Deal Breakers I Could Live Without | with Guest Ryan Sampson, ALC, CCIM

[music]

Justin Osborn: Welcome to the Realtors Land Institute podcast, The Voice of Land, the industry's leading land real estate organization.

[music]

JO: Hello, this is Justin Osborn, accredited land consultant with the Wells Group Real Estate Brokerage in Durango, Colorado. On today's podcast, we have Ryan Sampson, ALC. He's closed more than $800 million in land transactions since joining Eshenbaugh Land Company in 2005. His transactional experience ranges from single tenant retail out parcels to larger master plan communities, and most everything in between as it relates to development land. Ryan is an accredited land consultant and a CCIM, a Certified Commercial Investment member, which is a recognized expert in the commercial and investment real estate industry. He most recently was awarded the 2022 Apex National Broker of the Year Award in Commercial Land Sales from the Realtors Land Institute. Welcome aboard, Ryan. Thanks for being here, man.

Ryan Sampson: Thanks, Justin. Glad to be invited.

JO: $800 million in land transactions, that's a pretty big deal.

RS: You just keep your head down and grind every day, and, after 19 years, I guess it all adds up. So we're very blessed and fortunate to be in the great state of Florida that has a net migration income and people that wanna come here and build. So, very lucky to be here in the land business where development is flourishing in Florida.

JO: That's great, man. I'm happy for you. Now in 2005, is that the start of your real estate career or is that just when you joined Eshenbaugh? 

RS: No, that's when I started. I majored in real estate in college and, right out of college. Got into, working with Eshenbaugh Land Company. That's all I know.

JO: Oh, that's great, man. See what, I went to college, they didn't have a real estate as a major. They had a couple classes you could take, but I ended doing a business management and marketing as my major. So what college were you at that had real estate as an option for a major.

RS: Florida State University. The home of the Seminoles. So a lot of good pedigrees have come out of that school, at least for the southeast, in terms of the real estate program, I believe it's in the top 10 in the nation. And so very exciting to be a graduate there, come out of the program, with a business degree, with emphasis in real estate.

JO: Okay, so you grew up down there then? 

RS: I did. Grew up in Tampa.

JO: That's awesome, man. So you've been in this Florida market your whole life in one way or another? 

RS: That's all I know. I've never shoveled a day of snow in my life.

[laughter]

JO: Yeah, a little different here in Durango, man. We got ski season about to start here in the next couple weeks, so we're ready for it.

RS: Yeah, I'm wearing a jacket that's, the viewers can't see, but I'm wearing a jacket and I think it's 70 degrees outside, so that tells you how much Florida blood I've got in me, so.

JO: That's great, man. Well, talk to me about the market down there. What are you seeing as far as development and buyer's market, sellers market educate me.

RS: So right now we're at, an inflection point in what we're seeing. I mean, we sell land primarily for development. Primarily representing land sellers within about a two hour drive out of Tampa. And so depending on the asset class, it's a totally different market. So our home builders who we sell a lot of land to national home builders and regional home builders to build subdivisions, they're still actively acquiring land, actively closing on deals, sourcing new deals. And their market share has increased, maybe tenfold in terms of selling homes because most people today in Florida that have a house with a mortgage under 3% aren't looking to sell it. And so if you're moving to Florida, your options are really to buy a new house. So the home builders are buying land to build new houses, and that's still blowing and going.

RS: On the other side, if you're a developer of apartments or industrial, retail, you're having a really tough time getting deals capitalized. The interest rates have been a major issue. The exit cap rates are a major issue in Florida. We have a major insurance issue with the storms that have come through the last couple of years. So all the costs, construction costs, all the costs have gone up and, it's just, it's making land transactions very difficult to pencil today. So, other than the home builders, I mean, most of the developers are asking for extensions or unfortunately terminating deals just because they can't get it financed. With today's changing economical structure on how capital is used to get the deals across the table.

JO: Yeah, that's a problem across the board. Two things you said there that I can relate to, and that's the insurance, I mean, it's apples and oranges is probably the risk compared to, Rocky Mountains to what you have in Florida. But the problems are similar in that we're having insurance providers, pull out of Colorado, a lot of the same ones. They're pulling out of California, because of the risk that they associate in their minds. And, we're saying, wait a minute, these are properties on central water, central sewer, downtown Durango, downtown Pagosa Springs, and you're saying there's a wildfire hazard because it pops up in some map as being in the Rocky Mountains of Colorado. So it's hard trying to put a common sense approach with these insurance carriers. And so we're having a problem with that. And then the same thing you just said about the loans and trying to get these deals to pencil. I mean, we don't have the huge apartment complexes here in southwest Colorado like you'd have in Tampa. But when you've got deals that were, 3, 5 year notes a few years ago at 3% and 4%, and those are coming up on balloons and they're about to adjust to 9%, 10%, 11%, we're about to have a huge shakeup in that multi-family market here.

RS: Yeah, it's tough. And I mean, a lot of the developers have a lot of money invested in getting entitlements and rezonings and architectural plans and civil plans. And so some of these projects we're working on have, seven figure soft cost pursuit costs already spent. So if they don't close on the land, they're out, north of a million dollars per project. And they're coming back to the landowners, they're coming back to the landowners, Justin and saying, Hey, for it to work today, instead of giving you five million figure land, I can only pay you three.

RS: And the landowners here in Florida are basically saying, thanks, but no thanks. Oh, I'm not cutting my land in half or taking 30% off. I'd rather just wait three more years. We think the market will come back and there's nowhere I can take my money and double it in three years. That makes me feel comfortable. I'd rather just hold my land that I've known forever and keep farming it or working it. And when the market comes back and you're willing to pay me the number, come back to me. So, it's been a challenge, but this isn't the first rodeo, first time we've seen this. And, we know that it just takes the best brokers and the best developers to the top when the market returns.

JO: So educate me a little bit on that timeline. I mean, we've got, home builders here, but not the giant national ones that you have. So what is the timeline from you bring in one of these national home builders, they find a piece of land, they go through the due diligence process, they get the green light, they've got the funding, now they're putting in infrastructure and roads, and now they're framing and they finally get a CO. What is that timeframe? Is that a 36 month timeframe? Is that a five year timeframe? 

RS: So the average deal for us, down here is kind of a 90 day due diligence period for them to figure out if it makes sense or not. And then, most of the properties we're working with require rezoning, so then they need to take it through that rezoning process. And that depending on the municipalities, anywhere from kind of five to nine months, certain municipalities are taking a year, so now you're 15 months into a deal. And then they need time to get permits after they get the zoning in place. And that's another six to nine months, maybe as much as 12 months, to get permits. So from the day we put a property under a contract to the day we close is typically 18 to 24 months. And that's when they close on the dirt and then they start putting in the horizontal construction and then taking the house as vertical.

RS: And so they may be another year before they're selling it. So when we're talking to our builders, or really any developer that we're doing deals with today, they're talking about a 2025, 2026 delivery. So, it's interesting, what are they gonna be able to sell it for in 2026? Is kind of the wild card and what will insurance cost be and what will interest rates be? And so, there's a lot of speculation and a lot of gambling. But we're, like I said, we're fortunate. We're in Florida and we just believe in our great state and our low expense, low tax environment here that keeps bringing people here and our great weather. So, we're hopeful that it just keeps getting, keeps going and grinding away and getting better. And hopefully we don't have any more hurricanes that keeps shaking up this insurance this year. It seems to always get lit up this time of year and after a couple years of no big storms, that comes back down. So I know we're working on it.

JO: Well, sounds like you got a lot of good stuff going your direction, man. I tell you, it's our zoning process alone here. Just going through county trying to get something annexed into city limits or go through the county and get it broken up. It varies between county and county. But, we're often 36 months just to go through and get County approval. And so it's no wonder, seeing the transaction you guys are doing the amount of volume, you're obviously in an area that's pro-growth and when the government officials can approve projects that fast for you guys. I'm, envious, man. That's awesome.

RS: Justin. I think we're painful. We used to be three to four months and now we're a year. And I'd say our government officials are not, it's tough to get deals approved, I'll put it that way. There's a lot of neighborhood opposition, a lot of opposition and these developers, their creditor are working their tails off trying to just appease neighbors and make sure that it fits the neighborhood. So as much as there's pushback, the projects are getting approved. And it depends who you talk to. If you talk to a developer that's been in Florida 30 years, we're really difficult. If you talk to somebody Justin, from your state or from Chicago, New York or California, they think we're easy. So I guess it all depends where you're looking from, but, to me, a year to rezone and a year to permit seems like it takes forever. I don't know how you can do any deals at three years. I mean, that is a, and how you have landowners that patient that are willing to give people time to get that done before they close. Are they willing to give people three years to close on dirt? 

JO: Well, a lot of them have to pay to play, so they'll get tied up thinking they can do it in 18 months and then come 18 months, they've gotta ask for an extension. And sellers are saying, yeah, we'll give you an extension, but you're gonna put up another, a hundred thousand non-refundable earnest money and instead of giving it to the title company, you're gonna have the title company release it straight to me. So we're dealing with a lot of that right here, man, where these buyers just have to keep paying to play.

RS: Yep. That's the reality. And I think unfortunately, I know we don't wanna talk politics, but some of these government agencies, they just deny a project that should be approved. The developer has worked three or four years on trying to appease everybody, and they get denied and they don't understand that the developers out $1000,000 and pursuit costs or maybe $300,000 or $400,000 in deposits. It's just, it's tough on some of these projects that people, the amount of time and energy, it's not even money, it's their time and energy and trying to do a project that really will benefit the community just gets turned down because 15 people show up in a yellow shirt that say, we don't want you to, build on our dog park, though it wasn't a dog park. They were trespassing on somebody's property. But, I'll digress there.

JO: Well, tell me how kind of the pathway was for you coming out of Florida State, getting a major in real estate. Most realtors maybe dabble in land and focus on residential. You obviously, had an opposite approach where it looks like you knew right from the get go that you wanted to get into this land business. So kind of walk me through that pathway on how that happened, if you don't mind.

RS: Sure. Yeah. So I mean, I grew up in the Tampa Bay area, second generation. Real estate kid I guess is what I'd say. Grew up with my dad doing real estate and so I always wanted to be on the development side. I loved watching buildings come out of the ground or parks come out of the ground. I mean there's more to development than just buildings but grew up watching it and knew I wanted to do that when I had the choice to choose a career. So I went and majored in real estate and you know there's no better way to learn development than to learn the land side. It all starts with the land. And I was fortunate that I got in with Bill Eshenbaugh, the founder of our firm when he was a one-man shop back 19 years ago and we hit it off and have had a great run ever since then. And you know the things he taught me are you know some of our core values that our company believes in have just set a great mindset and ethos of what we follow and that's what I think has made us successful and you know we basically at Eshenbaugh land company our core values are we live by five E's.

RS: The first one being ethics that we will always do the ethical thing no matter how much we may need money or need a commission. It's always about doing what's right and keeping our reputation so ethics is the key for us every day. That's the first thing we think about. The second is experience. I mean we want people to know that you know our firm has done over 2.2 billion in transactions. When you're working with us you're working with experienced people that understand the land business. We understand the approval process. We know who the players are and that's vital. I mean if you're going to use a realtor on any project you better know somebody that has experience in what they're doing.

RS: I would never try and sell a house. If I'm going to buy a house I wanna use a realtor that sells houses every day you know but it's tough to be a residential realtor and then come in and try and do the land game if you don't have experience. So we always refer our residential work to residential realtors and reciprocate that with the residential realtors. Hopefully if there's somebody looking for a commercial land transaction that they would send them our way. The third E for us is enthusiasm. We love what we do. We love being out on the land. We love talking to landowners. We love seeing buildings come out of the ground. The fourth one is probably the most important and that's education and that's where RLI came into play with us.

RS: Bill's philosophy that he has ingrained into me over my time has just been education and you've got to get educated. And the Realtors Land Institute you know did that for me getting my accredited land consultant designation. I think I had it maybe at 24 years old which may have been one of the youngest to do it at the time but you know Bill's thing was we need to be able to set ourselves apart and if you're not educated you know how can your clients trust you and hire you. So big believers in education. Everyone in our office is either has their ALC or is pursuing their ALC. Also as you said in the intro CCIM certified commercial investment member through the realtor organization. So I mean those two designations are vital.

RS: I mean we you know as Bill said why would we get those to make more money? And every time you deal with somebody that's an ALC or CCIM you know what you're dealing with. They're experienced and educated and that helps you get deals done. So I would highly encourage anybody that's listening to this that's thinking about it. You're crazy not to get it if you want to be a land expert. Get your ALC, take the classes, get involved with RLI. The people you meet across the country it's just astounding how much you deal with them over the course of your career. And then the fifth E is empathy. You know we're always empathetic to both our sellers and our buyers. We try and understand where they're coming from, see their side of it, and see if we can help get a deal done. So those are our core values. That's what we live by every day at Eshenbaugh Land Company. That's what makes us successful.

JO: Man I love that. So make sure I got it here. The five E's. Ethics, Experience, Enthusiasm, Education, and Empathy.

RS: That's it.

JO: Oh man.

RS: That's why you should hire us man. Mickey touched on all five of those. You know every question you ask I could probably answer in one of those five E's. That's what we shoot for.

JO: Well I think that's great man. And you know I loved how you worded it. I think it was core values. You know not just values but core values. And you know there's so many people in our industry right now that I think just you know hit the ground running and don't really slow down to think about all right what are the core values. And you know a lot of people I think have some of these without the others. I mean it's easy to get online and you know take a class and get educated. But there's a big difference in a three-hour continuing education class and a 16-hour ALC class like you're talking about. And then once you get that you know how do you put it to use? Are you being ethical with it or are you just trying to do what's best for your pocketbook and moving on to the next transaction? And I think you know that if people can focus on the relationship business and really taking care of their client's best interest like Eshenbaugh said man I love it.

JO: Why would you get those two designations? To put more money in your pocket. And the better you take care of your clients the direct correlation you're going to have with that.

RS: Yep. Absolutely. Yeah you know I'm very blessed to learn from Bill. He's a great mentor and leader and friend. So he's still in the office every day. For those of you who don't know Bill Eshenbaugh is kind of a legend I think in RLI just because he's been around for man 40 plus years and has taught a lot of classes. But very fortunate to follow in his footsteps and learn from him. There's not much you need to change if you learned it from Bill. He's got that figured out.

JO: Well that's great man that you look up to him and that you've had a mentor like that. Now am I remembering correctly Bill's the one they call the dirt dog right? 

RS: He's the dirt dog and last year now I think about I think the Apex awards which is the awards that RLI gives out. He was the number one overall producer for all RLI members nationwide last year. So that should just tell you that if you follow the five E's you can make a lot of money.

JO: That's awesome.

RS: And have Fun. He has a lot of fun. He does not work with anyone that he doesn't like to work with. So we have a lot of fun down here.

JO: Well, when you're having fun, it doesn't feel like a job, man. You know, it's great. That's.

RS: Right, that's right.

JO: Now have you run the stats? I mean, you're kind of a stud that I'm sure you're not gonna brag on yourself, but I will, when I meet an ALC and a CCIM, they're one in a few man. I mean, you've gotta be just with those two titles, I would think the top 1% of the top 1% as far as realtors across the United States go. Do you know how many people actually have both of those designations? 

RS: I do not. I believe there's about 20. I think that's the number in the state of Florida. So I'm one of 20, yeah I am one of four in our office, so that's pretty good. You know, I think there's four of us in our office that are both.

JO: Well.

RS: So that you know, but again, that's what, yeah, that's what, we try, I mean, we go up and compete every day against some of the national brokerage firms that have offices, all around the world. And why would you hire a local firm when we could hire a national firm? And we say, because, you know, we're on the boots on the ground, we're educated and we're experienced. I mean, I could, there's no land brokerage firm, or land broker in any of these, national firms that are based in Tampa, that have done more volume or have more connections or more educated than us. And that usually gets us the assignment.

JO: Well, and so let's talk about that a minute, because there are, you know, so many new brokers in the industry. You and I am sure both have similar conversations every week where you're talking to, you know a local in the area and they say, well, my, friend just got their license, or, you know, my brother-in-law got their real estate license or my son-in-law got their license. And so, you know, what's your kinda two minute elevator speech on, yeah, that's great, but here's why you want to use us instead of them in a polite way of course.

RS: Yeah. It always goes back to... We try and revolve everything around our core values. So, you know, it's just most of the people's land that we're selling is one of their, the most valuable assets in their life, right? And so, if you're gonna give your most valuable asset in your life to somebody, do they know what they're doing? I mean, are they experienced? Are they educated? Do they know what they're doing? I mean, we have no problem paying referral fees. I mean, it comes up a lot that, hey, my, my niece is a realtor and she has done that. I said, listen, we're happy to pay her a referral fee or bring her on board and kind of, not necessarily co-leased it with her, but keep her in the loop to help her get educated and learn how we do it.

RS: But I mean, if it's like, again, if it's my house and I'm looking to sell it, and I want top dollar, I want somebody that knows the market and knows the players. I'm hiring a residential realtor. I'm not trying to do it myself. So our thought is you're more than happy to hire your, niece or nephew, but when, somebody says they need to get a wetland delineation done or geotech or they need an extension, or who should they use for the rezoning? What land use attorney do they recommend? I mean, I'm not sure if they even understand what a wetland delineation means and we wouldn't obviously say that to, to them, but we just harp about why some of our other clients have used us and our experience and education. So, and again, if it's your most valuable asset, I mean, you're not, at least me, if I'm, if that's my most value asset, I wanna make sure I'm using somebody that I trust and can get it, get me top dollar for it. 'cause you may only sell, have one chance to sell it.

JO: Well, and that's a great point. I mean, you do only have often, that one chance and you wanna make sure it's marketed properly, it's priced properly. And I mean, don't get me wrong, we were all rookies at one point. For you and I, it was both right around the same time. I got licensed in 2001 or 2002, excuse me, you got licensed in '05. And so, you know, we were both rookies at some point. But then, you know, you learn, all right, this is kind of who I want to base my business after. This is the role model I want. And I want to get that experience of boots on the ground, but I also wanna get that education, and I can't recommend it enough for our listeners, you know, to really check out all the variety of land designation courses that RLI offers through the Land University to help build more confidence and better advise your clients across just all the variety of real estate topics that are out there, because it is so diverse. You're selling a different type of product in Florida than what I'm selling in Colorado. And there's people in between in Alabama and Mississippi that are selling different products than both of us. And so because of the diversity, I think it's really important for people to figure out what that niche is gonna be and get educated on it properly.

RS: Yeah, absolutely. I'm a 100% agree. And also relationships. I mean, we track every development project that's happening in our sub-markets. And so, I mean, we know, I would say every of the top 25 builders, we know every one of their division presidents and have their direct cell phone number and talking to them on a monthly basis basis, if not weekly. I mean, we know who likely the buyers are, and we can counsel you on who the good guys are and who the bad guys are. And you know, unfortunately in Florida, the highest price offer typically isn't the best offer. There's a lot of people out there that are watching shows or listening late at night on how to flip land to make money. And there's a lot of people that can get you in a lot of trouble. So we try, and make sure our clients understand. At the end of the day, the clients make the decision. But we just try and educate our clients to make sure, Hey here's the pros and cons of all these offers, and here's what we would recommend. But at the end of the day, we, we respect what your decision and happy to go down that route. Just know if it doesn't happen, we'll be there to try it again. Pick the pieces back up and go to horse number two.

JO: On that note, what would you say, obviously price is important, but it's not the most important thing. What would you say are kind of the other top two, three, four bullets that you're analyzing in an offer when you're going over the offer summary with your clients and analyzing offer one compared to offer two? 

RS: Yeah, I mean at the end of the day, it's do they understand the property? Every piece of land is not the same, and I think that's the biggest driving point is land is totally different than selling a self-storage facility on a cap rate. People are just buying income in certain locations, whether it's McDonald's or Starbucks on a cap rate. It's just you're buying credit and location and a lease term. It's probably a little bit easier to underwrite and appraise. Land is totally different. One piece of land on one side of the street could be worth double what the land on the other side of the street is, and people don't understand that where utilities are and moratoriums and future land use.

RS: There's all kinds of things that come into play that people just don't understand about land. And so our big thing is we know the land. And so if the buyer knows the land and they know the players and they have the right consultants and they've done it before, that gives us a lot more credibility to recommend them. You want to make sure that whoever puts on their contract isn't coming back on day 89 or 90 day due diligence saying, I need more time, or I didn't know this. I didn't know. I didn't even know there was this approval process.

RS: I didn't even know there was a moratorium and stuff that we all knew. And that's why typically the highest offer price-wise isn't the best because they're just tying it up and don't really understand the local dynamics based on some of the other buyers that we deal with. And sophisticated sellers understand that. They're more in timing, what you're going to do, deposits the price will always get worked out. That's my take. Make sure that they actually are going to spend the money and do what they say they're going to do and can get it across the finish line.

JO: Man, that's such a good point. And I want to circle back to what you said, do they understand the property? And I think that's so important because so many listing agents that I deal with don't even understand the property. And so it's hard for me to get my buyers to understand the property when a listing agent says, "Oh yeah, the central water line's available. It's right there at the property" And then you call the water district and they say, "Oh yeah, we're maxed out" We can't sell any more taps. And then you go get a quote for a water well and it comes in at $80,000.

JO: And that's what just happened to me last week. And you go back to the listing agent with this and it's of course, we're going to ask your seller to pay for it because you told us we could get central water there. And so it just, it baffles me how many land agents, or I shouldn't say probably land agents, but just how many realtors that dabble in selling land don't take the time to slow down and understand the property and the infrastructure and the utilities. And then put together a marketing package that clearly explains that and how much more money they would get for the property if they were able to clearly understand it and relay it to the buyer and the buyer agent on everything that they're getting themselves into.

RS: That's right. And time, save time. Time is money. If you knew all that going in, it may save you some time. And with the way interest rates have gone up, you may have been able to get it financed six months ago and the six month delay, now your rates have gone from five to eight. It's just, makes it really tough. So we do put together a marketing package on every property. We try and put together a frequently asked questions page on every property. Hey, what's the maximum zoning? What's the maximum height? Where are the utilities? What's the what are the impact fees? It just goes on and on. Who is the civil engineer? 

RS: We try and put that in. And every time we learn something new about a property, we don't know everything. Every time we learn something new about a property, we put it on our frequently asked questions page or in our package. We're always updating those 'cause at the end of the day, the buyers we deal with, most of them, they're in the business of development. They know what they're doing. If there's an issue with the site, they're going to figure it out. We're not trying to hide anything, sugarcoat anything. We want to tell them all the issues up front that we know of that a seller knows of, hear it all it, make the offer based on this.

RS: Because we don't want to get day 89, come back and say, Hey, I can't pay you 5 million. I got to give you 3 million because you didn't tell me about X, Y, and Z. So we're pretty transparent. We like to believe that that's why we get deals done. You can try and hide it, but at the end of the day, you just add more time and more frustration because likely that buyer is going to terminate and you may have five buyers that terminate 30 plus years and reputation is everything. We're not going to burn it and we're not going to try and lie and cheat. It goes back to ethics. We tell it how it is and want to get a deal done.

JO: Well, I think that's great. I'm a big fan myself of laying it all out there right from the beginning. If there's negatives you put those out there that way the buyer understands the property before they get up there and waste their time. But Ryan, thanks for joining us today, man. I think it's great that you're here. And one of the great things about our ally members is your willingness to share experiences and information and land deals are certainly complex, man. A lot of people think that they're a lot easier than residential, but with what you're talking about, these are not simple transactions. These are complex. And I hope our listeners are able to walk away with some positive things they can apply to their business to help make them better. Anything else you want to share here and wrap it up? 

RS: No, just thank you, Justin, for your time this morning. And if you guys have questions or want to reach out to us, www.dirtdog.com is our website. Feel free to shoot us emails, call me, happy to answer questions. We're here to help and highly recommend taking our RLI classes. They are well worth it if you're thinking about getting in the land business.

JO: Man, I strongly second that. And listeners for more expertise on land real estate topics, be sure to check out the RLI blog, follow us on social media. And of course, tune in for upcoming episodes of the Voices of Land Podcast.

[music]