The Ultimate Guide to Land Investing

Aviva (00:00)
This week's listener of the week is Premiere Prop. Premiere Prop, thank you so much for leaving us a five star review. And for those of you listening, if you leave us a five star review below, you might be next week's listener of the week, week, week. This week on Commercial Real Estate Secrets, we have Pete Reese. Pete Reese is the president of Real Vest. Pete.

Thank you so much for being on the show today.

Pete Reese (00:31)
Well, thanks for having me. I'm looking forward to this.

Aviva (00:33)
Hey, I'm looking forward to talking about land because we have not really talked about land on commercial real estate secrets. And ironically, it's a part of every single deal, no matter what. So Pete, will you tell the listeners who you are, where you come from and a little bit about your business?

Pete Reese (00:57)
Yeah, so obviously my name is Pete Reese and we have a company that we do land investing. So we do a combination of short term holds, you know, just buying, maybe doing some minor value adds to these properties and then reselling quickly. We also are starting to get into some of the, you know, bigger type projects, land subdivisions and things like that as well. So I've been in real estate for, you know, over 20 years at this point.

have my broker's license in California, but we actually don't do many properties at all in California, buying things all over the country and reselling them and many times, most of the time, I don't see them at all. So.

Aviva (01:40)
Hey, that's the cool thing about land is you don't have to.

Pete Reese (01:43)
Yeah, pretty easy. You can see most of it on the computer screen, what you need to see at least.

Aviva (01:48)
So tell us about your endeavors flipping land, what that looks like and how you find your properties.

Pete Reese (01:58)
Yeah, so, you know, we've been on this path, you know, the last little over almost three and a half years at this point, kind of taking this business from the ground up and trying to grow it. Well, we're trying to do 20 million in revenue this year. So we've really been scaling and trying to build out a great team and everything like that. So we've been on this journey and basically what we're doing is pretty simple. In a lot of cases, we're buying properties off market.

And then we are selling them on market, you know, through a real estate agent or local land broker. And a lot of times we are doing some value add to these properties. So we're buying them. We could be doing something as simple as clearing some brush to make the property more accessible. We might be getting a per test or a survey or in recently we've been focusing a lot on minor subdivisions. So we buy like a larger property, say it's a hundred acre property. We split it up into.

five 20 acre properties and then resell those off individually. So, and obviously by doing that, you know, you can get a higher price per acre for the smaller properties than you would, you know, just trying to sell the thing, resell the thing as one big property. So we get a lot of our deals from, from direct mail. So we send out actual offer letters to people in the mail. So we build a big list in a particular area that we like.

Aviva (03:07)
Sure.

Pete Reese (03:18)
And we assign kind of average values for that particular area. And we figure out what we'd need, where we'd need to be in order for it to be a deal. And we just send out a lot of mail and sometimes people just sign them and send them back to us, mail them back to us. So, you know, a lot of times people call or they'll email or they'll text in and we start a conversation about the property and, you know, we base our offer prices on averages. And with land, there's a lot of variances, especially in rural properties.

And so we don't know, you know, sometimes these we were too high. Sometimes we were too low. Sometimes we're right on. But it starts a conversation and we see if we can put together a deal at that point. So and then the other thing we do have been using pay per click lately to get some deals. And then as well, we we've got kind of we do a lot with educating other investors on this business model and everything. So we have a program for other investors where they bring the deal.

and then we partner with them as well. So we've been getting a lot of deal flow with that as well.

Aviva (04:23)
Wow. So, and I want to get into your community in a bit, but I wanted to ask you, when you're buying land, what does your due diligence process look like? And do you buy anything or are you selective? How does that work for you?

Pete Reese (04:43)
Yeah. So we buy anything that's a deal that meets our kind of criteria as far as the minimum profit and everything that we need to make on a deal. And so, you know, basic criteria is we're always trying to double our money on a deal. So if we buy a property for 50 ,000 or we're looking for an anticipated resale price of 100 ,000. Now we're not actually going to double our money because we've got closing costs on both sides. We've got due diligence expenses and maybe some value add costs and things like that. But that's kind of the basic.

guidelines that we're using. So that's one thing. We don't do deals where we're projected to make something less than $10 ,000 or something, because there's a lot of things that go involved with each of these properties and it really just doesn't make sense. First part of the question, I forgot what you asked though. due diligence, very important part of the process. And in fact, when I first started,

Aviva (05:32)
the due diligence process.

Pete Reese (05:38)
I didn't pay much attention to due diligence. I kind of just lucked out and things went well and everything. And as I got more and more into this, I realized that the professional investors are spending a lot of resources and time on due diligence because doing a bad deal is something you really want to avoid. It really sets you back. So.

By doing due diligence, we're able to hopefully avoid bad deals and red flags. Our main process for due diligence is we've got kind of a four -pronged approach. We are doing every single one of our deals through a closing company with title. So we get a title commitment. We review that title commitment to see if there's any sort of red flags or anything weird on there. So that's one aspect. We always get a local broker opinion as well from a local land agent. So we try to work with the top land.

agents and brokers in each area. So we highly valued their opinions because they know the area and the nuances and everything that goes along with that. We also send out someone physically to the site. You know, obviously I'm in California here and properties are all over the country that we're buying. So we hire a local photographer and drone pilot to go out and, you know, take photos and videos of the property, walk the property, do a little inspection report on that. So that's, that's another thing.

And then the other kind of piece of that is we do a due diligence report. I've got someone on my team that makes calls to the county or the city or wherever this property is located at. You know, we're asking about stuff like utilities. We're asking about buildability, zoning, any types of things that could prevent, you know, the property from being built on. So, you know, we have a whole list of questions that we go through. So those are the four prongs of our due diligence. And, you know, it takes a lot of effort.

you know, and I've built up a team to kind of help with all that, but it's super, super important.

Aviva (07:34)
Talk to me about zoning. Is there a type of zoning you're looking for, avoiding, and anything in between?

Pete Reese (07:43)
You know for the most part zoning doesn't come into play a lot aside from the fact that sometimes we get in say a commercially zoned property when Realistically, it's better for just a residential property. So we set have that sometimes But you know, it doesn't really come into play about most of the properties that we end up with end up being some sort of Agricultural zoning or some sort of residential zoning we buy a lot of larger properties. That's kind of our sweet spot. So we buy

maybe 10 acres and above. The biggest property we bought was 15 ,000 and some acres. So we do the whole gamut. So the zoning a lot of times in these more rural areas is kind of an agricultural zoning. But if you're looking at development properties, properties closer to a suburban area or within a city or something like that, it becomes very important, especially if you're going to develop it into a housing subdivision or something like that, you've got to make sure it's got the right zoning.

or at least a path to get to the right zoning that you need. So.

Aviva (08:45)
Fascinating. I'm kind of a history nerd. And something I love about real estate is learning the players, the past and the players. Your sellers, what are the average hold times that you're seeing on a seller when you're buying their ground?

Pete Reese (08:56)
Yes.

Okay, well we have we run into a lot of scenarios some people are just You know that they contact us because they've recently inherited a property and they've never even been to it and they never planned to go to it So we get a lot of those types of situations. We're basically the convenience buyer So, you know, we're not gonna be paying top dollar or anything like that, but we are convenient We pay cash because quickly that type of thing You know, and then sometimes we have people that have bought this property, you know

Aviva (09:21)
Bye.

Pete Reese (09:36)
20, 30 years ago and they had maybe had the intent at one time to actually develop it or build a house or a cabin on the property and they just never got around to it sick paying these property tax bills. So we get a good portion of those. We get some that have just been in the family for many, many years and they don't use the property and it's just, you know, it just unwanted property. So we get those types of things, but I'd say the average mostly.

Probably most of them, I guess, have been some sort of longer -term hold. Not a recent purchase, at least.

Aviva (10:11)
Okay, yeah, I, we sold, my old man and I sold 320 acres of ground in 2022. And the family who owned the ground had their patriarch of many generations back had owned the ground. He had homesteaded on the ground. Yeah, and it just happened to be amazing ground and an amazing location. And I just, to think,

Pete Reese (10:31)
wow, that's cool.

Aviva (10:40)
This this ground happened to be immediately south of Denver International Airport to think just that it so happened that they homesteaded right where they were about to build a major airport is It's wild and Yeah, yeah exactly very close to Blucifer and Everybody's still smiling except for the

Pete Reese (10:59)
and anywhere near Blucifer. Okay, okay.

Aviva (11:09)
except for anybody who was involved with building Blucifer.

Pete Reese (11:09)
Yeah, yeah, yeah, I heard. Yeah, it is cool. We did run into some neat historical type things one time and we had one property in particular where, you know, it was a smaller property, like six acres or something like that. And we bought it and we put it on the market and a buyer stepped forward and was like, hey, this is my family's old property. Like, and...

We have a family graveyard on the property and everything like that. So he actually ended up buying it. He wanted to get it back in the family and everything. So he bought it. So it was kind of a really win -win type scenario. So.

Aviva (11:47)
Yeah, I try to just rule of thumb, avoid dead bodies, dead uses. One time I had a guy showing me a warehouse and one of the tenants was a crematorium. And he said, you want to come in? I said, absolutely not. That is not for me. But so six feet under, still not for me, but a great story nonetheless.

Pete Reese (11:52)
Yeah.

yes i certainly understand that sentiment yes i don't i don't look for those types of properties yeah

Aviva (12:17)
No, but a great story. So you had a very successful 2023. Can you talk a bit about that and see if you could bring some value to the listeners on your successes?

Pete Reese (12:31)
Yeah, we did roughly 8 .2 million in revenue and almost $3 million in gross profit off of that. Now, net profit is different because I have to pay my team, I have to pay market expenses and all that kind of business type of expenses. But overall, still pretty healthy and profitable business and allows us to kind of expand and invest into buying more properties and to try to really start snowballing this thing. So...

It's kind of an interesting business. The profit margins on these properties are pretty substantial. And a lot of times you're able to turn these properties in an average of like 90 days or so. So when you're able to turn the property in, you know, 90 days or so and double your money on the deal and, you know, it doesn't take too many of those for it to really start snowballing. And then when you have a bunch of properties, like right now we've got, you know, probably 60 properties that we own, you know, in various stages, either we're...

Aviva (13:11)
Wow.

Pete Reese (13:30)
prop on the market to sell or in under contract to resell something like that then it really starts snowballing so we're just trying to scale up scale up and scale up.

Aviva (13:41)
Wow, very cool. So let me ask you, the way that I was taught was that there was a element of risk when you're deploying money to buy land because it might not, because it's not income producing. How do you mitigate your risk when you're buying land?

Pete Reese (14:06)
Yeah, well, I think there's risk in all forms of real estate investing, first of all. And I've heard that same sentiment as well, that land is too risky because you don't get any income. But as a side note, I drove past this strip center the other day where it had, I don't know if you've ever heard of Fresh and Easy, but Fresh and Easy used to be like kind of like a regional sort of grocery store, I guess. Anyhow, it went out of the...

it went out of business, I don't know, five, seven years ago, something like that. And they still have the fresh and easy sign at that strip center because there was the anchor tenant there. And obviously they're not getting any income from that for the past five to seven years. So I think all forms of real estate investing are risky and they all have the risk. Now, the way we mitigate that with land is that we are buying it. We're trying to buy it at a price that's...

Aviva (14:41)
Oof.

Yeah.

Pete Reese (15:01)
aggressive so then we can resell it at an attractive price that will sell right away. So for the most part, even if we get it wrong, like so say we're off on our resale value a little bit, it still leaves us some room to hopefully sell it quickly and to sell it for a profit, maybe just not as much profit as we thought. So.

Aviva (15:23)
Okay, hey, risk and reward.

Pete Reese (15:26)
That's right. And we try to only buy in situations where there's an active market where people are buying land. Like if I look at a particular property and then I'm seeing like, there's 30 listings that are 10 to 20 acres in this county. And then there's only three properties that sold in that same category over the past year, I would avoid that because it's just not an active market. You'd have to price it so cheap or you'd have to have such a premium property to sell it.

Aviva (15:57)
Yeah, and that's an element of experience that I'm sure you've acquired over your.

Pete Reese (16:02)
Yeah. Yes, yes. I tried to learn from my lessons on ones that I bought didn't go so well.

Aviva (16:10)
Hey, as long as you learn from your lessons, I always say it's okay to make your mistakes. So I know another element of your business is teaching and you have the land conquest community. Can you shed some light on what that is? And yeah, in general.

Pete Reese (16:14)
That's right, yeah.

Yes.

 Yeah. So, you know, I've had a lot of people kind of like asking me over time, like, Hey, how do you do this? You know, how do you do this? I want to do this and everything like that. So actually, about a year and a half ago, I was like, I'm just going to create a community around it. So I created a community called manned conquest. And if you're familiar with school, it's the school platform, sk oO L .com. so you just go to skool .com / land conquest and,

That's where we got the community. We've got over 4 ,000 members in the community. We do a lot of kind of free training and things like that in there. You know, I do these regular deal evaluation calls, we call it, where basically we're on Zoom and different people in the community submit properties that they're looking at buying or have under contract or something like that. And I just share my screen and go through all the evaluation process I would if I was going to buy the property myself, try to give an indication of what I think it's worth.

and stuff like that. So we do those types of regular things. And yeah, so we're really trying to just kind of shed the light on what this business is all about and how to do different aspects of it. So it's been a lot of fun. So, and by that, I've been able to come in contact with a lot of other land investors and we've got a partner program that we do where, you know, I mentioned on our deal flow, which is really pretty cool because it's, you know, it's a situation where we,

With land, there aren't hard money options available, at least unless you're not really experienced. So we try to fill that gap by offering to fund the deals. We'll use our money to buy the property, and then we basically partner with the investor on that. So my team actually takes over and does all the due diligence, all the transaction process. We negotiate offers when they come, everything. And then we just split the profits 50 -50 when it resells. So, yeah.

Aviva (18:27)
 real estate is a game of finding win -win for everyone, so.

Pete Reese (18:28)
Yeah.

Yeah, yeah, definitely. I had an investor that brought a deal to us and in the matter of this property resold really quickly and they made $180 ,000. We sent them for their portion of the, you know, and they just got the deal under contract and submitted it to us and we just partnered on it. It was great.

Aviva (18:53)
You must have made a friend.

Pete Reese (18:56)
Yeah, it was a good win -win. We made a lot too. So, yes, and we've done many more deals with that same investor.

Aviva (18:59)
Yeah.

Hey, deals make more deals. So Pete, before I have you tell the audience where everybody can find you and connect with you, we always end Commercial Real Estate Secrets, the podcast with this question. And that is what about what you do in commercial real estate is making you happy today?

Pete Reese (19:06)
Yep, that's right.

Yeah. Well, for me, what makes me happy is the kind of flexibility that this business kind of provides my family and everything. So I'm working all the time, but on the flip side of that, I've got a lot of flexibility to, you know, go pick my daughter up at school or, you know, go just like take off randomly in the middle of the day and do whatever we want. So that's kind of what makes me happy. It's all about my family for me. So anything that I can do to kind of enhance our family life is a...

is a win for me.

Aviva (19:57)
I was the daughter who my mom couldn't ever pick me up from school, but my dad could. And I wanted that lifestyle too. So I get it. And it might seem like your kids don't realize it, but they, you know, it goes further than you would expect.

Pete Reese (20:15)
Yeah.

Yeah. And the other thing that's cool is I've kind of, our family's kind of incorporated into our business. My oldest daughter who's 24 now, but she is kind of like really involved in the business, evaluating properties when they come in, like kind of making the call, like, Hey, what, what will we pay for this property? Or would we buy it or not? And they've done deals on their own too. my oldest daughter and my middle daughter. So. Yeah.

Aviva (20:42)
Hey, I think I read you have three girls. I'm the baby of three girls. I wish my sisters were into it, but I suppose I have to spearhead the way. But yeah, I love women in commercial real estate. I think we bring a different mindset and perspective and element of value that I don't have to sell you on. And I've just found it to be nothing but a value add. So I'm sure.

Pete Reese (20:47)
Yes, three girls. Yeah. cool.

That's right.

Aviva (21:12)
Your daughters, although they're young, have a lot of runway and acreage in front of them, so.

Pete Reese (21:18)
Yes. Yeah, I'm super excited for where they'll take all this because they're way ahead of me when I was that age. Yeah.

Aviva (21:26)
yeah, hey, it's the best thing I ever did with my dad was just get in the trenches with them and I still am to this day. So Pete, for the listeners, where can they find you, connect with you and contact you?

Pete Reese (21:38)
That's great.

Yeah, yeah. Well, a couple of different places you can find me online. First of all, our community just go to school .com slash land conquest that school with SK OOL .com. And then also, we have a podcast called turning profit. And that's when I say we, it's myself and my wife, Heather, and that's on YouTube and all the different podcasts, you know, platforms. So on YouTube, it's @turningprofit and, you know, social media, I'm.

@partnerwithpete .com on Instagram and on TikTok. Yeah.

Aviva (22:21)
Awesome. Pete, thank you so much for being on this week's episode of Commercial Real Estate Secrets. And for everybody listening, we'll see you next week.