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SHOW NOTES FOR EPISODE 265: CRUSHIN’ IT WITH RAW LAND INVESTING
Want to make 300% profits flipping raw land online? Sound too good to be true? Well, for Mark Podolsky, it also sounded too good to be true, until he proved it by doing it himself. In today’s podcast, Mark shares how he started land flipping part-time until his “side hustle” income surpassed his full-time investment banking job.
What You Will Learn
- What’s the difference between raw land flipping and speculation?
- Why is land flipping considered the best kept secret in real estate investing?
- How to generate consistent cash flow with raw land investing
- Who are the people that are the first ones to want to buy land you are selling?
- How to buy raw land at 30 cents on the dollar
- Where the best places are to flip raw land
- Why and how land flipping works
- How to get free resources to teach you how to flip raw land
About Our Guest
Mark Podolsky
Armed with only $3,000, gut-wrenching fear, and absolutely no real estate experience, Mark bought his first few parcels of raw land in 2001. Today Mark is the owner of Frontier Properties, a reputable and successful land investing company, and has been buying and selling land full-time since 2001. By focusing on working smart, not hard, he has completed over 5,000 land deals with an average ROI of over 300% on cash flips, and over 1,000% on the deals he sells with financing terms.
Prior to his land investing success, Mark had a high-stress, soulless corporate job, and felt trapped in a state of solo-economic-dependency (i.e. his income stopped as soon as he stopped working). Escaping solo-economic dependency changed Mark’s life in so many positive ways that he decided to teach, coach and mentor others to help them achieve their financial goals. Even though Mark invests a lot of his time helping others, he stays actively involved in running his land investing business, and is dedicated to teaching the most current and relevant “real world” land investing methods to his students.
Mark Podolsky is a return guest to the Old Dawg’s REI Network. Check out his first interview here.
More About Mark
- Was an over-stressed, overworked, micro-managed investment banker
- Worked with private equity groups in mergers and acquisition
- Hated his job
- His firm hired a guy who shared with Mark that he had a side hustle that brought him to tax deed auctions where he was buying raw land for pennies on the dollar
- The guy was flipping the properties online and making an average return of 300% per investment
- In Mark’s job he worked on “great deals” for companies where he would get 15% returns
- Mark wanted to see for himself and asked his new friend to show him how to do it
- So, with $3,000 he had saved for car repairs, he buys 10 1/2 acre parcels for an average price of $300 each and he flips them online for an average of $1,200 each or $12,000
- He took that money and went to a tax deed auction in Arizona, where he lives, and bought lots, acreage and, over the next 6 months, he sold that land and made over $92,000 profit
Becoming a Full-Time Land Flipper
- Mark wanted to quit his investment banking job to invest in raw land full-time
- His pregnant wife at the time said “absolutely not!”
- So, he continued investing part-time until his flipping income surpassed his investment banker income – then he quit
His Investment Model
- How to Generate Monthly Cash Flow With Land Flipping
- He contacts the treasurer in a town in Texas
- Find out-of-state owners who owe back taxes
- Looks on the tax delinquent tax list for out-of-state raw land owners (he looks for out-of-state owners because they don’t usually have a strong interest)
- Finds a person that’s $200 behind in their taxes (usually means the person is distressed in some way)
- He’s probably getting notices from the treasurer every month saying that if he doesn’t pay he could lose his land
- He looks at comparable sized properties and sees what they are selling for
- If a comparable plot of land, for example, goes for $10,000, he divides the amount by 4 and then sends an offer to the owner for that 25% amount, or, in this example, for $2,500
- 3-5% of the people accept the offer
- Mark then does the necessary due diligence on the land to make sure that the person really owns the property, verifies that the back taxes are truly $200, that there are no breaks in the line of title, no liens or encumbrances, ingress/egress legal access, what is the water table like — whole due diligence checklist (he actually pays only $11 for others to do all the due diligence work)
- At the same time, he is also developing a marketing package
- If the property passes all the due diligence, he buys the property for $2,500 and offers it to his “built-in” best buyer (the people who own the land on either side of his land).
- Mails out marketing letters to the neighbors
- Offers potential buyers terms (for example): $2,500 down, 9% interest, with a monthly payment of $449 per month (he tries to make it no more than an average car payment), for the next 84 months. (The terms can vary from 3 to 30 years, depending on the property sales amount)
- He tries to get a larger down payment by negotiating a reduced interest rate because he knows that the larger the down, the less likely the buyer will default. He created a software called Geek Pay IO to calculate payment amounts and manage the payment process
- If none of the neighbors go for the offer, he goes to his own “buyer’s list” (a list of people he has developed that are always interested in buying raw land) and, if that doesn’t work, he goes to Craigslist, Facebook, LandMoto.com, LandsofAmerica.com, LandFlip.com, or LandHub.com
- He will sell the property in less than 30 days because he makes the property “irresistible”
- For the next 84 months, he has steady cash flow of $449 with no renters, no rehabs, no renovations and no roads
- Plus, because of the deal with the tenant, he’s exempt from Dodd-Frank, RESPA, SAFE Act
- His goal is to generate enough of these deals where his income from these land deals exceeds his fixed expenses
Craziest Deal
- Early on in his land investing, he wasn’t very good at his due diligence
- 40 acre parcel in New Mexico, on the side of a mountain
- Only 15 of the 40 acres were accessible (he didn’t catch that fact on the maps)
- Paid $2,500 for the property
- It wasn’t selling and, at one point, all he wanted to do was to get his money back
- He put it up for sale at “$1 No Reserve” plus land recording fees on eBay
- On the first day, it got bid up to $2,500
- By the 10th day, bidding had gone up to $32,500
- He was freaking out that somehow he may have misrepresented the property
- When a guy won the bid, he called the guy right away to further explain that only 15 acres are accessible and that it is on the side of a mountain
- The guy said it was perfect!
- The guy was a film director in L.A., filming a movie, and he didn’t want to have to get all the film permits
Why it Works
- There’s a “lust for land” in the U.S. that most people don’t realize
- The neighbors will often buy the land
- If you buy it right, market it right and make it irresistible, the worst he’s done is to double his money
- Out of 5,500 transactions, he has never bought a parcel of land he couldn’t sell
- If you buy any asset at 25 cents on the dollar, there’s always “someone else on the other side of that deal”
- There are not a lot of other people doing it – No competition
- If you go to a REIA meeting, you’ll probably be the only land flipper there
- No big money
- No private equity groups
- No hedge funds
- No private money
- Once you start doing it, you realize just how many people want to buy raw land
How it Works
- Marketing is the key factor for success
- He tells new investors that they need to get a “bag of M&Ms” to succeed – mailing and marketing
- If you’re not doing these things everyday, then you’re not in this business
- Need to do your deal flow and constantly generate potential buyer interest
- He can run 124 Craigslist and Facebook ads through software that automates the process
- Mailing process:
- Obtains list from the County Assessor all real property in that county
- “Scrubs out” the list of all commercial & residential property (houses, industrial, etc.), sorting by “use code” to find all “vacant land” in the county
- Does another “scrub” by APN or by neighborhood
- Doesn’t want to send the same direct mail piece to the same guy that has 5 acres and the guy that has 40 acres because the guy that has 40 acres will send back glitter in the mail
- Then sorts by pricing
- Uploads the list to a software, using an API like lob.com, it automatically finds bad addresses, has his VA (virtual assistant) manually finds the correct addresses using Intelius or BeenVerified.com to find the land owner
- Continuous deal flow by continuous mailing
- He only markets to Arizona, New Mexico, Colorado, Texas, Washington, Oregon, California, Florida – fast growing “sunshine states” where there is an abundance of inexpensive raw land
- He doesn’t start analyzing the list until he starts hearing back from people responding to his offers
- Target audience
- People who were raised having an interest in buying raw land
- “Preppers” – people who are hoping for the best but preparing for the worst
- Military people
- Recreational people
- He has one client who is a CEO in San Diego who spends $5,000 a month buying raw land, never looking at the property
- He tells new investors that they need to get a “bag of M&Ms” to succeed – mailing and marketing
Before You Start Investing in Raw Land
- You need to get educated
- It’s a simple model but there are a lot of other moving parts
- You need to know:
- How to due proper due diligence
- How to find out where the good areas are to buy
- How to target the right market
- What are the irresistible numbers to make it sell
- Get a Mentor – Find an experienced person who has done a lot of land flipping
- Know what it costs
- Fixed expenses are pretty low
- Due diligence – they use VAs that cost $11 per property
- Craigslist and Facebook marketing is free
- Subscriptions on some of the land websites
- Direct Mail
- $400 per month on postage
- AgentPro247.com for list/property data
- Once you find a profitable county, keep mailing
Free Info for Old Dawg’s Interested in Raw Land Flipping
- Mark’s website: LandGeek.com
- Get his free eBook – “Avoid the 3 Fatal Land Buying Mistakes“
- Free Course: The Passive Income Launch Course
- Listen to his podcast: The Art of Passive Income Podcast
Check Out Mark’s New Book
- New Book by Mark – Dirt Rich
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