Podcast Episode 147 Transcript

Episode 147: Land Flipping: Millions Per Year In A Little Known Niche With Pete Reese

folks this week on the pre-real podcast
we have Pete Reese he's the president of
realvest properties uh he's got a focus
on the land business something you've
heard me talking about quite a bit over
the last few years something that we've
pursued and we've had some success with
Pete's doing it in an unbelievable way
he's scaling to the tune of like a
million to three million to 10 million
over just a few short years uh he he
takes you through the ins and the outs
and how he's doing it and opportunities
and ways to get involved if you're
interested in learning about the land
speculation business give this one a
listen it's a good one thanks guys are
you ready to bring your real estate game
to the next level my name is James
prendamano I'm the CEO and founder of
pre-real and over the past 25 years I've
closed over a billion dollars in
transactional real estate each week I'm
meeting with outstanding investors High
performing individuals and Visionaries
operating in the real estate space these
are the people that are actually out
there in the real estate game right now
getting it done this podcast aims at
bringing anyone
anyone this is the pre-real podcast
welcome everyone to the pre-real podcast
we're joined today by Pete Reese he's
the president of realvest properties and
doing my homework I felt like Pete's
kind of my brother from another mother
we have very similar backgrounds and
similar interests and we're on a similar
trajectory so with that Pete thank you
so much for taking the time and joining
us today
well thanks for so much for having me
I'm super excited to be here
yeah man always a pleasure to talk to
someone that has kind of come up and
gone through the ranks in the business
uh you're a real estate broker out in
California since early 2000s uh you
became an active investor in real estate
actually even before that I believe
since
2000 and you you've run the gamut here
right you've done a lot of different
transactional real estate thousands of
deals why don't you talk a little bit
about the the onset of that journey and
just bring the audience up to speed
briefly on how you got where you are and
then I'm super excited to dive into the
model that you've deployed in your
scaling now which is a focus on
acquiring land so let's let's just go
back to the beginning and kind of a
quick roll up if you will sure sure well
yeah I started kind of my real estate
investing
journey in the early 2000s and we were
flipping homes actually before before it
was as hot as it is today I mean there
were still a lot of people doing it you
know there were shows on HGTV back then
they were just different ones but was a
thing right before yeah
long after people were like are you
doing the BRRRR method and what's the
BRRRR method and then you said oh is that
what they call that today okay
uh yeah so I mean I you know we were
flipping homes back then I say we myself
and my wife and uh yeah it was it was a
great business until the market
collapsed in 2007 to 2009 previous to
that uh a year or two I got my broker's
license out here in California just
because
it gave me better access to the deals I
was buying on MLS property so I was able
to offer myself and I was able to show
myself property so that's why I got my
license and then when the market crashed
I was like hey um flipping homes isn't
really the best business to be in
because the end buyers kind of the
retail end buyers disappeared because
they couldn't get financing so I thought
well
foreclosures are selling I'll just
represent those for the banks and I kind
of did a major focus on that for a
number of years and it was just
that was an REO listing broker for the
banks when the market crashed it it was
good because I kept income coming in at
the time but not a great business by any
means uh not something I'd like to
revisit in any way tough emotional
business I think in a lot of ways but uh
but I was thankful to have that at that
time I got connected with some great
people through that though some larger
investment companies that
um you know we're always looking for
deals so I was for a while there I was
just helping them Source deals and
finding them as many deals as I could
get them and they would buy as many as I
could find so that was great for a while
I got out of real estate kind of all
together for a little while
um in uh
2017-ish yeah 2017 started a business
with my wife an online education
business about blogging and travel
blogging that was really successful did
that for a number of years but I've
really got the itch to get back into
real estate and specifically real estate
investing didn't know exactly which path
to take I didn't really want to get into
home flipping because there's a lot of
logistics involved with that dealing
with contractors and just a lot of
moving pieces a lot of unknown so I
figured there was probably a better
model out there just was looking for it
stumbled upon some people talking about
land flipping and specifically stuff
like hey I bought this property for ten
thousand I sold it for thirty thousand
in you know 60 days days and I thought
to myself well that's pretty cool you
know tripling your money in 60 days and
it's land you don't have to fix it up or
do anything to it
and uh just kind of went down a whole
Rabbit Hole in that bought it bought a
course on that
and I just went kind of all in that was
the end of 2020 which I bought a a
course on that and then in
um 2021 March of 2021 is when we flipped
or completed our first flip uh land flip
and that first year ended up doing about
1.25 in revenue and about 50 gross
profit margin too so on average we were
able to pretty much double our money on
each of these uh deals and about 60 days
hold time too which was kind of cool
moving our money fast and then 2022
ended up doing just shy of 3.5 million
and a little bit shy of the uh 50 gross
profit margin but not that far off and
then 2023 I'm looking to do 10 million
so well well on my way well congrats on
the success man it's uh and for those in
the audience that are hearing these
numbers
um you know we see these these ads and
we see things come across our devices
all the time about
courses and and ways to make money in in
real estate I'm doing right now what
Pete's doing
it's very real
this is uh absolutely a pathway folks
that doesn't require nearly the amount
of expertise you would think it requires
on the way in it's something that you
can kind of study up on relatively
quickly there's a massive amount of
inventory available out there and if you
find the right Niche there is wild
profits that you can make here so
when you decided to kind of get back in
Pete you having run such a wide array of
deals and being involved in a number of
different types of transactional real
estate deals
what was it about land specifically I
know for me that there was a you know
you can't appreciate it so that was a a
mark in the wrong section but there was
a lot of things about the land business
that were attractive to me what were
some of the things that that made it
sexy for you that said you know what
this is where I want to put my time
energy and money
yeah well it just kind of makes sense to
me I've always prided myself on being
able to identify value I've always felt
I'm good at that so in in this type of
business you make your money when you
buy it on the land business you're not
you know we're doing some value-add
stuff but a lot of times we're just
buying it off market and then selling it
on Market so it's kind of an Arbitrage
situation in a way but I feel like um
but you got to be real confident because
each piece of land is different you know
so I feel like I'm really good at
identifying value and identifying you
know is this property actually worth
what I think it's worth that type of
thing so that really appealed to me you
know the buying and the selling thing
the short hold Times Really appealed to
me the fact that it was a cash business
too like I don't have to you know you
can do it you could do some really good
numbers but you don't have to get
financing for all these deals or
anything like that which I think is
pretty cool as well uh just it just
really kind of made sense to me and also
I like the fact that it's it seemed
really scalable to me like all the
business that we generate all the leads
that we generate are generated with
Direct Mail
so you know in my mind it made sense
that okay once I get this kind of system
up and going then I can just send out
more and more mail and hopefully my
business will scale more and more
so
are you buying in one location are you

buying in one state are you buying in
one section like how far do you go
well I want to get in as many markets as
I can we've done most of our business
really has been on the East Coast you
know anywhere from like New York down to
Florida
but I'm you know I'm trying to expand
into other markets and we'll send out a
lot of test mail into certain areas and
see if we can get gain a little traction
get a deal there and kind of start
building up our kind of team on the
ground and that's what's kind of
important for me I'm I'm in California
and I never go out and see any of these
properties so I rely on you know getting
some good people in the area that you
know agents and Brokers working with
them to to help us on the the resale
side of things so I always sell with a
agent or a land agent or lamb burger
so it helps to get their opinion on the
buy and that type of thing and are you
selling cash or are you selling on terms
we're selling cash
okay yeah so I know there's a there's a
number of different models that people
do you know so there's other people
other investors that will you know buy a
property they'll take a down payment and
and sell it on on terms and uh that way
but I'm I'm always just liquidating and
moving on to the next deal so when when
you're making the the offers right you
said something earlier you make your
money on the acquisition and what that
means is you you buy it right right so
how are you
um getting a sense of Market here you're
not seeing the the dirt yourself uh
you're you're doing this at scale right
entire coast and now you want to spread
out into the entire country how are you
determining
values when you send the Letters Out
yeah so we're basing when we're sending
out these letters which are
they're uh blind offers as they as we
call them they're based off of what we
do is we base them off of average price
average values in a particular County
generally so I'll take a particular
County and look at the comps the recent
Soul comp say we're mailing the list
that's 10 acres plus just vacant land in
a particular County so I'll look at the
comps and then I'll say Okay retail
price maybe is ten thousand an acre
and then we'll back off a certain
percentage from there and that becomes
our offer price now when it when the you
know the people respond then we kind of
get into the nitty-gritty because in
reality each property is different each
little you know we could have we could
have three 10 Acre Properties on the
same street and they all have different
values and you can't really know that
until you really look at each one I mean
one might be all Farmland one might be
all Forest one might be all swamp or
they may be some combination of those
types of uh things or they might one
might be very sloped one might have no
Road French so there's lots of lots of
different variables and you just can't
you just can't accurately know that
until you actually look at the property
so we based our offers on the averages
for a particular area and then we get
into the details you know sometimes
we're too high sometimes we're too low
uh so it just depends you know some
people will say okay I'll take the deal
and then we look at the property and
we're like yeah I don't I don't want to
buy that property because it's a it's a
landlocked swamp you know or something
like that and uh so you know in those
cases we either renegotiate just a
decent property that we want to buy or
um or we just pass on it all together
but you know and if we're too low and
the people call and they say hey I want
to sell but I need this price we take a
look at and see if we can come up to
that price in order to make the deal
happen so when you you're checking comps
are you looking at like the MLS where
are you pulling comps from yeah Zillow
Redfin
yeah Public public data yeah
okay so Zillow Redfin the local MLS
you're pulling those comp sets sending
your letters out and then engaging on
the individual pieces you said there's
so many variables so many factors that
go into value uh really is amazing uh
how how much a property can
like you said you could have three on
the same block and and the owners never
understand that right like well well
they sold for this so why am I not
getting that uh but there are a myriad
of factors so are you running title on
these things like how far are you taking
it yeah so once we get a purchase
agreement signed like like they sign it
we sign it we're both in agreement we're
moving forward it kicks off a whole due
diligence process I've got a team now
that really helps me with that but first
thing we do is we order a photographer
and a German person to go out and
actually walk the property
you know see if there's anything on the
ground that would be kind of a red flag
for us we also you know hopefully we've
got a local agent a land agent or broker
that we're working with we also kind of
bring them in and kind of ask them their
opinion at that point
um and if if we don't have one we'll
find someone to give us an opinion about
that and then we give them the listing
when we go to resell it but uh and then
you know we have a whole checklist of
different things that we do we call the
city call the county whoever
jurisdictions are we call the utilities
we try to determine if it's a buildable
property or not or if there's any kind
of red flags that pop up you know asking
all these general questions with them
and then we also buy everything through
an attorney title Escrow Company as well
so when the title report comes back then
we see if there's any red flags on there
or anything that that would cause us to
to not want to move forward with the
purchase and it's happened sometimes you
know like ever I can recall one really
recently where everything looked great
you know property inspection everything
looked good and then we got the title
report back and there were some
something filed in the 50s
um for a landfill you know and
apparently they were using this property
as a landfill they had dug up and buried
a bunch of trash there you know this
local community and covered it all up
you couldn't tell even on the ground the
seller didn't mention anything about
that uh but obviously that's not
something I want to deal with so we just
uh you know we obviously didn't close on
that deal but sometimes things like that
come up in title as well and we just you
know
um so we try to do as much research as
we can you know before we actually close
on the property and it takes you know
the closing process normally takes about
30 days because it's the title generally
that we're waiting for these title
searches they're all backed up so yeah I
mean but if you're running title that
that's a that that certainly gives me
peace of mind when we have the
opportunity to run title it it usually
catches the major bogeys uh how are you
finding people in these different
locations to walk the property for you
and how are you imparting to them what
it is that you want them to keep an eye
for
yeah well um so we we you know the areas
that we've done a lot of business with
we've found pretty good people over time
but I if we don't have someone in a
particular area we do a posting on
either site called droner.io and
basically they're drone Pilots mostly
but many of them are very used to doing
these type of inspections for land
investors so we have a whole write-up of
Specific Instructions that we give them
but basically we want them to write up a
little report talking about the property
we want them to actually walk the entire
property and uh you know obviously drone
photos and drone video and on-the-ground
photos and video as well it's a whole
kind of checklist of stuff that we give
them but we've got a predetermined sheet
that we give them and uh so that that
really helps out and you know some of
them are better than others and when we
find a really good one we try to keep
them busy over and over again
good stuff so
are you finding uh because certainly I
could say over the last four or five
years I'm noticing more and more people
in the land business where
10 years ago
I could count on one hand how many folks
I knew that were doing the land
speculation deal
um there is a massive amount of
inventory so we haven't seen the
competition really become an issue yet
but are you seeing that now has
competition started to create you know
some
wakes in the water if you will yeah you
know certain hot certain very hot areas
there's you know we you know we contact
Sellers and are like oh I'm tired of
getting these letters from Land
investors or whatever and you know so
but I just kind of look at the numbers
and cost per deal and everything like
that uh so the hot areas obviously when
you get it maybe a little harder to get
a deal but when you do get a deal it's
easier to sell the areas that are not as
hot you know obviously easier to get a
deal but maybe take a little bit longer
to sell so it's a little bit of a
trade-off I like a lot of the hot areas
um just because when you do get a deal
it's it's pretty easy to sell but uh so
yeah there there's a little bit of
competition out there but I think that
there's plenty of
um I think that there's plenty of space
for others and that I don't see it you
know it cost me about my mail cost it
cost me about three thousand dollars per
deal on average as far as mail goes and
I'm only buying like better proper I'm
pretty picky on the properties I buy and
I'm only buying larger ones I know if I
were to
uh just do kind of more info odds
smaller lots and everything I'd be able
to get that cost down down considerably
but you know my average profit per deal
is about 22 000 on average between all
of my deals so and I just look at kind
of the aggregate numbers you know it's
cost me three thousand in mail for each
deal and I'm making 22 000 on the deal
then there's a big return on investment
so
um you know even if that creeps up some
you know I there's still room where
where it makes sense for sure yeah
without a doubt
um
we have found the the most difficult
thing to do not just in the land
business in any
facet of the business is scale that has
been uh our absolute biggest challenge

you're talking about taking an operation
here that is seeing explosive growth
percentage-wise and really ratcheting
this thing up
um
there's a host of challenges now as you
start to push West there's a lot of
different rules the the land values are
completely different
um
what are your
what are your plans what are your
thoughts on some of these challenges
you're going to see as you enter these
new markets I mean finding new Brokers
finding these new Dependable people
um valuing the property do do you have a
specific plan in place to kind of make
this next jump
yeah so we try to we try to establish
um you know like we send out that test
mail that I was talking about we try to
uh we try to get like a deal in a
particular error a deal or two or two in
a particular area and then we've tried
to work hard to find the best broker
agent to work with in that area and at
this point it's actually probably easier
for us than maybe maybe a new company
because we've got a pretty established
pitch you know like we try to make it as
easy as possible on these Brokers and
agents that we're doing with that we've
got we've got agents that we've done
tons and tons of transactions with so we
can point to that and say hey we want
this to be you we want to do as many
deals as we can in this area I want to
make it a win-win for you so I try to
try to look at it from their perspective
and and find the partners in that way
and believe me when we find a really
good land agent partner everything
everything works so much better so
that's really the key there into
breaking into new markets because they
educate us on the local
things that are different from from our
other areas so where we send them a
property and they're like well have you
looked into this have you looked into
that and we didn't and then obviously it
may be something we didn't know about
we're about to tell us you know like
what do we need to do like what do we
you know what do we need to know about
these type of properties and make it
work so the good ones will will alert us
to those type of things they'll be able
to refer us to title companies and and
other partners as well and uh yeah so
that's kind of the key and uh we're just
kind of conservative as we're breaking
into a new market too you know we're
only kind of cherry picking the best
proper best potential deals
um and ones where we're sure where we've
got good comps we we feel really
confident about that after we've done
some deals in a particular area we can
get a little bit more aggressive in
those areas because we've got more
information we know how how fast
properties sell and what kind of
activity we get
um we know what kind of what the area
the best areas are and things like that
so uh you know we're able to get a
little bit more aggressive as we gain a
foothold in a particular area but you
know when we're starting out we're
trying to get a foothold in the area
we've got to be pretty conservative
so the the banking crisis that

we believe we're just seeing the start
of now
um certainly can wreak havoc on on a
real estate portfolio in particular uh
the fix and flips and some of the larger
scale stuff right this end of the
business I think is a bit more insulated
from that type of an impact but if
you're scaling and you're looking at
taking revenue from one to three and
three to ten uh is there how is the cap
stack rounding out are you planning to
self-fund these Acquisitions or have you
brought in Partners is there any bank
financing what does the capital side
look like yeah so I've done everything
self-funding to this point uh I've done
a couple of large properties with
partner with the funding partner meaning
they
brought the money to the deal and then I
split the profits with them when it
resold so it was it was kind of a you
know one of the properties was 300 that
315 000 and we sold it for 590 so it was
a good deal for both of us I brought the
deal they brought the money and then we
split the profits another one I've got
going on that was is just like that we
haven't sold it yet but we're getting
some traction uh that one was
360 and we'll probably end up selling it
in the 600 somewhere so I think that
those types of deals are good but
everything else I've done myself you
know self-funding it myself uh the the
interesting thing is that in this
business just like it it accelerates and
I'm like and it's not just the revenue
that we're doing it's like our portfolio
value is also like continually climbing
as well and these are properties that I
own free and clear so I've like right
now I've got about 2.8 million in
inventory that I just own free and clear
so as I sell those I'll get more cash to
do more Acquisitions and stuff but but I
know coming uh at some point you know
the cash flow is probably not going to
line up the way I want it to line up and
then I'll I'll uh take on some maybe a
partner or something but ideally
um I just put something on my website
um a couple weeks ago about that you
know I'm looking for private lenders so
you know I'll pay them like uh 12 with a
couple points probably and then and then
they could be secured by a first
mortgage or trustee on the particular
property that we're buying which is
obviously uh way discounted from from
retail value so I think it's pretty
secure from their end they they make a
good return uh as well so I think that's
probably the solution to uh to scaling
once once the the cash flow becomes too
uneven or something
so you touched on something that is
so important and it's become uh one of
of my passions is trying to impart to
folks that are looking to get on the
equity side I know it took me a hell of
a lot longer than it should have to have
the confidence and and the
infrastructure to make that leap
um and and do it in a confident way
you you had mentioned that there are
some certain deals where you'll bring
the land and someone else brings the
capital
folks I've talked about this in the past
I hear all the time from people
they want to get involved in real estate
and and they've got access to Deals and
they are good networkers and they
understand how to put stuff together but
they don't have access to Capital they
don't have access to cash how could they
get into the market if they don't have
access to cash if you have the deal
people will bring the money
I had that so Twisted Pete for so long I
felt like well if you didn't have the
money then people wouldn't take you
seriously and if you know we're actually
reading a book now I'm not gonna out uh
the person that that wrote it but
wrote it but in book club it talks about
if someone's not putting their own cash
into the deal they're not serious and
you should move on and listen brother if
you've got the deal you call me up any
day of the week Pete and tell me you
want us to put a couple hundred thousand
in to flip a piece for a couple of
hundred thousand more yeah sign me up
all day long right and it doesn't take
guys like us long to realize well you
know what let's put that portal on the
website we will pay someone 12 plus two
right like that's that's a better deal
you know yeah we'll do it that way
instead but man if you're out there
folks and you're thinking about getting
involved or you have deals and and money
is what's stopping you please
get off your asses and get in the game
do not let money be a barrier because if
you have the right deals there are
people lined up to fund your projects
for you
um
something that held me back for so long
and I just wanted to highlight that
there so Pete let's talk about uh the
process and talk about the website so if
there are folks out there that are
thinking of selling
um or they know someone who's thinking
of selling what do they do how do they
find you what does that process look
like do we have to upload surveys like
how far do we have to go here well if
you got a piece of land obviously you
know you could just email me um best
email would be Reese@turningprofit.com
and you know basically I just need to
know the state county and parcel number
and I can I could take it all from there
and obviously if we have questions we
can ask you about that type of thing too
I've actually
um I've got a website too which is
turningprofit.com where if you're
interested in kind of the land flipping
business in itself I do a monthly income
report on there where each month I go
into the details of our business you
know how much revenue we did how much
profit we did
uh each and every deal that we did what
we bought it for what we sold it for how
many days we held it for all kinds of
notes about this property so I've been
doing that for a little over a year and
each and every month we do that so you
can kind of follow along the process and
see kind of what's possible maybe within
the business
um and then you know my wife and I have
a podcast where we talk about about land
flipping and other things as well it's
it's you can find it links to it from
that website turningprofit.com so
is there uh Before I Let You Go any
advice you would give to folks out there
that are thinking about getting into the
land business
yeah I would focus first on it's the
whole key is to be able to determine
if a property learn how to evaluate
properties and then learn how to
determine it is that property a deal or
is it not a deal you know like at what
price would it be a deal so if you get
really good at that part which is really
not that difficult you just have to kind
of follow a checklist of things uh you
know it everything opens up to you you
can identify deals and you can get deals
under contract and if you don't have the
resources like you said there's plenty
of money out there to fund these deals
I'll fund your deal I'll partner with
you on them uh in most cases if it's a
deal
um so that's not uh that shouldn't be
any sort of restriction for you at all
like there's you get a deal there's
about it for you like it's just out
there um so uh so yeah learning how to
evaluate properties is the big thing
oh
all right Pete well give us that website
one more time please sure it's
turningprofit.com so and also on there
I've got a link to a uh a land flipping
community that that I just started in
January so we're really trying to build
that up we've got uh we've got about 700
six or seven hundred people in there
right now all the way from brand new
investors and we've got a bunch of
experienced land investors in there as
well and I've been doing like a you know
this is all free stuff and I've been
doing like a weekly Zoom call where if
you've got a deal I'll go through and um
kind of evaluate the deal and kind of
show you exactly on my screen how I
break down how I evaluate property so I
think you'd learn a lot from from that
process that's awesome so that that's on
the YouTube channel
um no that's in uh that's in my mind
flipping Community but you'll find the
link for it um you know on uh
turningprofit.com
and as always uh all the links folks
will be down below in the show notes uh
Pete Reese realvest properties it's been
a pleasure I really appreciate the time
man thank you so much well thank you I
really appreciate being here so yeah uh
best of luck on on the on the growth and
I'm sure you're going to continue to
smash as always everyone out there
please stay safe