Episode 77: Mobile Homes, Double Closes & Lean Teams

Clay Hepler (00:12)
Hello and welcome to the number one land investing podcast in America, the Ground Game Podcast. I'm here with my co host who I haven't seen in so long, Mr. Justin Piche And this is Clay Hepler. How are we doing, Justin?

Justin Piche (00:30)
Hey, we are we're doing. We're doing. It's been a minute since we've been back on here. So for all of our faithful listeners, I got a few texts of like, hey, did you guys stop recording? The answer is no. It's just really busy. I mean, like, life is life is busy. It's been hard to coordinate time to meet up with Clay and actually record this. We had a time last week, but I got got sick and I'm still kind of getting over it. You've been traveling all over. We had summer vacation and then the kids started school again.

Man, it's just been tough to coordinate, but we're doing okay. We're doing all right. My son turns five next week, so we got his fifth birthday, fifth birthday party coming up this weekend, which is exciting. And my youngest is now six months and starting to crawl, which is a whole new world. We gotta re baby proof our house, I guess. So life is full, life is busy, life is exhausting.

Clay Hepler (01:26)
Ha ha.

Justin Piche (01:26)
I'm look

I'm looking forward to one day in the future when I can sleep, you know, more than three to four hours without being interrupted. That'll be nice. Yeah.

Clay Hepler (01:35)
Yeah.

Justin Piche (01:36)
Yeah. Things are okay. Things are okay.

How about you?

Clay Hepler (01:39)
I I I

know, you know, you and I were talking about before this call.

We were talking about sort of the state of the market, right? And what what's going on right now in land. And I'm not gonna come on and poo-poo. I'm gonna share reality. and I think it's it's within a context that I've been thinking about. So

There's been three distinct eras of land flipping that I know of, right?

there's

three distinct eras that that I've sort of thought about, right? And and the reason why I'm so

kind of plugged in, dude, is like I'm operating a community and I'm operating a business. And so I I have to constantly be evaluating what's working, what's not. So before 2019, information was the edge. People just didn't know what their lots were worth. And there was no really value. There wasn't a big exodus from the cities in COVID, which gave

After 2020, a huge tailwind. I mean, I think you were you experienced this from 2020 to 2023-ish. There's a massive tailwind. People are leaving big cities, right? and it it artificially propped up land prices. Now, when I say artificially, I think you and I could agree that like land prices are still going up in some locations, but in a lot of places they're holding steady or getting discounted a little bit, right? So

The where people really crushed it was hey, go to the Sun Belt, find a piece of land, flip it, you're gonna sell, basically, right?

Justin Piche (03:26)
Yeah, a hundred percent.

Clay Hepler (03:28)
And then 2024, it's been a slow slide into getting better at being an investor. And getting better was our way. I think you can agree, Justin, because you were running a massive op operation. It was a way to

Beat the competition. Just getting better is I can beat the competition. I could still catch this market. It was kind of stagnating a little bit, but it wasn't really stagnating. and the value add, the way that we got better at that era was hey, I'm just better at sales, I'm better at marketing. That's when a lot of people were doing the you know, the Callan Faulkners, texting, building out your CRMs, all these things that gave you the edge. Now we're sitting here today at the end of Q3.

In 2026. And I think a lot of people are experiencing a couple of different factors, which we'll cover today. markets that's not moving as quickly, offers maybe not getting accepted. And what I hope to do on this call is kind of unpack what I'm seeing success, maybe what you're seeing successful, maybe the things that we're not seeing. So this is kind of a general market update. I can go more into data that I'm seeing Justin about specifically about.

the general land market,

Justin Piche (04:49)
Yeah. No, I I'm with you. I I agree with that. I mean, we we can we had every year from twenty twenty one when I started land investing until twenty twenty five was like just an upward trajectory. This is the first year where we've taken a step back in terms of profit, revenue, sales, everything. and so something has shifted because we've been adjusting with the times. I mean we've we've

changed our marketing strategy with the times. We've changed our team with the times. We've changed the types of properties that we've targeted with the times. and we're in a position now where we've got just a lot of inventory. And that's that's kind of like the big challenge. A lot of inventory is a lot of drag, right? It's a lot of unproductive capital that's tied up in land that has an inherent value. it's just when you can't find a buyer for it and nobody's willing to give you that capital you need to keep running and growing your business.

Your options become a little bit more limited. So we're seeing this across both flips and developments. And, you know, I could point to a bunch of external things that I think are driving this. Obviously, interest rates, general pessimism in the real estate market. those things are are are have huge impacts on people's ability and desire to buy an extra piece of land or a different place to live. But

Yeah, I that's kind of what I'm seeing right now is just slowness all around.

Justin Piche (06:22)
it's just it's just a challenging time when when properties aren't moving. I mean, yeah, we've that's really all all there is all there is to it.

Clay Hepler (06:30)
So one I I think that it's important to look generally at what was causing the demand so that we can then be strategic about how we actually continue to build this business. Because if if it takes longer for us to sell a parcel of land in general, right? what does that actually mean to our our business? What does it mean to our business model?

And most importantly, right, what's the two, three, four, five year outlook on this business model? I think that in general builders are not buying as much dirt because they can't sell it. I think in general, people are buying less recreational land because they can't sell it as easily. there is an opportunity though that I think is is clear as day and it's

becoming more and more popular, which we'll talk about later. But

What is actually working today is not what was working a year ago, two, three years ago. what do you see working today in your business?

Justin Piche (07:38)
I mean the the deals that have the most promise are all in higher growth areas, right? Places where people still do want to move. And you know, that's been a big shift in the way that we did marketing, which was with a huge team, we were doing very general, large shotgun type marketing. And it worked because there were enough, there was enough demand even in the low demand areas to get a good deal on a piece of land and move it. You kind of had

two in two advantages. One, information arbitrage and two, market demand for kind of more rural parcels that were outside of major metros, on the outskirts, people wanting to get out into the country, so on and so forth. And interest rates, you know, were creeping up, but they weren't where they are right now. And so buying a piece of land with a loan or s you know, a building a getting a home construction loan, things like that, we're still

feasible or reasonable for people. I think now we're at a point where many people are content with their three percent, four percent, five percent home mortgages. And the idea of getting a construction loan at seven and a half percent is just untenable because the cost is substantially higher. I mean, in some cases double what you would pay monthly for your existing mortgage for the exact same value and size of a loan that you currently have. And that

You know, when people's income isn't growing particularly fast and everything has become more expensive, those are real choices that people have to make. the places that are moving the best right now are are the are places that are close to population centers but still allow for affordable housing units to go up on them, like mobile homes, manufactured housing. That's kind of the area where we're still seeing units move, and there's still demand because people can

afford the land with a cheaper home build and be content to live there with with without having to spend hundreds of thousands of dollars on a construction loan, right? They can buy a mobile home or manufactured housing with a hundred thousand, two hundred thousand dollar loan and be all in on their property for three hundred grand, you know, three hundred and fifty grand or less and have a home and acreage to spread out.

Clay Hepler (09:51)
Yep. I would agree with all of that. I think what's interesting is that I was in a conversation with one of a business coach of mine, and he was talking about how he is going all in on mobile homes. And I literally hate to be the guy that's like banging the drum that everyone else is banging because it's like, my gosh. But mobile homes are the opportunity that exists in our space right now.

Now, are we still selling premium estate lots? Yes. Are we selling cheap dirt? Yes. We're selling cheap dirt. But we are the anything that's in the middle is where we have the most issue. The middle is where I think it's gonna be more harder and harder to actually dispose of, right? Because in an economy that's tightening,

The type of land that you target to sell is really important because there are still opportunities with bargains, but you have to sell on the front end to meet the demands of the market. what do I mean by that? You got to get the deal under contract at a good price. And sellers, because there are still a lot of people reaching out to them, have these expectations, right? That their land is worth more than it is.

And so, you know, imagine, you know, you have a a piece of prime real estate, right? And you're in the middle of New York City or whatever, and someone comes up to your door every day and knocks and says, Would you sell your piece of real estate? Or twice a day or three times a day, right? You look around you and the sky is falling and you look around you and i interest rates are going up and the stock market's falling. But every day you have people knocking on your door.

Do you think your piece of real estate is worth a lot of money if you have people knocking on your door every day?

Justin Piche (11:44)
Yeah.

man, everybody wants my property. It's gotta be worth a lot.

Clay Hepler (11:47)
Exactly.

Exactly. And so that's the that's the issue. And so it's our role and job as salespeople and organizations to educate the seller, right? On these on these transactions. it's even more important nowadays, I I think we we can agree to get good at market selection too, man. Like getting really good and understanding which markets actually move is critically important.

Justin Piche (12:12)
Yeah. No, I agree. I mean, honestly, we've had our best lead flow that we've had in a long time over the last kind of two months.

Tons of leads, too many to handle in a lot of cases. and we are like on the precipice. It's it's crazy. It's it's it's almost nonsensical on the precipice of closing so many deals. And it's just they just all always seem to be slightly, you know, slightly out of reach. And I think we've moved, you know, we moved back in the good old days, if you will, of land investing, it was so easy to find a deal that you could just buy outright and flip.

You know, you don't need to worry about a double close because you could get a discount to market that was sufficient for you to take title, market list, and sell. I think now we're in a stage where it's been challenging for us to find a deal that we actually legitimately want to take him in inventory and then flip. Part of that is because the margins are a little bit smaller, then they keep kind of inching down, and which lean lends it lends, you know, the business more towards a double close style model. and then the other

Is that we're having to hold things a lot longer. Even in the good markets. Okay. Even in markets where there's demand, there's still a longer hold time than there would have been, call it a year and a half ago, two years ago, than there is today. And so those are the two things that are that make it, you know, it's

Clay Hepler (13:34)
Yeah.

Justin Piche (13:34)
it's a tough business decision to decide should I buy this property for $100,000 when I know that I can sell it for $160 or $170 or $180,000? Like

Right now, that'd be a pretty good deal. Like I would take that deal most days. But what if I told you you couldn't sell it for twelve months? Now do you want to buy it? I don't know. You know, those are the types of decisions we have to make every day on these leads, which lends our cell, you know, lends it lends itself much more to these double close style contracts where we get more time, we get time to market and do our due diligence and work to find a buyer. But even in some of these faster moving markets, if you will, where sell through rate is, you know, a hundred percent in a year.

it's still challenging, you know. It that's not a good enough a lot of times to ensure that you're gonna get a property moved in in six months.

Clay Hepler (14:23)
Yeah, I I would say yes. I would say the the way that we look at buying dirt, it all comes down to what does our investors get. So, you know, your ability to acquire land at this time like at this time in the cycle comes down to what can I get my money for and what can my profits generate. I think that that's a very important frame. We've been

Going through all of our current deals and putting them into pro forma for every single deal, estimated timelines, because we have a fund now, and the fund is doing very well. but the pro forma tells us what we can buy it for and what timeline we have to hit. And we're be we're we're decreasing the amount of time, like or decreasing the aggressiveness on how we say, hey, we're gonna sell it in 10 months. Maybe it's gonna be 11 or 12, right? Or

And and that's all we're doing. I think that one thing is really important for the listeners to know is like like you might be hearing Justin and I and saying, hey man, like it's harder out here. This is just a part of the cycle. It sucks, but like land was like this a decade ago or or 15 years ago, right? And it's gonna come back and be more popular again, right? The type of land that you're targeting just has to shift. And the type of things that you put on it just has to shift.

But I don't know about you, man, but I'm still like very excited and bullish on land investing in general. It just comes down to what am I actually targeting and how do I scale the business to hit my financial goals, which I think brings us to our next point, right? This is not the time. This is at least for me and I love your side. This is not the time to scale, scale, scale. This is the time that I talked, told my team, I said, look, here's our net profit goal for next year. Net profit. That's all I care about.

So we don't have to scale team. We get more efficient. We go after better types of properties. We hope we we wait, we target, we spend the time on filtering on the front end and spend the time adding 50 to 100 to 200K per deal by developing it out, actually putting mobile homes on this. We could talk about that later. But we're starting to do that. We're doing we're dropping 12 mobile homes on locks over the next two, three months, which means we have to do fewer deals and we make more money per deal. So

Yeah. I I don't I'm just kinda speaking in generality, do you have any follow ups from that dude or like what

Justin Piche (16:48)
Yeah, I mean, maybe

can go into that a little bit because, you know, it's obviously something that we thought about a bunch of times. We've never actually dropped a mobile home on a lot. I mean, we've done all the improvements to get it ready for somebody to drop a mobile home on a lot. But what what does that process look like today? I mean, you're not a mobile home dealer, but obviously you're working with somebody who is. Are you getting financing through them to get the mobile home and then selling it and the person is financing it the whole package themselves? Like how is that all working?

Clay Hepler (17:17)
So we have a financing partner that I'm that we use, like a hard money person that we l use to acquire mobile homes, right? and the terms are, you know, aggressive, but they're not they're not bad. and I I will say we we have not gone full cycle on a development deal yet, but we're s we've put mobile homes on parcels and sold them. But we have a lot more that we're doing on actual development deals.

All we look at, man, is a in a profit per deal. There's no mystery. The only the only difficult thing that we've found is the project management, finding the right people. But if you have a PM in place, which you do, adding mobile homes to parcels is a way to increase your profit per deal. I'll give you an example. We have this deal that we're buying, it's about 10 acres, and we're gonna cut it up into about eight tracks.

We're gonna drop mobile homes on each of the tracks. Originally we thought we could double our money. Now we think we're gonna make between 400 and $500,000 in net profit. Right? After expenses, it might be a little bit lower in terms of like interest expenses. So we might come at 350 to 400 in net. And it's it's gonna take probably a little bit longer, a couple months longer to actually sell through. But I would rather do one of those deals.

Then try to make it up and do three to five more. Now I have a project management team as you do too, so it's a little easier for us to just say that. Right? But

Does that answer your question? Or do you have follow up questions?

Justin Piche (18:51)
Yeah, I mean a

a a little bit. A little bit. It's it it's a little more nuanced, I think, to finding the land that you can actually do that on. Splitting a ten acre into eight single, you know, individual home sites is typically like a full plat engineering, paved

Clay Hepler (19:04)
Yes.

Justin Piche (19:05)
road, like the whole nine yards, the tension on the property. So I mean where where are you guys at in the development on this one?

Clay Hepler (19:13)
It has road frontage on all sides. So

Justin Piche (19:16)
Okay.

Clay Hepler (19:17)
we we're getting a track that has road frontage, so we don't have to put in a road. We have to extend

Justin Piche (19:21)
That's great. So it's literally

a box with road frontage on every side.

Clay Hepler (19:25)
No it's it's an L shape. So it's yeah, right. So we're

Justin Piche (19:29)
Okay, two side yeah, yeah, two side road footage.

Clay Hepler (19:31)
doing like smaller lots all the way down and then we're doing two th long and skinny lots in the middle.

Justin Piche (19:37)
Yeah. Yeah. Th I mean

Clay Hepler (19:38)
So

Justin Piche (19:38)
those are great if you can find those types of properties. Those are fantastic.

Clay Hepler (19:41)
Yeah, they're great. They're great.

Justin Piche (19:43)
Those are the ones we all look for.

Clay Hepler (19:45)
Yes.

Justin Piche (19:48)
Yeah. I I think that's where

Clay Hepler (19:48)
Yeah, I mean what I

Justin Piche (19:49)
we I I just to I like to add on your point. I think that's kind of what you people have to be looking for right now is what are those opportunities to add revenue to a deal that you can actually do? Because holding vacant land, unimproved vacant land, and trying to sell it, flip it into the market is just it's not a particularly great strategy right now. If you're super duper lean, if you're an incredibly lean team, it's you and a couple VAs, you've got good lead flow, you could probably keep doing

the age old type stuff and not be too impacted because you don't need much money to run that team. But if you've got a big team and you got a lot of overhead, like you've got to do something more. I think that's kind of where we're at. And so in w when we talked earlier this year, I had, you know, I had to I was downsizing my team from like twenty something people down. Now I have 10 on the team. And we've had we're having better lead flow than we've ever had, which is fantastic. You know, now we're you got to figure out and work on the conversion problem.

Right? How do you convert those leads into actual contracts and then close them and sell them? So that's kind of where we're.

Clay Hepler (20:48)
What do you think is your biggest

your biggest problem with converting them?

Justin Piche (20:53)
Man, I wish I knew, you know? I wish I knew. I

Clay Hepler (20:58)
Right.

Justin Piche (20:59)
think that I think there's a big challenge with pitching long term contracts right now. We're a little gun shy with short contracts because we don't want to take many of these in inventory. The margins are too thin, capital too expensive, and buying something in cash isn't, you know, isn't the move right now for for my business. And so educating, that's that's probably the biggest thing, is like educating.

The closer's educating the sellers. I had a talk this morning with one of my closers. I'm like, we need to be explaining to these sellers the state of the market and why a sale to us in four to six months beats putting on the market for 12 to 18 plus. Because that's what we're offering them, right? We're we're offering them a way to sell their property in a reasonable amount of time. And demanding we close in three months with a bunch of money hard is just like not a viable.

you know, option for for us right now.

Clay Hepler (21:56)
Yeah. I would agree with that completely. I think that those types of sellers, the double I think the double close is really important to have. That that that is like the move in twenty I was actually talking with Ajay. Hope you listen his buddy. and he says a lot of his clients are doing double close.

Justin Piche (22:16)
Yeah. Yeah. I mean it I mean that

Clay Hepler (22:18)
Less capital

risk and you can scale that. And again, you don't need that much to make good net profit. What I what the whole thesis of what I'm saying here, dude, is this build a business that you're taking home 400, 500, three-quarters of a million dollars right now. Don't build the business that you're scaling and crushing net margins. If you have a team of five, six, seven people, a couple of VAs, maybe one or two US-based people, right? And you're scaling.

or you're you you know you're good on your net profits, you're good on your underwriting. There's no reason why you can't take home that amount of cash if you have the right design. Like, let's just think about an a normal mobile home on land package deal, right? That we're looking at. We're we're looking to make 50k, 40k per deal. If we make 50k per deal, we I do a deal a month, right? A single deal a month. I do 600k a year. I only need maybe a project manager VA, maybe another VA.

That's it's solid. My maybe my monthly burn is six thousand to ten thousand a month. I do really, really well. Those are the types of businesses I think Justin really work in 2026. This the small, nimble team, but the team that's like, you know, you're used to doing so much volume, right? And have so much team. So you feel it. You're like, well, dude, I what

We're we get so many leads, but we can't convert them. It's like, well, there could be a sales process issue there, but also, you know, you might just have too many people for the state of where the market

Justin Piche (23:53)
I know.

Clay Hepler (23:54)
is. And and and you might just like need to, you know, do projects like more complex projects, bro. You're like an engineer. You have all these amazing skills, project management, understanding costs, like under dude, you're talking about two months of underwriting a deal. I would like blow my brains out if I did that.

Justin Piche (24:10)
Ha ha.

Clay Hepler (24:11)
Right.

Y right? Like you have that skill set and I think that that you know, you could use it for the mobile homes on land deals.

Justin Piche (24:19)
Yeah. That's a good thought. I tend to agree.

I tend to agree. I think I think, you know, last time we talked, getting like a team of six, seven, eight, nine, ten and being more nimble was the right move. And I think it might even be smaller. It might even be an even more nimble team, you know, in this market. Reduce overhead, ride the ride out the slowness in the market, especially when you got a lot of inventory like I do. there's a lot of dollars just chilling, locked up in that land that will sell eventually, right? When? I don't know.

How do we make itself faster? I don't know, other than potentially adding more value to it. so we're throwing around a lot of ideas right now. yeah, it consumes a ton of my mental energies trying to figure out what exactly are the next steps that I need to take here. I'm not bullish on land investing right now. I think long term I am. I still think there's a ton of value in, especially in development and

Bringing

subdivisions to reality. And I really enjoy like the larger, the larger deals, the long-term vision, the longer term kind of consistent revenue that they have the p the ability to produce. I think I'm a little bearish on land flipping right now.

Clay Hepler (25:36)
Tell me about that.

Justin Piche (25:38)
yeah, I just when you get used to a certain style of business and a certain demand profile.

And you have a lot of success and you scale. It's it's kind of sucks to take a step back, you know? It's it it feels like I don't want to call it a failure. It doesn't necessarily feel like a failure, but it certainly feels like a but when you look at a graph of how somebody grows a business or grows a revenue, it doesn't ever look like this, right? I mean it's like this and this and this and this and like slowly up over time. And so I've kind of taken that

You know, that principle in stride saying, maybe this is just the year where we where we restructure again, right? Where we rebuild from a more efficient standpoint, where we target parter value add deals because we have the capability of doing them and we stop targeting as many of the, you know, bulk marketing flip type deals. And we've already taken strides towards towards that. we we certainly have.

Hey guys, thanks for listening to the Ground Game Podcast. Clay and I are back this week to talk about the current state of the market and how we think you need to structure your team, how you need to be disciplined to succeed. if you got value out of this podcast, please rate, review, subscribe, leave us a comment. We love reading them. Now back to your regularly scheduled programming.

it could just be too early to tell. I mean, I I literally made a big business change in July, right? June, July time frame. I totally restructured the business. And and a lot of the deals that we're getting right now that we're actually getting under contract there, they've been in the pipeline for three months. There's not a ton of deals where we get a lead and we close it, you know, in a week or two. Most of them are we get a lead and then

Two months later, after continued conversations and follow-ups and submitting an offer and calling them back and not them not answering for a month and then they respond to a text and then we re-engage them and then we get it signed. It's like three, four months later, we have the contract and we can start moving forward. And so, you know, we we we struggle with leads earlier in the year. there's a lot more in our pipeline now that are active and and in negotiations. I mean, literally, I was talking to my team this morning, we have a daily stand-up.

Each morning. I talking to my my acquisitions manager, and I was just like, How many deals do you have right now, like in active negotiations that you think could we could get signed? She said she's got 12 deals that she sent a contract out in the last like week and a half that are engaged. They already agreed verbally on price. It's just a matter of getting the contract terms accepted. They all have.

Clay Hepler (28:12)
What do

you think is preventing that from happening? That that that so that's

Justin Piche (28:15)
I know man.

Clay Hepler (28:16)
the honest thing. Like that's like is it credibility? Is it sales process?

Justin Piche (28:20)
It can't it can't be credibility.

Yeah. If sales process is a likely candidate. Terms, you know, the timeline.

Timeline is a big is a big kind of thing for people. Most people want to be done with it, right? They're like, why can't you close in forty five days? I mean, and the honest answer is because your property's only worth three hundred and I'm offering you two fifty and like that's not enough margin for me to close in thirty days. But I don't you know, I don't wanna say I don't wanna say that.

Clay Hepler (28:49)
Yeah, dude. I agree.

Let me show you let me show you something

if I can, about the ideal land business, 'cause I've been thinking a lot about this. I know we talked about this in the past, but let me just show this for the listeners and I could talk about this,

you know, can you see this?

Justin Piche (29:06)
I can. Yeah. I we never shared screen in one of our podcasts. So maybe the somebody's watching the video they can actually see this. So I'm seeing the five

Clay Hepler (29:12)
Okay, so bas

Justin Piche (29:13)
the five year path and what the gross profit and net margins look like on that five year path.

Clay Hepler (29:20)
So you scaled way faster than this, right? You

Justin Piche (29:24)
Yes.

Clay Hepler (29:24)
scaled way faster than this. And so did I. But that costs us net profit.

So, my whole thing is for those that are listening to this, there's a year one, two, three, four, five. Year one's 100K to 250, 2 is 250 to 750, year three is five to one, year four is one point five to two point five, year five is two point five to four. Now, Justin, if you it could be even more, but if you were to have gone this path and you maintained a lot of equity, like obviously you went faster because you had more money to start with. Right? But

You know, you look at this path, you're like, this doesn't seem like this seems achievable, right? And then at fifty percent net, which is the most important thing, all of a sudden by year four, you're doing seven figures in net income. But when I look at this, it's like, how do you actually distribute this type of cash? This is how I think about it, right? So you get thirty percent of net to taxes, you got personal income. Your first year, you're not making a lot of personal income. You might take out some for personal investments, and then you put, you know, ten percent back into the business, right? After

You know, the the net income because you obviously your growth, your your other income is going into keeping the business going. Year two is th this is what it looks more like, right? You're starting to see your personal income go to six figures, your personal investment. But what happens if you scale quickly as you know this, you're like, dude, I'm going back. It's like, well, this is kind of the ideal structure of like how you scale it. I think would you agree with that? Or would would you say, hey, Clay, this is actually too slow or

Justin Piche (30:57)
No, I mean I like I

No, I I like this kind of thing. I think my my trajectory was more like year one, year three, year five, and now we've got to figure out where we're gonna come back and settle, you know, after your

Clay Hepler (31:18)
Right.

Justin Piche (31:19)
year five, you know. and it's it's interesting because I I have multiple businesses, right? I have I have the development side, the investment fund, which which are is doing fine. I mean it doesn't produce a bunch of income yet because I've a bunch of long-term projects, but that that side is is actually

Fine. It's just they're longer term deals that take a long time to pay out. But for for a pure kind of land flipping, minor subdivide, all in house type stuff, yeah. I mean, I feel like we went on a rocket ship. 2025 was incredible. I mean, it was such a good year for for me, for the business. And, you know, we went into twenty six with the same spending that we had in twenty twenty five. but you know, the sales and and the margins have just shrunk substantially.

Maybe that's kind of like the big thing. The expenses were really high for the first six months. margins shrank s considerably. We f we we reduced expenses in July, but I think we probably need a, you know, another earnest cut to try to figure out how do we get them down a little bit more. And maybe that's a team restructuring, you know, maybe that's a maybe that's a canceling some of the services and things that we use to get back onto this kind of track, preserving that margin.

Clay Hepler (32:28)
Well, dude, so look at year three, right? So this is what I'm talking. And by the way, like I this is from my webinar tonight. So I was like showing you. I I said I was gonna show you or wasn't, but like year three, you start to get to

Justin Piche (32:39)
I like it.

Clay Hepler (32:40)
so so right, like so this is the type of thing that I should have built, right? Because what I did was like I'm getting personal investments. So by the end of year five, if you do it right, you're at one point two or two point one to four point two.

You make an average of 113K a year to 225, obviously making more at the end, right? Most businesses don't even get profit. But the big thing is your personal investments get bigger. Right? So you can take money off the table, you can reinvest in your own deals. And let's just say like that that that starts to get really, really attractive. And that's not to say that you like if you're running this one man show or even your your team's leaner, like the one I'm gonna show you here.

Like this is what I think the best team is honestly, like you could argue TC plus PM, but if you get this right it and you have even higher net margin, you're you're at 200k to 225k per year, plus your investments go to 150 to 250 per year on average, dude. That starts to become like real massive wealth building, right? and then

A team at this level is as a CEO, you got an AM, maybe you have two AMs, right? You have a TC slash PM, you have a marketing person, right? who is handling your KPIs or handling your your your data, their optim their whole goal is getting more qualified leads in the system. And then you might have a dispo person, right? Which we can talk about that in a little bit, but

You really only need four to five people in this business to to to hit these net margins. You might need two AMs if you want, depending on what you're doing with cold calling. But this type of business, if we look at this here, what I say is this is how you actually you should actually do it. You should do three to five flips a month, right? And then if you want to add more net profit to the flips, dude, that's when you do the mobile home on land. Right? So your flips go from 20 to K to 40K to

50K each. And so then if you're doing that four per month, you're doing, you know, 200k a month on that. That's how you get to year five. And then you have your subdivided quarter, which gets you to a top line of two million. And the two million top line looks a lot easier when you're at 1.5 or you know, one to or two to to four million in gross profit and maintaining those net.

So the way we thought about it is we we also kind of looked at our business and I was like, dude, like where am I falling short? Like what what's my team structure? Like, why, why, why are some people succeeding, other people's not? I think it comes down to the quality of the people that you have on your team and scaling in that way, the systems that you have, and making sure that you're you're patiently doing this, right? Because it's kind of like I scaled my business like I was trying to stock pick.

And this is like the S P five hundred way of building your business that gives you more net profit and less headache. So that's what the five year path. So I thought that that was just relevant for this episode.

Justin Piche (35:56)
Yeah, I'm I I'm with ya. I I think you gotta be really disciplined in this market. You really do. And it's hard to make it's it's a lot easier to build a business this way than it is to scale back into it. Right? It's way easier to be really disciplined from the get go and and

And build slowly, methodically, and be really just disciplined as is the only word that's really coming to mind. versus going after the shiny objects and scaling the tools and the systems, building the huge team, sending out a ton of marketing. When things are good, things are great. You can make a lot of money that way. And I did, right? and then when things are tough, when things slow down, that overhead crushes you, right? It crushes your net margins.

You gotta see keep paying your team, man. If if deals aren't flowing, you still pay your team. You still gotta pay your software costs, you still gotta pay

Clay Hepler (36:44)
Yeah, that's right.

Justin Piche (36:45)
your marketing and data costs. Your s you know, those things don't go away. You just net margin gets crushed. Net margin is a residual. And so when top line drops, net margin drops the fastest.

Clay Hepler (36:59)
That's right. I love that man. It's like I don't know if you've ever read, I forget which one it is, Nassim Taleb. It might be fooled by randomness. I think you know he Nassim Taleb, who's a statistician and a former trader, who w wrote all these books about you know, investing and mental models. And he talks about how

The guys that get super rich really fast are the guys that trade on leverage. And these guys trade on leverage. And basically he when he was he was there, he tells this story. I think it might be fooled by randomness about this trader who was buying the big house and buying all the cars. And then he got this, you know, wife that was you know, bought he basically bought the wife, if you know what I mean. And

This trader felt really bad. The the one in the story, the anecdote. There are two traders, the one that's super wealthy, high flying, and then the one that's not. It's just a general trader that tries to scale throughout his life, right? You know, building wealth but not getting ridiculously wealthy. What ends up happening is this huge bond crash happens, and this one trader gets wiped out, right? But he was making so much money along the way. He made so much money, but then he lost it all, right? Because he was

Betting at all, right? The other trader was getting heckled for years. His, you know, his social circle was he was the poorest guy, but he ends up being ahead. Now, why is that? He had the patience and the discipline to just focus on the fundamentals. You're not gonna get the podcast, you know, shout out, I scaled from zero to right, like the the stuff that you and I both have done.

But the problem was, like, you know, I did it, I think you did it a little better than I did, but you know, the the net profit, like it starts to get eroded. And then all of a sudden you're you're caught with your pants down, you know, proverbially, because you you have such a high overhead and y w when you cut, you have to cut deep and hard and you lose good people. and so yeah.

Justin Piche (39:08)
No, I'm with you. I'm with ya. That is a that's a great example of kind of what happens in a lot of different different markets.

It's

not as sexy, right? It's not as sexy to to do the slow and steady approach, but it certainly pays a lot better when when the market turns down.

what do you think's gonna happen with the with the market, you know, over the next cause because in and let me say, like historically, s this has been a really good time to sell land. September, October, early November in our business has been a great time to sell land. February, March, April.

Early May has been a great time to sell land. That's when we've booked all of basically all most of most of our profits for the year. June, July, yeah, slow. August kind of slow. The end of November through December, January, like really slow. And, you know, this year it's not necessarily materializing the same way it has in the past, which which to me is an indication that like people are feeling it a lot more than maybe the economy is showing. Cause stocks are up, man. My stock portfolio is doing great. It's doing great.

there's a lot of growth in tech stocks, the tech sector, but gas is high, right? Interest rates are really high. We got this crazy war in Iran. A lot of people are still feeling, you know, we were hoping for lower inflation, and the Fed just keeps raising rates because it's not it's not happening because we're printing money to fund these random things. What do you think that how do you think that's gonna impact the land market over the next six to months to a year? Like when are we out of this slowdown?

Clay Hepler (40:37)
I'll I mean I'll tell you what I do I'm doing, not what I'm anticipating. So we used to have a goal of let's lock up this amount of deals per month. And then that turned into this profit of deals, right? So you go from transaction base to cash and development base, your business changes. Our goal, our focus is back end, right? Like so,

We're spending all of our extra resources, time, energy from when we get a deal on our contract to when we sell it. Like that's the focus of how do we get really good at that. That actually comes and starts with the type of parcel we're buying and the area that we're buying in. What do I think is gonna happen, dude? I think it's gonna be our our entire thing is we're buy being much more selective on the deals that we're funding and buying. The only time that we're less selective is in our community. Like when people bring us deals in our community, like we that they need to get them funded.

We're we're a lot less selective because we want them to succeed, right? Not that we're gonna buy a bad deal, but you get what I'm saying.

Justin Piche (41:37)
Yeah yeah, no, no.

Clay Hepler (41:38)
But we're not hiring anyone. We are looking at every line item with a fine-tooth comb. We are not we don't have any extra line items that we're trying to

You know, it's we're trying to scale. It's like, no, man, we're just focusing on net profit for next year. And we're not trying to add a bunch of inventory where it's not needed. And we are trying to get good at developing the land in what whether that's a mobile home on land or that's actually just improving it so that it sells faster. Dude, that's literally what we're doing. So we have deals in our inventory that we were gonna the one that I told you about the

Eight subdivide, the eight parcel subdivide with the L shape. Like that was just going to be a regular flip. We're just like, dude, we're going to make 400 to 500 on this. That's going to be our project. And if we don't have a huge overhead, that pays for our entire year. If we make 500, maybe a you gotta make a little more than that. But okay, so one deal pays for our entire year. So everything else is net profit.

So we're not scaling marketing. We're being very discerning about what we're doing. we're still sending out marketing, but we we're keeping it pretty steady. We're doing a stair stack method of different marketing channels hitting the same markets that we believe in versus trying to do a county you know, countywide.

Justin Piche (43:06)
Yeah, you can't

you can't expand markets indefinitely anymore. Those days are done. You've got to hit your markets, pick your data and then retarget and retarget.

Clay Hepler (43:19)
That's right. So I mean that was pretty comprehensive, I think. But we're not like doing crazy hires. We're literally just focused on making money.

Justin Piche (43:29)
What's

the team

what's your team look like right now? How are you setting up? How do you have the team set up? 'Cause you've fluctuated

a ton in team size and people and my make up of your team.

Clay Hepler (43:43)
Yep. I'm just gonna write it out right now so I can you tell me about your team, I'm gonna write mine out real quick.

Justin Piche (43:51)
We're at we're at ten people now. We have two negotiators, one US based, one overseas. we have one cold outreach and a kind of nurture manager. We're getting a lot of leads and a lot of like long nurture cycles. And so her job is she's making sure that all of the leads are on the right follow-up sequences and

You know, basically making sure that people are continue to be touched with legitimate communications for long periods of time. They don't just fall into the ether when a lead lead comes in. and then we have an underwriter and a project manager. Underwriter underwrites all the deals as soon as they come across, sends it over back to the negotiators to, you know, have the conversation and make the offers. project manager is running all of our development deals that we handle in-house. Cons they think contractors, improvements.

subdivisions, talking to the counties, working with JV partners, other folks that bring us development deals, and then underwriting bigger deals, all kinds of stuff. And then we have transaction coordination and back office, one person for each of that. and then we have sales dispo manager and one dispo assistant that are responsible for all the realtors, all the listings

All the bringing of buyers, making marketing decisions on the sales side, et cetera. So that's that's the team right now.

Clay Hepler (45:13)
Okay. So I got three underwriters, one general manager, one acquisition manager, one funding acquisition manager, closer, display associate, marketing manager, a marketing analyst, a T C and a PM. That's eleven people.

Doesn't include our the

Justin Piche (45:32)
Th three

three underwriters.

Clay Hepler (45:35)
That's right.

Justin Piche (45:37)
What's your lead flow? Pretty high, I'd I have to assume very high. You

Clay Hepler (45:41)
Yeah. Yeah. Yeah.

Justin Piche (45:42)
have four callers?

Clay Hepler (45:45)
five. No.

Justin Piche (45:46)
Five. Okay. Yeah, that's

a lot of lead flow. Yeah, you you definitely need more than one. We have two We have two collars right now and it's plenty, honestly. It's been plenty of lead flow.

Clay Hepler (45:57)
They're doing a great job, aren't they?

Justin Piche (45:58)
They are. I agree. I appreciate the rack.

Clay Hepler (46:02)
You're welcome, buddy. I'm here for you. So that's our that's our team. We're not we're not really adding more people. Although if if there's any good acquisition managers out there, feel free to hit me up. I'm always looking for good sales guys. but that that that's we're not gonna expand, bro. We're we're keeping it like that. We're we're just keeping we're dialing in our processes. We're I've hired a business coach to come in to even help improve our processes even more, making sure that we're just

Effortless from under contract to sell, effortless on our sales process, like really being really, really good. so we can scale one thing, dude. One thing that I've found is you know, sp specifically as we scale, it's like we scale to the extent with which we can install consistent, reliable, predictable processes in each side of our business. So if I have a good process, I can hire a quote unquote B player, B minus, and I can elevate them to a B plus A.

But if I don't have good processes, which has been my problem in the past, then I have to hire an A player. And if I don't hire an A player, they get confused, they get overwhelmed. Don't work. So that's what we're focusing on right now. We're focusing on internal improvement, not trying to pull external deals through. And raising capital.

Justin Piche (47:16)
Yeah.

Clay Hepler (47:16)
I mean, that's what I'm doing a lot of. So that's that's you know, we have pretty similar team sizes at this point.

Justin Piche (47:23)
Yeah. No, I think it's a good a good makeup for a team. It's interesting. you obviously have different processes than we do in order to have like 'cause we have I mean, similar but pretty different teams, I'd say.

man, business is fun. Sometimes it's scary. Sometimes it kicks you in the nuts. Sometimes it's incredible. just depends on the day, you know? Just depends on the day.

Clay Hepler (47:50)
Yeah, I think that the I think to to kind of end the end the pod, I think the big thing that I took away from this conversation is

Understand where we are in the market. Be thoughtful about that. Don't try to push a rock up a hill. Understand that net profit was is what matters right now. Build your team and processes around being a foundation of success, not this year, not yet, next year, but the following year and the and the years that come thereafter, after this sort of bumpy road is gone. and

That's the my big takeaway. You have any other takeaways, man, or any last minute stuff to discuss?

Justin Piche (48:31)
I think I think you really need to look at everything you're paying for in your business and and make a determination on if it's adding value in the way that you think it is. And I think that that that includes every person on your team. you know, we've had discussions on how much revenue per employee you you know you should expect to make and all these different things. But I think you need to look at everything you're spending money on, figuring out is it necessary? Because now is a good now it now it's not a doom and gloom. It's just the reality is of the market, things sit.

It's harder to get deals. You need to be really disciplined with your sp your spend. You got to control that overhead and try to get more done with a smaller team. I think I agree with you. The answer is not hiring more people right now. It is not expanding, you know, your expenses. It's getting better at at at at what you're at the markets you're currently working, getting better at identifying those markets, getting better at selling.

Those are the things that you need to be working on today.

Clay Hepler (49:27)
Dude, I love it. Guys, if you like this podcast, rate review, subscribe. We are back and we are gonna be more deliberate about recording. Dude, we might even record

Justin Piche (49:37)
We're

Clay Hepler (49:38)
one we're we might even record next or two weeks from now when we're at Ajay's event.

Justin Piche (49:42)
Yeah, we should. We should definitely we did that last time. Last year we did a live recording in the studio. That was fun.

Clay Hepler (49:49)
Yeah man. I'd be good I'm pumped to see you. and yeah, other than that, I'm good to go, man. We'll see you guys next week. Or whenever we record

Justin Piche (49:56)
All right. Let me do a

Clay Hepler (49:58)
next.

Justin Piche (49:59)
that's right. Yeah, whenever the next one comes across, we'll see you guys.