Identifying a Profitable Market
Data is key in Land Investing. Here is how I used software to choose Washington State for my first profitable market.
The lifeblood of any business is making money, so the sooner that I get moving on that, the better. Unlike selling software, profiting in the land game isn’t something that can happen overnight.
At the risk of stating the obvious, I need to buy property first, and that means running a marketing campaign. The goal is to find potential property owners who are willing to negotiate and ultimately sell me their land.
Years ago, this process would have sucked. So much so, I probably wouldn’t have gone any further with this business. A lot of driving around, perhaps calling various counties to get a delinquent tax lists, so on and so forth. I don’t have the patience for that kind of thing. All confined to my local demographic.
Luckily, big data changes everything. And that’s why I’m here in this space. I can leverage software and the abundance of data available to spread the net far and wide!
For my business, I’m going with PRYCD. Not because it’s the best at any one thing, but because it’s pretty good at everything.
You know why most police departments use German Shepherds for their police dogs? They aren’t the fastest dog. They aren’t the strongest or most athletic. They don’t have the best sense of smell. They aren’t the brightest.
But when it comes to the dog who has a high ability across all of these desired characteristics, they are the clear winner (whereas another dog may have a better sense of smell, but is slower, for example).
Okay, weird analogy, but it’s to show my point.
PRYCD isn’t the be-all, end-all for real estate software. There are other programs out there that I have come across that are excellent. Some are good at pulling deep data across one area, while others have very slick UI and report pulling capabilities. But after my research, I found that PRYCD does many things very well in combination.
Plus, it’s made specifically for land investors, and I know the value of niching down when it comes to software. This results in more relevant features, and continual enhancements as the industry evolves.
If you went to the PRYCD website, you’ll see quickly that it sure as hell isn’t winning any awards for aesthetics. The website and the software both look like they are from 2006. Honestly, I sorta dig it. Like some kind of throwback to another time.
But anyway, I don’t mind the looks because the software allows me to conduct the necessary research for making money.
How I am using PRYCD.
I mentioned earlier how finding desirable land used to be a pain. Well, I use PRYCD to search for land all across the country. I am able to zero-in on counties where I believe there to be a high probability to either (a) buy & sell, or (b) buy and split-up into smaller lots (for a more advanced strategy).
By way of example, I have identified three counties in Washington State that will be a good place to buy inventory. Key metrics that I search by include:
Parcels on market
Ratio of parcels for sale versus parcels sold
Total number of data records available
Average days on the market
Comp vs. price variation
The first metric, parcels on market, gives me an idea of how competitive the area will be for when I eventually list the land for sale. If a county has a crap-ton of parcels for sale, then it’s supply heavy, and I move on.
I am also looking at ratio of parcels for sale versus parcels sold. My initial is a 1:1 ratio, but if I can find counties that are higher than this, then that to me indicates that parcels of land are selling.
I look at the total number of data records available so that I know (roughly) how many pieces of direct mail I’ll be sending out. I have found that the initial number gets a lot lower after additional filters are added. I shoot for around 10,000 to begin - which is a well-sized county.
The average days on market give me a sense of how long it takes for a piece of land to sell. This is more for expectation setting. Which is probably a good time to mention that if you’re interested in land investing, then a buy & sell usually takes 4-6 months, so be prepared for that.
PRYCD has a filter so that I can see the comp vs. sold price variation. It looks at all them for sale property prices, the list price of sold property, and compares that to the actual sales price. I believe this is useful for when I start valuing properties, and listing them for sale. The lower the variation, the better.
Trying to decide between mailing one county first, or all three simultaneously.
At the time of me writing this, I’m still trying to figure out my best approach with how I will be marketing to these counties. One option is to go after one exclusively until the leads “dry-up” then move to the next. The other option is to try all three at once, and if I’m getting a better response in a county, I can then reallocate funds to the more productive one(s).
The latter sounds smarter, so I’m kinda leaning that way. However, this is my first campaign, so I do see value in keeping things simple, at least initially.
The other decision that has to be made is what type of campaign will I run in the county? There are a few methods that I will go into in my next update, but for the sake of not being mysterious (which I generally detest when subscribed to a newsletter), here are the options I’m trying to decide between:
Neutral offer
Blind offer
Range offer
More on this later, as each has pros and cons. Again, seeing as this is my first campaign, then I’m thinking a simple approach might be best for this time around.
What still needs to be done?
I have my counties identified, so next up is to download my lists. This cost money, and I’ll share how much in a coming update once it has been done. For example, the price will be less if I just go after one county at a time.
I am holding off on the purchase of my lists until I am sure on my way forward because once I download them, they will start to “go stale” as time passes, and I don’t want to waste too much time making other decisions.
I’ll then need to format the data, so it can be uploaded to the program I’m using for handling the mailing (Pebble CRM).
Things are moving along nicely, especially considering life has gotten a little busy in the recent weeks. As I write this, I’m in Mexico visiting family and getting ready to celebrate my one-year anniversary with my wife, Lorena. I’m holding off on pressing “GO” until some of these events are finished, and I can give them my full attention.
Next update, I’ll share the marketing approach that I ultimately choose, why, and personal goals I have with the process. I am getting close to the official launch!
Until then!