GUPDates #1: February 2024

Hello everyone!

This is the first of what will be a monthly newsletter that we will be sharing with you all where we will be detailing what we’re doing, seeing, and buying in our businesses across the country. Over the years, we’re both enjoyed reading memos and newsletters from some of our favorite investors and businesspeople and wanted to share something similar with you all. Our intent with Ground Up Partners is to create a sustainable lending company that we can grow over the course of decades and we are very intentionally laying that foundation today.

We hope you all find this useful and engaging and we encourage any feedback!

Business Updates

What Dan is Seeing

It’s a strange time to be in real estate. In the southeastern US, it feels indistinguishable from 2020/2021. Properly priced properties sell in days and often get bid up above ask. Prices are going up everywhere we’re doing business and there seems to be no end in sight throughout the inexpensive markets where people are migrating. Juxtapose that with large multifamily/office where overbuilding (multifamily) and reduced demand (office) combined with current interest rates are causing significant distress and you get a strange market indeed! In El Paso County Colorado (CO Springs Metro) alone there are 20,000 apartment units in some stage of development yet I’ve had no issue renting my houses or larger units. Just about everything being built is 100+ small units so the studio and 2 bedroom apartments are where there is the significant oversupply. 

Reflecting on the aforementioned apartment overbuilding, I’m left thinking about the future of the SFR market in the southeast. Yes, it’s still severely undersupplied BUT I expect it will get overbuilt in time. Consequently, I’m setting the foundation for a shift into other segments of the market in my business while still getting what I can out of the current frenzy.

What Mason is Seeing

As Dan mentioned, the market seems to be heating up again. Builder confidence is up, rates are down, and it is once again turning into a seller’s market. That poses an interesting time for the acquisition side of the business as there is more competition and sellers have the ability to make a higher profit listing their land with a realtor; however, through relentless marketing efforts we are seeing a surge in acquisitions throughout the southwestern USA and southeast. 

On the sales side, there are more buyers coming into the market which is fantastic to see after a slower Fall. Many of my more rural properties are beginning to receive offers and sell after sitting on the market for a longer period of time than historically. The optimism that buyers and builders have throughout the country indicate that 2024 is going to be a strong year. 

What we’re working on:

Given the above, for any short-term transactions we’re focusing on the affordable markets in the southeastern U.S. where the population is growing rapidly. Regardless of interest rates, markets where new homes are selling in the mid $200s and there’s a substantial lack of inventory will continue to thrive in the near future.

Additionally, the lack of access to affordable capital within the land space is something we are working on solving. EVERYONE in our business has this same problem which presents an opportunity. 

Why Land Loans are Hard to Find and the Complexity of LTV in Land

For many, the dream of owning a piece of undeveloped land holds the promise of building a custom home, starting a farm, or simply enjoying a private sanctuary. But turning that dream into reality can be surprisingly difficult, thanks to the scarcity of land loans and the complexities of determining a suitable loan-to-value (LTV) ratio. So, why is securing financing for vacant land such a challenge, and what makes LTV calculations on these properties so tricky?

The Scarcity of Lenders: Unlike traditional mortgages backed by the tangible security of a house, vacant land presents a higher risk for lenders. It lacks immediate income potential, requires additional development costs, and may be subject to unforeseen environmental or zoning issues. This translates to fewer lenders offering land loans, and those that do often impose stricter terms and conditions.

Higher Hurdles for Borrowers: Be prepared for stricter qualifying criteria when applying for a land loan. Expect larger down payments (often 20%-50%), higher interest rates, and shorter repayment terms compared to traditional mortgages. You’ll also likely need a solid plan for using the land, including detailed construction blueprints or proof of agricultural expertise.

The Complexity of LTV: Unlike homes with established market values, vacant land valuations can be subjective and influenced by various factors like location, potential use, and access to utilities. Appraisers need to consider future development potential, zoning restrictions, and comparable sales of similar undeveloped properties, which can be scarce and geographically specific. This complexity makes achieving a favorable LTV ratio, which influences loan amount and interest rates, significantly more challenging.

The Business Opportunity for Ground Up Partners: 

Even Fewer Options for Investors: The scenarios discussed above are for borrowers who have the intended goal to use or develop their land themselves. If you are an investor who intends to buy a piece of land at a discounted rate with the intent to resell (something we do), then there are truly no institutional options available. By becoming the go-to solution for investors, Ground Up Partners sets itself up to capture a majority market share to be the capital option for land investors.

Experts in Land Valuation: By doing deals in dozens of markets throughout the United States, we have developed the necessary tools, processes, and relationships to effectively determine the value of land. With the ability to effectively verify through comparable sales the true differentiating factors between what can bring a higher value from one piece of land to the next, Ground Up Partners is effectively able to underwrite deals and ensure that the initial purchase price is substantially below the true market value of the land.

Involvement only in Land with Development Potential: Ground Up Partners name comes from the idea of investing in land that has the potential to be built on from the “ground up”. By avoiding “raw” land (such as recreational land, hunting land, agricultural land, etc.) Ground Up Partners increases the pool of end buyers for the product we are selling. End-buyer-financing is always an issue with bringing any new product to market but with the land we are buying and selling having development potential, it increases the likelihood of banks being willing to lend.

How you can participate: If you are looking for a passive opportunity to get involved in this space, we have countless deals that you can be a lender on. Ranging from $15,000-$500,000, and structured through a simple promissory note, you will receive a return upon the sale of the individual property at a rate anywhere from 7-20% of your capital invested.

What We Are Buying and Holding

Spaulding Ave, Pueblo West (closing end of Feb): “A sharp contrast to the cities up north, Pueblo West has almost 0 new inventory coming online AND is nearly out of water taps. From there, new construction will not be feasible unless the metro district secures more water rights (not easy) and if they do, prices will increase further. Given this, buy/hold is very appealing in this market. I’ve been talking to this seller for a year and a half and am optimistic that I’ll be able to buy all her buildings here.” –Dan

Rosita St, Pagosa Springs. “This project, thankfully, will be an extremely long term hold. While there have been constant setbacks in the renovations associated with doing the conversion from previous office space to a dormitory-style workforce housing solution, this property has all the characteristics for a great, albeit unique, buy and hold project. Pagosa Springs has an extreme shortage of affordable housing which limits the ability of a workforce to live there (as evidenced by the struggles of finding labor to complete the project). However, once the project is completed, it will significantly cash flow, be a great depreciation play, and is a long term play because the property is walking distance from all downtown amenities.” –Mason

What We Are Reading

  • The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources by Javier Blas and Jack Farchy. This has been an exceptional read for anyone who wants to learn about the business of trading commodities. It also offers insight into human nature and illustrates how much nothing really changes over the decades
  • The New Map: Energy, Climate and the Clash of Nations by Daniel Yergin. I’ve just started this one but so far VERY good. I’ll give my full take on it in the next newsletter once finished.


  • Determined: A Science of Life Without Free Will by Robert Sapolsky. I’m a huge fan of Sapolsky and his writings on human behavior. In Determined, he dives into the biological, psychological, and sociological experiences that humans have to discuss the idea of free will. Any reading material about how humans function and behave is always fascinating to me and I enjoy applying any learnings to business.

We hope you enjoyed hearing what we’re up to and the opportunities surrounding all of our business endeavors. Feel free to reach out to either of us to discuss how you can be more involved. 

Thanks so much,

Mason and Dan