Episode 70: The future of land investing: funding, ai, how to level up

Clayton Hepler (00:12)
Hello and welcome to another episode of the ground game podcast. Um, I want to apologize, right? Someone on the other side of the mic had a kid and our recording was thrown off for a week. I'm just kidding. Justin, what's going on, buddy?

Justin Piche (00:31)
Hey, yeah, what's up man? This is Justin, your other co-host, and we're here to show you how to win the ground game. But yeah, things are going good, man. We had our fourth child two Saturdays ago, Mabel Amelia Pache, born on Pi Day, 314, nine pounds, healthy baby, mom's doing great. You know, just adding to the chaos, Mabel, Mabel, M-A-B-E-L. Yeah, we're going for like the old lady names.

Clayton Hepler (00:51)
Mabel Mabel and I like that name

Justin Piche (00:58)
know, Nora, Grace, Mabel. Anyway, yeah, dude, it's been great. think kids love her. Gracie is like in love, infatuated. She just, she gets jealous when other people hold the baby and like lets you know it. You know, she puts like a little stink face on and it's just, it's great. It's been great, but.

Clayton Hepler (01:14)
Hahaha

Justin Piche (01:17)
Julia is actually staring at me right now through my office window, right on the other side of my computer, just like looking at me. Because she's got all four kids right now and the baby, and she's less than two weeks postpartum. She can't hear you. I got the headphones in, but she's entertaining the kids. But yeah, that's the big life event. obviously, I apologize to the audience. It's been tough to keep a weekly cadence, but here we are recording a podcast. What's new with you, man?

Clayton Hepler (01:26)
Hi Julia. Hi Julia.

Dude, ⁓

well, a lot of really good things are happening in our business. Our funding business is absolutely going asymptotic. It's pretty crazy. And we're seeing a lot of sales go move. We're seeing deals move. We're getting really good deals under contract. I've never been more optimistic. I feel like I'd come here and say that, but I'm really excited about what's going on.

And in our community, our community people are just freaking murdering it in in so all really good things. You know, I what's a negative update? I mean, I think people are feeling there's a lot of like uncertainty in the world in the market right now. And I think that generally people I think trust is an all time low. Interesting story, man. I was talking to someone in

the deal engine and he was saying this person was telling him on a sales call, I'm sure you've experienced this, he didn't want to go through the regular script. And this guy asked me, are sellers just, are they overwhelmed? Are they feeling like, are they getting too many people reaching out to them? And he's like, this person just seemed fed up.

And my answer to that was people are fed up man, period. I don't think it's isolated to the land business. I think in general people are fed up. think people, trust is an all time low with institutions, with people. And so how do you separate yourself in the marketplace? That's something that we're thinking about. But that's what I'm seeing. That's a negative thing that we're forced, that we're contending with in general.

that's just very top of mind for us.

Justin Piche (03:16)
Yeah, I agree. On the business front, sales has picked up big time these last couple weeks, which has been fantastic. Just getting a lot of things on the contract. We have a lot of inventory to move, that's been great for the business. We're still slower than I'd like on acquisitions. We got a few contracts this week, which are great, but I'm just not seeing as much as I saw this time last year. I'm spending a more of my time focused on these bigger deals, which is great.

but it does raise a question. Although it's hard to, we're looking at our data, we're getting decent lead flow, we're getting good conversations, it's just a lot of price motivation, a lot of fed up with just people reaching out to you. It's interesting, it's interesting.

Things are going pretty good though with sales. When sales moves, it feels good. This business moves in a ton of different cycles. So you might be at a point in your business where you just are loaded with inventory. You just need your sales team or your realtors or whatever, your sales process to work to bring capital in. Some of you may be on the other side where you don't have any inventory left because you've sold out of it. Now you need acquisitions. And I'd say we're more towards we need our sales to move and having a light month or two in acquisitions, honestly.

doesn't really hurt right now very much. It's more the sales side not moving that is painful. But the movement is encouraging. I don't know what happened in the market. You we had a couple months of just lull and now it's kind of on fire. Could it just be the winter and spring break? But I don't know. I don't know. I wish I had answers. Sometimes I come to this podcast and I have answers. If you ask me about funds and

and development and I got lots of answers but sometimes just like simple market economics or market dynamics I don't know why they happen the way they happen.

Clayton Hepler (05:03)
Yeah, well, I can tell you a couple of interesting things that I've been reading thinking about in the general widespread market. So a couple of years ago, Justin, I had a call with someone I was a part of a mastermind. This would have been about two years ago, two and a half years. And I met a guy there who was a debt funder who funded a lot of transactions, specifically soft costs for

Justin Piche (05:20)
Mm-hmm.

Clayton Hepler (05:26)
A land investing development company called BRD Land Co now they were one of the largest in the Carolinas that brought Paper lots and build ready lots to the national builders. In fact, they had over 20,000 lots in their pipeline across the Carolinas Georgia in Texas That is a huge huge business. They filed for chapter 11 bankruptcy

about a week ago. Now, my question is, why do think they would file for chapter 11 bankruptcy?

Strong idea.

Justin Piche (06:00)
Because they have

people, yeah, I mean, they've got a lot of people trying to get their money. They don't have the capital or equity or the...

bankruptcy, they no longer become accessible to those creditors.

Clayton Hepler (06:12)
Okay, that yes, the literal term. Yes, that's the technical term. That's fair. The what what what? Yeah, yeah. So so so yes, good answer. What I'm saying is what they are selling their 1400 lots, because the big builders pull back

Justin Piche (06:15)
Okay, Reframe your question for me.

Yeah, 100%. Yeah. I mean, we see that, right? mean, builders are pulling back. There's still the housing demand, but prices are high. Interest rates didn't really drop. They just spiked back up a little bit. There's a lot of uncertainty in the market and builders are just taking down kind of smaller projects, right? You got a 300, 400 unit development that's outside, you know, maybe not in like the perfect school district, but it's still an area with growth developments all around. Builders don't want that right now.

It's just too much inventory, too much risk. They'd rather have a 40 unit, 100 unit, something like manageable that they know they can roll out in a couple years.

Clayton Hepler (07:03)
Okay, so that was it. That was a consensus. So this guy was speaking with this guy who is the primary debt funder for this massive, I mean, we're talking $60 million of debt. That's a lot of debt. And he said, if you're going to focus on entitlement opportunities, you want to focus on fewer than 100 lots. Builders can predict absorption. Builders can predict market demand.

Justin Piche (07:22)
I agree.

Clayton Hepler (07:28)
they can control costs at a scale that they need to control costs, they still get the, you know, economics of scale, but they're not pulling a multi year phase out project. That that was super interesting. Okay. Another thing that is interesting is, you know, what I'm tracking in our business is, you know, we're all I'm always looking at, okay, so, you know, what's the next two to three years look like, right, as we develop as a mature as an or as a business.

Justin Piche (07:38)
Mm-hmm.

Clayton Hepler (07:56)
Where is the actual opportunity? And one of the interesting things is, and I'll read it right here, and I actually believe that this is going to affect significantly

in a two to five year window and then values will plummet after a five year window. Yes, ladies and gentlemen, I am making a prediction. Uber has invested $1.25 billion in Rivian for 50,000 robo-taxis, okay?

So flying callers, Joby and Archer are 18 months from US development. And so what I believe this will do is this will reshape land values in rural settings, right? Because primarily, with your, okay, cool, cool, cool, cool, cool. Okay, cool.

Justin Piche (08:37)
Nobody else can. Nobody else can. Nobody else can. It'll get better. It'll get better.

Clayton Hepler (08:42)
So I think that this means in the short duration, land values will continue to expand, especially outside of major metro areas, because people can move out of cities and they can access these more rural locations over a period of, let's say, two to five years while white collar jobs are still relevant. And so I think that the era of land investing is going to be good for another two, maybe five-ish years.

And then, also, you know, that means, you know, septic is more important, all these types of businesses are more important. But comma, after that period of time, like robot, I think robot taxis are going to be almost legal, right? You know, because they don't have they don't crash, there's no problems, there's no drunk driving, right? And so I think that that actually augurs quite well for land investors.

outside of major metro areas, two, three, four hours in concentric circles outside of major Metro. I think land values are going to continue to increase dramatically. And if you're positioned to acquire this land off market, I think you can ride it on the way up similar to Justin, how flippers were making an arm and a leg in 2021 in 2022 because house prices just kept going up. I think it's going to be the same exact thing with land.

Justin Piche (09:56)
like the prediction. It'll be interesting to see how it plays out. I think in the short term we're probably fine, but I still question what will happen when and if the amount of jobs that are taken from white collar people, right? Think legal professionals, engineers, business finance, all these jobs that make up a large portion of the economy, much of money of which have

disposable income to buy a second property or buy a property out and like expand for their family like what happens when they get replaced you know by AI that is able to better faster do the jobs that they do you know what ripple effects does that have through the economy I'm I don't know I was on a text thread with with Seth and maybe I talked about this last time with Seth Williams and

and drew Haney and they were discussing like what's going to happen with with you know AI and the economy and how much money is able to flow into a product like land. I think we're relatively protected on like the lower end side for sure. Like odor financing, parcels where you can put mobile homes, rural settings. I think that stuff is pretty protected. I'm concerned about the higher end products.

Clayton Hepler (11:11)
I actually completely agree with you. In fact, I was speaking with someone who's the largest mobile home dealer in the state of Florida earlier this week. And he was telling me at certain price ranges of mobile homes, the demand is infinite. It's infinite. And so provided you can bring that product to the market and I think that similar to how Land Investors two, three years ago,

We're like locusts going across the land, pulling up these opportunities. This same exact thing will happen with mobile homes. In fact, we're doing a mobile home development. I told you about it. I think probably said it on the podcast, but we're doing a mobile home development. Seven, eight lots right now, full development. And it's going to be a huge payday, multi, multi high six figure payday. But we brought it from a $75,000 parcel of land.

right and we're parceling it up and then we're bringing in the infrastructure. And so I think those are where the opportunities are and that is dude that's that's going to be there for a long time provided again you go in the concentric circles, but people need the affordable housing. And so if you can control the land values, the underlying land and allow it can be to be financed through these advantageous USDA, rural loans finance, you know, backed by the government of people buying these FHA buying these parcels.

and their trades people, right? Waitresses, you know, people that can afford these homes. That is the buttress of all this crazy AI layoffs, right? Because it's not like it's not like the housing stocks going to deflate to make it accessible for these people. The housing stock still needs to catch up. Right? And so if we can provide that product to them, we can bridge the gap and the profits will be how do I price as much capital

in the most efficient way as possible in this short period of time to handle that affordable demand. And that's what we are honed in on that in all of our markets right now.

Justin Piche (13:06)
How's the mobile home project going? mean, where you gotten to? Have you gotten bulk pricing? mean, it's not that many in seven, eight lots, right? said so, but there's probably some bulk pricing. I don't know if it like starts kicking in at, well, you know, once you buy 10 mobile homes or whatever it is, but like, where are you guys at? And how's the approvals work and where you are? Because mobile homes, one of the challenges with mobile homes is it's gotta be on the right parcel, you know?

Clayton Hepler (13:21)
But.

Justin Piche (13:29)
There's a lot of places in a lot of markets, and this is super frustrating for those of us who've tried this before without as much knowledge as I have now. There are rural markets where a stick-built home price is like sub 200K. Those are brutal markets because you can't sell a build lot and the person can't build a house for less than that. They're not gonna come in less than the price of the house that was built in the 1980s that's...

know, 1700 square foot, three, two, whatever for 175 K. It's just not possible in today's market with today's prices. The only option for anything new or newer than that is for them to renovate, which is not going to be great because they're not going to get the price. They're not going to get their value out of it or mobile homes. But there's so many municipalities that have specific regulations against mobile home zoning. They want stick built houses, right? And there's so many pieces of land.

with restrictions on putting in mobile homes. And there's a stigma, I guess, about them because they used to suck. mean, frankly, mobile homes used to be terrible. They used to be just like ugly boxes that are, know, that are anyway, they've come a long way. I mean, they're really nice now, right? They really are. And they're the most viable economic option for a huge amount of people. And so putting mobile homes on a piece of land, the first

question is can you do it? Is it zoned correctly?

Clayton Hepler (14:54)
Yeah, I mean, I think that that more and more people are open to this type of stuff. These types of products, I think it will become a necessity. And the reality is, you want to go to the locations that this is a viable strategy. I'll give you an example. So I was talking to this guy, and he was in Marion County, Florida. Now Marion County, Florida during COVID

was a boom because all these wealthy northerners would ship their horses down to this specific area. And they would buy mobiles and put them on their 10, 15, 20, 30 acre tracks and have their horse hands stay in these mobiles and live in these mobiles. Okay. And so this guy was making an absolute killing in that specific part of the market at that time. Now as it evolved, it became unfeasible to do that.

It's like knowing your markets when you're flipping houses. Now evolution is natural for, you go from I'm flipping in this neighborhood to I can't flip anymore in this neighborhood to I can't, right? And so that's the same thing that happens with us as land investors. We have to continue to adapt and grow. And I think that there's more profits for those people that can do that, you know, provided it makes sense.

Justin Piche (16:09)
Yeah, I agree. What else you got going on?

Clayton Hepler (16:11)
Well, we got some we got we're bringing on a AM get an AM next week. We're bringing on a funding a new AM a funding lead next week, which are super excited about CFO from former CFO of a company just just really sharp guy. Really.

Justin Piche (16:16)
New AM.

So tell me real

quick, talk to me about this land funding company now that you've started. I actually don't know anything about it.

Clayton Hepler (16:32)
Yeah, we're just, you know, pulling up some powder from some Colombian. I'm just kidding. I got to believe we got to believe that out. We got to believe. Please take that out, please. I'm going to get I'm going to get justice going to kick me off the podcast. All right. Hold on.

Justin Piche (16:38)
Hahaha!

No, no, no, no, no. We can

tell jokes. We just can't cuss, you know, because this is rated E for everyone. I don't want to have to put some foul language filter on here.

Clayton Hepler (16:51)
Yeah, that's right.

Yeah. Well, one second. So what were we talking about? ⁓

Justin Piche (17:00)
I

wanted to talk about your funding company or what you're doing. You said that's blowing up at the beginning of the podcast and I, yeah, we haven't talked about that.

Clayton Hepler (17:03)
yeah. Yeah, so.

Yeah, yeah. So I mean, the funding

company is interesting for two reasons, right? One of the things that we've been able to really do is, and this is a product of people in the deal engine. You know, we built this really amazing community within the deal engine, and we have shared a lot of brokers realtors in the deal engine, right? So we have a list of the top brokers in the best areas in the deal engine. And so that enables us to number one, double close at scale in different markets with the best brokers.

as well as offer financing, good financing, know, funding rates, good funding rates, you know, no different than most other people. But we have a very, very good operation, a very good team. And we're coming alongside people and helping them with different decisions on subdividing on re helping people with rezoning. We're just being a little bit more of a collaborative funder, I think that's needed in today's day and age. And we're also helping with double closing. So we will find the broker

and we will handle the broker relationship and we'll price it internally and we'll split profits on double closes and we'll handle all the transactional funding. So, you know, for a lot of people, the biggest thing in 2026 is, dude, I have all these deals. I just can't, I can't dispo them. I don't know how to dispo them. I don't know how to find the right broker. Well, if you have the right broker relationships at scale like we do because we can, you know,

pull all the relationships of all the people that are successful in our community and the community benefits from it too, right? Then we can do this really, really well. So we found, we've been able to really serve the market well, and people are just crushing it. You know, one guy sell, we fund a deal, he's selling four deals in April that we funded just at the beginning of March and Feb and crushing it.

And so, yeah, I mean, I think it's just a combination of the deal engine. I think it's a combination of, you know, being able to offer great rates and then our team helping with this on the back end. We're just, we're just really firing it all five cylinders right now, man. I just like, I don't know what else to say.

Justin Piche (19:06)
Damn it.

That's awesome, that's awesome. Congrats, I'm glad it's going well. I'm glad it's going well. See, do I have any updates? Maybe some progress and some big deals, but also like some challenges and setbacks. It's very interesting to work on these larger deals. So I got this deal in Burnett County, which I've talked about before, 150 acres, 40 home sites. We were supposed to have our county,

our hearing for our final plat on the 24th. And on the 23rd, the commissioner and the county development manager were supposed to go out and inspect the road. Well, they didn't, they didn't go. And so they push us off the meeting. They went out today and they told the contractor that he's got to rip up the chip and seal paving surface of this 8,600 foot road and redo it.

because of something they wanted to see on the road. And the contractor's like, curious, obviously, because they've been keeping the county informed the entire time and the county did not, like they just sprung this extra requirement.

So the contractor goes out and the contractor is pissed, you know, really angry. so basically the county didn't like didn't specify these certain requirements about the chip and seal layer and the seal code like whatever. I don't I don't exactly know because I haven't talked to him yet about exactly what the problem is. But they did commit to getting us on to the next

the next county commissioners meeting on April 14th if our contractors able to scrape the surface and redo it. Yeah, it's

Clayton Hepler (20:49)
Dude, that's absurd. Was that

preventable? Was that a preventable thing, you think?

Justin Piche (20:54)
You know, not on our side because it's like, signed a fixed rate contract. So that was my first question was who's going to eat this cost? That's like hundreds of thousands of dollars of work that's been paid for already. So who's going to eat this cost? And the GC and the contractor, subcontractor who did the paving service, they're going to have to figure out a way to eat this. We're not eating it, right? We have a fixed rate contract for a road that's delivered approved.

So it's, yeah, it's a challenge. These are like little, these are things that happen, you they happen all the time. I don't know how it could have been prevented, frankly. We have a project manager, everybody, have, we have an engineer or like a testing lab that's coming and taking core samples of the road. get emails like every day about some new sample that passed this compaction, this density, whatever.

Clayton Hepler (21:21)
Holy shit, bro. Holy shit.

Justin Piche (21:38)
But the so the road base all passed before they did the the paving surface it seems like there's just something about the paving surface that isn't up to some county spec or some requirement that the Commissioner and the Development manager for the county want so that'll be interesting to see hopefully I mean we're already kicked back to the 14th So the fact that they have to redo this in three weeks if they're able to get it done I think they will be then we should still be able to shouldn't delay our project anymore, but it is you know somebody's got to that cost

You know, this is why it's so important to decide to get these fixed rate contracts. Imagine if we, dude, imagine if we hadn't done that, right? The road, road billed cost is something like $950,000 total for the road. So if like we hadn't done that and we, we, it was just pass through billing and we pay a fee, you know, they mess it up. We say, yeah, go for it. You know, they mess it up. We're eating 250 K like unexpected costs out of nowhere. You know, that would be terrible. That'd be terrible.

Clayton Hepler (22:14)
Dude, that is crucial.

Wow.

Well, that's good in negotiation on your part.

Justin Piche (22:40)
Yeah, well, I think Ben was the one who negotiated the contract. But that's, I mean, it's pretty typical to get these types of rates or these types of contracts. anyway, so that one's going. We're in the middle of our raise for a backdrop. This is not a solicitation. I'm gonna go and this is, I'm not soliciting anyone who's listening to this podcast for any money. Just, I want that to be like abundantly clear. But we're almost done. We're almost hopefully subscribed. Closing end of May on the property and it is, it's a good one. It's a good one.

Clayton Hepler (22:53)
Okay.

Yeah.

Justin Piche (23:10)
I think I've talked about it a little bit. 77 lots, half acre, Bastrop, Texas, 40 minute drive from Austin, the neighboring development to the north with 140 lots sold out in less than two years. And we're positioned well, yeah, we're positioned well to offer owner financing, know, full asphalt road, eight inch water line, fire hydrants, full power. It's all in septic. The county's putting in a new middle school, like 2000 feet from the property.

Clayton Hepler (23:23)
Holy shit, man.

Justin Piche (23:37)
It's a, I'm pretty pumped about it. It's a $2.7 million raise total. So we're almost done raising for that and then we'll buy and roll out. Next week we're actually going up, me and Ben and Trey are going up to Bastrop. We're meeting our bank. We're meeting our engineer. We're meeting our GC. We're all gonna go out, walk the property.

Yeah, it'll be great.

Clayton Hepler (23:55)
Dude, I'm talking about these

finding deals. You're closing these massive, massive, I got fun. Yeah, buy for 60, sell for like 120. You're like, dude, buy for,

Justin Piche (24:04)
Yeah, but those are great. mean,

it's multiple, there's a million ways to make money in this business, guys. There's so many ways. There's so many ways.

Clayton Hepler (24:10)
Yeah, you're crushing

it. You're crushing it, man. I love what you're doing. So I think that really top of mind for me last is getting our team using AI. And this is like a very, like, look, what do mean by that? We are doing weekly operational meetings with our team to push AI. It's like,

Justin Piche (24:22)
Yeah, yeah.

Clayton Hepler (24:33)
It's like everyone on a team that's not like imagine if you use AI you're like wearing a red shirt and if you're not wearing a red shirt like you get publicly shamed. I say that kind of tongue in cheek but we are really pushing this in our org. I think it's going to make every one of our businesses highly net profitable. And it allows us to build better companies with higher net profit. The interesting thing will be sales.

We are building a and I actually showed this to you right, but we're building an internal sales trainer for our team in Oregon general and in in Greater market probably just deal engine but greater market for helping people get better at sales Because still do that is the I mean you you know, you and I were talking about earlier in the call that is the Difference-maker at this point. It's truly sales, right? How can I get from an 8 % to a 12 % close rate?

That's a 50 % increase in the amount of contracts I can do per month. And that takes me from the margins that I have to quadrupling those margins. So yeah.

Justin Piche (25:34)
Yeah, I agree 100%. I we're, I'm obviously a very heavy AI user. think a lot of us are, Cloud Cowork is doing a ton of stuff right now. I've got my open clause set up, building them side by side. I've released agents to key members of my team that have.

you know, access to our databases and our dashboards and our emails and like things like that. Yeah, there's people might say, there's all these concerns about security. Yeah, of course there are, right? You've got to set this stuff up the right way. And there's obviously vulnerabilities that you might not see or might not figure out, but it's just so outrageously capable. I am doing things every day that are saving me tens of thousands of dollars. Like, like they may, they may be things that I just wouldn't do otherwise.

Clayton Hepler (26:18)
Could you?

Justin Piche (26:21)
but I can do them using these tools. And if I were to do them outside of using these tools, it would be outrageously more expensive. You always do an example or something I was about to ask?

Clayton Hepler (26:30)
Yep. Yep. Yeah. Yeah.

I was gonna say I was gonna say yeah, please.

Justin Piche (26:35)
Yeah, like anything related to legal document review, that like huge for utilizing AI. Like we start these funds, right? And you gotta pay, I mean, you gotta pay an attorney to set up these funds. And the reason why you have to pay an attorney is because when you're millions of dollars from people and something goes wrong.

if you drafted up documents yourself with AI, you have no fallback. There's no backstop. And AI is not always right. mean, it does things a lot of times that are just totally incorrect. You have to hire an attorney. But you can give them something that you want. can read their contracts way faster than you would otherwise and explain in plain language what exactly you're trying to do and get the right amendments, changes, edits to make sure that it actually meets your goals. That's the kind of...

one example, you can set up internal contracts or agreements or memorandums or operating agreements, whatever you want that aren't necessarily as important like fund docs and subscription docs in a private placement memorandum that you definitely need an attorney for. You can do all those things and it's just exceptional results. Modeling, financial modeling, Excel modeling, deal modeling. I mean, I did.

Clayton Hepler (27:43)
Yep. Have you built out

your, here's a question. Have you built out your 13 week cash flow forecast for these? Yeah.

Justin Piche (27:50)
I haven't,

dude, I haven't. Wow, yeah. Thank you. I'm gonna go do that. I'm gonna do that, for sure. But no, I haven't done it using AI yet.

Clayton Hepler (27:56)
So, so what

it was really interesting. we, so we were thinking about hiring a CFO. Okay. A fractional CFO to look in like, you know, we, want to like one of the big things that I want to attract is the compounded annual growth rate of my equity in my org. So like every month I want to see like, okay, so what's my CAGR on my, individual equity, right? So if the business one,

you know, business no longer exists tomorrow, how much equity do I have? And what's my keger on it? So we were thinking about hiring the CFO and you know, he's 150 bucks an hour. And, know, 30 week cash flow forecast, you know, a bunch of other nuances, kegers, keger calculators, things like that. And I was like, wait a second. Like this, this is actually the true thing that

AI can do none of this like you shouldn't hire a CFO right in this case, I'm not saying you should or shouldn't that's your business's decision. That's your business's decision. But in this case, provided Yeah, exactly. That's right.

Justin Piche (28:54)
yeah.

Right.

Not for that thing, not for that thing, not for financial

forecasting at this point. Like you can do it with AI, right? Yeah, that's a great use case.

Clayton Hepler (29:08)
Correct.

So we're

gonna do a 13 week cash flow forecast, camp internal CAGR that our team puts together every month so I know how much equity I have and we'll go from there. So, saves me 15K dude.

Justin Piche (29:26)
That's awesome. Yeah.

Oh yeah, for sure. mean, so one of the other deals I'm working on is just the big one, the Purgatory deal that I'm working on with Buck. I do have some interesting updates on that deal, and we'll just talk about them a little bit. recap for anybody who doesn't know.

Clayton Hepler (29:39)
Yes, yes, yes.

Yeah, I would love to.

Justin Piche (29:48)
working on a project called the village at silver pick it's adjacent to Purgatory ski resort 86 acres 70 ish 71 with resort land use designation 12 units per acre maximum density another and then another 60 acres 15 of which we're purchasing

45 of which will be a joint venture with a neighbor that's zoned country tourist, which is one unit per three acres density. So that's 60 acres. We could put 20 single family home sites and then the 70 acres we could put, you know, up to 840 units, but obviously that's not feasible. So we're, we're targeting about 200 ish, 220 units of multifamily on that, the resort zoned parcel. So.

Buck and I have been under contract now for a year. It's been about a year. A couple hundred grand in on engineering and earnest money and all kinds of stuff.

We're supposed to get our first round of comments back from the county, Plata County today on our conceptual development plan. They were supposed to get it back to us about two months ago, but they're going through a new process. I had to pay like a retainer to the county for them to hire a third party compliance reviewer to review the project.

which is kind of a new, it's a new process. It's supposed to speed things up because La Plata County has a lot on their plate. They don't have a huge staff. And so, you know, if they don't hire this firm, then it just takes longer theoretically to get projects processed efficiently. So that's the idea behind it. I'm happy to pay a little bit of money to speed things up and things along. But it's, we're like, we're one of the first, we're like, I think we're the first developer to actually go through this process. So there's been a bit of a learning curve there.

But I mean, right now things are looking pretty dang good. We're working on a bunch of different things at the same time. You know, we have our rough unit count. We've gotten agency comments back. We're kind of understanding better the economics of the full phases of the project. We're talking, you know, we talked to the Colorado Department of Transportation regarding access. They've made it clear they're not going to grant any new driveway access, so we have to use the existing one. We're working on agreements with Durango.

Mountain Resorts or Mountain Capital Partners who's the owner of Durango Mountain Resorts for kind of like shared easements back and forth because they need one across our property, we need one across their property for a road. We did interestingly get neighbor comments so one of the things that they do when you get these big development approval kind of packages that the county's reviewing is they send out correspondence to anybody who's like within a certain vicinity, neighboring lots and all kinds of stuff.

And so for the longest time we didn't get any comments, but I think they left the, they left it open longer and we got, there's a, there's a unit, there's a, um, compound of, uh, townhomes, like pretty nice little townhomes. were built quite a long time ago, then they're a long time, uh, 41 total units. So 10 or 11 of them submitted comments to the county and they're not very good comments. You know, they're like, they're negative. Like they, don't see the project as something that they want. and I think what happened.

is maybe a couple folks kind of banded together and gave other people like a template of a response. don't know, because they all look really similar. All the responses are structured really similar. But like I get it, like I empathize, right? If you're a person who has bought like a nice condo, maybe it's worth 600, 800K, something like that, and you've owned it for 30 years, let's just say, and nothing's ever been built around you.

Like behind you is just beautiful mountainside, beautiful trees, animals, it's quiet, it's peaceful. There's no units, there's nothing developed there. There's nothing between you and the purgatory resort. And you have that, that's your reality for 30 years. And then somebody comes around and they're like, we're gonna put 200 units around you. And our property surrounds the parcel that all these townhomes are on. Like it's just these condo units, it surrounds it. Not on the roadside, but all around it.

Clayton Hepler (33:21)
Yeah.

my gosh, my gosh.

Justin Piche (33:47)
Like, of course you're gonna be a little bit frustrated and upset. Like, I get it. But, you know, a lot of the comments are things that they just maybe don't know yet, right? And things that aren't necessarily true. And so, we don't, we, one of the comments also was that the developer hasn't reached out to them. Like, we haven't reached out to them to talk to them about it. And that's something that Buck and I went back and forth on. Like, should we reach out to these people ahead of time? Like, talk to them about what we're trying to do.

And like the general advice from, you know, our planning consultant engineer, everybody was like, hey, there is actually a process in the county. Like you submit all this paperwork, you send it out and you have to schedule a neighbor comment review. And county officials are there at that meeting as well. Hearing the comments and you're there and you're able to talk and respond to the neighbors. And so we kind of both were like, okay, well, there's a natural, there's a process for that in this, in this application process where we.

We sit down with the neighbors and we discuss kind of their concerns and we discuss kind of some of the mitigations that we're working on with our project. And so, you know, it's kind of tough to hear that feedback because Buck and I are obviously like, you know, we were both, we were nice guys. trying to make, we're trying to make a beautiful product. And yeah, we want, obviously we wouldn't do this work if we weren't going to try to make money on it. It's a lot of work. mean, people, this is our job. This is what we do. But you know, it's kind of, they don't know who we are.

Clayton Hepler (34:55)
Yeah, yeah, yeah, yeah, yeah, yeah, yeah,

Justin Piche (35:09)
They don't know what we're trying to do. so some of the comments seemed a little mean, but you know, I'm not taking, I don't take anything, anything personal. So I'm looking forward to that opportunity whenever we schedule that to discuss with the neighbors. I think we have really good plans to help really drastically improve their property value. That's one of like the big things that I don't think the neighbor, mean, some of them don't care. Probably, you know, some of them would rather just have it shut down and don't want anything behind them. Again, I empathize with those folks. It's nice to have totally undeveloped land all around you.

That's beautiful. It's totally nice. I get it. You know, but the problem, it's, the only resort land use property bordering purgatory. It's like, it's the only, the only place in the county has designated for this type of development that touches purgatory. That's it. There's nowhere else. So if anything's going to happen, it's got to happen on this, on this parcel. So we'll see, we'll see how it

Justin Piche (35:59)
Hey guys, this is Justin interrupting your podcast just to say thanks for listening. Clay and I are catching up after I had my fourth child. We're talking deal funding, we're talking the future of land investing, we're talking AI, we're talking there's levels to this game. If you guys are getting value out of this, please ⁓ rate, review, subscribe, set your downloads to automatic. It brings a lot of value to us to know that we're giving value to you. So now back to your regularly scheduled programming.

Justin Piche (36:29)
It's kind of interesting.

Clayton Hepler (36:30)
Dude, mean

first of all, that is a, I mean a once in a lifetime opportunity. You better, are you gonna have your own condo there?

Justin Piche (36:34)
Yeah.

I hope so. I hope to have one of the single family home sites maybe. I have more to share this. This will be interesting for the listeners and for you. So I met with a private equity firm last week in Houston. One of my partners, Trey, really well connected, good friends with some guys at a company called Marble Capital. And they're a Houston based investment firm. I think they primarily

Place preferred equity in large multifamily deals. They've got some Endowments like university endowments and things like that that invest with them. They have about 2.5 billion under management They've done hundreds of these hundred million dollar fifty million dollar plus multifamily deals So he set up a meeting, you know Because we had sent him something on a deck on like our backdrop deal and kind of like teased for silver for this for this silver pick deal and so I spent a lot of time developing a model for

Silver pick. And I'm making a ton of, for Lepada, for Purgatory, whatever you want to call it, and I'm making a ton of assumptions because we haven't, you we're not through our CDP. We don't even know what our final road design, our final lock count, all these things are. So I can't like put it out to bid and like get prices on any of stuff. I have to use big rules of thumb for mountain development. How much dollars per linear foot is this road going to cost? These utilities going to cost, you know, how much of this road do we have to put in each phase so that it attributes some amount of construction cost to each phase?

There's so many assumptions I've got to make. But basically what I kind of have figured out the way I think we're going to approach this is six phases over five to 10 years in each phase. So we'll do one do one equity raise on the front side. That equity raise will buy the property. It'll have bring enough capital to do phase one engineering. So after the CDP approval, we do our preliminary engineering to prove this is possible. But then we have to actually engineer like

exact specifications for the road, for the pad sites, for the utilities, et cetera. So that'll cost another 400, 500 grand or whatever. So you gotta raise money for that. We gotta raise money for holding costs. We gotta raise money for the A and D loan, the development loan essentially for phase one for actually building the infrastructure, the down payment for all that. So we gotta raise all that big tranche up front. So we raise that one tranche of money, seller financing, we're actually buying the property seller financing, so we'll have a note on it.

Clayton Hepler (38:27)
Yep.

Justin Piche (38:52)
When the A &D loan, when we get the preliminary engineering back, our preliminary plat back and we're able to start work, we line up our contractors, et cetera, then we get an A &D loan alongside it to build out all the infrastructure. And then once we build it all out, we get our final plat, we sell the pads or we're JVing with builders to build their vertical or we're disbuilding, right? We're paying off the A &D loan, we're returning some capital or some pref or whatever to our investors.

and plus some capital to go into the next phase. So the goal is just a one-time raise. Raise up front and then use pad sales from each sale to then roll into each subsequent phase. And so the first A &D loan is probably gonna be somewhere in the $6 million range. And then each subsequent phase will probably be close to that, probably less than that, but the first one's probably the biggest one because we have to build some access places and it's a big phase.

But we're talking like each phase is gonna have like a two and a half to $6 million loan and there's six of them, right? Well, it's a big project for us, it's huge. For me, it's the biggest one I've ever worked on, right? And for any land investor listening, they're probably like, yeah, that's big project. You're about $20 million worth of like A &D loans, like maybe 25, $30 million worth of construction over the life of a project. Yeah, that's huge. It feels huge to me too. Well, so I'm talking about the deal with this guy, one of the...

Clayton Hepler (39:50)
Big project.

Yep. Yep.

Justin Piche (40:11)
managing partners and founders, there's three of them, of this firm, this private equity firm. And he's got his analysts on the call. He's got MBAs from Harvard and Penn and all these places. There's like four five of these guys. They're obviously really smart guys that are working for this private equity firm on there. And he's like, the project's just a little small. It's like the project's just a little small for us. And then he talks to one of his...

NLSC's like, could we do a six million dollar loan? What's our minimum? We couldn't do anything less than like 10, 15, right? And they're talking back and forth. Anyway, I say all that kind of tongue in cheek to say there are levels to this game. And we like even this project that I'm working on that I feel like is enormous is peanuts compared to projects that other people are working on.

Clayton Hepler (40:53)
Yeah, man.

Yeah. Yeah. Yeah.

Justin Piche (41:05)
Comparison is a thief of joy. I'm not saying that I want to be working on that type of stuff I like where we're playing kind of sub-institutional. You can do it yourself with a small team You can get the expertise yourself. You don't have to hire a bunch of you 350k a year like quant and the A's guys type of stuff But there are levels to this game. I thought it was I thought it was pretty pretty funny, but it was awesome meeting them I mean they were incredible and the guy who I met his name is Adam Adam Allen. I mean dude is just sharp

Clayton Hepler (41:19)
Yeah, yes, yes.

Justin Piche (41:31)
Smart, he's got four kids. He's built something incredible. Just super, super impressive, super nice guy. So I was really just happy to meet him and talk. He did say, one of the things he said is, if you can line up enough kind of project flow to get like 30 million a year of loans placed, that's probably something we could talk about. Because none of our projects require that big of a loan. But I mean, the idea of lining up enough projects to get 30 million in loans a year is.

kind of a really daunting task. mean, I'd love to be able to do that. We're working on it, but that's that's huge. I don't know. We'll see.

Clayton Hepler (42:06)
Dude,

you know, I think it's always those are always good frame frame of reference because you like you're like, dude, I'm the king of my pond. And then you go to a different pond. You're like, right, right. But that's like really healthy. Right.

Justin Piche (42:13)
Yeah, you're like, you're like, I'm not even, I'm not even like a tadpole in this pond. Like I, I

can't even swim in this pond. I will never swim in this pond. Yeah.

Clayton Hepler (42:22)
Yeah, man, mean, that's awesome. So guys, let's wrap it up for today. think we got some great, right? So at the end of the podcast, we all know, please rate, review, subscribe. When you review, make sure you say, this was my favorite thing that Clay talked about today. Justin was okay. I'm just kidding. As always, Justin, any last minute thoughts, man?

Justin Piche (42:27)
Let's wrap it up.

You

Clayton Hepler (42:43)
we hop off here.

Justin Piche (42:44)
No, great, great catching up. We'll be back next week. Let's get to something next week. Let's get back to our cadence. And as usual, just appreciate everybody is listening with us. We've kind of, we were super rigid the first year of doing this every week, trying to get it released on the same day. know, businesses have grown, families have grown, and it's still something we want to keep doing and prioritizing. But, you know, give us a little grace if we're not out every week at the exact same time. We're going to kind of do this as we...

Clayton Hepler (43:02)
Yeah.

Justin Piche (43:12)
as we find the time and try to add value to y'all's businesses and lives. And it brings a lot of value to us each week, just talking with each other, reconnecting our business.

Clayton Hepler (43:21)
Yeah, man. I appreciate you and hope Miss Mabel is crushing it. And please, might give my best to your wife and say, hey, you know, I know this guy always puts the worst time in the schedule, but appreciate it. All right, brother. Guys, we'll see you next week on the next episode of the Ground Game Podcast. And we always appreciate you. Don't forget, rate, review, and subscribe, and we'll see you then.

Justin Piche (43:30)
I I will.

I ⁓ will.

Hey guys.