Mike Browning

Tag: land investment

  • Only Two Problems

    Only Two Problems

    Most people only solve one.

    There’s a line that’s been passed around for years, usually credited to Jim Rohn, who said he got it from Neil Armstrong.

    Going to the moon only involves two problems. How to get there, and how to get back.

    The key is you don’t leave until you’ve solved both.

    Rural land investment is pretty similar, although a lot of people ignore one of the problems.

    First problem is pretty straightforward. You find something underpriced in an area where you expect values to grow. Then you run all the traps, and if it checks out you have something worth buying.

    What a lot of people forget is the second problem. What’s the plan for unwinding it on the back end?

    Then they buy it anyway.

    Ask how they get back out and you’ll usually get a shrug. Something about how land always goes up.

    There are only so many ways out of a piece of ground, and they’re all worth knowing before you own it. Hold it and sell it whole to somebody who wants what you wanted. Split it into smaller tracts, since smaller acreage generally brings more per acre. Develop it, if the location and the money and your patience all happen to line up. Put a building on it and collect rent. Farm it or lease it and let it carry itself while you wait.

    None of those is the right answer. The point is knowing which one you’re betting on.

    You don’t want to be rigid about it. Things change. Sometimes a better exit shows up than the one you planned on. A road gets built, a neighbor decides he’d rather be your buyer than your neighbor. Someone shows up with a plan you never considered and offers you a price you didn’t expect.

    When that happens you don’t turn it down, and you don’t fret about being “wrong” about how you would exit.

    But there’s a difference between changing your plan and never having one.

    And there’s a difference between a deal that looks good going in and a deal you know how to get out of.

    A land deal needs to work today, on today’s numbers. It also needs a believable way back out before you write the check. Both, not one.

    Miss the first one and you overpaid. That stings, and you find out about it fairly quick.

    Miss the second one and you didn’t buy an investment. You bought a place to keep your money where you can’t reach it.

    That one’s quieter. Nobody finds out for years.

    Then they need the money.

    P.S. Most of what crosses my screen doesn’t survive the first problem, let alone the second. When something clears both — priced right today, with a way back out I can actually explain — I send a short note to a small list of people who asked to see them.

    No spam, no newsletter, nothing on a schedule. Just a note when there’s something worth looking at.

    Check it out here

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  • Deport Yourself

    Deport Yourself

    (Let me explain.)

    Deport is a town.

    It’s in Lamar County, southeast of Paris, a couple of hours northeast of Dallas if the traffic cooperates… which, headed that direction, it usually does. Farm ground every way you look, a highway through the middle, a few streets on either side of it. I’ve never been. Yet.

    There’s a tract out there that came through my screen, the one I run looking for land priced under its area.

    Around 35 acres with good road frontage, in the $200K range. It’s been sitting a while, and reduced this week. So maybe there’s some motivation.

    There’s a difference between land that’s cheap and land that’s priced wrong. Most cheap land is cheap for a reason. Too much flood, no frontage, an easement straight through the middle, and finding the reason is a lot of what I do in a given week. On this one I haven’t found it yet.

    But it’s also about two hours from most of you.

    I’m not going to dress it up as something it isn’t. It’s not a development deal. Given the size and the frontage, it’d split into three. Above 10 acres you don’t have to plat, and it’s large enough to qualify for an ag exemption. Smaller acreage sells for more per acre than larger, so there’s a faster way out of it if you want one.

    But it’s probably just a quiet buy and hold. Somewhere you park some money with low holding costs.

    I think it’s a good deal, just not an exciting one.

    If you want more specifics email me at mike@browningre.com and we can make that happen.

    It’s been sitting a while. It’ll probably sit a while longer.

    That’s usually how these go, right up until they don’t.

    P.S. I run these screens several times a week and almost nothing survives them. Too much flood, no frontage, an easement through the middle, a solar farm going in next door. When something does make it through, I send a short email to a small list of people who asked to see them.

    No spam, no newsletter, nothing on a schedule. Just a note when there’s actually something worth looking at.

    Check it out here

  • The Ones You Never Heard About

    The Ones You Never Heard About

    Not every deal I lose track of was a bad one.

    A while back I flagged a property that looked promising. Priced well below recent comps, no obvious defects, decent location. The kind of thing I’d usually already have a home for before I even finished looking at the listing.

    This one, I didn’t.

    I made a couple calls. Nobody was in a spot for it right then. One guy just closed something else. Another was focused on a different area. By the time I got to the third call, somebody else had already put it under contract.

    I never even found out who bought it.

    That’s the part that sticks with me. Not that I lost the deal. I didn’t have a deal to lose. I just didn’t have the right person on the other end of the phone in time.

    It happens more than you’d think.

    Most of what I see isn’t worth a second look. Access, utilities, topography, floodplain, buyer demand, surrounding uses, and a dozen other factors kill most of it before it goes anywhere. But every so often something survives all that, and when it does, it doesn’t wait around.

    The properties that are actually underpriced don’t sit on the market long enough for you to find them on your own. Somebody has to already be looking, already know what you want, and already have your number.

    I think there’s a difference between wanting to hear about a good deal and actually being set up to hear about one.

    If you’re not on my list, you’re not missing out on deals I send. You’re missing out on deals I never get the chance to send, because I didn’t know to call you.

    I’m trying to fix that, one name at a time.

    If you’re an investor and want to be one of the calls I make when something survives the filtering, click below and tell me what you’re looking for.

    No obligation. No pressure. Just a way to make sure you’re one of the calls I get to make instead of one of the ones I don’t.

    Is it a bad idea to be on that list?

    Learn About The MBR Buyers Short List

  • Everything Is Great, Til It Isn’t

    Everything Is Great, Til It Isn’t

    Then they explain to you how it wasn’t really their fault they lost 100% of your investment.

    (This one needs a big fat disclaimer: I’m not a CPA, licensed securities professional, an attorney, or anything like that. I’m a real estate broker. I shoot straight, but none of this is legal or financial advice. You should consult the relevant professionals in those fields should you have questions. All of this is for informational purposes only.)

    If you follow business news at all, over the last few months you know that commercial foreclosures are up (“commercial” being a catchall for anything non-residential, not necessarily retail buildings). Office and multifamily seem to be hardest hit. Especially class B and C properties.

    This month another large real estate fund announced investors would receive no return of capital.

    I’ve been at it long enough to see it play out more than once, although not always in the same market segment. You’ll see glowing profiles on a supposed investment genius who’s outperforming everyone, then a few years later you’ll see much more subdued stories about how his company imploded.

    Most of the time in these things, the people who appear the most successful when times are good are simply the ones who are taking the most risk.

    A rising market can hide a lot of mistakes, which you may not even realize you’re making. You start to believe your own hype, things keep working, and you do more and bigger deals. And since you’re succeeding, people throw more and more money at you, meaning you have to keep doing even more.

    Then the market turns, and there’s really nothing you can say but sorry.

    It happens over and over, especially when debt or leverage is involved. One minute you’re riding high, then your guru calls you and tells you all your money is gone.

    I prefer land investing on a cash basis. One reason: it doesn’t require a heroic story. It doesn’t need perfect occupancy, rent growth, refinancing, or favorable debt markets. You buy it right, keep your carrying costs low, and let time do most of the work. You may not see giant annual returns, but you’re also a lot less likely to lose everything because someone borrowed money against your investment. It may take longer to see a return, but looking at it historically, land prices have trended up in north Texas.

    That doesn’t mean throw a dart at the map and buy whatever it hits, of course. You make your money when you buy, not when you sell. The safest way to play is to buy things that are underpriced in today’s market, while also being in an area expected to grow.

    Easier said than done for most of us.

    I spend a lot of time looking at land. Most of what I see isn’t interesting. Occasionally something is.

    When I find something I think deserves a closer look, I let a short list of people know first. If that sounds useful, click below and tell me what you’re looking for.

    Takes a couple minutes, no commitment required.

    Learn About It Here

  • On the Way to Your Appointment at Hidden Oaks…

    On the Way to Your Appointment at Hidden Oaks…

    Or on the way out, assuming you didn’t get talked into anything

    If you’ve got a tour booked for Saturday, you already know roughly what’s coming. Clipboard. A site map with the clubhouse penciled in somewhere. Someone explaining where all the wonderful amenities will be someday, in a voice that makes “one day only” sound like a favor.

    Here’s what won’t come up on that tour.

    Just west of there sits 1.88 acres that isn’t part of any of it. Same road, same lake, same general price range as what they’re rolling out Saturday. None of what comes attached to it.

    No HOA. Which means no HOA dues showing up every year for the rest of the time you own it, whether you use the clubhouse or not. No architectural committee either, so nobody’s signing off on your house plans, your shed, or what color you paint the fence.

    You build what you want, when you want. Camp on it this summer if that’s the mood. Put up a tiny house later. Fannin County has a few rules, nothing heavy, and that’s a much shorter list than a developer’s binder of restrictions.

    There’s also no reason to time anything around a Saturday. This land was sitting there last week and it’ll be sitting there next week. Only question is when it sells. Frontage runs a little over 500 feet along County Road 2980, enough that it doesn’t feel hemmed in the way a lot of the smaller platted lots nearby do. Water’s already run along the frontage through Bois d’Arc MUD. You’re buying a meter, not waiting on infrastructure that hasn’t been built yet.

    What sits west of this tract is worth knowing too. Ground gets thin fast once you’re close enough to the lake to start running into flood-influenced areas. There’s only so much of it left to develop. However busy Hidden Oaks gets, this stretch isn’t built to follow.

    Forty-three lots, a clubhouse, and a binder of restrictions is one way to live near this lake. 1.88 acres and nobody’s permission is another. Both are real options. They are not the same option.

    $199,000. MLS #21283218.

    Call or Text 214.354.3583, or email Mike@BrowningRE.com. If you’re working with an agent, have them reach out.