In this episode, David talks with Mark Podolsky (AKA The Land Geek). David interviews Mark and asks him all sorts of questions about how he invests exclusively in Raw and all across the country! Mark has been investing in land for over 15 years and he has done over 5,200 deals!! He has an awesome approach to finding deals, as well as marketing to the owners of these properties BEFORE the properties, go to tax sales. Then he offers to buy the land for pennies on the dollar and flips them for HUGE profits. On average Mark is doing about 1 deal a day. He has automated his business with about 90% and has VA's and other staff doing the other 10%. You can learn more about Mark on his website at www.TheLandGeek.com. Mark has also written a book called "Dirt Rich" as well as offers a course on how you too can invest in land too! To get a free copy of his course, "The Passive Income Launch Kit", send an email to [email protected] and in the subject line type: Discount Property Investor or David Dodge, and we will send you a copy of his course for Free. ($97 dollar value) Mark has mastered investing in Raw Land and has a passion to teach others how they can also invest inland. This was an awesome episode and we can't wait to learn more about investing in raw land here at the Discount Property Investor. Thanks for listening :)
David: Alright guys, welcome back to the Discount Property Investor podcast. I'm your host David Dodge, my partner Mike Slane co-host is out in the field today buying some properties. But I am joined today with Mark Podolsky, and Mark is aka the Land Geek, am I getting that right?
Mark: The Land Geek.
David: The Lank Geek. Mark, how are you today? Good morning!
Mark: David Dodge, pulse is normal, respiration is fine, I am doing great, how about yourself?
David: I'm doing awesome. I see you are on the treadmill desk today, I love it, very cool. I need to get me one of those. So Mark, what are we going to be talking about today? The Land Geek, what does the Land Geek do? What are you into these days? What are you doing? And how are you making money in real estate?
Mark: Yes, so essentially I am a full time land investor. Basically what I do is I buy and sell raw land. But the way I do it is a little bit unique in the sense I create passive income on this raw land, so I don't have to do with renters, rehabs, renovations or rodents. So it's this one time sale, you get this reoccurring passive income. Because I am not dealing with a tenant, I am exempt from [00:02:09.15 - inaudible] safe act. Any of this owners, real estate legislation. We have this massive market, no competition. Let's face it, it's like the least sexy niche ever, right? You are not going onto HT TV where the DIY network and see Flip this land. It's 90% automated with software. So it's a really cool niche. If you want to I could actually walk you through exactly what I do and how I do it.
David: I would love that, let's do it.
Mark: Okay so David, where do you live?
David: I live in St Louis Missouri.
Mark: Alright awesome, I'm from St Louis.
David: No way.
David: Where do you live now, Mark?
Mark: I'm in Phoenix now, but I grew up in Creve Coeur area.
David: I just moved out of Creve Coeur area, I love that area. I'm in Des Peres now.
Mark: Okay great, I love Des Peres.
David: Yeah it's great.
Mark: You have to send me some [00:03:00.05 - inaudible].
Mark: Anyways I digress. So you're in St Louis, and I see that there is this ten acre parcel in Texas. It looks like on the tax role David Dodge owes $200 in back taxes and lives in St Louis Missouri, right?
David: Only $200?
Mark: Only $200. You're advertising two things to me. Number one you have no emotional attachment to that raw land. You live in St Louis, the property is in Texas. Number two, you are distressed in some way. When we don't value something we don't pay for it, and you owe back taxes, right? Now I don't know what's going on with you, but it doesn't really matter. So what I'm going to do is I am going to look at comparable sales on that ten acre parcel, let's say the last 12-18 months. Let's say for example it's $10,000.
David: Now I have to interrupt you, Mark. How do you do that when you don't have MLS access in-- we're talking about Texas, right?
Mark: In Texas. Essentially you call the County assessor, and this is all public data.
Mark: They will have all the last sales. So you put that in your spreadsheet, you are going to take the lowest comp, and you're going to divide by four. That's what Warren Buffer would call, a 300% margin of safety. I am not going to be like the housing guys and say, David I am interested in buying your land. Well I'm interested in selling my land. I don't want to be in the appraisal business. I am going to send you an actual offer for $2500. Now you owe $200 in back taxes, you life in St Louis, $2500 is better than nothing, because you have been getting notices from the treasurer every single month that if you don't pay your taxes, the property is going to go to a tax deed, or tax lean auction. Essentially at some point in time you will lose it.
David: I just left a tax auction and bought one, paid five grand for it.
Mark: That's amazing.
David: This is a different type of thing from that, but I know a little bit about it. Continue, that's awesome.
Mark: Exactly, so we are going to get that property before it goes to a competitive auction, right? Now in reality, 3-5% of people are going to accept your quote unquote top dollar offer.
David: That's high.
Mark: Right, which is good.
David: That means I only have to do 100 offers to get 3-5 deals. If I can automate 500 offers a week, there is no reason I can't get ten deals a week, right?
Mark: Exactly. So now you accept the offer for $2500. Then we are going to do our due diligence. We are going to make sure like you still own the property, back taxes are only $200, that there ingress, and egress or legal access, there is something compelling about the property. So we have this whole property checklist. Now we outsource this to the Philippines, so our team does this, it costs about $11, they have access to an American title company. So for deals that are $5000 or less, we are going to do our own sort of title search. $5000 or more we are going to [00:06:11.00 - inaudible] title company. We are going to mitigate our risk on that case. So we go through our check list, while we are going through our check list and doing our due diligence, we are creating a marketing package for our buyer, right? So I am getting the GIS maps, I am getting the plat map, I am getting an aerial map, I am getting pictures of the property. I might do a local Craigslist gig for $50 and have somebody stomp on the property, tell me what the neighbors are doing, are they any debilitated cars or homes out there?
David: Basically when you do the Craigslist thing, they basically go out and take photos, a simple page or half a page summary of what the hell’s going on.
David: Nobody was there, or people everywhere and they just tell you what's going on. So you don't ever go to the properties then?
Mark: I don't go to the properties.
David: How many properties have you bought in let's say two years?
Mark: Well I have done over 5200 land deals since 2001, so I try and do about a deal a day.
David: A deal a day, wow that's pretty awesome. That's a ton of deals, man.
Mark: Yeah, but you know-- it's automated so it's really not that difficult to do. It's just a machine. So essentially I buy that property from you for $2500, then I have a built in best buyer, do you know who it is? Who is going to buy that property from me? I am going to sell this property in 30 days or less.
David: I have no idea, Mark. Who is this buyer?
Mark: It's the neighbors. I am going to send out neighbour letters saying, look before I go to the open market, here's your opportunity to expand your holdings, protect your view, protect your privacy. So often times the neighbors will buy that property.
David: How often are the times? What would you say the percentage is of that?
Mark: I would say for us it's about 30%.
David: Which is extremely high.
Mark: Which is extremely high. Now if the neighbors pass, then we are going to go to our buyers list. These are people on our e-mail list who have raised their hand and say, we are interested in buying raw land. So about 30% of the time the buyers list will buy. Now the other 40% will go to a little website you have probably never heard of call Craigslist. Using a program called PostingDomination.com/LandGeek, we can automate our Craigslist posting, by just pressing a button I can put out about 128 ads at one time. Same program will do Facebook listings as well.
Mark: Essentially the way that I am selling these properties is where the magic happens, so I am going to ask for about a $2500 down payment. I might go six months out to get my capital out. I want to get my capital out as fast as possible.
David: So you're financing these-- on the sell side?
Mark: I am owner financing it so I create this note so I am getting the passive income. Then I am going to make a card payment, so I am going to get $2500 down, let's say 449 a month at 9% interest for the next eight years. So essentially I am getting 449 a month at 9% interest for the next eight years. I don't have to deal with renters, rehabbers, renovations or rodents. Because essentially I am using a land contract and not a deed of trust, right? There is no costs to the foreclosure process if they don't pay. I use a software program called Geekpaid.io that automates the back end of it. So it is a one time said and forget it program, so we collect that 449 a month at 9% interest via ACH or check, but if the ACH fails, charges their credit card on file. So I went from an 8% default rate to a 4% default rate with this software. Then they can log in, they don't need to call me up and say, hey Mark what's my current balance? They can see it, they can make a prepayment at anytime, and the software does all the [00:10:05.07 - inaudible] calculations. So then the game we play, David, is can we create enough of these land notes where our passive income exceeds expenses, and then we are working because we want to, not because we have to.
David: I love it Mark, that's awesome, that's so awesome. So you have basically automated the investing process. Earlier you mentioned about 90% of it is automated. But what is the 10% that's not? Can you tell us a little bit about what that consists of? It sounds like you have multiple softwares that you're using which is great.
Mark: So the human beings essentially have to get involved in number one, there is 3700 US counties, right? Where are we going to make our offers. Nobody wakes up and says, hey you know what? I am going to buy some raw land today in Minnesota unless you live in Minnesota. So we want to focus on the sunshine States; Texas, Colorado, New Mexico, California, Arizona, Oregon, Washington, Florida. These are fast growing States-- Nevada. They have a plethora of inexpensive raw land. So we want to focus there. We want to find the best counties for that as well, so we are doing county research that we can't automate. So that piece we can't automate, but once we get our list, then we can automate that process as well. Go to Fivver, when I'm sleeping have someone scrub that list. So we want to get rid of all the commercial property, residential property. Essentially they can do it really quick and dirty by using a [00:11:45.26 - inaudible] for VL. Then we have to batch that list, because essentially if I send somebody the same offer as one acre, or the same offer that is ten acres versus one acre, they are going to send me back litter in the mail. So I have to price my lists. That part I can have a VA do but I have to double check that, that can't be automated. The offers go out, that's automated, due diligence human beings, we outsource that, so that is essentially automated. But the selling part of it, unless you're big enough and like me have an acquisition manager; that piece you would have to do yourself as well.
Mark: So that's where the 10% would come in, where you would have to have human beings involved, or you yourself would have to sell. The way that I teach this is; the last two pieces that you would ever sort of step out of are the County research, and the selling. Once you have enough deal flow then you can start completely being out of that business.
David: I love it. So whenever you are going to buy these, you are basically buying them at the lowest comp divided by four, so 25% of the lowest comps. You are trying to find the most comparable property to comp obviously, you can't compare 8 acres to 45 acres.
Mark: Right, right. Essentially the market is going to tell me how I'm doing with my pricing. So if the response rate is under 3% I have come in too low. If it's over 5% I have actually come in too high and I have to trade.
David: So you are doing a deal a day, what do you make on an average deal if you don't mind me asking?
Mark: So our margins are 300-1000% on average. We do owner financing, it's about 800-1000%, if we do a cash deal which I hate to do but sometimes we have to do it, it's 300-500%.
David: Okay, that's pretty interesting. Wow this is blowing my mind here man, I love it. A deal a day, you are crushing the game, that's awesome. So whenever you're buying the deals, then you do the owner financing, how long does it take for you to break even on the deal?
Mark: So I will go out six months at the longest.
David: After that it's all profit for you?
Mark: After that it's all profit.
David: What's the average term that you offer in your owner finance?
Mark: Well it depends on the property. So if it's an inexpensive property I make about three years, if it's a more expensive property I could go out 15 years. In some cases I have 640 acre sections, I might be out 30 years on.
David: Holy cow! You're shooting to get your money back in the first six months maybe a year. If it's a long one you are just getting passive income for many years after that. That's amazing, Mark. I love that.
Mark: One of my clients just did a deal, he bought 640 acres for $15,000 in Nevada. He sold it for $150,000 on terms, $15 grand down. I think it was $1000 a month.
David: That's amazing. So Mark, how did you get into this? And what kind of real estate were you doing prior to land investing?
Mark: I never did real estate prior to land investing. I was actually a very over stressed, unhappy, miserable investment banker; specializing in mergers and acquisitions and equity groups. I had a 45 minute commute to work and back. I was micro managed, long hours and stressful. It got so bad for me that I wouldn't get the Sunday blues anticipating the Monday coming around, I would get the Friday blues anticipating the weekend going by really fast, then having to be back at work on Monday. So my firm hires this guy, and he is telling me that on the side, like a side hussle, he is going to take tax deed auctions, buying up raw land, pennies on the dollar, and he is making on average 300% return on his investment. Well David I'm looking at companies all day long. A great company has 15% [00:15:55.06 - inaudible] margins or free cash flow. Your average company is 10%. I am looking at companies all day long less than 10%. I am from St Louis, I am from the show me state, I don't believe him. So I've got three grand saved up for car repairs, go to New Mexico, do exactly what he says to do, I buy up ten half acre parcels, average price of $300, I put them up online, they all sell for an average price of over $1200, 300% it worked. So I took all that money, $2000 right? I went to another auction at Arizona where I live, there is no one in the room. I am buying lots and acreage. Over the next six months I made over 90 grand on that one auction. I go to my wife and I'm like, honey I am going to quit my job and invest in land full time. She's pregnant, she's like, absolutely not. So I worked land investing as a side hussle. It took about 18 months before the land investing income exceeded the investment banking income, that's when I quit. I have been doing it full time since 2001.
David: Man that is phenomenal. I love that story too man, that's awesome. So you have been doing this for 17 years give or take at this point?
Mark: Yeah I love it.
David: Are you going to these actual auctions? It sounds like in the beginning you were.
Mark: In the beginning I was.
David: Now you don't go?
Mark: My business philosophy is that I can always make more money but I can't get more time. So anything I can systematize, outsource, delegate or eliminate I will do. So essentially if I actually wanted to go to an auction-- let's say the recession hits, right? Well then those competitive auctions-- no one is going to have the cash, right? Like in 2008/2009/2010 I could buy all day long at auctions, nobody had any cash. Then I would hire a bidder service to go and bid for me, instead of me spending time, going to a hotel room, paying for food and whatever it is. I got three kids, I want to spend time with them. I let the bidding company buy up that raw land.
David: Nice, so are you doing that still?
Mark: No, because I want to get the properties before they go to auction. In this current market I don't need to. Those auctions are too competitive anyways.
David: I just left one, there was like 100 people there, it's crazy.
Mark: Yeah that's crazy. You did really well, you got a deal for five grand.
David: I did, I got one for five grand. It's got a one year redemption on it. So is there any redemptions you have to deal with? Didn't you just mention a minute ago there are 3000-5000 Counties?
Mark: There are 3700 US Counties, so it depends on the State. There are redemption periods. But because it's raw land, again-- they are not living on it, the redemption is very, very low. So since I have been doing this, I think I have had one property redeemed during like a period in New Mexico.
David: Just one?
David: One out of 5000?
Mark: It's really rare.
David: Wow that's crazy. In the event that they do redeem in, do you get a return on your investment then? How does that work? Or do you just get your money back?
Mark: You get your money back.
David: Got it. So the one I just did, it has a 10% return. So if they were to redeem it in a year, I would get 10% back on my $5525 I just spent. And if they don't redeem it within a year then I get the property.
Mark: Right, right. So you are basically doing a tax lean model. 95% of tax leans are redeemed. In the housing-- you got the hedge funds, private equity groups. There is big money in that space. In this space there isn't.
David: I love that though. Sounds really fascinating to me due to the fact the redemptions are so low. Basically you're flipping the equation completely around. There are going to be redeemed is less than 5% of the other ones. In your case 1 in 5000.
Mark: Right, if we went to a REIA meeting together, real estate investment meeting, there are 100 people in that room. 99 of them will be flippers, landlords and wholesalers. You and I David would be the only land guys. So we have this massive market of billions of acres and no one doing it.
David: No one doing it. Man, that's awesome. Mark, how do we learn more about how we can do this? You have given us a really good, simple 10,000ft view of how that works. But I am sure there is a lot of information, a lot of education somebody would need to actually get in the game and start doing a couple of these a month or even a week. Do you have a product or anything like that you can sell, or you help people with, or coach or anything like that?
Mark: Yeah we do all of that, because essentially we want to be a [00:20:48.25 - inaudible] right, like if you are going to go up that land investing mountain, we want to help you get up there quickly, safely and efficiently, and not have you freeze to death. So we do all that. But I think the best place to go is TheLandGeek.com, and you can get started there. I have a book on Amazon called, 'Dirt Rich', kind of walks you through the entire process as well. Then I have a course which is called The passive income launch kit course. It is normally $97, but if your listeners e-mail [email protected], they put in the subject line David Dodge, or Discount Property Investor, we will send them that course for free.
David: Okay, let me recap real quick so I can get the show notes straight too. So TheLandGeek.com is the website. You're an author, you wrote a book?
Mark: I wrote a book, Dirt Rich.
David: Dirt Rich, that's awesome. Are you the only author on that one?
Mark: I am the only author. It says, 'how one ambitiously lazy geek created passive income in real estate without renters, renovations and rehabs'.
David: Dirt Rich. Hold that up for me again real quick. Awesome, got it, cool. Very cool. Then The passive income-- what was that again?
Mark: The passive income launch kit, it's a $97 course, that if they email [email protected], they just put in the subject line David Dodge, or Discount Property Investor, we will send that to them for free.
David: Awesome, man. I am going to check it out myself. Very cool. So Discount Property Investor or David Dodge in the subject line. You are going to send out that course, that's awesome. I'm going to be checking you out as well as purchasing the book. I am super excited. [00:22:40.03 - inaudible] is doing 10-15 wholesale deals a month. We have six or seven rehabs going at any time, we are acquiring two to three rental properties a month. So we have a big, big organization, a lot of moving parts, a lot of people. I am all about passive income. That's my goal, I even have my goal written on my phone I will show you here. Everyone laughs at me, but-- passive income is my passion. It says, 'Auto suggestion--' probably hard to read.
Mark: $100,000 a month in passive income, I love it.
David: $100,000 a month in passive income, that's right. So that's where my goal's at. I think this would be a really great tool to add to my belt as well. We have three virtual assistants already, so train one or two of those individuals to start automating this business like you have, to 70-80 maybe 90% of the way through it wouldn't be that difficult for me at this point.
Mark: You already have the infrastructure in place. So essentially-- real estate, it's a numbers game. That's really what it is.
David: I love it.
Mark: Get your marketing in place, it wouldn't be very difficult at all. We got all the tools and software, you will love it.
David: Right. So real quick because I know you got to run here soon, couple of quick questions for you in terms of marketing. So you went to the auction, in the beginning that's what you were doing, awesome. But now you are basically sending out mail, is that you're main source of marketing is mail?
Mark: The mail is the main source of marketing. I will also do wholesale deals a well-- from people in the business. Sometimes they need cash, quick cash. Maybe they have a bigger and better deal and just want to sell that property fast. So they will wholesale it to me, we will do that as well.
David: But the majority of your marketing though-- so basically you are going in before the property even gets to the auction or it becomes competitive? So you have killed all the competition, I love that.
Mark: One of my favourite deals that I ever did was-- one of my clients-- sends out a mailer, guy responds; he is like, I owe $30,000 in taxes, the property is going to auction tomorrow. So this is kind of a de-grabber situation. So if he's going to lose that property if he doesn't pay the $30,000 in taxes, he doesn't have it. This is about 3000 acres. We bought it five cents on the dollar. I paid the taxes, I called the treasurer, wipe it off from auction, I create a video for writing the check, here's the FedEx, sending the check in. After we did due diligence all day on those properties. Essentially I had the seller, I watched him sign the deed over to my company, have them noterize it, had to watch the video of them putting it into FedEx, because I'm not paying his taxes not knowing I am getting the deed. Watched all that, got the deed. We each made $350,000 on one deal on a de-grabber situation.
David: Wow that's sweet. How hard was it to sell?
Mark: Five cents on the dollar, it's simple.
David: It's simple, I love it man. So you are beating everyone to get to the property which is cool.
David: You are finding out where or who owes, and who is about to go, then you are just contacting them directly with mailers. Are you doing any cold calling? Or do you have anybody who is doing any skip tracing?
Mark: Now skip tracing we will do. We have a VA program, so we use [00:26:19.09 - inaudible].com, so let's say we get that little yellow letter back int he mail-- Lob is who we use, and they will do the address verification. So that's really low now. But for the longest time like-- we would do the skip tracing, because that is gold, nobody is getting to those people. Then we would re-send the mail. But that's all done in our software.
David: I love it man, I am going to check this out. Mark, I know you got to hit the road, I got to hit the road too. I bought one this morning, I got another appointment this afternoon. I am going to hopefully buy two today. I am excited about that. Everyone that's listening, check out Mark, he is the man, TheLandGeek.com, he has a book which I am about to buy here in about ten minutes, Dirt Rich. Then he is going to send you guys a special offer today. The passive income launch kit, typically $97 it's a course. If you email Mark at [email protected], in the subject line put in either Discount Property Investor, or David Dodge. He is going to send you that kit. Is that an online thing?
Mark: Yep that's online, we will get them access, it will be great.
David: Sweet, very cool. I am going to to send you an e-mail right now. So check out Mark. If you guys are wanting to kill your competition, get away from even having competition and focus on a niche, that not many people are doing, that will create passive income, do tons of deals; then you need to check out Mark. Mark you're the man, thanks for joining me today.
Mark: David thank you so much, I really appreciate it.
David: Absolutely Mark. Well it was great talking to you, let's keep in touch. I am going to go ahead and end the show. If anybody has any questions, again reach out to Mark, TheLandGeek.com. Alright Mark, thanks again, buddy. You have a great day we will talk to you soon.
Mark: David, you too. Have e-mails for me.
David: That's right, talk to you soon, thank you, bye-bye now.