This is episode number 2,123. Jill and I are talking about the pros and cons of buying land in rural versus urban areas, way out in the sticks or in the city. This is a good topic. I don’t think we’ve covered it in a long time, probably not this concisely ever.

This is part of our weekly theme, which is helpful land acquisition rules we didn’t realize we lived by. It is funny. It is true. I didn’t even realize that there are times that we’re going to do infolot mailers and there are times we’re going to do our normal rural land mailers. Here’s a thought. It’s usually data-driven.

There are some serious hardcore. Write it down on a yellow piece of paper, pros and cons. I’ll go through them at an appropriate time here. The topic’s cut and dry and I got to figure out how to somehow work in marital relations.

We don’t need to do that.

Funding Land Deals: A Real-Life Example

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 by popular requests.

Jess wrote, “I’m looking for a funding partner to fund this deal at a 70-30 split in my favor or best offer. We have 16.5 acres in Blanco County, Texas under contract for $38,000. Our local agent suggests listing it between $92,190.”

Classic Land Academy deal.

“Interestingly, the county appraised value is $80,000.” That’s just for tax purposes. I take that with a grain of salt. That’s irrelevant. “They owe $1,000 in back taxes. I’m going to have to pay that in closing.”

That’s a good sign.

“Active listings in this county have an average days on the market of 169 days. Sold comps have an average day on the market of 155 days with 80% of them listing price sale through rate.”

I love your statistical presentation.

“Our agent advises that if we want to sell it for 90 days, we’ll list it for $85,000. Here’s a picture of it. Feel free to text or call me with any questions.” This is great.

I put this in here because this is what’s in Discord. If you’re a public version of Discord, you can’t see this. These are very common deals that go on within Land Academy, where the funder and the manager win. This deal has $60,000 or $70,000 spread in it. It should take 90 days to convert all that to make $60,000 or $70,000. Split it with a funder. Everybody’s off to the races.

Hanging out longer for more money. This is a good thing. Did it get funded? Could you tell?

I couldn’t tell. I don’t know. There’s always, “DM me.” What ends up happening is people see this and other people in our group and then they connect.

Calling and texting like, “I’ll do the deal.”

Urban Land: Finding Buyers & Market Challenges

He left his phone number in here so he probably got 100 people calling. This episode’s topic is the pros and cons of buying land and rural versus urban areas. This is the meat of the show as I used to say. We’ve all driven down the street and there’s building, building, house, building, house, vacant land, vacant land, and house. That’s an infill lot. It’s properties that are already in an urban area. They haven’t been developed yet or they’re being redeveloped. Those are very attractive.

Here’s a pro for urban land buying. You know what’s going to happen. To a huge degree, you know who’s probably a logical buyer. If there is a strip mall on one side and a gas station on the other side and this thing is zoned for single-use retail like a $0.99 store or any of that, you can very quickly inside 1 hour or 2 make a tiny database, and I’ve done this, of the 10 logical people in that county or the part of the state that own $0.99 stores and want to develop them or fast food franchises.

I put together little databases of twenty people on the phone and we sell it. A huge pro about urban land is you can piece it together like that and find out who’s going to buy and sell it. You can negotiate a deal with the seller because they’re responding to your mailer appropriately. With houses, it’s even better. If it’s already in a subdivision, not a master plan subdivision but a regular subdivision, it’s a vacant lot, the person who’s going to buy that property is someone who builds houses in the area.

You can get that person’s name from the county because they pull construction permits on the houses that they’re building. A con of urban land is you have a real specific buyer most of the time. If the economy is not good, then nobody’s buying infolots to build houses. It’s not an economically viable material. There’s no innate demand for that type of housing.

A con of urban land is you have a specific buyer most of the time, and if the economy is not good, there is no demand for it. Share on X

Think about office buildings too and stuff like that. There are a lot of vacancies in certain product types in real estate. That would be a con if it’s a zone and for an office building. There are six around there that are all vacant. No one’s going to build a new one. We don’t want that one.

Here’s the good news. It’s data-driven. As Jill said earlier, it’s good. I’m not buying it done. That came back in the mail. I looked at it. If everything’s vacant, pass.

You probably wouldn’t even mail it. That’s the whole thing. I go back to this. At the very beginning of the process, Jack is trolling. Those of you in Atlantic County know what I’m talking about. He’s looking around areas, what we want to buy, and where people and things are happening. The data is telling us, “Look at all this. Everybody seems to be buying a lot of this in this area. Look what’s active. Look at how short the days on the market are. Look how much is closed versus available. That’s almost 2 to 1.”

That’s where we’re sending mail and that’s what we’re buying. It starts there. That’s what drives us. Maybe it isn’t an urban area. Do you remember during COVID? It felt like the planet was moving to Tennessee and buying a house. That would have been a thing but not now. Things have changed. It’s somewhere else. Maybe it’s more rural. That is happening too. Look at all the people who are getting the heck out of cities like San Francisco and other things like that. Maybe I don’t want to buy that urban thing.

Rural Land: Opportunities, Risks & Flexibility

Jill is exactly right. In its simplest form, if there’s a lot of success around your target property, you’re going to be successful. If there’s not, you won’t. There’s a lot of cheap property in the Southeastern part of the country because there’s a lot of blight. The prices don’t make sense. That’s all good news. It sounds like I’m saying something negative. The fact is I took all the mystery and the risk out of this land acquisition because I can see everything that’s happening around it.

I either want to buy it or I don’t. It’s easy to value and then go buy or not buy. This is an old man thing. I get just as excited when I find an area not to send mail as I do when I find one. I didn’t waste all that time. I didn’t waste Jill’s time and her staff answering the phone or my time finishing the mailer. “ZIP code X doesn’t work. Let’s look at ZIP code Y or maybe ZIP code Z. Yes, that works. I’m going to spend some time on it.” I’m reducing risk.

I do think some people are a little afraid though. If it’s urban, I know all the utilities are there at the lot line. I can see an argument for people being cautious there but remember you have us. You can look at adjacent when you’re out there and see what’s possible. I’ll tell you to do some recon on this. Spend some time looking at all the amazing solutions for people living off the grid. You don’t have to worry about that kind of thing but I’ve heard it as a concern.

Here are the pros and cons of rural land. The pro is the sky’s the limit. Jill and I have hit over our span of career a lot of home runs. We buy for $30,000 and sell for $450,000 or $800,000. It’s property that a seller ended up with somehow and they don’t care. They’re not in the land or real estate business. A lot of times, we buy property because it’s a lot of acreage and it’s cheap. We don’t know what we’re doing. It ends up being worth a lot of money.

The pro of rural land is the sky is the limit. Share on X

On accident. That’s the funny part.

Rural property, by its very nature, has a lot fewer rules if any. There are some counties that have no zoning at all whatsoever and have no building apartments. If you want to build a roller coaster, knock yourself out. If you want to build a chicken coop, go for it, and on and on. With small apartment buildings, these things happen all the time. Rural land is a huge, massive opportunity. It’s the Wild West but there’s a little bit more risk.

Final Thoughts: Which Strategy Works Best?

What’s the answer? Do both. At some point, you’re going to decide like what Jill said, “I did a lot of these deals both ways. I like infolots in Dallas so that’s all I’m going to do.” Right off into the sunset, they’re making a bunch of dough. Join us next time for a few more interesting episodes. Hopefully, you are not alone in your real estate ambition. We are Jack and Jill, information and inspiration to buy undervalued property.