Newsletter #00027

Happy Friday!

It’s good to be back home! Thx for all the love on the Koerner’s Corner show. The podcast format is growing the fastest, and I’m having a ton of fun.

Today will be the first day I livestream both the video and audio for the show. You can catch that either on my Twitter profile (at noon CST today) or on YouTube Live. And then we’ll post the edited version on YT and the pod in a few days.

If you ever have any small biz questions to ask, I’d love to have you on the show! You can even ask anonymously.

I also want to test a few other formats. I helped the president of an NBA team buy my friend’s failing bread company, in another state, and I thought he might make for a great interview. Like, what was he even thinking?

I also thought it might be cool to interview two business partners that are struggling. Like marriage counseling for business partners. I’ll keep doing the same show format as well, but as I always say, test everything, except drugs, right?

Is there any merit to these ideas?

Hey, this newsletter is now 6 months old! And I’ve never missed a week.

Alright, enough of the chit chat.

My buddy Sam is helping me find off market RV parks right now, and it’s been a lot of fun. We just found a great, small park that looks like this:

1. 86 acres on a lake

2. 10 RV pads

3. $550 lot rent

4. 100% full

On the surface I hate deals like this. Why?

Because I don’t want to buy 86 freaking acres, even at a steep discount. I wanna buy a cash-flowing RV park. That’s the whole play, not raw land.

My handy dandy calculator doesn’t account for that much land, because that land doesn’t cash flow!

So here’s how we use deals like this to our advantage.

Sam asked the owner what he thought his property was worth.

“About $20k an acre.”

Perfect! Your RV park is only on 2 of those acres. Why don’t we let you keep the other 84 acres, you sell those for $1.7m, and we buy your RV park for $150k per acre?

That’s like a 15 cap, BTW. We’re still negotiating, but it’s looking really good.

Remember my email on reframing? This is re-reframing (Real Estate Reframing)

This email combines that previous newsletter on reframing with my data center wholesaling newsletter.

Here’s how you can execute this plan in any asset class. You can have a VA do all this, BTW. I’ll cover doing this off-market at the end.

Residential

• Go to Zillow and search for residential homes on large 10+ acre lots

• Check the price per square foot against local comps.

• Check local zoning by having the VA call the city.

• If it looks good, get the property under contract and get a feasibility study.

• I just ran a search in random Tyler, TX and found this house. The price per square foot is even less than homes on normal sized lots. This lot is actually great because it’s plenty wide enough for an easement along the side.

• This play usually works best in more rural areas that have more relaxed zoning restrictions.

• You don’t have to build spec homes on the raw land you parcel out, you can just sell the raw land, if you want.

• Or, you can buy the property, slice is up, and the re-sell both the house and the land as is. It’s more profit than a flip with almost no work.

• In the Tyler, TX example above, raw land in that area is $20-30k an acre, which means the 7 acres behind the house would sell for $150k+, which drops your basis by 30+%

• The house has been sitting for a while. Why? Because believe it or not, most people don’t want a ton of acreage. They don’t know what to do with it, don’t want to maintain it, and they assume it’s baked into the price, so why pay for something you don’t want?

My friend just bought a house outside of Boise on 10 acres with no zoning restrictions. He’ll be able to build 4-5 spec homes behind his house, and grant them an easement.

He’ll literally get to live in a free house from the profit!

Commercial

• Go to Crexi and run a similar search.

• Filters: For sale, 10+ acres

• Most important filter: Manually check all the boxes of property types, except land, like this:

• Look for properties that have lots of road frontage, because easements are a pain. Lots of road frontage makes subdividing much easier and more attractive to developers (that you may re-sell to)

• You want something that is only using a small % of the footprint, preferably along the edge of the land. The RV park above luckily fit the bill.

• Sophisticated sellers or brokers may already bake in the value of the land separately, so you won’t find this play in every listed deal, but I’ll show you below how to find these bad boys off market as well.

• Check out this commercial property in Tyler. I think it has no tenants, but the market rate to rent that whole building is about $30k/month. The cap rate on that (when rented) would be a whopping 15%, which is amazing for office or industrial. Furthermore, you could sell off the 26 acres or so behind the lot for $440k, bringing your basis down to $2m.

• Yes, you still gotta rent the thing out and parcel out the back acreage, but this is a great play, as the value of that building when rented is over $4m. This ain’t passive.

I know what you’re thinking “This is too obvious. It can’t be that easy.”

What do you think developers do? Where do you think the phrase “buy by the acre and sell by the foot” came from?

This isn’t anything new, it’s just a new and different way of looking at this principle. You can do it with single family, RV parks, mobile home parks, or whatever you want.

Wanna find even better deals off market? 4 steps:

• Make a free account on Reonomy with a 1 week trial

• Run and save a search that fits all of your preferred criteria. The more search results the better, because once your free trial expires, Reonomy wants an arm and a leg

• Hire a VA on Upwork to scrape all the results. There are many.

• Start doing cold outreach to the phone numbers with this offer. You keep the land, I buy the buildings.

Conclusion

If nothing else, I hope this email helps you look at real estate a bit more opportunistically. Find a seller that either places more value in the land, or less value in the cash flow than they should, and you’ve got a winner on your hands.

I’ll follow up what happens with the 86 acre deal.

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As always, thanks for reading!

Chris Koerner
chrisjkoerner.com