How to Find Undiscovered Land Opportunities Before Other Investors | Nathan Tabor

Nathan Tabor (00:00)

Beautiful 11-year-old home. People owned a beautiful restaurant here in town, and they were great people. And we went in and looked at it. We’d given them an estimate 11 years prior, maybe 10 and a half years prior, for $500 to treat the home for termites. And they skipped over that $500 estimate, and 11 years in, subterranean termites had done something like $19,000 or $20,000 worth of damage. The first estimate, finally when they dug into it all and found all the damage when they started tearing into it, was almost $60,000 worth of damage that termites had done in 11 years.

Dylan Silver (02:03)

Hey folks, welcome back to the show. Today we’re joined by Nathan Tabor, an Arkansas-based investor and entrepreneur. Nathan, thanks for joining us here today.

Nathan Tabor (02:13)

Mr. Dylan, how are you today?

Dylan Silver (02:15)

Doing well, man. Doing well. It’s great to have you on here. What types of deals are coming across your desk these days?

Nathan Tabor (02:23)

We’re actually right now working on the next land grab. We’re buying land all the time. This week, currently the last couple weeks, we’ve been working on building two Airbnbs. I’ve got some full-time carpenters that work for me and they’ve been taking care of that and we’re overseeing that. And then I have one small Airbnb that’s really peculiar but got tons of character, that’s in Evening Shade, Arkansas, and we just got it up and it has been rented out I think if not every weekend since we’ve had it up almost every weekend. When I say weekend, maybe not the whole Friday, Saturday and Sunday, but at least one day of every weekend. And it’s been rented out through the week quite a bit. So we’re thankful for that.

We’re hoping that the others will rent out. We had this last week one of them was rented out. We had someone want to rent it again. Well, you can’t rent the same one twice. That’s why we’re building more than one. But yeah, that’s kind of where we’re at right now.

Dylan Silver (03:14)

I want to ask you about short-term rentals versus the traditional rental and how you determine which to position for a short-term versus a traditional rental when you are doing an acquisition, and what are the criteria that would make something a good short-term opportunity versus a traditional rental?

Nathan Tabor (03:34)

So I’ve been in rentals almost 16 years. Long-term, I’ve been doing that the whole time. I rented my second house out and that was when I started learning about rentals, was renting my own home and then we started buying a year later. Short-term I have been in less than three years, right around three and a half years. So I built one with a friend about three years ago. It was a type of deal where we agreed that I was selling a property, built a farm, building another property, and he said, “Look, if you go with me and help me build this, we’ll kind of go together and you can live in it while you’re building your house.” And so it was a partnership deal. It worked out well. It was a brand-new two-bedroom home, just standard home vinyl siding and beautiful front porch and concrete, finished concrete floors and a lot of the trends that are happening in our part of the country. And it has done well from the first month, the first day that I moved in that it was finished. Of course, we were there for a few months. Then the gentleman that has it now has rented it out. It’s carried itself. Brand-new home, complete investment. In the middle of nowhere. And this is what’s interesting to me. Like this one, the first one we done was literally like in the middle of nowhere. Like it’s more like 15 or 17 miles from the nearest Dollar General, if that says anything. You could probably find like a barn or a mushroom or something nearby, but that would be all that would be nearby the thing. There’s nothing there.

Dylan Silver (04:56)

So what made you say that’s going to be the short-term opportunity?

Nathan Tabor (05:48)

When you love real estate, when you love something, you don’t want to leave one corner of it unexplored. When you really like something, and it’s in your heart, and not only that, when you see the use of it, I think everything we do is for the future and not just for today, and I even believe that it’s for the good of mankind if we do it for the glory of God. That’s why I believe it. Not everyone would agree. That’s up to them. That’s what I believe. And so for me, it was just exploring another corner of something that I already had an appreciation and love for. I’ve started a bunch of businesses. I had gun shops. I was one of the youngest guys ever to have an ATF license in the state of Missouri. I had a gun shop on Front Street in Thayer, Missouri when I was just a kid. I’ve started, you name it, I think somewhere around 12 businesses. Started pesticide companies. I’ve done it all. So I got to looking at men that had really made money, and all the millionaires and billionaires had one thing in common: it was real estate. Yeah, almost every one of them. And so at some point I’m like, I’ve had all the ambition with a good throttle for years, why not put that in something that other people have succeeded in? And so as I began to put it in real estate, that same ambition and the same desire, it did start to succeed. And I’m by no means at the pinnacle of success or by no means where I would like to be, but I’m definitely headed in the right direction. One thing I would say, I would tell anyone, when you have a history of making deals that are making $100,000 plus and even quite a bit beyond that every time in a small town, that’s pretty good. That’s not failure status. And so anyway, I’m very thankful that we have found something that I feel like there is a future in. I feel like we’re not without stepping stones either in the future. And that’s kind of where it’s at.

Dylan Silver (07:32)

I want to ask you about ground-up construction. You mentioned, I believe, the short-term is going ground-up. Yes. And this is a different beast entirely, especially for folks who may not have done this before. How did you get into ground-up construction?

Nathan Tabor (07:46)

So I actually, my grandfather built quite a bit. My dad built a few homes, remodeled some, built one from the ground up, maybe two. He had some experience, and so I’d been around it quite a bit, been around building a lot, grew up with a hammer in my hand. I think my dad built me my first workshop when I was probably eight years old and handed me a jigsaw, and I was probably nine when he bought me my first chainsaw. So the ground-up construction came a little easier for me than most people because literally I’d had tools in my hand since I was a kid. So it was kind of natural. It’s not that easy for anyone. But on the flip side of the coin, I have a friend that had never done ground-up construction. He was a horrible lag, he wasn’t really great at building, and he has turned out to be a really good builder who I respect. Ricky Douglas, his building skills are phenomenal. He’s in our part of the country, and I just wanted to throw his name out. But I respect his building skills, and he came from no experience, no help, no hammer in his hand as a kid. So anyone can do it if they want to. I would say it takes ambition and a seeking of knowledge. If you seek for knowledge with something, you’ll find it, and you mix that with ambition, you’ll get that.

Dylan Silver (08:54)

There’s a lot of potential pitfalls for folks who have not done ground-up construction, things like soil testing, things like the foundation, and understanding that ground-up is totally different than a fix and flip because you could be successful even at doing a roof-to-studs flip does not necessarily translate to ground-up. Do you agree with that statement?

Nathan Tabor (09:17)

Absolutely. Absolutely. The number one problem we have with ground-up construction, and I would say it’s probably one of the biggest problems you see with fixers, remodels, flippers, is people come in, it’s kind of like the principle of this. I had a friend that bought a truck last week and the truck looked great. He found out like five days after he bought it, the whole frame’s rusted out. So it’s the same thing with a house. I can’t tell you the times that people have bought homes to flip, and they literally flip and sell—and this is one of the problems with the laws in the state of Arkansas, I wish they were a little tighter, they allow for people to sell a house that still has cancer. Some states don’t. I mean, I hate to say that, I love our state, but I really think if you’re going to flip houses, you need to do quality work. You need to know that home’s not covered in mildew and mold underneath. They don’t have black rot and white rot fungi. You need to know that the foundation is sitting on good soil. I’ve seen house flips where they look real good the day of, and three years later they look horrible. Poor people at the bottom are hideous. Well, that’s the fastest way to find that your client relationships not could fail, but will fail.

Dylan Silver (10:19)

Yeah. And one of the things that comes to mind when I hear this, and I wasn’t aware of that about Arkansas, but I’m using my Texas realtor hat now, is there’s a lot of people in Texas, and I’m curious to see how it is in Arkansas, who are realizing that they can get in many cases a new construction home for just about the cost of a pre-owned home. Now it might be smaller, right, but you’re going to be able to get potentially a lower interest rate. It’s new, it’s got a builder warranty. I’m seeing more people look at new construction now than ever before. Are you seeing a similar trend out there?

Nathan Tabor (10:53)

Yes, absolutely. There’s tons of new construction even in our area. Very much so.

Dylan Silver (10:58)

Well, when folks are looking therefore at investment opportunities and they’re thinking about flipping, one of the risks that they have to realize is traditionally they weren’t going up against new construction, but now they are, right? Because if you flip, let me just use whole numbers, you’re going to list it for $200,000, and there’s some new builds that are going to be potentially right around there, if not lower. And so you have to be competing against them. And that’s a difficult thing to do in your pro forma when you’re looking at land acquisition and new construction opportunities. What’s your buy box? What are you looking for? What catches your eye?

Nathan Tabor (11:34)

When I’m looking for new construction, it is all about the location before I ever start laying a block. And key would be to find a location that exists that no one else knows about. There are lots of times that you’ll find land that the trees are hiding an immense amount of beauty. And we just, for instance, we bought 16.2 acres right here behind us. It doesn’t join us, but it might as well because we have easement all the way to it. We have an easement lane and we can literally walk to it, but it is a separate block from our land that this place sits on. By the way, the house that I’m in is a very peculiar structure. This is a Quonset hut that’s been finished out. It’s the coolest Quonset hut in the state. It really is. You can go online and look it up, it’s on several forums. It appraised during the building process for $327,000. That was before it was finished, and it’s a Quonset hut. So anyway, yeah, that’s just a different deal in of itself. I’m sitting here at a concrete island that was built out of rocks from the yard actually. So anyway, yeah, pretty cool. All timber frame construction on the porch, that beam back here weighs 600 pounds. It’s kind of peculiar for sure. But…

Dylan Silver (12:41)

Do a lot of people, not just investors but buyers in Arkansas, are they looking for these opportunities to have these niche unique homes that you might not see in other areas of the country? We were talking in the green room about like these treehouse Airbnbs. Does that also translate into single-family homes to an extent? Are you seeing niche construction that you might not see in other markets of the states?

Nathan Tabor (13:06)

I think so. I think a lot of people that are buying are looking for home, but they’re also looking for fun. They’re also looking for food. They’re also looking for things that will sustain them at home. So our last farm we bought, it was a foreclosure, it was a mess. It was like a deal where it had to close in just a few days. I borrowed the purchase price on a one-year note, it had to be paid in full in one year. It was $179,000. You don’t borrow that much money on a note that has to be paid in one year. I said, I feel like this is what I need to do. We thought about it, prayed about it, felt like it needed to happen. I made the purchase, it was scary. Sold my other house, I made $100,000 on my other house. I was able to only end up owing like a little bit on this one. When I got done putting about $15,000 in, my first appraisal was like $460,000. And then the next appraisal just a little while later was just right under $500,000. Three and a half years later, I sold it for $485,000, and I kept half of it—kept half the land and some rentals that were on the property. So that figure honestly is hard to imagine, but you can look it up on Zillow and you can find out that’s how it is. But we were very blessed. The neighbors were good to us. The community was good to us. We didn’t just go there to make money. Honestly, I thought I’d be there a long time. It’s just when we found ourselves with the home finished and found everything like we wanted, we felt like you sometimes step from opportunity to opportunity. Yeah, we felt like there was a greater opportunity elsewhere, and we felt like it was an opportunity to get there, and so that’s what we done. So in the first half, no, we still got the land, but the first half just a hair under $300,000. We’ll profit right around $400,000 when it’s all liquidated off that purchase.

Dylan Silver (14:44)

Good deal.

Nathan Tabor (14:44)

I did end up buying the land next door. So I had I think $60,000 more into it, so I actually had $85,000 total because I bought 5 acres behind me. So I had $179,000 plus $85,000 in. I think it appraised out over three-quarters of a million, if it tells anything. The whole property did, so…

Dylan Silver (15:03)

You mentioned the nerves and it can be scary purchasing land like that. And I’ve heard from so many investors that there’s really a lot that goes into purchasing land, especially raw land. I’m not certain that all of these things would apply in this purchase specifically, but you have to look at what can this land be used for. You also can’t just trust carte blanche in what the opposing realtor says, right? Because you could purchase something that might be landlocked, that might not be buildable for what you’re looking for, and so therefore people do have to do their due diligence. On your end, what does that look like? When you’re looking at purchasing land, what is the due diligence that you’ll put into it?

Nathan Tabor (15:45)

Well, it comes natural. I think it’s like this: you gain as much knowledge in any one specific subject as you want to gain. Some people have the capacity to have more than others, I understand that, to retain it. And I’m probably one that’s on the lower end of that, I have to keep studying. But yet the truth is, if you study real estate, if you love real estate, study it, spend your time. Your marketing skills or marketing knowledge will come from—I’ve gained marketing knowledge from watching Facebook. That’s funny, but going online and watching what’s selling in my area from Facebook, from even Zillow, from whatever source, I can watch what’s happening in that area. So for instance, I don’t want to buy a piece of land and build on a piece of land in an area where there’s not been a house sale for over $100,000 in the last six years, because there’s no comps. Not there’s nothing, and your comps will really affect in Arkansas—now I don’t know if they do that in Texas, but it’ll really affect what I’m able to get from that land and that house. For instance, that farm place I bought and remodeled the house and then resold everything, it was sitting on the edge of a large housing addition that’s probably one of the nicer housing additions in or around Batesville, Arkansas. It’s called River Ridge. So it set on the edge of River Ridge. My farm was the first farm you saw when you rounded the curve near that housing addition. And I painted a bunch of the fence, built new fences, made it look real pretty from the road. Aesthetically it was very pleasing. And with that being said, I had learned to do those things by watching what properties were selling online and which ones weren’t. And the ones that sell and make money, I can’t emphasize this enough for sellers, is don’t burn out. Don’t be lazy in your project. Because if you get a little ways into it and you begin to get lazy and lose heart, you will only meet part of the potential of what that property could do. And I can’t tell you, even on new builds, we’ve finished out a lot of new builds that we didn’t start because somebody else came along and started it and never finished the build.

Dylan Silver (17:46)

Why do you think that happens? I mean, there’s so many reasons, right? There’s contractors and people not managing the contractors effectively and maybe some deals that go south. But you also seem to have people that maybe didn’t understand the scope of work that would go into it, run out of cash, right? Is there one reason in particular that you think that would happen?

Nathan Tabor (18:06)

I’m of the opinion that our American economy, we’ve got to a time in history where we want everything now. We want everything easy. Not all of us, but some of us do. Probably not you. Obviously, you wouldn’t be doing the footwork of what you’re doing here. But a lot of people, they want to come about it without any effort. And obviously, that’s where you and I want to end up. We want to get to that place, but we want to have built a plateau or a footing that will support us once we do. There’s a difference. And so a lot of folks want to get there, but they have no footing. A tax woman told me one time, she said there’s three people in the American economy: there’s bottom feeders, there’s swimmers, and there’s floaters. And I kind of agree with that. There’s folks that are on the bottom, they’re going to be on the bottom their whole life, and thank God I’m not quite there. I’m not a floater either. I’m somewhere in the swimmers category. But if you’re going to swim, go far. You understand what I’m saying? If you’re going to do it, do your best.

Dylan Silver (19:00)

To get a little bit granular on this idea and what you’ve done, selling a farm, pricing it, and then selling it. You mentioned that it was on the edge of a housing addition, so there were a bunch of homes, and then there were some farms on the other side. When you’re pricing a farm to sell, I mean, are there recent farm sales or are you looking at what those homes are selling for and then saying, “Well, the home’s worth this and the land’s worth this, this is where we’re going to price it at the start”?

Nathan Tabor (19:25)

Well, let me clarify. I had some farms around me where there were like hundreds of acres, thousands of acres. I just had 20 acres, and then I had a deal where a friend of mine owned the land behind me and it was right at 100 acres, and we were going in partnership on it to build some housing. So I didn’t have a huge amount of land like a lot of people did. I had 120 acres to work with, and I didn’t even own all of it. But the deal was this: anywhere you’re building or buying property, you need to be aware of your surroundings. Because if you’re not aware of your surroundings and you haven’t done due diligence, what’ll happen is when you get ready to sell, you’re not going to be able to sell that thing. And one more thing I don’t want to miss with alternative structures like you mentioned with treehouses and Quonset huts, if you’re going to build structures like that, you need to have it in mind for it to be long-term. Because honestly, I think we’ll find out maybe someday. This one we have built where I am, it’s fully insured. The insurance company passed it as a traditional home, but it was the first Quonset hut of this type that they’ve ever insured. And I did have trouble with some other insurance companies even wanting to insure it because they couldn’t fathom how a Quonset hut could be worth over $300,000. And that’s not the land, that’s the house and the little chunk of land here. That’s not all the land. So this property here should appraise at this point between $500,000 and $600,000 with the secondary structures we’ve built. Like I said, we have three Airbnbs. One’s up, two are well on the way, and then the property will go between $500,000 and $600,000.

Dylan Silver (21:00)

Pivoting here, Nathan, as we’re talking, I’m thinking about all the people who are looking for opportunities to invest in states like Arkansas and then markets like the one that you’re in. But oftentimes this comes with an increased degree of difficulty because people don’t have boots on the ground or they have to make those connections. Are you seeing out-of-state investors pouring capital into certain markets in Arkansas?

Nathan Tabor (21:26)

Not much. Not much. Very little. I have one investor in Oklahoma that’s a good man and he’s solid, and me and him’s done a little bit together. We bought this piece of property with a double-wide mobile home on it, two single-wides. We sold the single-wides with the land, and basically we got the double-wide and the land for free. We’ve done well with that. Very little experience dealing with investors. I’ll just be honest with you, Dylan. I’ve operated on cash. The guy that owns a pawn shop don’t know much about investors. You understand what I’m saying? Investment’s in a stupid safe in the back, and it may not be as much as some guys, but it’s a lot for that part of the country.

Dylan Silver (22:06)

I hear you. And what’s interesting as we talk about this is that you talk about your approach to investing, and it’s really based on your experience. You have an intuitive understanding of what the value of the land is, what the value of this home is, because it’s your backyard. And I can say the same thing about Texas real estate, right? Now if I take a step back and try to appraise something or value something based on not living there and just based on what the comps are going for, it’s a little bit harder. Like you’re talking about how the insurance company might have a difficult time understanding the value of this because this might not be their domain. They might not be doing deals in your neck of the woods all of the time, and so it adds a layer of complexity to it. Which brings me to my next point: if folks are looking at investing in Arkansas, what should they be looking for?

Nathan Tabor (23:00)

I would think if they’re looking to invest here, they should be looking for undiscovered land. There’s a lot of beautiful land. For instance, this piece that I just bought, the neighbor came walking over, and he literally showed me a geographic marvel that’s like a couple hundred feet from the edge of my land right there. I mean, just… and so there’s just beauty that hasn’t been discovered. If you want the diamond, you may get some—and I shouldn’t say this, this is from a country guy—but if you want the diamond, you may get some ticks. You understand what I’m saying? In Arkansas, you get ticks in the woods, they’re hideous. It’s dangerous. Just spray some stuff on and go through the woods and look at it. And the same way with house flips. If you’re going to do a house flip, either pay somebody that’s reliable to go under and photograph everything underneath there or do it yourself. Put eyes on the attic. Don’t ignore the attic. Put eyes on it. And so real quick, going back to the scenario of flips, like I said, I’m not an expert in flips. Most of my flips have been more long-term, like at least two, three, four years. What’s that?

Dylan Silver (24:09)

Yeah, slow flips, right? That’s what they call them, slow flip.

Nathan Tabor (24:12)

So let me say, which I personally think if you can do a slow flip over a three-year period in Arkansas, if you live in it for two and a half years, you don’t have to pay taxes on the sale.

Dylan Silver (24:21)

I mean, that’s a big opportunity. On the tax side, this is something else that sometimes real estate investors discover along their journey and might not be thinking of it immediately. But I’m imagining that if you have the opportunity to do ground-up construction, with cost seg analysis and all that goes into that, there’s a lot of ability to potentially have good effective tax strategy when you’re looking at undiscovered land and also putting new property on it.

Nathan Tabor (24:49)

When looking at building ground-up, make sure you get your soil right. There are so many people that ignore soil. If you build on soil that’s moving or that’s not a good compactor compared to good soil that can be brought in, compared to your house giving trouble with foundation, they’re very inexpensive. And another one that’s very inexpensive that people miss, if you’re going to build a $300,000 house, why would you not spend $1,000 or $1,100, $1,200 to have the thing treated for termites? It’s the stuff that people don’t do, the small steps that end up coming back and hurting them.

Dylan Silver (25:27)

Yeah, I mean that’s a big one, right? I mean, you talked about two things right there: compacting the soil… when we look at foundation issues, I’ve seen homes where there’s foundation issues almost immediately after the home has been built, and you wonder how could that happen. And you look at it and a lot of it has to do with the soil. And I’m no expert in this, I haven’t done this myself, but in talking with folks like yourself, this does seem to be a sort of learning curve, right? And unless you have experience doing this, you’ve really got to find the right team, otherwise you could find yourself in a situation where you’ve got a new home with foundation issues.

Nathan Tabor (26:06)

That’s correct. And it happens often. We worked on one home that was 11 years old. Okay, I’ve got to tell you, I owned a pesticide company for years in Thayer, Missouri, that’s still operable there—good guy owns it, it’s called First Class Pest and Termite Company. I started when I was just a kid. And so anyways, but with that being said, we had this 11-year-old home, we got a call. Beautiful 11-year-old home. People owned a beautiful restaurant here in town, and they were great people. And we went in and looked at it. We’d given them an estimate 11 years prior, maybe 10 and a half years prior, for $500 to treat the home for termites. And they skipped over that $500 estimate, and 11 years in, subterranean termites had done something like $19,000 or $20,000 worth of damage. The first estimate, finally when they dug into it all and found all the damage when they started tearing into it, was almost $60,000 worth of damage that termites had done in 11 years.

And so it’s like, don’t save money on the small things that matter. Take care of the things that really matter most and build on a firm foundation if you’re going to build. And I would say this too, if you’re going to be a house flipper, if you’re going to be a builder, if you don’t care about that structure, and you don’t care about your clients, it’s that simple. If you don’t have a conscience about that thing standing in a windstorm, and you don’t care about your clients… and if you want client relationships, Sam Walton said it like this: he said the customer’s always right. It goes back to Sam Walton, you know, and the truth is clear paperwork, good contracts, make sure it’s all in writing because the truth is I forget and customers forget.

Dylan Silver (27:46)

That’s the truth.

Nathan Tabor (27:47)

If I have it in writing, I can go back to that contract and say this is what was said. That’s very important if you’re going to do any of the above. If you’re going to do house flips, if you’re going to do anything, make sure you have paperwork. If you want referrals, they will not come from arrogance, they will not come from lies, and they will not come from shafting people. Now, let me say it like this: I’ve had people that disagreed with me, but it’s been many years since I’ve had a person truly think that my intent was to do them wrong. Yeah, I’m proud of that. I want it to be that way. I say it like this: powerful presentations always pinnacle at truth. That’s the truth. I’ve seen contractors and builders and house flippers and real estate investors that try to feed some stupid lie to people as if the customer is always ignorant. And the truth is it don’t work. A lot of times when I’m dealing with somebody, I just tell them the truth whether it hurts or not.

Dylan Silver (28:45)

I mean, over the long term, especially if you’re looking to have repeat clients and referrals, you’re building a brand, right? And so if you think short-term, it’s not going to help the long-term. It’s almost like a balance, right? So if you do things that are going to help the short-term and hurt the long-term, of course the long-term is going to suffer. And so having that long-term mindset, of course, is probably the right way to do things most of the time. We are coming up on time here though, Nathan. Any new projects or activities that you’re working on? Also, anything you’d like to mention directly to our audience?

Nathan Tabor (29:59)

Compared to what some of them are in the city, I’m just a country boy. But we are building some Airbnbs in Evening Shade, Arkansas. They’re called Graceful Woods Retreats. And we’re going to have three of those. One of them is already open. It’s an old barn that the back of it’s finished out. It’s really cute, a lot of character in it, good place to take pictures with your family. We’ll have it decorated up this week for fall. Obviously, want to keep those rented out. The second one we’re building in a Conex. We have some flip houses that we’re working on right now and hoping to do maybe five new construction this year. I want to say I appreciate you allowing us to be on the podcast. I have extreme ADD, I’m glad you don’t. I make a good entrepreneur, but maybe not the best at a podcast, but I still enjoyed it. And I really do love real estate. I could say that from my heart to your heart and to anyone else’s heart: real estate has really been a blessing to us, and it’s something that I’ve been able to definitely do well with.

Dylan Silver (30:51)

Nathan, thank you so much for joining us. Thanks for your time.

Nathan Tabor (30:54)

Thank you.