Land Deals During economic decline (Recession)

[Kaleb Dodson]

My partner and I are in the SFH Wholesaling market but have been looking into land as it usually is easier/less hassle. My only question is this: coming into a recession, is it still possible to profitablity wholesale land? I've heard that new construction slows during economic decline. I would love some feedback from anyone and everyone on their experiences. Thanks!

[Bryant Brislin]

@Kaleb Dodson I've been in the land business for 20 years, with the past 13 years as a land broker who sells land to large homebuilders and apartment developers, mostly in Southern California. I also work on smaller boutique land deals for hobbyist investors. Two years ago, I started a wholesaling business, as well. There are so many different types of land deals, so it's hard to give a general answer, but I would say that if you are working on regular lots that someone would buy to build one single family home, or even some commercial acreage, then there is always a wholesale market for it, as long as you're getting it at a pretty good basis (price). For deals that are just individual lots for someone to build a house, then of course, it should be in an area where people are actually doing that and from a zoomed-out aerial it looks like a checkerboard of vacant lots and houses. If it's rural and little-to-no homebuilding activity, that's probably not worth your time. But if you do your research and you see that, for example, in general people are paying 25k per lot in a certain neighborhood, and you're getting one at 5k, then yes, that could be a good deal, but sometimes I end up wholetailing those (closing on it and then listing it) because that is more of an MLS type buyer, plus people buying land often don't have the urgency that flippers have, when it comes to performing within a tight escrow timeframe. But if you find who the folks are in town who will buy multiple lots if you can get them at good prices, then of course, you can do a regular wholesale. As far as "new construction slowing during a decline", that was true for past econominic cycles, but this downturn's dynamics seem different...in most markets, we are undersupplied when it comes to housing, and also, there will always be hobbyists, i.e. the guy who owns a few car washes in town, or a few cell phones stores, et al who likes the idea of buying some land to build a house/houses, or some rentals. Plus, it's a good time for them to act since material costs and labor should be going down if we truly are in a downturn for awhile. Feel free to reach out to me, I think we may have spoken before.