What a year!
2022 was a year where we saw tremendous growth in our land-flipping business. Not only from a financial standpoint, but we were also to turn our land flipping operation into a well-oiled machine with multiple team members working together towards the same goals.
This report will document how we did in our second year in this business. In fact, 2022 was the only full year we’ve been following this land flipping model. 2021 was only a partial year as we flipped our first piece of land in this company in March of 2021. It’s been a rocket ship since then!
If you haven’t seen, I write a monthly income report as well and I did a report for every month in 2022. I’ll continue this going forward as long as there continues to be interest.
Before we get into the report itself, I’d like to address why I write these reports in the first place. I know it may seem odd to put all this information out there for the world to see.
I’ve got two big reasons for doing this:
#1 – Motivate ourselves to improve our business (nothing like putting it out there to the public to drive progress).
#2 – Motivate you! You’ll see what’s possible and learn valuable lessons (at my expense) that will allow you to become a better real estate investor.
Also, we just launched a brand new community where I’ll be posting a full training course for free. And, you’ll be able to network with both established and brand new people in the land flipping business. Join it here for free.
When I started this business, I didn’t know what to expect. I’ve always got big goals, but I didn’t even know what was possible. Few people showed any real details of the deals they were doing or the actual progress of their businesses as a whole.
All I had were anecdotes, like: “I bought this property for $10k and sold it for $30k”
That was great, but I didn’t know the whole picture. I’m a little skeptical when I hear stuff like this because I wonder if they are just talking about their successes and leaving out the deals that didn’t go well. It’s kind of like a gambler when they boast about all the jackpots they’ve hit. But, never talk about the times when they went home broke.
Before we get into the numbers, I will lay out a simplified explanation of how this business works. This will help to give you a little bit of context into these numbers in this report.
Here’s how the business works:
- We send letters (actual offers) to land owners.
- Some landowners respond and are interested in selling.
- We come to an agreement on the price and work towards closing the deal.
- In the meantime, we research the property in depth by sending out a photographer, calling the county/city, getting an opinion from a local broker, and many other little things on our checklist.
- Assuming all looks good, we complete the purchase with our own cash through a reputable attorney/title/escrow company.
- After closing, we will sometimes make some minor improvements to the property such as brush clearing, perk test, surveying, or other things.
- We list the property using a local broker that will market it in the MLS, to their buyer’s list, and neighboring landowners.
- We negotiate a deal when a buyer steps forward.
- We complete the sale at the negotiated time.
- Rinse and repeat!
A couple of other notes:
- We buy these properties all over the country and rarely see them in person
- Purchase prices on the properties range from $4k to $360k (in 2022)
That’s about it… It’s really just buying and selling land.
The main thing that makes this business work is that we buy for an aggressive price so we can resell it for an attractive price to buyers. That allows us to sell quickly. We’re able to negotiate good purchase prices because we pay cash and will close quickly.
Now that you know the basics, let’s dig into the numbers.
Here are the 2022 Statistics:
Starting with revenue, we generated $3,474,800.60 in 2022. That’s the money that hit our bank account after paying all closing costs and commissions.
I’m happy that we hit the $3 million+ milestone in our second year and I know we can blow away that figure next year! I originally wanted to hit $5 Million in 2022, but I fell a little short. That’s ok because now I know what I need to do to reach $10 Million and beyond in 2023.
Next is the gross profit which was $1,533,448.33 in 2022. Gross profit is the amount of money we receive in revenue minus the amount we paid for the property.
That means that our gross profit margin was 44.11% for 2022. Our goal is to double our investment dollars each time we buy a property. For example, if we buy a property for $50,000, we want to receive $100,000 back at the close of escrow. Doing so would be a 50% gross profit. Since we ended up at 44.11% for 2022, we’re a little bit below that.
I should also point out that this gross profit does not include the cost of my team and other business expenses including mail. But, it also does not include the value gained by buying other properties that haven’t resold yet.
The average profit per deal in 2022 was $22,223.89. This is a step up from last year.
We’re working on doing bigger deals for 2023 and I expect this figure to increase substantially.
The gross profit is only part of the picture as the value of our portfolio is growing almost exponentially.
In fact, at the end of 2022, our estimated portfolio value is about $2,700,000. This is the amount we expect to receive after all properties are sold and closing costs are subtracted. This could obviously fluctuate higher or lower depending on the sale prices we are able to achieve.
We’ve got a good portion of this portfolio under contract to resell, so if all the deals close as we anticipate, we should be in for really hot start to 2023.
I wish I would have taken a snapshot of our estimated portfolio value at the end of 2021. I could try to go back and figure it out, but that might be a little too complicated for me…haha.
The next important metric we track is the average number of days in inventory. This is the number of days we own these properties before we resell them. For 2022, we averaged 75.54 days.
We were hovering at about 60 days or less for much of the year, but I pushed hard at the end of the year to clear out some older inventory so this average really jumped up the last couple of months. Going forward, I will not buy some of the property types that stayed in our inventory too long. In hindsight, I understand in each case what happened, so now I know how not to repeat those errors.
I had no idea what to expect with the average days on market when I started. But, I’m extremely happy when you consider that on average we hold a property for less than 3 months. When you look at annualized returns on the money we spend to buy these properties, these figures are pretty jaw-dropping.
Another important metric we track is the number of pieces of mail sent. In 2022, we sent out 730,975 letters to landowners. On average, each letter costs us about $0.50. So, you can see that this is a big expense for us. You can also see the amount of business that was generated from this and it was well worth the money we spent. Plus, a lot of these letters have generated purchases that we haven’t resold yet (but we will).
The final key metric we’re highlighting in this report is the number of purchases completed. In 2022, we bought 95 separate properties. We sold 69 in 2022, meaning we are carrying some inventory forward to sell in 2023.
Based on the 95 properties we purchased in 2022, that’s about $3,847.27 in mail costs per deal. But, we’ve also got 25 more deals under contract to purchase. So, when you consider these additional 25 properties, the cost per deal comes down to $3,045.73. And, there will be more deals coming over the coming months from the mail we’ve already sent.
Yes, we spent a lot of money on mail. But, it was money well spent and produced an exceptional return on investment.
In this section, I’ll break down each month, one by one.The goal of this is to show how progress fluctuates in this business. I’ll also provide some small notes for each month to give you a little bit of context.
January was a pretty decent start to the year. We did over $200k in revenue and sold a total of 6 properties. Our profit on these sales averaged only $14,333.33 per sale, but it’s still substantial. At this point in time, I had a very small team. I was doing a lot of the day to day evaluations of the properties and handling all of the transaction duties which is time consuming.
February was a stinker…haha. We only sold one property. But, to honest, I wasn’t worried at all. That’s because we started going under contract to resell a bunch of the properties we had in inventory. I was pretty certain that March was going to be a good month.
Plus, we ended up buying 11 properties in February. That I knew would lead to a lot of deals in the future.
March was a record month up until that point! We did nearly a half a million dollars in revenue and did $262,000 in gross profit. We also purchased 15 more properties in March! Our inventory was really starting to grow and I knew this was needed in order to hit my big goals that I had for 2022.
As you’re probably noticing, the numbers really fluctuate from month to month. The more properties we buy and sell, I’m sure things will even out a little over time. But, it’s also the nature of the business. Each deal is different and so is each month. You can see that we started ramping up our mailings amount and sent out 78,738 letters in April. We also sold 7 properties which was pretty good amount.
The thing that really stands out in May is the 97,615 letters we sent out. I wanted to really ramp up our mail output and I was focused on getting as much quantity out the door as possible. The financial metrics for this month were all very respectable. At this stage in the year, we were bringing on more team members to improve our operation and take jobs off of my plate. We brought a property analyst on the team as well as a transaction manager. These 2 roles helped tremendously with my workload. It allowed me to focus on the big picture and grow the overall business.
At the beginning of June, we surpassed the revenue and profit we did in all of 2021. I was hoping that we would be well past that at this point, but I could also feel the momentum building. We were getting a lot of properties under contract and I knew that July was going to be a big month.
We also sent out 95,788 pieces of mail. That I knew was going to lead to big months in the future.
6 months into 2022, we brought in a total of $1,403.225.35.
As you can see, July was a huge month for us. We did nearly half a million in revenue, and close to $200k in gross profit. We sold a total of 9 properties in July which matched our previous high water mark.
At the point in time, I really felt the business growing. Things were starting to happen like I thought they would. I was really excited for what the rest of the year would bring.
The best part is that I was on a trip for most all of July and we still brought in this much money into the business.
And, unlike a mistake I made in 2021, I kept the mail going out with 81,402 letters being sent. In 2021, we took a month long trip as well and I didn’t send out any mail during that time. That cost me a lot of momentum and ultimately a lot of lost profits.
August kept rolling along! We brought in $322,223.92 in revenue, sold 7 properties and bought 10 more.
I decided to dial back the number of letters we were sending out. Instead, I tried to focus on really refining our lists so it was more of a targeted approach instead of a shotgun approach. I was trying to find a balance that would allow our current team to be albe to adequately process all the leads coming in without them being wasted as well.
September was another decent month. The only thing that bothered me was that we only purchased one property. This number fluctuates from month to month due to the length of time it takes the title companies to process the transactions. For some reason in September, it just worked out that we only bought one property.
October was another strong month. At this point, I knew I wasn’t going to hit $5 Million in revenue for 2022, but I still thought that I could hit $4 Million which became my new goal.
For some reason, we only sent out 22,738 letters. This bothers me the most because it is the most controllable aspect of our business.
November was another great month! The revenue, gross profit and number of sales were all really positive metrics.
The average days in inventory was much higher than normal because we began clearing out some inventory that we kept for far too long. We reduced them until they sold. While we did make much on these properties, it was best to clear them from our inventory and invest that money in properties with more profit potential.
We finished out the year pretty strong. Some deals got their closings delayed until January and I’m actually ok with that due to tax planning reasons.
In this month, we continued to clear out some of our older inventory which caused our average gross profit per deal to slip as well as our average days in inventory to rise.
In the second half of the year we brought in $2,071,575.25 in revenue. This shows that are revenue was accelerating and $5 Million plus is more than attainable in the near future.
One of the big improvements we’ve made as a company in 2022 doesn’t show up in the numbers. We added numerous exceptional members to our team that have allowed me to shift from day to day stuff, to growing the business as a whole.
As it stands now, here are the roles that we have on our team:
- Lead/Due Diligence Manager
- Acquisition Manager
- Property Analyst
- Transaction Manager
- Technology Manager
- General Assistant
- Executive Assistant
The next role I’m adding to the team is an asset manager. This team member will manage all of our properties for sale. In addition, they’ll be managing any projects that we need to complete for adding value to these properties that we purchase.
After that, we’ll likely add an additional acquisition manager that will help us deal with additional leads.
I’m working on a video that goes into more detail about how I structure our team and if you want to make sure you see that, join our free community here.
What’s Next for 2023?
I’m really looking forward to a HUGE 2023. I’m setting my revenue goal at $10 Million which would be nearly tripling our 2022. It’s definitely possible and I know what I need to do in order to make that happen.
I’ve also been getting a lot of requests for a training program or course in land flipping. Since it seems like there is interest, I’ve decided to put together a training course that is absolutely free.
This course will detail my entire system and I’ll strive to make it superior to the expensive paid options that are currently out there.
Why would I give it away for free you ask?
Because I love helping people and having a positive impact on their lives. At this point in my business career I don’t need the additional income that an online course would provide. While it would be nice, I’d rather give it away for free.
Also, I know that there will be many opportunities that will come from this that will benefit me. Things like partnering on deals, wholesale opportunities, private lenders, etc..
And if all goes well, I’ll probably offer a paid mentorship program later in the year if there is demand for it. This will not be free…it will be a premium offering that will be designed to grow your business exponentially with a lot of individualized help and services.
If you’re interested in land flipping and other forms of real estate investing, I think you’ll like our brand new podcast called Turning Profit. You can find this anywhere you listen to your podcasts and on Youtube. We’re brand new, so if you feel we’re worth of a 5 star review, we would be forever grateful for your support!
One last thing, if you liked this, you’ll also learn a lot from a recent video I filmed. It’s the 50 First Deals that we did in the land flipping business. It’s a very detailed breakdown and it gives you a good idea how our business started and what is possible. Get it here.
That wraps up the 2022 Year In Review.
Let’s all get ready for a big 2023!
Keep an eye out for our monthly reports for 2023, and sign up here to be notified the minute a new report is published.
P.S. In case you missed it, here are links to my past income reports:
- December 2022 Income Report $$256,473.60
- November 2022 Income Report $440,368.81
- October 2022 Income Report $275,462.13
- September 2022 Income Report $281,160.95
- August 2022 Income Report $322,223.92
- July 2022 Income Report $495,885.83
- June 2022 Income Report $178,831.06
- May 2022 Income Report $208,782.57
- April 2022 Income Report $264,322.07
- March 2022 Income Report $479,193.91
- February 2022 Income Report $67,143.23
- January 2022 Income Report $204,952
- 2021 Year in Review Report