The Balance Between Data And Instinct In Land Investing

This is Episode 2,130, and Jill and I are talking about balancing data and instinct in land investing. I have said this before. I will say it again, and I don’t like saying it or admitting it, but it’s the truth. There’s more art than science in buying and selling land. There’s more science than art in buying and selling houses.

Will you repeat that, please?

You know how everybody says. There’s more science to this than art when you are going down the path like tech development in coding. One would argue maybe there’s a little bit more finesse and art than science to that once you have the basic building blocks. It’s the same thing with land. There’s some more finesse and art to what Jill does than the science that I deliver. You can learn the science. Art is difficult for people who are like me. When it comes to houses, it’s all mechanical because we don’t buy houses because of window treatments and curtains and any of that stuff. We buy houses because the price per square foot is very low, and we know we are going to sell it to somebody who cares about curtains.

When it comes to houses, it's all mechanical. We don't buy them for window treatments, curtains, or any of that stuff. We buy houses because the price per square foot is very low. Share on X

Every 3-bedroom, 2-bath with a 2-car garage in that ZIP code is gobbled up inside of 30 days.

It’s all data and mechanical.

Every single one of them.

We’ll get into that in a second. Jill and I are talking about land research. I love this. Jill, maybe not so much. Each day on the show, Jill and I answer questions from our Land Academy member Discord forum and take a deep dive into land-related topics by your request.

Jen wrote, “For those of you who are mailing for mobile homes, what offer percentage are you using? Is it 35%? Thanks in advance.”

How Smart Pricing Works In Land And Mobile Home Investing

Since we are talking about land and houses, I put this question in here because when Jill and I buy and sell land. We buy land for 20% or 30% and resell it for more. Usually 60% to 80% of what it’s worth quickly. We also buy houses, and we buy houses not on a percentage basis, and the same thing goes for mobile homes.

We implement what Jill and I call or what I devised again, which was one of the products I have always been using, but eventually, everybody wanted to know. I explained it as I will here and gave it a cute little name. We call it Smart Pricing Service. Jill and I own a company called Offers 2 Owners. It’s a mailing company specifically designed for implementing your offer. It’s a blind offer campaign to real estate owners.

In that Smart Pricing concept. We take a real estate asset that has a post office address most land does not and a mobile home is one of those things. They get mail there. The post office has assigned it an address. Therefore, in general, the algorithms around the internet like Zillow, Realtor.com, and DataTree, and lots now. It used to be 3 or 4 and that’s it. Have assigned some value to it. Their algorithm looks at it and says, hopefully, it’s a mobile home. It’s XYZ square footage. It’s on some type of acreage. It’s in a great area, not a great area, whatever, and it gives us value. Maybe it’s $139,000.

Zillow gives it $139,000. DataTree gives it a $180,000 value, and on and on, and you take the average of all those values. We handpicked six sources of algorithms to take an average, and that average might come out to, let’s say, $150,000. Now you decide what offer you want to make. It’s not a percentage. It’s a dollar amount for us.

If it’s worth $150,000, do you want to send an offer for $20,000? I don’t think so. That’s way too low and crazy. For land, not crazy at all. A $150,000 piece of land, somebody inherited it, they don’t care anymore, they get a letter from me, “We’ll give you $25,000, and we’ll pay you on Friday,” and they call Jill, and she says, “This is how it’s going to go.”

If they own a mobile home, they get the letter and throw it away. It’s too small of an amount. They might even have a mortgage on it that’s higher than that. We choose if we want to make $30,000 on it or $20,000 on it we choose to send them an offer for $120,000 or $90,000 or some number like that. Imagine looking at all that data in a line in a spreadsheet and saying, “The algorithm came out to this. It’s $150,000. $90,000 sounds good.” Then looking down that spreadsheet 10,000 lines later, where you’ve automatically calculated all that, and you are going to use that to send out your offer campaign. That’s the Smart Pricing Service. We do all that for you. You tell us, “$40,000 is what I want to make.”

Let’s say in the San Diego area. You can have a $500,000 mobile home. The higher the dollar amount, the more you can make. Something for $500,000, you could probably pick it up for $350,000. That’s not crazy.

Jill and I are doing a deal right now. To give you another extreme example, it’s for a house that’s on a lake that’s worth about $2.5 million. We sent the offer out at around $900,000 to $1 million, and she’s going back and forth with the seller between $1.3 million and $1.7 million. Between us, here in front of the microphones on either side of the mic, $1.7 million probably works. In that case, we’ll probably sell it for $1.8 million or $1.9 million, and make a couple of $100,000. Everybody’s happy.

Unless Jill talks Jack into keeping it.

This is a pretty nice house.

Pretty sweet spot.

Do you want to have that meeting right now?

No. I doubt. I don’t want you to come back and remind me of what I said on air. That’s why.

You don’t want evidence.

No. You agreed with that crap.

This topic balancing data and instinct in land investing. At the end of the show, as we say, “We are Jack and Jill. Information,” and she says, “Inspiration.” That’s what this is about. The information part is balancing data, and the inspiration part is the instinct or the art part of this. Let’s go back to the top ten or so steps. Let’s make it real simple. There are the same number of steps in buying and selling property. You troll around or fish around the entire country. You take a look at where you think it might make sense to send mail, but it doesn’t matter what type of asset you are looking for houses or whatever. You have a theory that Duluth, Minnesota, might work for you. You take the data from Duluth, Minnesota, all the ZIP codes there. You throw it into the red, green, yellow test like we talked about. It either passes or it doesn’t, or some of the ZIP codes pass and some don’t, which is usually the case.

In land investing, the information part is balancing data, while the inspiration part is the instinct or the art of it. Share on X

This is all on my side of the data part, the balancing data versus instinct. I put together a mail campaign and got it out in the mail. At which time I wring my hands and say, “That was a blast. I’m going to go take the ATVs out,” or whatever. Jill then starts to receive the phone calls from people who are interested in selling their property, not interested in selling their property, or maybe they are just plain livid. Who knows why? Do you notice that there are more livid people in the world?

There are. I can’t even begin to tell you the comical ways that these prospective sellers are reaching out to me and what they are sharing with me like all kinds of interesting images. It’s funny. A little more angry.

I used to have Jill’s job a long time ago. Not a good idea. I don’t have that instinct or that finesse or the true knack in Jill’s soul to meet these people where they are coming from, talk to them about their real estate deal, and then find out whether or not they want to sell at the price that she wants or what their trigger is. Whatever. What do you do that makes this so magical because it works? What’s the instinct part of this?

First of all, the instinct part of it is when they call in, it’s usually two parts. It’s the deal and the situation because of their situation, they are willing to take me up on the deal. Then I looked at it, and I was writing some notes to myself like it’s instinct to me to go onto ParcelFact, look at a deal, and go, “Holy cow,” because I have the experience. That’s what I think.

It’s way more in-depth than that. You have a natural you were born with an instinct.

I can tell what’s going on with them. Like even this one you talked about, where he’s digging in at $1.7 million, he doesn’t need the dough. It’s convenience. There’s going to be some convenience that I’m going to bring to it. I know how to deal with these people. That’s part of it. When to call them, when not to call them, when to let them sit for a little minute. When to say, “Let’s go.” How to progress and get them in and on my team.

That’s the thing, too. I look at every transaction that I go into, that we are going to do a deal, and the seller and I are in this together. The only person working against us is escrow. They are the only ones getting in the way because they need paperwork and they need this and they need that. He and I, the seller, he or she and I are on the same page. We already shook hands. We are like, “Let’s go.” Now we have to get the deal done.

The early years of Land Academy again, this is our tenth year. Early years of Land Academy, we immediately attracted people who were engineers, that engineering-type background, and we still do. There’s still a ton of engineering- or STEM-related people accountants, things like that in our group. Very often in the early years, we would hold the Thursday call, like we still do. Every single Thursday, we have a closed webinar for our members, and they would ask questions like, “This doesn’t work. I sent out 3,000 letters like you told me to. I got 300 phone calls back, like you said would happen, and then about 50 people kept calling me, and I couldn’t buy property.” “Did you call any of them back?”

“No. I put my email address right there, and I put my phone number so they could text me.” This is true time this takes a huge amount of phone interaction with people, relationship building, and trust building. That’s the real instinct part of this that Jill handles that I’m not hardwired for.

Applying Instinct And Data In Decision-Making

I was thinking about this big picture too, data versus instinct. There’s even a little bit of instinct that you have going into the data part. You already have a good idea from your experience and instinct like, “This area’s going to be good.” Then you run your tests to confirm it, like your red, yellow,  green test, to confirm it. That’s a balancing thing right there. I have the instinct that it’s going to be a good area. The data’s going to prove it.

Then the deal comes in. I have an instinct that it’s the right seller, right time, right property, right price, all of that. Then I am even going to use some data too. I don’t automatically go look at every deal and make sure, because maybe some time has passed. That happens often. If the mail comes back right now the way Jack is so good that pretty much if they agree to it, it’s going to be great, and we move forward, but maybe it’s 5, 8, or 10 years later, because that does happen. Now I’m going to go look at the data and go, “Is this still a good offer? Maybe I want it, maybe I don’t.”

Sometimes, too, what’s nice is that I’m like, “This is a great offer. This area has already grown, and this is worth more than we even offered. It’s way more than we were looking at back then. Heck, I want to buy that.” I check the data to make sure. There’s some instinct there too. It’s fun when instinct happens first. For me, instinct is first like, “Gosh,” we have to buy that. Then data comes second, I’m like, “This is a great situation instinct. Now I confirm it.” That’s how I balance it, and you have to have both.

Instinct usually comes first, followed by data. Share on X

Here’s an example of data instincts. You are right. I never thought about this in this context. There are places in this country Jill and I can go right now immediately and buy half an acre of property for about $1,000 with access and all of it and go out there, put a house on it, and live. If you’ve been in the land business, you know where those places are too. If I tried to buy half an acre in the city of Manhattan, it would cost $100 million, probably more. I don’t send mailers out to try to buy half-acre property in Manhattan for $1,000. It doesn’t make any sense. It goes against my instinct. We know that big-city infill lot-type properties are going to be way more expensive than similar properties in a small town or a rural area. The same thing with farmland. I know now how much farmland costs in Iowa by doing a little bit of data research. You’re right.

This was a good topic. Thank you, team.

Join us next time where Jill and I talk about how technology is changing the future of land investing. You are not alone in your real estate ambition. We are Jack and Jill. Information and inspiration to buy undervalued property.