Is there an upper limit in land investing?

Land investing can be wildly profitable, but is there an upper limit to how large you can grow your business? I’ve heard some of the gurus talk about having two or three million dollars in sales per year, which is awesome especially given the high profitability in this niche, but I’ve never heard anyone talk about doing bigger numbers. I’ve never heard anyone say they’re doing $5 million in sales. Can you even grow a land business to $5 million in sales? What about $10 million, or even $50 million?

As an example, I recently came across an excellent interview of Jack Bosch on the podcast Millionaires Unveiled. 87: Net Worth of 15.0M – Broke Immigrant To Land Buyer It’s an excellent interview, and you should listen to it. In the podcast, Jack details the exact makeup of his income streams and his net worth. Of his $15 million net worth, only $1.5 million is vacant land. The rest of his wealth is made up of single-family rentals and multi-family syndications. The impression I get is that they make their money in land (and coaching…) and then invest that into other real estate.

But if land is such an awesome and profitable business, why not put all $15 million into it? With average returns of 100%, couldn’t you turn that 15 into $30 million? You already know the land business, right? Why would you take money out of your profitable business and put it into another asset class that you’d have to learn from scratch?

I wonder if there’s a ceiling in this business? Is there a cap around $3 million in sales that you can’t scale past? I’ve heard Jack Butala talk about doing $3 million this year, and Willie Goldberg mentioned scaling his land business to $3 million. Is that low seven figure number a ceiling because of the logistics of doing land deals? Or has nobody figured out how to crack the code and structure their business to handle the higher sales numbers?

If you think about what it would really take to handle BIG money in land, it starts to get interesting. As an example, what if I gave you $100 million dollars to invest in vacant land? (In the money management business, 100 mil is nothing). Could you personally even buy that much land? Think about what you’d have to do to buy it. Taking numbers from my own business, my mailing costs have averaged about 4% of my buying price. Said another way, it costs me $4,000 to buy $100,000 worth of land. So, to extrapolate that out, it would take $4 million to buy $100 million dollars of land. And at a cost of about 50 cents per letter, that equates to 8 million pieces of mail. And if you get a 1% response rate, that’s 80,000 phone calls you’d have to answer. Think about the machine that you would have to build to buy $100 million in land.

That’s a fascinating question to think through.

Why would you take money out of your profitable business and put it into another asset class that you’d have to learn from scratch?

I can’t speak for anyone else, but I can think of at least a few reasons why…

  • Diversification: Land is great for a lot of reasons, but there are other real estate niches (and other businesses altogether) that offer certain benefits a land flipping business cannot. Namely, better tax advantages, easier access to low-cost capital (conventional financing), greater scalability and more.
  • Enjoyment: Some people may see the opportunity in the land business, and it’s worth their while to do the work and generate cash, but it’s still not what they love to do (it’s not their life’s highest purpose). There could be plenty of other things that they’d just rather spend their time doing. Even if the money isn’t there, happiness ultimately matters more, IMO.
  • Changing World: Since I started in the business, a lot of things have changed (software, economy, competition, legislation, etc). Even if everyone wouldn’t choose to shift to something else over time, a person may get into a business for a lot of good reasons, and those factors can change significantly from one decade to another.
  • Changing Priorities: Suppose you start a business with the intent of passing it on to your children, but as your children get older, you (and they) realize they don’t like that business. Rather than trying to force the family business into their future, some people might divert their resources into something else that makes more sense for their children to pursue.

I hear what you’re saying though. There does seem to be a sort of “ceiling” of sorts. Nobody talks about making BILLIONS AND BILLIONS each year from land… seems like all the biggest players are in that 1 - 5 million range.

It could also be that there are much bigger players out there, but they don’t broadcast it to the internet. :slight_smile:


I have actually thought of this myself.
I think land is a profitable niche to get started, but for many reasons like what Seth said, people often difersify.

I myself can say from experience that the tax benefits I get from owning rentala homes are tremendous. As well as the fact that nearly all equity I accumulate can be leveraged tax free.

Now on the other hand I do have a friend who flips a couple of Missouri farms each year to the tune of 4 or 5 million, but he is NOT sending mail. Different ball game and different animal.

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Hey @retipsterseth and @jawollbrink, thanks for responding. I totally agree with what you guys are saying. If you are looking at land flipping as part of a larger investment strategy, it makes sense to pull out profits and to invest them into other asset classes, especially those that have a more favorable tax treatment. And I can totally understand that priorities and interests shift over time. To be perfectly honest, I’m getting a little bored with land flipping lately since it’s not the creative outlet that my personality type requires. I’m at a point in my business where I need to scale it just to keep my interest going (scaling appeals to the builder/creator side of my personality).

Listening to the Bosch interview reminded me of my business goals when I got into land flipping a few years ago. My goal was this: I’ll make X number of dollars in land and then take that money and put it into a larger asset class like a multi-family or self-storage syndication. You can make “real money” in a syndication. We’ve all heard stories of the fortunes that GP’s make in these syndication deals when they cash out. That can certainly be a life changing event for a syndicator.

But why can’t you make “real money” in land flipping? Why would you even consider another asset class? Is there some kind of logistical ceiling that makes it unprofitable to operate above a certain number of deals? Is the total “flippable” land market limited, in other words the total number of sellers willing to sell at a steep discount? Is it that there’s no leverage in this business (compared to a real estate syndication that leverages other investor’s money and bank loans)? Or is it, like Seth suggested, that the really big players in this business might just fly under the radar?

I don’t know, but it’s a fascinating thought exercise, and something I’m thinking about as I start to scale my business to the next level.

I believe the “real money” is made in land but in different classes and niches. For instance, subdividing and developing, although some see it as risky, can be madly profitable or a larger scale.

Also farm flipping, and agricultural development. Forestry land as well where you buy, cut, and resell. There are large companies doing this in different niches. But I think a person would need to specialize skill-wise and consider the possibility of a more hands on approach.

@billwalker it could be that there is a hypothetical “ceiling” on a per state, per county, or per region basis.

For example… we know there are many investors making over a million per year, but the only way they’ve been able to do this is to develop some expertise and market knowledge in the markets where they’re working, and everyone has limited capacity in this sense. You can’t be a expert in every market, there’s just too much everchanging property and data out there.

So in a sense, as long as a land investor is only willing to flip (without doing any improvements or subdividing to create new value), even with the great margins that the average land deal has, a land flipper’s income will be limited by the number of markets they’re able to learn inside-and-out.

Not to mention, some markets perform better than others… and being an expert in Market A may not be as profitable as being an expert in Market B, if that makes sense. So there’s also a bit of good fortune involved when an investor picks a great market, becomes and expert in that market AND they continues to work it hard.

Giveh what you mentioned about the Bosch interview, you might find this one interesting:

This is from @MrBigBoi, who has one of the best podcasts I’ve heard in the business/entrepreneurial space. Definitely worth subscribing to.

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