Even better, he has figured out how to automate much of the system so it becomes almost passive income and in the case of installment sales literally passive income that can stream in for years down the road.Very eye opening conversation and it left me with lots of food for thought!
Show Links:
Website: http://www.thelandgeek.com/
Email: mark@thelandgeek.com
Twitter: @thelandgeek
LinkedIn: https://www.linkedin.com/in/thelandgeek
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Transcript
Matt: Alright! Well, today’s guest is Mr. Mark Podolski from thelandgeek.com. I am very excited to have him. One, because I think he’s got an interesting story to share with us. And two, I’m dying to ask him some of these questions because I’ve always heard a lot of negative things about land and land investing. I have a feeling he’s gotta shatter some of those myths for us. But before we jump in to that, let me just give you the opportunity, Mark. Why don’t you give us kinda a little bit of your background, how you got started and where you at today?
Mark: Yeah, sure. Thanks, Matt! Thrilled to be on the podcast. The way I started I was a kinda a miserable cubicle investment banker. I have this high pressure, terrible kind of existence working with mid-market companies, private equity groups, strictly mergers and acquisitions. Then, I met this guy. He is telling me that he is going to Tax Deed Auctions buying up raw land, pennies on a dollar, and flipping them online is making 300% return on his investment. I’m from St. Louis. I’m from Missouri. [Inaudible 0:05:29.9] so I don’t believe him. So I got to this auction with him in Mexico and I buy up 10 properties. I have to take the properties at $300 each. Sure, though. Thirty days later, I’m flipping them online $12,000 each. That’s 300%. So, I take all that money and I go to another Tax Deed Auction in Arizona and there’s no one in the room that’s buying properties for like next to nothing. The next 6 months after that auction. I made over 300%. I made over $90,000 and I am miserable at my job. I said to my wife, “I think I’m onto something. I want to quit my job and invest full-time in land.” She said, “Absolutely not.” So, for 18 months I worked part-time in land, full-time investment banking job and once the land income exceeded my investment banking income, I quit. That was in 2001 and I’ve been full-time land investor ever since I’ve flipped over 5,000 parcels and I love it. For me, it was just really a fantastic way to get out of a dead-end kind of job that I hated, be my own boss but at the same time create systems automations so I can even get out being a sole entrepreneur whereas what I called Solo Economic Dependency. That is if I’m not working, I’m not making any money because now I make land cash flow. I got what I call “The Best Passive Income Model” where it’s a one-time sale and I get recurring income, passive income but I don’t deal with the headache of real estate. I got no tenants, no toilets, no termites and no trash. That’s really how it all started, Matt.
Matt: That’s pretty impressive. I think a lot of people can relate to the kind of cubicle dwelling drone. A lot of people are looking for an exit on that. But if you jump in to any old business, particularly one that maybe a good business but you don’t have a lot of passion for, you still kinda got that challenge. So you’re talking about a business where it’s much closer to a passive income model although you still have to do your work presumably sourcing the right deal and maybe traveling around and doing that kind of stuff but once you’ve done the deals and you’ve set up cash flow, it does sound like a pretty attractive model. Yeah, I mean, I’ve got clients of mine that work at this for 2 hours a day. There is over $10,000 a month passive income. It doesn’t require a lot of time and this is with the model. Right? We don’t even need to go out and look a property because technology in crowd sourcing takes care of all of it. So basically, all I do is I look for somebody who is distressed with a piece of raw land. How do I know they are distressed? They owe back taxes. If they even live out of state, that’s even better. That’s like the lowest hanging fruit and we send them an offer for their property that’s $10.23 and then we could do our due diligence on that property using Google earth and you can do less than $50 on Craig’s List gig to have somebody physically go out to the property, draw up your proper report, you buy it and short after you could put it back online on Craig’s List. No cost of marketing. Matt Remuzzi doesn’t need to do it. I don’t need to do it. A VA can do it and you got your marketing systems involved and then it’s very simple. It’s a very simple model. And the margins are massive. Three hundred percent on cash flips, and over thousand percent on owner financing terms.
Matt: That definitely sounds pretty impressive. It sort of goes against what I always heard about land investing was it wasn’t a good idea because you could depreciate it. It didn’t cash flow and appreciation was hit or miss unless a highway was coming through or somebody who’s buying upland to build a mall or something. You can potentially sit on that same worthless piece of land for the next 30 years without it ever going up a dollar. It sounds like you’ve figure out a way to overcome all those obstacles particularly, and I think this is the case for most real estate and a lot of business in general, is the buying right part of it. If you buy it for the right price, then you are more or less locked in your profit when you bought it.
Mark: Exactly. So, I always say to people, “There’s a pig for every barn. Just because you and I don’t think it’s a good property, it might be 30 miles from the nearest town, there’s this huge segment of the population called preppers. They would love that kind of property and would be happy to invest on something that they don’t have to maintain. They don’t have to protect. If they need to bug out to an area, they had something that’s affordable, that they own and they sleep better at night knowing that they got this valuable piece of land for them.
Matt: One of the key pieces that it sounds like to this system is to know where to go to find this land for sale where you can find land that’s got taxes in the rears and then make offers to the owners. That seems like maybe one of the things that you’re teaching people how to do that. It’s not obvious to the average person. Will more people would be doing that kind of thing?
Mark: Yeah. It seems you got this massive market. There’s over 32,000 counties. There’s over 2.8 billion acres of land and a very few [inaudible 0:11:16.1], hedge funds, private equity groups, big money just like you said in the very beginning of the podcast, don’t like the space because they don’t. You’ve got this nice niche of modern pop players in there. There’s very few big companies doing this in a massive market. You, me and a million other people, we would all have money before we ran out of deal flow. It’s pretty crazy. There’s enough for everybody. I get that question all the time like “If you are teaching all these people, Mark, how to do it, aren’t you creating your competition?” and I’m like “No! Not at all. I can’t buy it all. You can’t buy it all. There’s tons.” I mean, even the single family home. There’s enough for everybody. It’s a massive market but the nice thing about our niche is you don’t go to HDTV or the DIY Network and see who flipped this land? It’s kind of this unknown, kind of hidden gem, where you are not running up against hardly anybody if you ever do it. Since 2001, I’ve never had somebody call me and say “Mark, I got your offer letter and I got 2 others just like it. Yours is the lowest.” It never happened. It kinda gives you an idea how big this market it because there’s one county in Texas that has 48,000 properties available. It’s huge. I look really at South West in Florida because those are the states that have some growth to them and tons of inexpensive parcels of property.
Matt: Well, what’s interesting to me is if you’ve been doing this since 2001, you’ve been through some real estate boom markets and some real estate bust markets. Obviously, the overall economic conditions are not necessarily a factor in being successful. Everybody was a real estate agent in 2005 at least here in southern California it seemed like everybody was something or real estate agent that had a deal for you. Then in 2009, all those people are gone in the market. There was like 4 real estate agents left. So, that doesn’t appear to have slowed you down much. Are there limiting factors even though there’s plenty of land and economics aren’t necessarily an issue? What are the limiting factors in this?
Mark: The limiting factor is basically the way you hustle. In a hustle in business in the sense that you got to make offers. You got to have a team and systems and automations in place to scale because if just you are doing it, then you basically create another job for yourself which isn’t good. Right? You and I are the limiting factors. I think it’s more of a mindset, basically. And the fact that you go out after you ran out of money and when you raise money and continue your deal flow. A have a lot of people that they invest $10,000 in the property and then they are doing financing terms and they’ve got stop their deal flow because they need to get their money out first before they can start buying more profit. Don’t stop your deal flow because there’s always money if you buy any asset. Doesn’t mean raw land. You can buy anything $10.23 and you can put it wholesale to somebody $50.60. That put a dollar into it. the great thing about raw land is that because there’s so little competition, personally I don’t have any competition, is that you can just wholesale that out or you can even extend your due diligence period right? So, you don’t have any money. You can slack up a deal, find a buyer and do a deal close. It’s that simple. It’s a very simple model.
Matt: Well, dealing with land obviously cuts out a lot of the other issues. We have clients who are real estate flippers and they for the most part, once they got it figure out, they can make pretty good money doing it but there’s a big learning curve in figuring out what properties to buy, what kind of fixes they can do, what contractors to work with and all that kind of stuff with land, it is what it is. You’re pretty much done when you bought it, right?
Mark: Exactly. You don’t have to deal to the rentals, rehabs, renovations, runs and you don’t have to deal with the owner’s legislation because land is exempt from the safe act, [inaudible 0:15:59.8] and why is it exempted? Because we’re not dealing with a tenant.
Matt: It makes sense. Are there any gadgets in buying land? Do you find out after the facts somehow that it’s got some kind of environmental issue or something?
Mark: Yeah. If you didn’t do your due diligence, sure, you can buy something that’s gonna lean on it and [inaudible 0:16:21.2]. It doesn’t have legal access, its land locked. It’s on the side of the mountain. But even still I made some mistakes and I still made money. I had a client of mine, he bought a mud pit. He was like “Oh! I’m never gonna sell this property.” He sold it in 4 days and he made $21,000 out of the flipped because sure enough, there was somebody who wants to ride their quads on the mud pit. It’s crazy. I really know there’s a pig for every barn. You can buy a swamp land and people can grow Shutaki Mushrooms on swamp land. I bought property that I thought was a mistake. It was on the side of a mountain in the Mexico. A director in LA bought it from me because it was like this beautiful picturesque area and he didn’t want to have to get a permit to shoot on someone else’s land so he brought the property.
Matt: Well, yeah, I guess there is a buyer for everything if you just know where to look.
Mark: Yeah. I’ve never been stuck on a piece of property. They all sell.
Matt: Yeah, and I guess if you did buy it $10.20 then you only have to go a few cents over what you bought it for to at least get your money back. It would just still 80% discount face value so you should be able to sell it for that.
Mark: Yeah. Absolutely. On average, people make 300% to 1000% on these flips.
Matt: So, if I’m sitting here in my office in San Diego, am I able to look out and investigate and purchase these properties all over the south west in Florida or anywhere else? Or is some travel involved? Is there some on site required of me?
Mark: No. there’s no travel involved. I can’t tell you the last time I went to physically look at a piece of property because again, you just have somebody go out there and take pictures and fill out your profile report and leverage your time. You can use Google earth as well. With technology, you don’t need to do that. What you just need to do is call a county treasurer. Get the list of people that owe back taxes and do a little bit of research and see “Okay, where are the comparable sales?” send them offers. Again, I don’t want to be in appraisal business. So I don’t say – like housing guys will send out a letter saying “I’m interested in buying your house.” Well, I’m interested in selling at the right price. I don’t need that. I actually send an actual purchase agreement making authors. So it’s just a numbers game.
Matt: Yeah. I was just gonna say that it sounds like at that point if you put together a checklist and the ones that meet the criteria you put your letter in the mail and the certain percentage of them are gonna turn around and become deals. At that point, yeah, it’s just a numbers game, the amount of capital you have, the expected acceptance rate of your offers and how much volumes can you do and what are your limitations, either capital or time or both.
Mark: Right. And time should really be an issue once you got some confidence and created your systems and if you just be completely automated. I mean, you should get to a point where you look on Friday at a Profit Report and you see “Okay, how many properties did we buy? How many did we sell? And how many are pending?” That’s when you have a business. That business is a business only because it’s running without you and it just as be a machine at that point.
Matt: Yeah. I’m definitely a big advocate of that. For any kind of business owner and entrepreneur, you put as many systems in place as you can so that you can take yourself out of it as much as possible. It doesn’t mean you don’t go to work every day, you don’t enjoy what you do, but you have the ability if you need to to stop away for a day or a week or a month and your business continues. Not only to run but continue to grow and generate income and so on for you, that for me, is kinda the end goal or should be the end goal of anybody that gets into business to be able to back away from it. It sounds like you’ve got a model that would do that and yet can scale large and yet you have a fairly small requirement for people to be able to help you and run those systems.
Mark: Yeah. Absolutely. We got software now that has automated 85% of our business. So, that’s tremendous.
Matt: Is there any risk for you that it becomes easy enough that some big players do move in and start under cutting it or is it just so big and so scattered that’s that’ll never happen.
Mark: Yeah. It’s never gonna happen. It’s too big. It’s too scattered. Again, there’s enough for everybody.
Matt: Where do you go from here? You’ve been doing it since 2001. You’ve had a huge amount of success – 5000+ properties flipped. Is the education sort of the growth center of what you’re doing now sharing your story and your plan with people or you just kinda get bigger and bigger and bolder the whole way and more land, more deal?
Mark: Yeah. I love it. After doing something for over 10 years, you do want a new challenge. So I do enjoy the education aspect of it because I got people calling me and e-mailing me and they send videos for me saying “Mark, you changed our lives.” Nobody has ever said that to me after buying a piece of raw land. So, it’s a different type of feeling of accomplishment. So, I like the certain aspect of raw land knowing that it’s providing for my family. It’s providing for my children. That’s really my sort of ethical obligation to be successful and do that for my family. But then on the other side of it, I want now to contribute and give back and be that pebble in the pond. Because if I just changed one person’s life and they don’t have to work as hard. They’ve got the retirement. They’re providing for their children. It kinda ripples out like a pebble in a pod and touches everyone in their lives. It’s just something that is a legacy. That’s kinda my why. That’s why I do it. It’s really gratifying in that respect. And then, just the entrepreneurial side of me like “Okay. So, we had pin points in our business right because people do ran out of money.” Solve the math. We started a note business again. We’re buying parcels on peoples notes because when they ran out of money, then we are providing that capital for them. We were taking 12 to 18 months of the cash flow and then we return that note back to them so they can continue doing more deals. That aspect is a lot of fun as well. Creating better systems and automations. Providing education is actually making me a better land investor as well. And the collective intelligence of my community is incredible. I’m just really proud of it.
Matt: Yeah, that’s awesome. It’s great to be personally successful but I think it’s even more gratifying to be able to help other people be successful as well and share the knowledge like you said kind of have a real impact on somebody’s life. The more you do it, the more people you’re gonna touch, the more people you’re gonna be able to impact in that way. I think that’s something you just can’t do sitting in a cubicle. That’s the great thing about being an entrepreneur is you can.
Mark: Exactly. It’s all about value creation and I tell everybody “When the day comes, if it ever comes, and I doubt it will, that I do get that call when someone says “Hey, Mark! Got your letter offer here but I got 2 others just like it. Yours is the lowest. I’m gonna shot that land gig because that’s not what’s best for my community.””
Matt: Right. So if somebody is interested in starting this, what’s kind of the minimum level of capital they should expect to invest and presumably because as you said you got other cost in the system and automation and outsourcing some of the work, how much should they have to invest both in land and in what we call operating capital to actually run the business? What would be a good number to at least shoot for to start with?
Mark: You’re maybe surprised. You don’t really need much capital because you can lock up deals on options. You really need the costs of mailing and I don’t know, maybe a thousand dollars for startup capital. That’s really it.
Matt: Wow. Okay.
Mark: It’s very minimum. Money is not the issue in this business. It’s really gonna be “Will you make offers? Will you work that numbers game? Will you create systems and automations? And eventually once you got confident in it, will you make yourself irrelevant to the business and then just be like me like “Okay. What can we break?”
Matt: yeah. I think, like you said, that would be definitely the goal that I would be interested in shooting for and certainly I would encourage other people to shoot for the same goal of business that can run without you. It is to me, that sort of the peak. That’s the best you can get as a business that doesn’t need you at all. Other people, they go wrapped up in it or they want to be sort of indispensable but to me, that’s completely the opposite of what I want to be. Totally, immaterial to the success of my business.
Mark: Right. Absolutely. You’ve got figure out a way to leverage your talents and your skills.
Matt: Awesome! Well, I appreciate you sharing your knowledge and your experience with us. I’m super excited about what you share today. I’m feeling a lot of other people are gonna be as well. How can people get in touch with you and presumable what we covered in 20 minutes here, that’s not all that’s in it. Where’s the best place for them to go and learn some of the more specific on this process?
Mark: I think the best place to go is probably the website, thelandgeek.com and you can get more information there. You can also go and listen to the podcast. We have 2 of them, the Land Geek archive which has 90 episodes about land investing and then the best passive income model where people like you, experts and their field, I could put them on the spot them “Do I have the best passive income model?” but we talk about land investing there too.
Matt: Well, I’d say you’re pretty close. The ultimate passive income for me is if you own dividend stocks. You want enough dividend stocks. Its kicking off enough or cash flow investments that you don’t have to do other than cash or dividend checks. But this sound like a pretty close second. I’m impressed with what you’ve come up with and again, I appreciate you taking the time to share with us today. Have a great rest of your day!
Mark: Thanks, Matt! I really appreciate it.
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