Raw Land Eats Three Meals a Day
I was recently skimming through one of my favorite business books is The Road Less Stupid by Keith Cunningham.
In one chapter, he shares a simple quote reminded me of a lesson I’ve learned over the years:
“Raw land eats three meals per day.”
At first glance, it’s a funny statement. But for real estate investors, it contains a powerful lesson that can save you from making expensive mistakes.
Don’t Waste the Lesson
The chapter is titled:
“A Crisis Is a Terrible Thing to Waste.”
The premise is simple. Many people go through difficult situations, setbacks, and failures, but they never extract the lesson. They take the pain, the frustration, and the financial hit—but they never gain the wisdom that experience was trying to teach them.
That’s a costly mistake.
Every deal, good or bad, has something to teach us.
The question is: Are we paying attention?
What Does “Raw Land Eats Three Meals a Day” Mean?
Keith Cunningham shares a story about owning large amounts of raw land during a market downturn.
The problem wasn’t that the land was bad.
The problem was that the land didn’t produce income.
Unlike a rental property, raw land generally doesn’t generate cash flow. Yet it still requires money for taxes, insurance, debt service, and holding costs.
In other words, it constantly consumes resources without feeding you back.
Just like a child, it needs to be fed every day.
That’s what he meant when he said:
“Raw land eats three meals per day.”
Is Land a Bad Investment?
Absolutely not.
Land can be an incredible investment when purchased correctly and paired with the right strategy.
The key is understanding your business plan before you buy.
Many investors successfully:
- Wholesale land
- Flip land
- Subdivide land
- Develop land
- Hold land for appreciation
Each strategy can work.
The danger comes when investors buy land without understanding the carrying costs, timeline, or exit strategy.
How We Approached Large Land Deals
Over the years, my partners and I have completed several large land transactions, including multiple 100-acre tracts and a nearly 200-acre property.
When evaluating these opportunities, I kept coming back to that lesson:
Raw land eats three meals a day.
I didn’t want to take on massive debt payments while waiting for appreciation.
Instead, on our first two large land acquisitions, we raised capital from investors and structured the deals in a way that minimized our risk and avoided large monthly debt obligations.
That allowed us to control valuable assets without personally carrying all the financial burden.
The Deal That Taught Us a Lesson
One of our larger land deals was approximately 197 acres.
Unlike our previous acquisitions, we financed this one with a bank loan.
At the time, we believed we had a quick exit strategy.
In fact, shortly after purchasing the property, we secured a contract with a developer at a significantly higher price.
It looked like a home run.
Then the deal fell apart.
What we thought would be a quick flip turned into a long-term hold.
Years later, we were still carrying the property and making payments.
That’s when I experienced firsthand what Keith meant.
Raw land doesn’t care about your projections.
Raw land doesn’t care about your plans.
Raw land simply keeps asking to be fed.
The Hidden Cost Most Investors Ignore
One of the biggest lessons from land investing has nothing to do with land.
It has to do with opportunity cost.
Many investors focus only on potential profits.
Very few stop to ask:
“What opportunities am I giving up by pursuing this one?”
Every deal requires resources.
Those resources include:
- Money
- Time
- Focus
- Energy
- Team bandwidth
- Borrowing capacity
When you tie up significant resources in one project, you limit your ability to pursue other opportunities.
That’s a cost many investors fail to calculate.
Why We Chose to Partner
On one of our large land acquisitions, my business partner and I had the ability to purchase the property ourselves.
Instead, we made a different decision.
We brought in investors and partners.
Could we have potentially made more money by keeping the entire deal?
Maybe.
But we also reduced our risk, preserved liquidity, and maintained flexibility to pursue other opportunities.
Sometimes sharing the deal is actually the smarter long-term play.
The Bottom Line
Raw land can be a phenomenal investment.
But it requires patience, planning, and realistic expectations.
Before purchasing any land deal, ask yourself:
- What is my exit strategy?
- How long can I realistically hold this property?
- What are the carrying costs?
- What happens if my primary exit fails?
- What opportunities am I sacrificing to pursue this deal?
Remember:
Great investors don’t just look at potential profits. They evaluate risk, cash flow, flexibility, and opportunity cost.
And if you’re going to invest in raw land, never forget the lesson:
Raw land eats three meals a day.