GI298: Land Investing with Mark Podolsky

GI298: Land Investing with Mark Podolsky

Mark Podolsky is a raw, undeveloped land investor who, over the past 20 years, has completed over 6,000 transactions, including buying, selling, and leasing raw land as an investment. Additionally, he wrote the book “Dirt Rich,” the ultimate guide to building passive income through raw land.

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Transcript:

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Mark Podolsky. He is a raw, undeveloped land investor who, over the past 20 years, has completed over 6,000 transactions, including buying, selling, and leasing raw land as an investment. Additionally, he wrote the book “Dirt Rich,” the ultimate guide to building passive income through raw land. Thank you so much for being on the show!

Mark:
Thank you so much for having me.

Charles:
So You have an interesting background prior to getting involved and you had an exit story too, which we’ll get involved with too, of leaving your W2. But prior to getting involved in investing in real estate and raw land, I mean, can you tell us a little bit about yourself, both personally and professionally? Yeah,

Mark:
I mean, you know, personally I live in Scottsdale, Arizona, and I have three kids. And I, I really just love to, to really help people solve not just their money problems, but their time problems. So my, my vocation is, is really doing that every day. And you know, I do a lot of very woowoo things like breath work and meditate and hike and ski and travel to keep my mind right, but it’s all in service of helping people solve not just their money problems with their time problems, so that once they have enough paths to income, it exceeds their fixed expenses and they’re working ’cause they want to, not ’cause they have to. I think people can really live their best lives. Yeah,

Charles:
No, that’s great. How did you get involved with raw Land as an asset class? I mean, it’s not one of your, not one of your top choices, I would think when people say I’m getting involved with real estate investing, there’s other, you know what I mean, choices out there that are more common, let’s say. And how did you end up falling in or picking raw land vacant land as a investment class? Yeah,

Mark:
It was by accident really. I was, you know, if we rewind the tape to 2000, I was a miserable, you know, 45 minute commute to work and back micromanaged investment banker specializing in mergers and acquisitions with private equity groups. And Charles, it got so bad from me, I wouldn’t get the Sunday blues anticipating money coming around. I 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 and he is telling me there’s a side hustle. He’s buying up raw land, pennies on the dollar. He’s flipping them online and he is making a 300% return on his money. And I’m looking at companies all day long and a great company great has 15% EBITDA margins or free cash flow. Average company’s 10%. I’m looking at companies all day long, less than 10%.

Mark:
So of course I don’t believe him. And I’ve got three grand saved up for car repairs. I go to New Mexico with them. I do exactly what he tells me to do. I buy 10 half acre parcels, an average price of $300 each. I flip them online and they all sell for an average price of $1,200 each. It worked. So I took all that money. I went to another auction, Arizona, which is where I live, and again, it’s 2000. There’s no one in the room and I buy lots of acreage for like nothing. I saw all that land and I made her of $90,000 cash. So I go to my wife and she’s pregnant. I said, honey, I’m gonna quit by job and become a full-time land investor. And she said, absolutely not. So I said, okay, okay. So it took 18 months for land investing income to exceed the investment banking income and then I quit. And I’ve been doing it full-time ever since and, and love it.

Charles:
That’s great. That’s a great story. So can you give us an overview of your land in investing strategy, kind of from buying raw land, that deep discounts and then strategically selling them and generating passive income? Yeah,

Mark:
Charles, let’s use you as a case study. So you’re in Florida, and I’ll assume that you own five acres of wrong land in Arizona where I live, but you owe $200 in back taxes. So you’re advertising two important things to be number one, you have no emotional attachment to the raw land. You’re in Florida, left properties in Arizona, and number two, you’re distressed financially in some weird way. ’cause When we don’t pay for things like our property taxes, we don’t value them in the same way. As a result, the county treasurer keeps sending you notices saying, Charles, if you don’t pay your property taxes, you’re gonna lose that property to a tax deed or tax lien investor. So all I’m gonna do is look at the comparable sales on your five acre parcel for the last 12 to 18 months, I’m gonna take the lowest comparable sale and divide by four.

Mark:
Let’s say it’s $10,000 for Easy Map. So I’m gonna send you an actual offer of $2,500 for your five acre parcel. Now you accept it. ’cause Why for you 25, 20 $500 is better than nothing In reality, three to 5% of people will accept my quote unquote top dollar offer. But now that you’ve accepted it, I have to go through due diligence or in-depth research. I have to confirm you still own the property. I have to make sure the back taxes are only $200. I wanna make sure there’s no breaks in the chain of title, no liens or encumbrances. So I have this property checklist that I outsourced my team in Jamaica. It costs about 11 bucks and they’re connected to an American title company and we’ll do our due diligence. Now, if I was investing say more than $5,000, I wouldn’t take any title risk. I would just close traditionally through a title company. But this is only $2,500. We’ll assume everything checks out. And so now I’m gonna send you a check for $2,300, the treasury check for $200. I want it free and clear. Now, Charles, I’m gonna sell this property 30 days or less. I’m gonna make it cashflow like a rental home. So I have a built in best buyer. Do you know who it is?

Charles:
Neighbors.

Mark:
The neighbors. You got it. The neighbors. I’m thinking exactly. <Laugh>. Exactly. So I’m gonna send out neighbor letters saying, Hey, here’s your opportunity to protect your privacy, protect your views, know your neighbor. So oftentimes the neighbors will buy. Now if they pass, I go to my buyer’s list, the buyer’s list passes. I’ll go to a little website you may have heard of called Meta or Facebook buy sell groups in the marketplace. And then I just go to lands land moto.com, land.com, land and farm.com, lands of america.com, land flip.com, land hub.com, land century.com. These are platforms where people buy and sell raw land. But the secret is in the pricing. So all I’m gonna ask for is a $2,500 down payment, and then I’m gonna get a car payment, let’s say 2 49 a month at 9% interest next 60 months. So Charles, I get this one time sale, I’m gonna get my money out in the down payment. I could go six, 10 months out and now I’m gonna get 2 49 a month and 9% interest. Charles, no renters, no rehabs, no renovations, no rodents. And because I’m not dealing with a tenant, I’m exempt from Dodd-Frank Respite on the Safe Act. All this owners’ real estate legislation. So then it’s a simple game. Can we create enough land notes where our passive income exceeds our fixed expenses and then we’re truly free.

Charles:
Oh, that’s, that’s a pretty fantastic strategy. So it’s really, as you, what are the reason, I mean, what are the, other than finding that we’re back on taxes, are there any other methods you’d use for kind of locating, identifying these properties that could be purchased where you might have a a an owner in distress?

Mark:
Yeah, I mean, our, our lowest hanging fruit is going to be someone that lives outta state and owes back taxes. But once I’ve established a market there, I’m gonna send out an offer to everybody. Now, I’m not gonna know by looking at a list of property owners who’s distressed, but who’s not. But we can assume, given the marriage rate at 50%, someone’s going through a divorce, someone’s, you know, maybe died and now you’ve got an heir who doesn’t know or what to do with the property. Does it want the property? So you’ll have that baked in to any property list where you’re sending out offers.

Charles:
Hmm, that makes, that makes great sense.

Charles:
So when you’re buying land what, what other kinda markets would you say are some of the most sought after, let’s say, for people that are gonna be your end buyers?

Mark:
Yeah, I mean, Charles, let’s be honest, right? Nobody wakes up and thinks themselves, boy, I’d like to buy some raw land today, Minnesota, unless you live in Minnesota. Yeah, right. So we wanna focus on those sunshine states, Florida, Texas, Arizona, Nevada, New Mexico. How about California, a little bit in northwest Oregon, Washington, and then parts of the Midwest where it’s beautiful in treat. So that’s from your biggest fire pool and there’s just a ton of inexpensive raw land available.

Charles:
When, you know, when you’re looking at these different deals, you say you, you check to make sure that everything’s fine with the title. And you have your team that does that, which is great. You’ve outsourced all that to some VAs. How does it work with is there any other problems that could happen physically on the property that you have to be aware of, such as if there’s not a route, a way for people to get to it or other issues that you have to check out before you just buy something?

Mark:
Yeah, I mean this is why I’m, I’m gonna focus on the southwest, northwest in Florida. I might avoid the Northeast because I don’t want to go anywhere where there can be potentially a Superfund site. You can go to epa.gov and make sure you’re not buying in a Superfund site, but a Superfund site basically means that an industrial company has polluted that land if you buy it, U of them responsible for that millions and millions of dollars of cleanup. So when we’re doing our due diligence, we wanna make sure that we’re not buying in an environmentally dangerous area for, for example, that’s why I’ll avoid those industrial areas in Ohio, Pennsylvania, New Jersey. Short of that, really we’re, we’re not gonna get too picky with this rural undeveloped land because it’s rural and it’s undeveloped. And so as long as there’s GPS coordinates and somebody can find it, I don’t have a problem with it because I’m not the buyer. You are not the buyer. And so what I’ve discovered is that there’s a pig for every barn and we have a, a, a massive buyer pool of people that just want inexpensive raw land in the United States. And they’re not very picky. They’re not looking for million dollar ranches for country club properties.

Charles:
Interesting. When in in multi-family and other like commercial asset classes you know, when they’re going out, the bankers are, you know, they they call it like the phase one, right? They’re going out and they’re checking to make sure that, like you were saying, there’s not, there wasn’t a dry cleaner there, there wasn’t a garage there. And then they do like, you know, they get, you know, phase two and further if there’s issues or they think they might be an issue and you pay like a few hundred dollars on your closing, something like this. What for you, I mean, how does that process go? ’cause Obviously it’s not in phase one. How do you check to make sure if you were buying in one of those areas that you had mentioned that might have a higher chance of that, that, is there a way of easily doing that that it’d be more cost effective?

Mark:
Yeah, I mean we’ll do a $50 Craigslist gig and send somebody out local, have them shoot video for us, fill out our property report checklist and scope out that property.

Charles:
And when you’re selling the property is obviously if the whole point of this is putting everything on payments and building that like as you said, 60 month, five year passive income stream, which is awesome. Do you ever sell these straight up for cash? Does that, is that something that happens often or is it a very rare occurrence? I

Mark:
Don’t market it to sell for cash, but clearly there’s people that are Dave Ramsey risk averse, they pay cash for everything and they’re gonna pay cash for their land. But I’d say that for my portfolio that’s about five to 10% of people. The majority are gonna be paying on terms, which for me is what I want because I don’t want cash, I want cash flow. I think it’s the antidote to financial insecurity. Yeah,

Charles:
No, for sure. It’s it’s interesting because there’s certain industries I see with raw land and there’s like certain ones that are all sold on payments. So like cars are sold on payments, you know, boats are sold on payments, furniture sold on payments. There’s not, you gotta, you gain, find a cash price with a lot of these things when you’re searching for ’em. So I think that’s kinda one of those things when you said that when you’re looking at different land sites, it’s, some of ’em will have cash price, but a lot of ’em will all be done on on on payment terms, which I found was very interesting when I was looking into it. So your thing happens, obviously you’re going out, you’re putting a mortgage on these properties. As you said before, there’s a chance that people might not be emotionally attached to them. I mean, how often do buyers that you deal with default and how does that process go with like taking them back?

Mark:
Yeah, so it’s a, it’s a great question. So we’re not gonna use a deed of trust and, and put a, a mortgage or a lien on that property. We’re going to use a land contract. And a land contract states that during the time that you’re paying down your promissory note that if you go to default, you have 30 days to cure your default. If you don’t cure your default, we keep your Dow payment, we keep all your monthly payments and we resell it to another buyer. So because we’re not doing credit checks, we actually don’t mind defaults. So in this county right now we’re looking at about a 10 to 12% default rate. And so when that happens is they’ve basically lowered our cost basis and we do it again and it extends out our return on investment.

Charles:
Yeah, it’s almost like the renter center type model where, you know, you pay and you’re like, almost like renting it until you own it kind of a thing. And then if you miss anything, they keep everything you have, you know what I mean? So,

Mark:
Exactly. Yeah,

Charles:
That’s a great way. I was just gonna ask that about the due diligence because obviously the easiest, the less friction you have about getting that person into, let’s just say this property, the easier it’s gonna be to sell. So there’s no credit checks. What, are there any other type of due diligence other than they are actually speaking to the person and selling it to the person that they say they are? Is there any other kind of checks or KYC that you need to do or review that you found to kinda lower that default rate, even though 10 or 12% is very low for this type of strategy?

Mark:
I, I don’t want that lower de default rate, honestly because it’s, it’s, it’s so lucrative, but essentially you can just, if you want a, a lower default rate, you just raise your down payment and the more skin they have in the game, the lower that that default rate’s gonna be. But I, again, I’m not doing credit checks, I’m not, you know, saying to somebody, oh, you know, your, your income level’s too low, we’re not gonna sell this property. If they can put down the down payment, they can secure it. They, they can afford the monthly payments and they stop paying, no problem. We’ll take it back and we’ll just sell it again at a lower cost basis

Charles:
Before we get into like kind of how you’ve set up your business and made it much more automated, which is something that’s very interesting is one thing is other than doing the title checks, taking larger down payment, is there anything else that you would suggest that people land investors to kind of mitigate their risk that you might have seen people fall through the cracks before and make mistakes on? I,

Mark:
I would say that people, it’s hard to make a mistake in land, especially if you’re buying at the right price. So we’re, we’re making our money on the buyer. I don’t often see people overpaying out of the gate if they’ve gotten, they’ve gotten training now, if they haven’t gotten any training, I’d say get training for sure. So assuming that they have a reasonable amount of training, then the biggest mistake I see people making is actually fear. So I send out these offers, it takes about six weeks to get returned, accepted offers, and then I say to myself, okay, I’m done sending out offers until I sell this piece of property and then I sell the property and then I’ve lost all my momentum of deal flow and I’ve become a chicken company with no chicken. So I’d say that’s really the biggest mistake I see newbies make is this one in one out foot of fearful mentality because they all sell, it’s just a matter of time and getting your pricing right. And so oftentimes people don’t have that confidence and they hurt their, they they pass up on good deals or they lose deal flow because of that.

Charles:
So all the money, like in real estate in general, all the money’s made on the buy. How do I know when I’m going into buying a property and there’s not, it’s not as easy to decide and figure out a value for a property which makes this lucrative if you know what you’re doing. How do I come about with that? You know, a an area, a range or an offer price for the sellers?

Mark:
Yeah, so you can just really look at that comparable sale divide by four, get yourself a 300% margin of safety. So that’s why we’re gonna take the lowest comparable sale and then we’ll look at our data as we send out those offers. If under 3% accepted, I know I’ve come in too low for the market, but if over 5% accept it, I’ve gotta retrade I came to too high, so I really wanna know my numbers on that. Acceptance rate, where

Charles:
Are you checking those comparable sales? Is it through land records or is it through a website?

Mark:
Yeah, so it’s all public data. You can go through you know, there’s, there’s tons of different places to go now, but the easiest place might just be going to the county assessor on the websites.

Charles:
So you’re finding parcels that are near yours, similar sizes, figuring out whatever that cost per acreage is for something there. And then working out, like you said, dividing it by four and figure and knowing that that’s gonna be a fair market price or you know, a deep discount price where you can put on payments and make some income up. Yeah,

Mark:
Absolutely. And so I can go to a website like land moto.com and even just reverse engineer what are other people selling these properties for as well? Lemme get a range.

Charles:
Yeah, that’s what, that’s what I was gonna ask. I wasn’t sure where you’re coming up, but how both, both ways. Obviously going through and seeing actual closed sales would be a, I would think a little bit more accurate and probably a little bit more conservative than seeing what someone’s probably trying to sell it that possibly might have paid over for it. Even though that, like you said before, if you’re, you know, four x-ing what the price you pay for a property, it’s kind of difficult to lose money on that. But I mean it’s it’s an interesting system of how that works. So

Mark:
You,

Charles:
You, you mentioned briefly when you’re talking about how your business works and you’re sending out a lot of offers, so is these offers, how do you, how does this automate it to send out, because I know some of those land investor down here in Florida, it’s out like 10 20,000 offers a month they get sent out and I never really asked them about how they were. Is it, I mean, how are they figuring out those, the system that they have in place for putting a specific offer out to, to every owner?

Mark:
Right, so the first thing is you’re gonna use two pieces of software. So 90% of my business is automated with software, inexpensive virtual systems. So the software that I use is called lg pass.com and it’s my own proprietary software. So we just upload a list and then we have an API where the mail then automatically goes out. And so I can also manage it where I don’t wanna send out 10,000 offers in one day because I wanna get data back. So I might send out 30 offers a day, get that data back, see what my response rate is, and then I can essentially adjust my offer by a dollar amount or even a percentage amount in my software. Then once it comes back, I can get my team in there as well. They get permissions, user permissions we can do our due diligence in the software as well then show where we’re marketing the land.

Mark:
And then it also, when we do our sale, it’ll automate the promissory note, the purchase sale agreement and the land sale contract. So what used to take me 20 minutes of paperwork, now it takes me about the time to, to press a button and I don’t even need to do it. My, my team can do it. Then once that property is sold, we have to manage the note and we created a set forget it payment system called Geek Pay do io. And so we collect our down payment via Geek pay.io and then we pull out via aach h the monthly payments with their checking account, the writing number and the account number from our borrower. And then we also can collect the property taxes. We can charge a note collection fee and you charge a note set up fee. And so using Geek Pays io, it’s actually a profit center. It’s the only software I know that actually makes me money.

Charles:
Interesting. So that was the other thing too, is gonna be like the servicing. So it’s all done with your own software because servicing can get very expensive if you’re paying, you know, a set price or, or maybe you’re not percentage ’cause these are lower amounts, but a set price per month, so you’re taking care of all that and then you are collecting for all the property taxes to make sure there’s no issues and then you are paying the county directly.

Mark:
Correct.

Charles:
Now there’s no structures on these properties, so insurance isn’t a requirement. That’s correct.

Mark:
That’s correct. Right. And through LG Pass you can even make your tax payments and you can pay your seller as well using that software.

Charles:
Interesting. Yeah, obviously you’re now becoming the, the lender on it so you can make your decisions if there was insurance or not. But obviously if there’s no structures on there or anything like that, I mean you have someone you’re paying for to go check out the property, then really there’s, there’s not really any risk.

Mark:
There’s no risk. You can get an umbrella policy if somebody falls on your piece of property.

Charles:
You mentioned for advice for new investors and one of the first things you said was getting trained. Is there anything else that once someone gets started, they’re beginning their process of becoming a raw land investor that you think are some of the most important things to kind of get in place before they start making offers? Or is it really go out, make offers and kind of everything else will work out? Yeah,

Mark:
I mean I would, I would learn as much as I can about the, the land investing business. Anybody can go out and start making offers and, and make low ball offers and then next thing you know, you’ve built yourself a land investing job. And so really what I want people to do is create a business for themselves and get outta what I call so economic dependency, which means that their person not working, they’re not making any money. And so the business itself becomes a, a deal flow machine a cash flowing machine for you so that you can be able to travel around the world and do whatever you wanna do. And the land investing business keeps your deal flow to keep selling the property. And so that’s really the, the, the key piece of the education is how do you become a CEO of this business and what are the, the pieces I need to have in, in place and the infrastructure and the software or the people and the systems and processes so that I don’t build myself another job.

Charles:
How are you putting everything together? ’cause With VAs obviously the majority of your business is automated, but for that part that’s not, when you’ve gone, you’ve sourced your VAs from Jamaica. How have you successfully found virtual assistants and maybe what have you used to whatever software you use to assist with training or just kind of keeping in touch with them the workflows? Is there anything like this that you can share with us for people, whatever industry they’re in that are looking to expand with utilizing VAs? Yeah,

Mark:
We use notion.io to have all our playbooks. And then as far as finding VAs, there’s actually services out there now that already have pre-trained virtual assistants that understand the land business. So a company like Land VA for you.com, land masters.us there’s parcel viewer out there parcel review.com, they’ll do your due diligence, but ultimately if you don’t want to use an agency, the best way to do it is do it yourself first, create a loom video of yourself doing the work, put that limb video into chat GPT, have it, create your SOP or your playbook for you, and then hire two or three inexpensive virtual assistants and test them and see which one has the most emotional labor which one goes above and beyond just the instructions and can think for themselves. So one is none, two is one <laugh>.

Charles:
That’s great. That’s great. Yeah. One thing I’ve found with VAs over the years of using ’em for 15 plus years is that I think people make mistakes with them when they, when they hire one and they don’t understand the amount of time that they’re still gonna have to spend with them, getting them to how they want it done. You know what I mean? Yeah.

Mark:
We, we call it the 30 to one ratio. So if it takes you say an hour to do that task, then you are going to invest 30 hours in training that person to do the task that takes you an hour. And so that’s sort of how we think about it. And that way when we are onboarding a new va, we’re taking full responsibility that this is on us and our team to properly spend the amount of time with them so that they can be totally competent Now after that 31 rule, right, and they’re not getting it or they’re making mistakes, well that’s when we know, okay, this person’s just not in the right

Charles:
Seat. No, that’s a, that’s a great way of putting it. The amount of time they, you’re gonna have to spend and invest with that person. And if they’re not successful and you haven’t spent that time with ’em, then you know, kind of, hey, it’s maybe on me that why they’re having a problem. ’cause I haven’t given them the correct directions and I’ve had this before when I started working with VAs before, I wouldn’t give them enough instructions with it and enough guidance. And then when you did, everything kind of worked out a lot better because that’s what they were waiting for because you know, it’s just one of those things that, you know, this industry, they might not know it as well and you’re kinda explaining how you wanna do it, how you’ve done it, and like you said before, doing it first and then handing off to ’em. That’s a great way of doing

Mark:
It. Yeah, absolutely. So you, you don’t want to abdicate, you wanna delegate and if you don’t do it yourself first, now it’s the blindly the blind and you really don’t even know how long it should take them. So you don’t even know the 31 ratio ’cause you haven’t done it. No,

Charles:
A lot of great information there. Marcus, as we’re wrapping up here, what are some of the main factors contribute to your success from your previous W2 life into what you’re doing now and all the way into your personal life?

Mark:
I think consistency, showing up every day. And it just compounds every, every little thing that I do right from breath work to meditation you know, just taking care of myself right mentally, physically, that compounds getting a good night’s sleep every night that compounds. And then just showing up every day and trying to get a little bit better in what I’m doing and also realizing that I should only probably be working on the things that only I can do. And so my job becomes how do I have no job? And, and really, you know, working on those leadership skills, those delegation skills and creating the systems and processes so that if my main goal is total freedom, well how do I really have total freedom? True.

Charles:
Oh, that’s great. How can our listeners learn more about you and and your business, mark? Yeah,

Mark:
So Charles, I would say the Land geek.com is a great place to go. I’ll give you a link to give to your listeners so they can get the book Dirt Rich for free, just pay shipping and they can really go dive deeper into the model and see if it resonates with them.

Charles:
Fantastic. Well thank you so much for coming on today, mark, and sharing all your secrets within raw land investing and looking forward to connecting with you here in the near future.

Mark:
Thanks Charles.

Links and Contact Information Mentioned In The Episode:

About Mark Podolsky

In 2001, Frontier Properties founder Mark Podolsky was an Investment banker with a crazy high-pressure lifestyle in Phoenix.
Like several of his colleagues, Mark liked the idea of investing in real estate. So the next time he earned a commission check, Mark went down to a tax sale auction at the county. He ended up buying a property with a commission from a big deal… and what’s more, Mark put everything he had into buying land in New Mexico.
“My wife thought I was crazy, he says, but I told her, at least we own land. Sure enough, Mark was able to sell all his New Mexico property at a profit. Even better, Mark was soon able to quit his job to go into the real estate business full-time.
He has actively invested in real estate and raw land for almost twenty years and has completed over 6000 unique transactions.

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