Ep 299: Infill Lot Land Investing WIth Ray Zhang

0:00 Hey, welcome to today's episode of the hybrids podcast. I'm your host, Daniel Martinez. Today here, I have a special land a special guest who does land just like us. So we're gonna have a great conversation about that. I have Mr. Ray raising. 0:19 Yeah, either way, or x. 0:21 I'm sorry. For I was trying to think about that before I started doing this, this but virtual flipped land? Is that your brand that you're you're doing education with? 0:33 Yes, that's the one. Okay. 0:36 So he told me. I was like starting off with like, How'd you end up in real estate? Because me I kind of fell into it. Like, what's your story? Like? What was their kind of like path into real estate, especially land? Because I think everybody's path is completely different and creative in its own way. 0:52 Awesome. Yeah. So I actually came to the country about 10 years ago and came to Yeah, came to the States with $3,000. I bought my first car and live in the car. So you know, for a couple of months, basically homeless. And then I find my passion in cars, I started flip cars, right. And, you know, I did whatever it takes to find a home to live in. And then after a couple of years, one or two years, I started to have some money and start to park the money. Real estate is the one I was living in Hawaii. And I tried basically everything tried Wholesaling Houses. I tried virtual Wholesaling Houses, you know, basically didn't have much success at all. And I was like, Okay, I'm gonna try something else. And then I tried apartment investing. Right? It didn't work out either. So, you know, it sounds easy, but it's already six years in real estate. And I spend at least 150,000 on tuition, or the mentor fee or the programs and direct mail and nothing worked out for me because, you know, I couldn't do it in the mainland. And then about four years ago, I found land. So that really has some results from there. 2:16 Awesome, awesome. Yeah, we've we found I kind of went straight into land. I did houses for a little bit, and then I went straight into land was kind of how kind of how it happens. But a lot of people that like they're like really scared of land. And then like, once you like, do one good deal with it. You're like, oh, man, this is amazing. Let's Let's do more of that. Yeah. 2:34 Yeah, a lot of people don't know, how much land how much money you can from, how much money you can make from land, right? And even investors, they throw away or sometimes they just, when they get a landlord, they throw away the lead. They don't even care, right. But sometimes they can even make more money in land and houses. So 2:55 yeah, I've done a bunch of interviews with people and they're like, they're like, You guys do land. Right. And like, yeah, it's like, my biggest deal has been from land, but I still do houses. I'm like, 3:04 right? That's a mess. 3:08 Yeah, it was one of those things were like, okay, like, I understand why you're telling me this, but like, you didn't come to your own conclusion after that. 3:18 Yeah, it's like, you know, I know this Pelican lose weight, but I don't want to eat it. So. Yeah. 3:29 So So tell us a little bit about like, like, what type of deals you're doing, what markets? What size acres are you looking for? And whether it's infill lots or large farm and ranch like what's what's your target area and like target type properties? 3:43 Yeah, that's a that's a good question. Because even land there are a lot of different niches right? And what I do, what I do mainly is that to flip infill lot, where it's about 30 to 90 minutes from the major city, for example, if you're living in Texas, the major cities are Houston, Austin, and San Antonio, and Dallas, right there are four major cities and I don't do any major any business in that major cities but 30 minutes to 90 minutes from though and you know, drive distance of course. 4:25 So, people if you listen to this podcast a lot you hear that a lot of everybody that does land they do within 90 minutes, and we stay away from the inner city so it's kind of like a donut. It's kind of like the term we came up with is it's a donut. So it's 30 minutes away from the inner city and you have that sweet spot of 60 minutes in between that buffer zone. That is the sweetspot Absolutely. What states are you doing the what states are you doing the deals that for Latin? 4:54 I basically in seven states right now about eight taxes. is Colorado, Florida, South Carolina, North Carolina. And I'm starting to look into Georgia. I have some land in California. I just started Arizona. So you know, basically everywhere. Wherever I see there's a good market, I'll go into there. So 5:22 that's cool, man. Now I have a bunch of clients that do they do like reverse wholesaling with a find the buyer first, are you in some version of that? Are you actually buying the property and listing it? 5:34 I do is a process called reverse, lead, reverse land buying or whatever terms. So, basically, is I look at the area, and I see how much the price sold per acre. And then I will offer 40 to 55% of that to the entire colony. You know, basically when ever I send offers, if there's offer comps back, I know they're motivated seller because they they see my letter and they saw the offer price, you know, it's about 40 cents on the dollar. Right? So and you know, if they still call me back, I just buy them maybe and then after negotiation, I'll buy them. 6:23 So you're doing direct mail? Is there a marketing strategy? 6:26 Direct mail with offer letter? Yes. 6:29 Direct mail will offer letter. And then you said you said you do reverse wholesaling. So you find the buyer first figure out what they're looking for. 6:37 No, I don't do that. Because I did that before and find out. If I do that constantly. They will kind of get used to that. And they always want to lowball you right? And so what I do now is buy the land and then I'll put it on the market. Which is the MLS listing service. 6:57 Yeah, we found that we found that a better a better bang for your buck for 100%. And let's see on the MLS. Because we do we do like a little bit of version of both like sometimes we'll contract themselves on the MLS or sometimes we just text agents out that we have property to buy their property to sell. And we can do a little version of that. So looking for buyers different markets 40 cents on the dollar. There's Are there a lot of deals like that out there? Oh, yeah. 7:25 Oh, yeah. And a lot of people they, I really appreciate whoever teaches right now you can offer 10 cents on the dollar. I appreciate them. I appreciate them. I respect them. Right. I love them. Because they teach that and people do that and they don't their offer don't get accepted. Right. So I do a 40 cents of the dollar a lot of people accept that offer instead. But I think the reason why the market shift like that because you know, you know about when you first started is easy, right? You can offer like 10% or 20% but right now you know the people guys smart and the owners know how much the land is worth is probably you go guy last deals if you're still offer 20%. 8:13 So what size properties you're looking for illegally, one to five acres, one to 10 acres. What's your seats, but 8:19 infill lots under two acres as? Yeah. 8:24 Okay, okay. I gotcha. Yeah, we're, we're, we're like one acre and above. We just did a deal that closed last week. It was a two acre lot. We made 80,000 on it last week. 8:34 Oh, wow. Where is it? 8:37 That one was commerce, Texas, I believe. 8:41 AKA malkani. 8:43 I don't know what county it is. I don't even look. 8:48 Yeah, but that's awesome. Yeah. 8:50 Yeah, it's a good it's a good deal. No, I like land, because it's just one of the things were like 100%, three years ago, 10 to 20 cents on the dollar. You'd get deals all day long. But now, you definitely got to be up a little higher. It's interesting. It's interesting seeing the different strategies. Yeah, we try not to mess with anything under an acre. Just because I think we like larger stuff for like doing larger deals, so we just don't get anything under an acre. Oh, your marketing Listen, MLS. Are you taking? Are you taking the deals down with your own capital that you kind of made over time? Are you to have our private capital? 9:30 Yeah, right now I do it with my own money. But I started with a 10,000. So my first deal I bought in Texas, I bought it for 6000 and sold a couple days later for 55,000. So that's a little bit jump. And after that, I use other people's money for about nine to 10 deals. And after I close them I never used any other people's money. So basically right now I use my own but you know what? Don't get intimidated if you start just started right and you know there's ways that you can get a lot of funding if you really have a good deal I mean that money is not a problem the problem is if you have a good deal or not right 10:13 yeah 100% yeah the the money the money is not a not an issue for the right deal. 100% I really want to talk about that $6,000 For 4055 So for everybody me and my my partner would make fun of me not to make fun of people that do houses but we make fun of people that do houses. 10:37 You Yeah, that's makefile Yes. 10:42 My partner made a post the other day is like right because he used to be a contractor before we started doing land he used to be a contractor so he's like, I love doing flips going out on Karen drywall. Make sure you estimate for the right amount of mud. I'm flipping this land do I'm making more than a flip Sure. happens without having to make a trip to Home Depot. 11:06 Yeah, and also you carry a huge amount of risk when you do land. I mean, two houses. You never know what the market is going down or not. Right. And Tony Robin shared example. He had a friend almost hit a billion dollar net worth mark in 2007. And he said I'm going to push this one last time everything on the table. I'm going to buy a lot of houses and then after this everything the whole package sold I'll be a beginner for sure. Guaranteed. And Tony Robbins I suggest him to take some money off the table, but he didn't do that. And then he go bankrupt. So that's how brutal it can be. You know, if you if you do a lot of houses, that's you never know. 11:56 Yeah, it's a it's definitely not my cup of tea anymore. Yeah, definitely. Yeah, he's doing coffee now. Yeah. Yeah. So like, what are you seeing now as far as like your your wait time on the market? Now I know a lot of land investors late whenever they leave by enlist to like, pick it up 10 cents in the dollar and push it at 80 cents just moves fast? Like are you listening like for for what you think it's worth? Or you see overselling it? Or how do you like, what's your days on market? Like how fast you're moving these deals? And how often? How, like, what's your price range are moving? 12:42 Yeah, it definitely goes lower than about six months ago, you know, six A month ago, you put a market on, on on the MLS, you put a deal there. You know, you can get us all within a week. And we're quick, right? But right now, you just have to buy right and be the cheapest one in the same subdivision. So that's what I do right now. And but you got to really be careful, the poor your money, I need to because you don't want to buy too high and want to sell it too high. And you cannot write right now. So it's better to buy low. And the good thing about land is genuinely appreciate over time. Even if you don't sell it right now. That's fine. I mean, you're not losing anything. You're just holding it there. It's better than your stock or, or money in the back. Right? 13:36 I, we had to explain this because we still use private capital, because we're doing a lot bigger deals, we had to explain it to one of our private capital. I'm like, like, your money is just sitting there. It's not depreciating. It's not losing in value. It's just sitting there till we sell it. And like we got a really good deal. So it's just not moving in the timeline you want but it's it's still valuable 100%. And it's really that loss, but it did land is such a amazing space to be in. I definitely great results with it and seeing great results of that happen with different people doing different types of strategies. Have you kind of ventured down doing any other type of land strategies? Are you just kind of stuck with the info lots? 14:22 Yeah, mostly you can feel lots and I'm thinking to maybe go to a bigger acres like pinpointing because I want to have a ranch myself, right. So I'm still looking for those big lands, maybe in Texas, or somewhere in the North or South Carolina side. So yeah, 14:46 I've heard a lot of good things about North Carolina land as far as being Yeah. I stay in Texas, but I've heard a lot of good things about North Carolina. Wow. Yeah. You Did you hear? I've heard that there's a lot of, there's a lot of movement out there. So it's easy to sell your property. And if you get a really good deal, it's gonna fly off the shop. 15:09 Yeah, yeah. So good. Good market is beautiful. And the house is good. And the area is good. Right. So, 15:19 yeah. So like, I don't know if he mentioned it, but like, what? What's your like turnaround time to sell these deals with like, 60 days, 90 days. Now the market slowed down a little bit. What are you seeing right now, as far as your days on market? 15:33 Right now I see at least at least 30 days and the smaller deals take less time. The bigger deals just take a longer time. You know, the small deals, I went into another market by accident, because one of my students said, you couldn't get deals there. So I went there. And I bought 11 deals from for sellers. I just sold one. So I bought it for 1800 and sold it for 6500. So very small deal. But it took me about three weeks for that one. So 16:10 Gotcha. So you said you have students how many students you have right now? 16:15 I have about 20 right now. And they're coaching students, and I'm trying to help them to get their first deal. About five of them already got their first deal. So I'm really happy about that. But you know, the others, it just, you know, in different progress. 16:31 Yeah. That's cool, man. That's cool. So are you only doing direct mail as far as marketing wise, or is that? 16:41 Yeah, only direct mail right now? 16:44 Only direct mail. Okay. I gotcha. All right. What has been what has been like your Have you had like, because that everybody has like different like, issues they're gonna come up with like, what is the issue that came up like early in your lane career that can help other land investors overcome faster, that you kind of got hung up on? 17:07 I was, had this belief that you can only do small deals, meaning deals under 5000. And I still have one student, I always want mentioned him. He literally knows more than me. I mean, I, maybe we weren't on the call. I tried to teach him. And he said something I was about to say. And so he knows a lot of stuff already. And but he always do small deals. I told him, Hey, man, you just need to go need to go to those bigger markets, meaning the land worth a little bit more, right? And don't Don't be afraid. And he asked me find me a market that have absolutely no competition. And I want to my deals sold very fast. And I just don't like competition. Right? I said, maybe you can find such a space on the moon, but definitely not here. So. So just to see the market and go, you know, don't be afraid and just do in the bigger markets. I guess. That's the thing that I stopped for almost three years. And this year, I started doing like bigger deals. And I feel good because I always trying to help you, right? And the realtors guy involved the title company come in. They do whatever they can to help you close a deal. Whereas on the small, small deals, everything you have to do yourself. 18:39 Yeah, let's talk about that, because I really heard you mentioned that. So on the smaller deal side, you have to do a lot of stuff, closings. 100% Because like you might be dealing with a $500 lot. And if you use a title company, it's gonna cost you 600 18:56 Yeah, and maybe you cannot get a realtor super excited to sell you a $2,000 property right. 19:03 So yeah. So I always, always, always, like bring up the story because my first deal I did in Florida and I live in I was in Atlanta at the time. And I sold it for I got it for five, I sold it for 12 and the buyer that I was talking to ended up getting an agent involved. So the agent called me and he's like, like, Are you do you pay buyer commissions? And I'm like, Man, I'm gonna pay by commissions. And I did the math and I'm like, okay, yeah, I'll pay buyer commissions Yeah, yeah, I'll do that. Just make sure your buyer closes That's all she does. Yeah. But like what in the land space special in the smaller deals like it's hard for them to. 19:52 Yeah, that's why they're, yeah, there's realtors. There's a realtors charge a flat fee. You know? I thought that Yeah. 100 Because they No, you know, they're not gonna get a 6% out of a $2,000 deal. That's like 120 bucks. Right? So, you know, they're not going to be excited. 20:10 Yeah, that's crazy. So smaller deals got soft closings, you got no agent involved, or no agent that wants to do it for they want to do a flat fee. What's another issue you have for doing smaller deals. 20:22 Another big issue is what are called is available. Disappear, guys, meaning people message you because when you do self clothes, you have to market those all over the place like Facebook marketplace, Craigslist, or some land website. Right? And when you do that, there are people message you is this available. Oh, is this? And then? And then that's the only thing they say? I mean, they're gone after you say yes, it's available. And they're gone. I mean, whatever you say after that they're not responding. So that pissed me off. And I was like, What is going on? You want to you let me know if you don't want to let me know, too. Right. And they just don't respond to you the best the worst case is, you know that they saw the message, but they just don't want to talk to you. Yeah, right. It is. Yeah, 21:27 that's funny. That's funny. Facebook marketplace is such a Interesting. Interesting, but they definitely low end buyers. You're gonna get left on available all the time. Definitely. Definitely. That was good. I hate it too. I hate that part that is available. But it happens. happens if you do enough deals. It's gonna happen more than more than that happen. Yeah. So what's your what's your deal flow now you're trying to do since you're like medium sized deals, you're like five deals a month type deal. 22:08 I tried to stay there. And this month is very slow. I only close to last month. Sorry. This month, I have another one scheduled. So it's it's very slow. But I have been buying like crazy. I just store them. I guess. I read they I tried to buy one. And today and tomorrow I'm going to buy one. And this week already bought one. So I tried to buy as many as I can. Sometimes it just a small deal. Because in the same time division, there's small deals, right? Yeah, can avoid it. But uh, you know, I buy them for like a couple of 1000 I can sell for 20 Not too bad. But you know, I had to do whatever I can. 22:52 It's just so how many properties you own right now? This is simply to try to buy a lot. 22:57 Yeah, I only own about 20 Something like that. Not too much. Yeah. 23:03 Plenty. Yeah. 20 lots listed right now. 23:06 No, I have 10 Less it but I have 20 That never list it. I just keep it myself. 23:11 Oh, waiting for opportunity. One thing that's cool about land is if you buy an upcoming area, just sitting on it is such a strategy. 23:20 Yeah, just I bought, I bought land in Oklahoma. Two years ago. I for $2,000, by then it was worth 4000. So I completely forgot about it. And recently, I started to dig Coahoma county city. And then I searched my name and this property jumped up. And I was like, Oh, I have a property there. And then I put it on the market after a few days. We sold it for 13,000. So, you know, that's that's when I tell people you know, land business is as good in nature, you know, try to try to sell like clothes. Right? Your the clothes you wear. If you don't sell this year, next year is auto fashion, is you maybe you can use that for napkins, but nobody's gonna buy that one. Right. 24:16 It's not, it's not a bad term return on investment from two to 13 1000s. Not bad, right? No, I think it's really cool. Because there's a lot of people out there like most of the land owners we talked to, they're just sitting on it. They inherited the pass down to them. They bought a cache and never did anything with it. So it was just there. Absolutely. One thing one of things I like about land doesn't cash flow. 24:44 Yeah, you can make a soul some people will sell on terms, right? Yeah, buy for a couple 1000 and sell in terms and collect a couple 100 per month for for cash flow. There are people doing that but I don't like it. So 24:58 you don't like it? You know, have you done it? Well, what was your experience with seller financing? 25:06 That's when I first started, I paid a guy 70,000 My first year to just learn that I didn't know I was learning that if I knew I wouldn't pay him. So but I did. So he taught me about how to do term steal. And, you know, that's when I, I saw a lot of is this available guys? And I absolutely hate it. So I was like, Oh, my gosh, I spent a lot of money on this thing. What do I do I need to get my money back. Right. So instead of asking for a refund, I do something a little bit creative. I was like, there's a lot of people doing terms deals, they try to sell it on terms, but there's one issue, they do not have enough land themselves. So can I do something about that? So I mailed the entire county, they want to buy at and mail to those landowners who own land more than five lots at the same time. Yeah, and I approached them, I tried to buy their whole portfolio. And I hit a jackpot where this guy has 100. Now he has about 300. Lots in the same subdivision. So I, I bought 150 of them and sold everything to those term investor guys in four months. So I got my money back and more. That deal. 150 probably shows probably, I know it's about 240,000. Yeah. 26:46 So it didn't turn out so bad. 26:48 Yeah, not bad at all. And at least I got rid of those. Is this available guys? 26:59 What is a quote that is yours or somebody else's that you resonate with? 27:03 A coat? Yeah, a quote. are a lot of them. I think the one that that really helped me throughout the journey is believe and receive, right? And it's very, very simple. It's just two words. But if you think about it, what I what I understand from that sentence is there are three types of people, right, and the first type is people, they're always complaining, right? They're complaining about the environment, everything they experiencing, right. And there are some people if you go a little bit level up, there's people are very grateful. And they're grateful for what they have. They're grateful for everything good in their life. And what I know from the what I see from the most successful people, they are great for, for things in events. Imagine, for example, if you want a million dollar business, right, and because you haven't got there, but the successful people are grateful for the $1 million business before they had that business. So they're like being grateful for what the things in the future. So I think that's really the mindset I'm trying to trying to hold right now. And, you know, I was grateful for being on your show. Here we go. All right. 28:45 So, what do you how do you think you're going to handle the recession as far as land cuz I know, not to like pivot, maybe ask a little bit deeper pricing? Like, what's your, what's your new strategy coming into? Market? Especially with you in land? 29:00 Yeah. So I share with my students that our method is, is recession proof. Because basically, if there's a recession, if there's a buy and sell activities in our area, we only offer a 40 to 50% on the sold price within the three months period. So if it is go out or three months, we don't even look at it. If there's a subdivision that have no sold within the last three months, we do not even go to that subdivision. So we all right, yeah, we all we only go to those subdivisions that have data support, you know, we will, we will be successful there. So if there's a recession, the price of course, the sold price will be much lower, but our offer price will be much lower too. And on top of that, our second layer of safety is negotiation. For example, I bought the land for 1000 Recently, and that land I send the offer for 13,000 And that land is worth about 25 grand. So after the call comes in, we always negotiate no matter if that deal is super hot deal or not super hot deal. We always negotiate on top of the offer letter. So, you know, as soon as long as you get the deal, like super cheap, you're pretty safe of any type of recession. I mean, if you look at the history, what's the worst recession? Right and the house market? Maybe? Down? 30%? That's about it. Right? So 50% Or is that enough? Okay. Yeah, we have a 50% deck already offer favorite percent, right. So, yeah, so we're pretty safe there. It's good. 30:42 You buy deep enough that your margins or won't even be affected? As far as your profitability wise, if you buy? That's, it's 100% True. 100% true. I love the land game. If there's somebody on the fence of not getting the land game, what would you say? 31:02 I don't know. I mean, what are you waiting for Matt? So I mean, is there a better one? I mean, there is no better game. I mean, I tell people all the time, if you cannot get a land deal, just forget about houses, right? They're not You're not going to bake it if you do if you have done a house to land is like a piece of cake. Right? So, you know, why not? I mean, you want to choose the harder game. Go ahead. That's a house or apartments, right? And there's the one easy and you can make a lot of money and you choose the harder one I don't understand. 31:45 Go Go's during the land game. Where can people find you online? Where and where can people go? searched about your education platform? 31:54 Yeah, I have an Instagram account. My account is called virtual Flatland. Vi r t u a l so virtual flatland that's where I am most Yeah. 32:10 Then you have your landflip North Carolina 32:15 No Yeah, I still building so now yet? 32:23 Yeah. Virtual virtual flip land out in. Yeah. Graham, Instagram. Well, if not already asked the question. Man, this is such a good interview. I like I like hearing different strategies because there is even in the land space. You got infill lots, you got large acreage, you got entitlements, you got subdivides. There's all these different types of strategies, even owner financing that come in with the land space. So it's kind of cool having different conversations with different types of investors all over the world all over the all over the United States, you know, how to do a different type of strategy. So it's kind of cool, interesting. I appreciate your time. And thanks for coming on. 33:03 Right. Yeah. Thank you for your meeting. Thank you very much.