The Land Flipping Millionaire: How Pete Reese Scaled to $20M/Year

Hello and welcome back to another episode of the Collective Clicks Podcast. This is your host, Brandon Baitman, and today I'm joined by Pete Reese. Pete is a friend and a client of mine who specializes specifically in land investing. So, Pete, we'll be talking a lot about what land investing is, how it compares to single-family houses, how you've grown your company significantly in the past few years, and also some impressive numbers in terms of marketing for land. Specifically, what are some of the advantages of direct mail versus pay-per-click marketing in that particular industry? I'll see you there, Pete. How are you doing today?

I am doing great, Brandon. Good to be here.

I'm excited for you to be here as well. Nothing like a Friday afternoon podcast.

That's right. Everybody's winding down.

Exactly. I sometimes wonder if anything does get done on Friday afternoons.

You know, honestly, not much. If it's anything like my own work habits on a Friday afternoon, they really fall off a cliff after lunch.

No kidding. Maybe we should all just move to a four-day workweek someday.

Yeah, someday maybe.

I am super excited to have you here. I think you bring a unique perspective to the podcast. But for those who might be listening and don't know you and your background, tell me more about you. What do you do now? What has your real estate journey been like?

Well, my real estate journey has taken a long and winding road. I've been in real estate in some form or another since the early 2000s when we bought our first home here in California. We bought it with an FHA loan, 3.5% down for about $200,000. We sold it about two years later and netted about $50,000. At that point, I thought I was a real estate mogul because I had done some very shoddy improvements myself. In hindsight, not so much, but that got me exposed to real estate and maybe the power of it a little bit.

We started buying some homes and flipping them. In the early 2000s, it wasn't as mainstream as it is today, but there were still shows on HGTV and such. We did pretty well with that until the market crashed in about 2008. Prior to that, I got my broker's license out here in California just to get more access to deals. I was buying everything on the market through the MLS, thinking I could show myself the homes and write my own offers. I thought that would be great, but not long after that, the market crashed and it wasn't the best thing to be in real estate at that time.

I needed to earn income, so I actually started representing banks on their bank-owned properties. I became an REO broker and worked on that side of things, working with a lot of investment companies that were buying and flipping homes or buying them for rentals. It was easy for me because I understood what they were looking for and had access to deals that they didn't. That worked out pretty well.

I got a little sidetracked into a business with my wife related to blogging and travel blogging. We did a bunch of traveling as a family for quite some time, and that was a really fun business. But I got the itch to get back into real estate investing and stumbled upon land investing. I didn't really want to get back into home flipping because for me, it was too cumbersome with so many moving pieces. I stumbled into land investing and went down the rabbit hole. This was in late 2020 when I identified that this kind of matched what I felt I was good at.

In 2021, we did our first land deal in March and generated about $1.2 million in revenue that year with about a 50% gross profit margin. In 2022, we did about $3.4 million and some change at a little over a 40% gross profit margin. Then in 2023, we did $8.2 million at about 40% as well. Now, we're aiming to hit $20 million this year just buying and selling land. So, that's what I do now.

Wow, those are impressive numbers for the land investing space. You seem pretty nonchalant about everything.

You know, just buying and selling stuff. It's inspiring, though.

No, that's fair. It's super cool. I didn't know a lot about that from your journey. Obviously, most of the people listening to this podcast know the real estate space but maybe less about the land space. I'm super curious to hear more.

Let's say I came to you right now, and I fully expect a biased answer. If I asked you, "Should I get into a real estate acquisitions company, like wholesaling or flipping houses right now, or should I get into land?" What would you say?

Well, like you said, I'm pretty biased. I know all the different investment models, and I choose to do land because, honestly, it's the easiest. There are a lot of challenges and nuances, but there are things you don't have to deal with that you do with houses. For example, there aren't a lot of occupants, tenants, evictions, or anything like that when dealing with land. Occasionally, you might have a squatter on the property, but that's about it. It's very straightforward. Even something as simple as arranging a time to see the property is easier. You just go and go. You don't have to coordinate much.

The thing that always challenged me, and I know others are better at this, was the construction side of things, coordinating with contractors, running into unexpected issues. When you're doing a land purchase, you try to determine all these things upfront. It's not like opening a wall and finding something out after you've bought the property. Those surprises always seemed to come up when flipping homes, and I didn't enjoy that aspect.

While there's competition in land investing, there's also a lot of opportunity. I don't think it's nearly as competitive as the single-family home market, and the profit margins are great. Our goal is always to double our money on deals, though we average about a 40% gross profit margin. If we can move these properties on average in as many days, it starts to accelerate really quickly with that kind of return.

Yeah, that's wild. Those are impressive numbers for land.

Yeah, you know, the profit margins are great. A lot of times, our goal is to double our money on our deals. If we're doubling our money, that's a 50% gross profit margin, but we pretty much average around 40% at scale. We're still making a really good return on our investment and moving these properties pretty quickly.

Let's talk marketing. Obviously, my passion is marketing, and I know you're into it too. What's it like compared to houses?

Are you talking about on the acquisition side?

Yeah, so we use two methods at this point. Obviously, we're working with you on the pay-per-click side of things, and we also use direct mail. We send out offer letters to landowners based on average pricing in specific areas we like. These offer letters are kind of the first shot over the bow to see if we can get them to call back and gauge interest. Sometimes we're right on the offer values, sometimes not. When they contact us, we fine-tune and see if we can make a deal. So, that's primarily our marketing side of things. We're doing a lot of direct mail and paper click advertising.

As I understand it, direct mail is a staple for land. Most land investors seem to be doing direct mail. It's classic, just like it was for houses before it got really competitive.

Yeah, nowadays, direct mail isn't as easy as it once was for houses. It's interesting because we can define the type of properties we want and target specific areas where we know land sells fast and where we've built a good infrastructure, like a good team, maybe a good broker or title company. We buy a lot of larger rural properties, like 10 acres or more, so we can target those specific types of properties. We can filter by absentee owners or tax delinquencies, but we're more of a shotgun approach with our mail strategy. We send out a lot of mail, and overall, the numbers work out. On average, we're spending about $3,500 in mail costs per deal, and last year, our average gross profit per deal was about $30,000. So, it's a really good return on investment.

Paper click is different. The motivation is there, and these are motivated sellers, but the property type is random. We get properties from all over the country and random spots. Like today, we're advertising for land and got someone wanting to sell a school they bought and are renovating. So, we get all kinds of random stuff, even though we're putting out ads for land.

That's wild. I bet nobody's searching to sell my school for cash.

Yeah, they probably searched for "people who buy schools" and found us.

Interesting. They probably searched "sell my school for cash."

Yeah, if nobody has already, you should go snag that domain.

Yeah, I'm doing that. It's crazy because I'm looking at the satellite images, and I've always thought it would be cool to buy one of those old schools and redo it. I know there's a lot involved with it, but I'm looking at the satellite images, and it's in a great spot near a big shopping mall with a huge football field. I'm wondering, what would you do with that? I have no idea.

Brandon: That's fun. You've given me a couple of ways to think about land investing and marketing strategies. I hope you all got some value from what Pete just shared.

Pete: Absolutely, I hope it helped, and we'll see you next week.

Brandon: All right, guys, thanks for tuning in. If you haven't already, go over to LandConquest.com, check it out. We've got some really cool tools and resources that can help you in your land investing journey. We'll see you next time.

Pete: Take care.

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