Real Estate

Episode 13: Investing in Land and earning 1000%+ ROI with Mark Podolsky

Ben Lakoff, CFA
October 19, 2020
Listen to this episode on your favorite platform!

Today’s interview is all about investing in RAW LAND with Mark Podolsky of the Land Geek.

Since 2001, Mark has completed over 5,500 Land deals with an average ROI over 300% on cash flips and over 1,000% ROI on the deals he sells with financing terms.

In this conversation we talk about all things LAND Investing. What does the process look like, risks, characteristics of a great deal and more.

This is an exciting Niche Market within the real estate market, please enjoy this conversation with Mark Poldosky.

Show Notes

0:00:00   Welcome and context

0:02:20   Transition from investment banking into land investing

0:04:46   What is investing in raw land?

0:10:00   How do you find your potential land sellers?

0:14:30   Why aren’t people investing in land if the returns are that great?

0:17:41   How do you value the land

0:19:00   What kind of transaction and additional fees you encounter are you looking at?

0:22:50   What else are you checking when you’re doing your due diligence?

0:27:33   What is your average holding time?

0:29:41   Do you actually find investors in Facebook groups?

0:33:59   What are some of the most common misunderstandings with land investing?

0:35:01   What are the most common mistakes you see?

0:36:23   Do you do any international land investing?

0:37:55   What does the best case scenario look like for you?

0:39:35   Other ways for people to get into land investing

0:40:19   Where can people find out more about you?

Show Links



Lands of America


Dirt Rich by Mark Podolsky

Wholetailing Course

Episode Transcript

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor. Here’s your host Ben Lakoff.

Hello and welcome to the alt asset allocation podcast. Today’s interview is with Mark Podolsky of the land geek. Mark is a fellow Hoosier from Indiana.

And since 2001, he has completed over 5,500 land deals. That’s over 5,000 land deals. He has an average ROI return on investment of over 300% on cash flips and over a thousand percent on deals, he sells with financing terms in this conversation, we talk about all things, land investing. What does the process look like?

Risks cares, characteristics of a great deal, where to find buyers, where to find sellers and more, this is an exciting niche market within the real estate market. And I think you’ll really enjoy it. Before you listen, please don’t forget to like, or subscribe to the podcast. Really, really helps land investing.

Here you go. Please enjoy this conversation with Mark Podolsky,

Mark. Welcome to the all to asset allocation podcast. Glad to have here.

Mark: [00:01:12] Ben. Thank you so much for having me. I really appreciate it.

Ben: [00:01:15] Yeah, your audio sounds fantastic. It’s just, you’re whispering in my ears and I love it.

Mark: [00:01:20] Thank you. Thank you.

Ben: [00:01:21] Where are you right now?

Mark: [00:01:23] Okay, so I’m in Phoenix, Arizona. Okay. And, if you want to know how it feels in summer, just wrap yourself in saran wrap and then put yourself in the oven. Perfect.



Ben: [00:01:35] It sounds wonderful. It sounds wonderful. This time of year. Yeah. That you get those winter months that are very, very nice.

Right? Okay.

Mark: [00:01:42] No exactly, exactly. And if weren’t for the summers, we’d be like LA. So lots of parking, not too many, you know, it’s big, but not that crazy.

Ben: [00:01:51] We caught up a little bit before we started recording, but I came across your product land geek via a podcast of, through a friend and really sent me down the rabbit hole.

I’ve done a number of different interviews with real estate investing. And you’re the first one with. Land investing. Really excited to have this conversation. I wanted to start off just, sounds like your background was in investment banking and then you got into land investing. Walk me through your background, how you ended up where you are now.

Mark: [00:02:22] Yeah. So imagine me in a car fighting traffic, 45 minutes there, 45 minutes back, getting to work in a cubicle. no control micromanaged. I stress long hours, Ben. It got so bad for me. I didn’t get the Sunday blues anticipating Monday coming around. I’d get the Friday blues anticipating the weekend going by really fast and having to be back at work on Monday.

So my firm hires this guy. He’s telling me that as a side hustle, he’s flipping them online and he’s making a 300% return on his investment. And meant. I’m looking at companies all day long and a great company, great company has 15% EBITDA margins or free cash flow. Yeah. Average company is 10% and I’m looking at companies all day long, less than 10%.

So of course I don’t believe him. So, but New Mexico, I got three grand saved up for car repairs. I do exactly what he tells me to do. I buy up 10 half acre parcels and average price of $300 each. I flip them all online. And they also sell for an average price of $1,200 each three and percent of worked. So I took all that money.

I went to another auction in Arizona where I live. And again, it’s 2000, there’s no one there buying up lots and buying an acreage for like nothing. And over the next six months I sold all that land. I made over $90,000 cash. So I go to my wife, she’s pregnant. I go, honey, I’m going to quit my job to become a full time land investor and take about 18 months for the land investing income to exceed the investment banking income.

And then I quit and I’ve been doing it full time ever since.

Ben: [00:04:00] That’s awesome. those first flips were in Mexico,

Mark: [00:04:04] New Mexico.

Ben: [00:04:05] Oh, okay. I was going to say that’s a, that’s a big transition from, Mexico to Arizona. I would say, I think.

Mark: [00:04:11] Yeah, no, it would have been, yeah.

Ben: [00:04:13] Yeah. From some of your stuff, a quote that comes up from Ted Turner, who’s one of the largest landowners in the U S buy raw land.

It’s the only thing that lasts. And that, that really impacted me and really, you know, made me want to. Has started having this conversation, especially I’m in LA and the property prices here are just sky high. So the thought of buying raw land somewhere as, as a way of getting exposure to real estate, might be an interesting way to do it.

What is investing in land? What would you consider land raw land? you know, Lee laid out for me here,

Mark: [00:04:51] Yeah so Ben let’s do the deal together. Okay. Cause I love that you’re so interested in it. All right. So you’re, you’re in LA. Right. And I’m want to asume that you own 10 acres of raw land in Texas, and you owe $200 in back taxes.

So you’re advertising two things to me. Number one, you’ve no emotional attachment to that raw land. You’re not lay the properties in Texas. And number two, you’re distress financially in some way, because you haven’t paid your taxes. And as a result, you don’t pay for things. We don’t value them in the same way.

So what I’m going to do is I’m going to look at the comparable sales on your 10 acre parcel. So the last 12 to 18 months, I’m going to take the lowest comparable sale. I’m going to divide by four and that’s going get me what Warren Buffett would call a 300% margin of safety. And I’m going to send you an actual offer for your 10 acres.

So let’s assume a loan. It was comp of $2,500. Yeah. Now this whole time you’ve been getting notices from the County treasurer thing. Ben. You don’t pay your taxes. You’re going to lose this property to a tax lien or tax deed investment. So for you $2,500, it’s better than nothing. So you accept it now in reality, three to 5% of people, except my quote, unquote, top dollar deal of 25 30 cents on the dollar.

But you do. Now that you’ve accepted it. I’ve got to go through this in depth research or due diligence. I gotta to confirm you still own the property I got confirmed back taxes are only $200. I got to confirm that there’s been no breaks in the chain of title. I had to confirm there’s a liens or encumbrances.

I gotta find out what’s compelling about the property. What about the access? What can you do out there? Where are the restrictions? All this whole big checklist, which of course I outsourced my team in the Philippines. They’re connected to an American title company costs about 11 bucks and they check everything out from me.

So let’s assume that everything checks out in by the day when they’re doing the due diligence, they’re creating my marketing package. I’m getting phone. Those I’m getting videos, I’m getting plat maps. I’m to aerial maps. I’m getting, you know, everything that a buyer’s going to want to know, because that’s what I want to know too.

So now I pay you for the property. And you get net 2300, $200 goes to the treasurer, and now I own the property. I’m going to sell this property been 30 days or less. I’ve got a built in S buyer. Do you know who it is?

Ben: [00:07:14] Do I know who the builtin buyer is?

Mark: [00:07:16] Yeah. You didn’t realize I was going to quiz you.

Ben: [00:07:19] I got this from another podcast.

I wouldn’t have guessed the answer to this question that I believe might be neighbor your

Mark: [00:07:27] neighbors.

Ben: [00:07:27] Okay. I cheated. I listened to it, did my research.

Mark: [00:07:31] Oh, very smart. So, but, but I wonder

Ben: [00:07:35] as well.

Mark: [00:07:36] So we’re going to send up a neighbor letters saying, here’s your opportunity. Protect your privacy, protect your views, know your neighbor.

So oftentimes the neighbors will buy it. Now let’s go down the marketing checklist here. Because of the buyer’s pass, we’re going to go to our buyers list. And these are people that have opted in at some point, maybe they bought property from us before maybe they’ve gone to our website and they’ve gotten something of value in exchange for their email.

And we’d say, here’s your opportunity to buy Ben’s 10 acres for, you know, instant equity type of thing. So the buyer lists my buy it. Now, if they don’t buy it, I go to a little website you’ve probably never heard of, but Craigslist it’s 10th, most trafficked

Ben: [00:08:14] website, never heard of it.

Mark: [00:08:16] And then I go even smaller. One. I know you’ve heard of this. One’s called Facebook, the marketplace by so groups and then the lands land lands of and in Land Land These are all these platforms where people buy and sell raw land, but where the magic happens, Ben is the pricing. So when I get my capital out on their down, I might go six months out.

And then a car payment, let’s just say four 49 a month. 9% interest makes 84 months. So I got this one time sale. I get my money out in the down or six months out. And then I create a passive income come like a rental of four 59 a month, 9% interest next 84 months. Ben, no renters, no rehabs, no renovations, no rodents.

And it caused them that dealing with a tenant. I’m exempt from Dodd-Frank RESPA and the safe act as onerous real estate legislation. So the, I mean that we can now play is can we create enough of these land notes where our passive income exceeds our fixed expenses? And now we’re working because we want to.

Not because we have to,

Ben: [00:09:23] it’s a really powerful story. I like it. And so that last portion is seller financing. Right. And we’ll dive into that in more detail. you covered a number of things, thanks for zooming out and going over the whole process. But I kind of want to pick apart the different individual pieces of it.

If you don’t mind, when you start it off off with a great example. a landowner is an elephant current state. He owns land raw land in a different state. and he’s. You know, laid on a few payments. So that means it’s neglected. Maybe he’s a willing buyer or seller at this point. How do you, how do you kind of hit this first level of this first filter?

How do you find these people?

Mark: [00:10:03] So we have to get the list. So this is public information of property owners in that County. So you can get it from the County treasurer, the assessor, sometimes the it department will have it, maybe a title company. Maybe we’ll go to a company like or

I don’t care how we get the list, but we’re getting the freaking list. Now what we’re going to do is we’re going to scrub that list because I’m going to get rid. Of all the residential property, industrial property, commercial property. And there’s a quick and easy way to do that. We can sort by use code, let’s call it VL for vacant land.

Okay. I’m going to do one more scrub because I would’ve scrubbed by APN number assessor’s parcel number, which gets me into neighborhoods and similar parcel sizes. Cause if I send the same person with a 40 acres, the same as five acres that off the 40 acre, person’s going to send me that glitter in the mail.

So we want to price it right, depending on the sizes. So once we get that list, we’re going to upload it into our software, which is, you know, we recreated in a it’s called LG pass.  proprietary, automated software solution. From there we’ve started that, that marketing or mailing process to get people to respond to us, to sell us their land.

Ben: [00:11:21] Okay. That makes sense. And, Before even choosing this portion, this, these land owners within this location, do you start macro picture? Okay. These are the markets that we want to be in. I love land in Montana dot, maybe start with a little more of a macro backdrop of what land looks like investing in the U S I presume you’re primarily, or if not, only in the U S

Mark: [00:11:49] and then in the U S.

And so Ben, let’s just be honest with ourselves. Okay. Let me mix up think some stuff, boy, unless I’m Raul in Iowa today, I live in

Ben: [00:11:58] Indiana.

Mark: [00:12:00] Well, I w I went to, I would do

Ben: [00:12:04] ball, state. I played golf there.

Mark: [00:12:06] yeah, but you know, like we’re salting there if the Hoosiers and there’s nothing

Ben: [00:12:11] wrong, the full campus, it’s really, really nice.

Mark: [00:12:13] There’s nothing wrong with, for Midwest. But if you live in New York or LA or Chicago or San Francisco, you’re going to be more interested in the sunshine States. You want property in Nevada, New Mexico, Arizona. You’re going to want property in California, maybe Oregon, Washington, Colorado, Florida. So we’re sticking to these markets and these States that are fast-growing have a plethora of inexpensive raw land.

And are growing. So that’s not to say I wouldn’t do a deal in Arkansas or Indiana or Missouri if it’s priced. Right. But that’s what I’m going to focus on. I want the biggest buyer pool possible, especially when I started out. The other thing I want to know is what’s the market. So imagine you and I go fishing together, right.

Then there’s a bunch of boats over on this one bank and they’re all fishing. They’re all catching fish. You and I say to each other, well, we don’t want to go over there where they’re catching all that fish because they’re catching all the fish. We’re going to go to somewhere. There’s no one fishing. And what happens when we go to where there’s no one fishing.

There’s a reason. There’s no one fishing there, the fish aren’t biting. So what, so counterintuitively, we should have joined those boats actually and started catching our own fish. And that’s what this market is because at the end of the day, it’s such a big market. You may a million people get in this niche.

We’re all gonna run out of money before we run out of deal flow, especially cause there’s no private equity groups, there’s no hedge funds doing it. And like you said, You couldn’t find a more boring niche in the real estate world. I mean, it’s not like you can go on HGTV or the DIY never can say flip this land, but before fixtures raw land, the after pictures, raw land.

So at a REIA meeting a hundred people in that room, 99 of them are landlords, flippers, and wholesalers. You’re not the only land guys. So he’s got this massive market. Nobody really doing it.

Ben: [00:14:14] That brings up a good point. Whenever it’s like the fishing example, right? If, why are people not doing this? If the returns are so attractive?

Mark: [00:14:26] Well, just like I said, it’s all gotta, you gotta, first of all, you gotta, you gotta know about it. It’s not like, you know, it’s not a big, niche. In the sense that, you know, let’s just take Robert Kiyosaki, right. You know, or, or those guys that talk about real estate messing with these big marketing budgets.

They’re talking about houses. houses are sexy. Multifamily is sexy. Raw land is not sexy. And if you talk to somebody who’s traditional, they’ll say, well, don’t buy raw land because the typical model is. You’re going to buy in the path of growth and you’re gonna wait and wait and wait while you’re waiting.

You’re cashflow negative. You’re paying property taxes year in, year out. So, and then hockey sticks up when the development comes. So we’re not playing that game. We’re looking at this like, Hey, here’s an asset. I can buy 25 30 cents a dollar. I’m going to just make a cashflow and there’s a less for land in this country that most people don’t realize.

So I think that’s that’s the main reason is, you know, number one, you’ve got no one really marketing it. And number two, you know, you gotta think yourself well, if you’re in real estate, right, I can wrap my head around the fact everybody needs a place to live. Nobody needs raw land, but when you look around our homes, nine, 9% of things that we have, we don’t need anyways.

So, but that, that’s why I think it’s such a. Such a particular niche.

Ben: [00:15:59] There is a lot of all land in the U S right?  the traditional way of investing in raw land, like you said, is by just outside of a city and just say, okay, population growth here. Eventually the city’s going to grow in this, this land.

They’re going to want to put some. Mall or something or road here, and it’s going to be worth a ton. with your model, it’s more of a value investing.  this thing is,  not loved by the owner. I’m going to scoop in and for pennies on the dollar, I’m going to, I’m going to buy it. I’m going to market the heck out of it.

I’m gonna find some sellers using all of these tools and then offer the seller financing and have a good source of passive income. from, from flipping this land, is that kind of the model?

Mark: [00:16:43] Exactly. So imagine that I knew what you had in your garage, just sitting around collecting dust. So we magically make an offer on all of it.

25 cents a dollar. You could, you wouldn’t have been more than happy. I made it so easy for you to now finally sell this thing that you’re sick of looking at. It’s the same thing with these they’re they’re wrong and they’re sick of paying the property taxes. They had the use case for it back in the day, it didn’t pan out and they just wanted to get rid of it.

And, and we’re happy to help them do that.

Ben: [00:17:13] Okay. I like it. you find, you find this location, so maybe it’s an Oregon, you get this list of all these people, you, you, You filter it. you only have land. Then you find the people with back taxes, you send out a ton of messages. You said three to 5% actually replied back.

How do you, how do you, you said I’m coming up with a comparable sales. How do you value this land to say, what is pennies on the dollar and what you’re willing to offer them?

Mark: [00:17:42] Right. So the County assessor has all that public information of what that property is sold for. And we’re gonna think of the lowest comp because, you know, sometimes it’s just crazy.

I mean, they’re all over the place. It’s very inefficient market. So we have to take the lowest and divide by four. And then we know if our response rate is under 3%, Oh, we probably need to raise our offer a little bit. If it’s over 5%, I’m going to get nervous. I’m like, Oh, maybe I need to retrade. So that’s why we keep those metrics in line to see.

How, how close we are to hitting the sweet spot of the market. Because just like in everything at the real estate niche, we make our money on the buy. Yeah,

Ben: [00:18:22] exactly. after you send out a number of these offers, then you go through the due diligence process. What you’re doing, making sure they actually own it.

They’re the title’s clean, no back taxes, liens all of these things. and then if you actually proceed and purchase the property, what kind of transaction fees? Additional fees. property taxes. What, what kind of costs associated with ownership or transfer of ownership? Are you looking at?

Mark: [00:18:49] It depends on the County.

it’s not much, it’s not, there’s not a lot of frictional costs, especially in the counties that we work in. So, you know, Nevada might have a transfer tax, but. You know, typically it’s, it’s not like housing where you’ve got, you know, title, company fees and, you know, appraisal fees and all, you know, you get fee to death.

That’s not in this niche. We don’t have that at all. You might, if you’re going to go 5,000 or more, you might have a, you know, a, a title company fee, but that’s really it. I mean, you can negotiate that too. Okay.

Ben: [00:19:23] And then you talked about tax liens, tax deeds. What are the differences between the two how’s this relevant?

Mark: [00:19:30] So attack deed. State is one where if you don’t pay your property taxes, they’re kind of heartless. And we’re going to deed your property to this person at auction tax liens are a little bit sweeter. They say Ben that’s okay. We’re just going to auction off. You know, your back taxes that you owe to the investor.

We’re going to give you three years to go ahead and find that that money you’ll pay off that investor. So you gonna pay your taxes, plus the interest and penalty fees when you get around to it. It’s okay. Right. But if you don’t pay it off in three years, then that tax lien owner can go through the foreclosure process.

And then get that property, but either way, we’re avoiding that whole auction, whether it’s a theater lien, cause we’re going direct to the owner anyway, to buy it

Ben: [00:20:19] and going direct to the owner. This is mostly direct mailing email, whatever you can. Right.

Mark: [00:20:26] I liked the mail. email is going to be spotty. you know, I met some old school guys like Otto is we can all, we can make more money in our lives, but we can’t get any more time.

So I will do anything that will save me time. So there’s other people that say, Oh, you know, send out blind offers, blind offers. I’m going to be on the phone all day negotiating with maybe they’re selling. Maybe they’re not. That’s why I send the actual offer. I want my response rate three to 5%. I don’t want a 15% response rate.

Because I’m just going to be wasting time.

Ben: [00:20:57] I like it. That’s a. I mean with everything, right? The time is the one precious resource and anything you can do to automate and systematize all of these things, you’re going to win back more of it. Exactly.

Mark: [00:21:09] That’s it. That’s exactly what we do. So we’re getting, we’re using other people’s time, software and other people’s money.

And that’s how we scale this thing to the next level.

Ben: [00:21:18] And what do you mean by other people’s money? You mean bank financing to do these deals?

Mark: [00:21:23] It can be well, banks don’t like raw land, but you could do as investors did. He’s a home equity line, you know, when you’re making 300000%. You know, help your friends.

If they’re making think of 0% and their bank Cape, like, dude, I’ll pay you 12% quarterly. How much, how much do you want to do? It’s just a promissory note and you, you know, UCC one filing use the raw land as collateral. You’re all fine.

Ben: [00:21:46] In terms of getting traditional financing, banks are not very willing to lend on

Mark: [00:21:53] Raul like wrong land.

No, well, they don’t want to own it. They don’t know how to sell it. So to collateralize a piece of raw land for them, that’s a lousy asset on their balance sheet. if you’re going to do a construction loan with them and you’re, you know, you’re an established developer, then you can put 50% down and they might loan 50%, but that’s not a great loan.

Right. So, okay.

Ben: [00:22:20] What else are you checking when you’re. Doing your due diligence. Are you looking at water and mineral rights? County city, government regulations, are selling this to somebody that wants, you’re either selling it to another land flipper, which is probably pretty unlikely because as you said, it’s a small niche, so you’re probably selling it to one of these people.

That’s a traditional land investor. Who’s buying it with the intention of this going up at some point because of some development. what else are you looking at here?

Mark: [00:22:52] Yeah, I mean, honestly, I don’t judge. we’d like, you would, like you said, like, you know, you’re making the assumption that my buyer is going to go vertical one day with it.

Well, that’s not what happens typically. I mean, it’s like man jewelry, sometimes they don’t even ever go out there. They just liked the way it views the Owens and raw land and they can forward the taxes. Right. So we get a lot of preppers. We get people who are recreational. We get people who just think it’s cool.

I got one guy CEO in San Diego. And he spends hundreds of thousands of year with me every year. He’s like, I just want to pay $5,000 a month with you towards this land. I’m like I going to do with all this land. He’s like, I don’t know. I just think it’s cool that that’s his highest and best use for it. I don’t know.

I think it’s cool. So you just never know. I mean, it’s a lot of people. I got one guy who goes out every year with his buddies and they do their own little burning man in Nevada. And every July 4th and it just go out there and he’s like, you wouldn’t believe how dark it is. There’s no one out there, night sky.

There there’s a lot. There’s a big niche. It’s a big niche. It’s

Ben: [00:23:59] a big thing that I believe that, especially right now with Corona and people cooped up in their apartments that are wanting more space and nature and things like this. I think that trend will be accelerated a bit with COVID. You’re just more concerned on the purchase price, as you said, you make your money.

On the purchase. if you can get a good deal, you know that there’s a buyer out there for some reason.

Mark: [00:24:24] And there’s a pig. If you

Ben: [00:24:25] purchaseit at a yeah.

Mark: [00:24:28] Sorry. There is, yeah, there’s a pig for every barn. I mean, I’ve done this over 5,500 times now. Guess how many properties I’ve been stuck with? I couldn’t sell.

Ben: [00:24:35] I’m guessing zero or only the ones who want to keep it

Mark: [00:24:39] well, yeah, the way it was, I want to keep it, but that’s, you know, that’s when they’re in the path of growth and I just put it in my trust and a little note, you know, kids don’t sell this until you get a seven figure offer from a developer. but other than that, yeah, because there is a pig for every bar and I learned this the hard way.

And I love telling the story when I was real God, like the first year I started, I’m driving around with my buddy and there’s even heard of Las Vegas, New Mexico. There’s like a university.

Ben: [00:25:07] No,

Mark: [00:25:08] no. Okay. It’s like, it’s like, you know, there’s a university, that’s it. And there’s all these like acre lots that you could buy over the counter, which means they went to tax deed auction, and they were so bad.

Nobody bought them. So they lowered the price. Just get rid of them because the County didn’t want them. So driving around, I’m looking at it and I’m like, dude, Chernobyl looks nicer than this. And he’s like, well, he’s like, yeah. I mean, it’s the ugliest thing I’ve ever seen. He’s like, yeah, but it’s like so cheap.

Maybe someone to buy them, like, yeah. But someone might. Like it cause someone, eventually someone bought it at one point, I’m like, look, you buy this. There’s going to be two things that happen. Number one, refund. And then number one, then number two lawsuit, I’m going to, you can buy all of it. He’s like, you sure you want to split it like that by all of it.

So he’s selling it in front of me. He’s emailing me every day at the sales and he’s, he’s making thousands of dollars. On every transaction cause he bought it so cheap and I emailed back refund another cell. I email him back refund slash lawsuit. He makes a hundred thousand dollars on the whole auction, whole thing or do the over the counter deal.

And guess how many refunds he had? Zero. Get somebody lawsuits.

Ben: [00:26:29] And hopefully Sarah

Mark: [00:26:31] zero. So essentially it’s a $50,000 lesson. I learned that I am not the market just because I don’t like the land personally. And it’s happened time and time again in my, career where even when I made a mistake in due diligence, I was able to sell the property.

Ben: [00:26:48] Yeah, that’s wild. I’m curious, you brought up a few questions there. so you own this land and you’re holding it, looking for a buyer. you’re holding onto it for a period of time. One, what is your average holding time? That would be a question. And then two, are you worried about like squatter rights or something?

Somebody goes out there and parks the camper and then they have rights to it. Is that not really a thing?

The other question would be insurance, like some kid Brian riding his bicycle across and there’s a landmine buried out there. Something that you didn’t know about?

Mark: [00:27:22] Yeah, no. I mean, you know, for insurance.

We attach it to an umbrella policy, but we don’t insure each and every property. It doesn’t make any financial sense to do. especially, you know, I’ve been doing this 20 years now and I’ve had nobody Sue me, you know, and the thing is in real estate, it’s like, it’s not a matter of if they’ll be sued, it’s a matter of when.

So, you know, basically what we do is we say, look, go out there, give 90 days additional due diligence. If you don’t love it for any reason to exchange the properties of. Or we’ll refund you. And then we go 365 day exchange guarantee. So they don’t love it. Even if they can get out there the first 90 days we’ll exchange it for property.

They do love. So we’re not going to fight with anybody if they don’t love what they bought. That’s that’s number one. But, the, the other issue, I think you, you brought up was, squatter’s rights, right? It has happened where we’ve had to kick people off the land. Cause I’m the owner. We use land contracts.

It’s not like they own it yet. They’re paying that property off to me before on a note, before we conveyed the ownership. So I’m the owner. So they always contact me. Hey, do you know what this guy’s doing on your land? And then we have to hire a local attorney. the local attorney then filed the proper paperwork that.

The sheriff then goes out there and kicks them off. And then we got to spend some money cleaning it up. But again, in 20 years, this has happened to me. What’s so it’s really rare. That happens

Ben: [00:28:57] very low, indeed. Yeah. assuming you find a buyer and you’re looking through Facebook and Craigslist and some of these other things, but I mean I’m on Facebook and some of these like investor groups and everything is so scammy to actually find buyers in these Facebook groups, potential actual buyers and not just it just

Mark: [00:29:18] all the time.

I think, I think you’re playing in the wrong group. So we don’t go to real estate groups. That’s not the group you want to join at all. We want to go to like different types of groups that would be interested in raw land. so we avoid those scammy groups that the preppers, like, you know, everybody’s trying to sell us stuff.

Their buddy, that’s not good. We want to go to big, big groups that are not real estate groups that have different. You know, interests that would be interested in a piece of raw land, but yeah, no, we don’t have an issue with it. Okay. I mean, you know, again, the show is we probably have to deal with maybe 60 to 70 leads on Facebook before we get a sale, but that gets outsourced to our VA in the Philippines.

So, you know, we don’t use any it’s that it’s pretty cheap to do.

Ben: [00:30:07] Makes sense. What percentage of the, you make money on the, on the purchase. You’re buying this with it with a large margin of safety below value pennies on the dollar. And then it sounds like a big portion of the returns and the passive income longevity potential comes from this seller financing.

I know that you guys have a tool that you offer, but just walk me through. What is seller financing? What does it look like? How does it look like with land?

Mark: [00:30:36] Yeah, so we just use a software program called geek, and so in geek pay the set and forget it system. And we create a link. So within geek pay your, you basically select a little merchant thing with Stripe or

So you can get your down payment via credit card. Once you get your down payment. And then we automate the paperwork. Using our first software called LG pass. So that automatically goes out. They digitally and the paperwork, 30 days later, we’re going to get the routing number and checking account number.

We’re going to validate it with the software to make sure it’s good. And then that’s it. And it just automatically draws from them, their checking account, their monthly payment plus probate property taxes, plus a note collection fee. So this is the only software I know of. That actually after two notes makes you money.

So it’s a profitable software, for our users. It’s amazing.

Ben: [00:31:34] Yeah, indeed. And I mean the biggest risk is that they stop making the payments.

Mark: [00:31:41] Not that deeply. Yeah. So when they stop making the payments, we keep the down payment. We keep all the monthly payments because it’s a land contract. So there’s no cost of foreclosure.

Now just increases our ROI even more. So we don’t mind defaults. We don’t care what they put down. We just want to get them the money moving. And then if they default you keep it, we resell get a new down a new note payment. And

Ben: [00:32:10] what percentage typically is the down payment. And then how many years of financing is this?

Mark: [00:32:16] So for every thousand dollars of capital that I invest in a property, I want my note payment to be a minimum of a hundred dollars. So I want to get my capital out again on the down payment. So then it’s just a matter of, you know, looking at the market and see what it will bear. People don’t really care so much about the total price of the property.

They really care. Can I make the monthly payment? And that’s why our margins are so big.

Ben: [00:32:39] And how long are your loans that this

Mark: [00:32:42] financing? Third years? I have some that

Ben: [00:32:45] then you can get that.

Mark: [00:32:47] Yeah.

Ben: [00:32:48] Wow.

Mark: [00:32:48] I have some there three years. I mean, just depends on the property and the price.

Ben: [00:32:53] And what’s the monthly cost for geek pay?

Mark: [00:32:56] Well for it’s, for up to 10 notes, it’s 49 bucks a month. but up to 99 notes, it’s 99 bucks a month.

Ben: [00:33:05] Awesome. Great service. I mean, it’s, it’s scratching your own edge, building the tools that you need to systematize this and make it easier. Bravo to you for building that.

Mark: [00:33:14] Thank you.

Ben: [00:33:15] You, you see a number of different ambassadors.

You’ve done a ton of deals. What are the, what are the biggest misunderstandings for somebody getting into land investing that you see?

Mark: [00:33:26] I think the biggest miss understanding is going to be. You know, why am I buying were other land investors? Are it seems counterintuitive. that’s a big misunderstanding who’s going to buy it.

Is that another big misunderstanding? But I think initially those are the two things that kind of mess people’s heads because it is so different from what they’re used to seeing. Yeah, definitely.

Ben: [00:33:53] I mean, the fish, I keep going back to the fishing analogy well done, but   it’s very counterintuitive momentum ask strategy.

Everybody’s over there. Let’s jump over there as well. Cause it must be there’s something worth looking at. Right.

Mark: [00:34:07] Right, right. And then

Ben: [00:34:09] what are the, what are the biggest, the most common mistakes you see with first, first time early land investors?

Mark: [00:34:18] The biggest mistake we see. Is people buy a piece of property and then they start marketing it and they stopped their deal flow.

They’re like, well, I’m not going to keep mailing until I sell this property pretty. I just, I just didn’t prove concept. Once that mailing goes out, it takes four to six weeks to get responses. So you just, you just literally killed for yourself four to six weeks of deal flow. Never stop mailing.

Ben: [00:34:45] That makes a lot of sense.

And then the type, the size of land plots that you’re typically going for. I think one time you mentioned 40 acres was like your sweet spot, but what is the size? And then what is kind of the price per acre? Obviously it’s a range, but that your rough, roughly looking to spend on something like this or average, I

Mark: [00:35:08] mean, honestly, like it’s, it’s all, it’s an impossible question to answer for me because it’s so.

So random, every market’s different, the acreage is different. And again, you know, I don’t care. So if I can buy any asset 25 cents of the dollar, whether it’s Raul and or anything, there’s, there’s someone else on the other end of that deal, I just happen to think raw land for me is the best. I’m just shuffling paper and making money.

Ben: [00:35:34] Do you do any international land investing or only in the U S

Mark: [00:35:39] no. I’ve looked at it and I thought why, you know, it’s. I had a, one of my mentors is, Ori. He sold his company for $360 million and his mentor was more Meyerson. The billionaire partner of Ross Perot, they had like a, like an Epic falling out.

So if you’re from Texas, you know about these guys. So, so already I’m telling you, I’m talking to worry about business and he’s, you know, I’m mentioning, Hey, you know, I might be looking at some, some deals and you know, some Costa Rica and he’s like, Mark. He’s like you remember when you were a kid? I’m like, yeah.

He’s like you ever tried to kill ants. I’m like, like with a magnifying glass, I’m like, Sure. He’s like, okay, could you Kewanee ants? If you kept moving the magnifying glass around, he’s like, you’ve got to hold the magnifying glass there for a little while to kill an ad. He’s like, go kill ants. He’s like Steven United States, wherever you want.

And no, don’t start generating a bunch of the heat and losing focus. He’s like, I can’t, he’s like, I can’t tell you how many people get bored of making money. If you’re making money, keep making money. Don’t start looking for, you know, new markets until you need

Ben: [00:36:50] them. I like it. That’s a very good analogy that I’ll, definitely steal as I think back fondly of my Indiana summers burning ants underneath the magnifying glass, for sure.

walk me through best case scenario. The ideal plot of land, the ideal process of how this whole thing goes, everything just ticks all the boxes as the perfect land flip and sell it financing package. What does that look like? I

Mark: [00:37:19] mean, they, any of them are perfect. Anytime you can buy that asset 25 cents on the dollar.

It’s perfect. Now, if it doesn’t sell in 30 days or less, something needs to change. Maybe you’ve got to increase the price. Maybe people are like, why is it so cheap? There’s something wrong with it. Maybe if the lower, the down payment, maybe it’s the lower, the monthly payment, but something has to change.

Maybe your pictures. Aren’t good. Maybe your headline is terrible. You’re not getting enough interest. I don’t know what it is. But it should be irresistibly priced and irresistible to be marketed and it should sell 30 days, right? Yes. So, I can tell you the, my best deal was as you know, buying, hundreds of thousands of acres from.

A a public company that bought all this property from the railroad in Nevada. So I bought 640 acre sections and subdivided them into forties. And over the next five years, I made $5 million on that. Just that one deal. So if you said, Hey Mark, what’s your favorite size? I would say forties, but that’s just me.

Every acre size. That doesn’t really matter. They all sell. but for me, I really loved forties.

Ben: [00:38:28] Awesome. At the time, the land you offer a number of different services, land investing. I mean, I’m convinced, I think it’s a niche market that you can make a lot of money on. It also sounds like it’s very active, a lot of work, everything is right, but are there other ways for investors to get exposure to this asset class, this, this process that you’re offering?

Mark: [00:38:52] Yeah. I mean, I’ve got a book on Amazon called dirt rich. So for like a buck 99, they can get exposed to it and hear my story and, you know, get it, get walked through the mall model. I’ve got a course that’s $97, called wholesaling. How to double your money three days or less is the best way to learn is to do so.

If they’d go to the land forward slash quick deals, they can see, does this model resonate with me or not? And then go deeper with it.

Ben: [00:39:21] Awesome. Well, it’s certainly an interesting model. Really appreciate you coming on today, Mark. Where do you want to leave my listeners? What else do you want to leave them with?

Mark: [00:39:30] Yeah, I would say if you’ll do the next three to five years, what other people won’t do you’ll be able to do for the rest of your life? What other people can’t do that? The Zig Ziglar quote. So I think if you’re going to do it, do it, commit to it, burn your ships and really go deep with it. And, and, you know, I think it’s, for me, it’s the best passive income model.

I don’t know what is better, you know, you get this onetime sale, you’ve got recurring, passive income. You’ve got no headaches, nothing physical, nothing to maintain, nothing to protect, and a huge, huge market. That’s non-competitive so I’m look, I’m flexible, like a Yogi. If you can tell something better.

Well, we actually, I’m sorry, there is one thing better than this. I know for sure. There’s only one thing better. What’s that pre money? No, from a PA for a passive income model, because he didn’t have free money. Yeah. That’s great. But like, it’s really passive. It’s really passive, but you want that central accomplishments, your life, you know, just, you know, just to get something handed to you, that’s boring.

Yeah. Cause like we all know that kid that like grew up with a trust fund. They’re like the most screwed up people. Like you got to earn it. But I think life insurance is very similar to smile, except the difference is life insurance is just an idea, but let’s face, it takes 10 years to make any money in life insurance.

Nobody wants to talk to you at the party. It’s kind of boring, but besides life insurance, I think this is the best passive income model. Awesome.

Ben: [00:41:00] Awesome. Mark. Always good to have a fellow Hoosier on the podcast and really appreciate you spending all the time and going through this stuff today.

Mark: [00:41:08] Thanks, Ben.

I really appreciate you having me. Yeah,

Ben: [00:41:11] of course there you have it. Thank you for listening. I really appreciate your support. Show notes, transcript links, and more can be found on our website at all. Asset If you’d be so kind, please share this with anyone you think might be interested or get some value from this conversation.

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And I really appreciate it. Thanks again, and hope you have a fantastic day. Happy investing.

Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.