I can get money. I have money.” Maybe bring in a partner. That’s my other big fallback and there’s nothing wrong with that. You could do well.

We took a question from Chris & Chris. They said, “Here’s our background. We’re 60 days in and we’re excited.” Their background was in math and STEM-related careers. They owned companies. That doesn’t happen by accident. It doesn’t happen by getting up in the morning and deciding what you want to do that day. That is the killer of all success.

You have to get up in the morning and look at your calendar, the one that you populated, not somebody else. Populate the stuff that you have to do that day, week, or month to get to your end goals. Doing a mailer is part of that. If for whatever reason you’re not wired that way, you need to get somebody in your life who is wired that way.

Success doesn't happen by accident. Get up and tackle your calendar! Share on X

Make some changes.

The Growth Of The Construction Industry In High-Demand Areas

Get a good W-2 job because that’s about it. Our topic is how to make money in the modern construction industry. I love construction. I don’t like being involved in it but I love the results.

I don’t like hearing it next door but it’s pretty to look at.

We’re in Phoenix and that’s not an accident. We moved here in the early ‘90s and were very quick for a job. We realized how everything was growing by leaps and bounds. The inexpensive housing industry was growing here. We very quickly bought some real estate land, specifically flipped it fast. I realized that’s what I want to do. I was flipping all this land to people who are going to build on it. A construction industry in a high-growth area like Phoenix, Las Vegas, or Miami is amazing. Jill grew up in Southern California, the construction development center of the universe during our childhood years.

It does make me feel good. When you and I drive around, I see areas and it’s positive. There’s money here and things happening. It’s good. I do like seeing it. There are almost limitless career opportunities in construction. At the tip-top, there’s the developer who decides to build a hospital and lease it in the mail. At the very bottom, there’s a kid out of high school who wants to be a bricklayer or wants to be a finished carpenter and gets into a program where they can do that. Every single thing in between construction is amazing.

Construction is amazing! So many career opportunities, from developer to bricklayer. Share on X

Capitalizing On Low-Cost Real Estate In The Modern Construction Market

Here’s the thing. I put Modern Construction in this title for a reason. We’re in this little bubble. This is the second or third time in my career that it’s happened where we are buying constructed assets for substantially less than the replacement cost. Jill and I came down from the mountains and looked at houses regularly in certain places that are $100 to $200 a square foot, including the land. Most of the time, we’re looking at assets where the modern current land cost meets or exceeds the actual cost of that entire completed project. An old house, let’s say.

We're buying houses for less than replacement cost! It's a weird, opportunistic market. Share on X

It’s weird because interest rates are so high. It’s the time to take advantage of that. For us as investors, we take advantage of what’s happened and what is happening with construction. Construction is so expensive. Look at the MLS. You can buy a finished product for $200 a foot where it would cost $400 to 500 without the land to replace it. When you think about that, especially if you’re comfortable with money and numbers, spreadsheet that out and make it part of your trolling effort. It’s staggering.

Based on what you’re telling me, I want to clarify here, I’m in the modern construction industry, which is a little bit upside down, as what you’re describing.

High interest rates equals opportunity! Find properties for half their replacement cost. Share on X

It’s expensive as hell to build something.

That’s what I’m saying. How do I make money?

It’s by looking for property that is half of the replacement cost of something new. You don’t have to look very far.

Do I rehab it?

It’s up to you. It’s the same old story. You want to get as much bang for your buck as you can. You want to find a circumstance where someone has to or wants to sell it below its market value.

Can I do it with mail?

Yeah.

I’m not asking for myself. You’re hilarious.

Where did my girl go?

I was asking you strategic questions for a reason. I know the answers.

Let’s use houses as an example. You can buy a completed, remodeled house in a neighborhood that’s acceptable to you for $200 a foot and it costs $400 to replace it. If it’s $400 in sticks and bricks construction costs without the land, you’re winning. It’s upside down like that because interest rates are a disaster. They’re so high. It happens so quickly. We went from 3% to 7% or 8%. That’s the result of printing too much money, inflation, and monetary policy. For whatever reason, our politicians don’t get it.

Guess how we know all this?

We’re capitalizing on that. That’s my answer.

Thank goodness we know how to buy things cheaply. Unless you’re in this every day, you don’t see it happening. You could accidentally be like, “I got this. Is the cost to build $100 or $200?” I remember an easy $100 to $150 a square foot. Now, it’s different.

It was $100 in replacement cost.

That’s what I’m trying to say. If you have not been paying attention and you try to step back into this and do it, you’re going to be like, “What just happened? What do you mean it’s $450 a square foot to build it?” Stuff changed.

Affordable Housing Or The Lack Of It

Inflation and mortgage rates cause that. The results of it are what people love to talk about in the lack of affordable housing. It’s not because of evil landlords. Everybody loves to blame landlords and people moving from California into other central states and jacking up the price or everything. That’s not the case. When you go from 3% to 7%, no one can afford it. Bringing a bunch of equity in from another state doesn’t help but it’s not the real culprit. The real culprit is monetary policy.

Inflation and high rates are the real culprit behind the lack of affordable housing. Share on X

Thank you.

There are a ton of ways to make money with construction. If you’re new and want to get into real estate, join a construction crew and watch a house go up. I did that for one summer. I don’t know how exactly but I’m sure it shapes the choices that we’re making. One of the things I learned about construction is it’s hard and grossly over-regulated in my opinion in most places, especially in cities. Regulation is very expensive. It also keeps people from dying off of balconies but there’s a happy medium. Join us next time for five more interesting episodes. You are not alone in your real estate ambition. We are Jack and Jill, information and inspiration to buy undervalued property.