10 May Mark Podolsky – The ‘Land Geek’ – Turning Raw Land Into Pay Dirt
Raw land may not be the most pleasing asset in all of real estate. Undeveloped plots are often full of grass and dirty all over. But for Mark Podolsky, this neglected land can be turned into the best passive income model. Joining Matthew Sullivan, the Land Geek explains the benefits of doing business with raw land, particularly the exemptions one can get from owners’ real estate legislation. Mark talks about the rise of interest in this kind of asset during the height of COVID-19, making 2020 one of his best years in business. He also shares his mission on educating the people about tax liens and land auctions through his book Dirt Rich and his two programs focused on land investing.
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Mark Podolsky – The ‘Land Geek’ – Turning Raw Land Into Pay Dirt
I’m delighted to welcome none other than Mark Podolsky, who is Founder, Head Chef and Chief Bottle Washer at TheLandGeek.com. Mark, welcome to the show.
Matthew Sullivan, thank you so much for having me.
I’m fascinated to find out more about what you do. I’ve got this synopsis here that’s written down about all the stuff that you get involved with. Someone put it quite succinctly where you help people buy raw, undeveloped land. That’s the tip of the iceberg. There’s more to your business than that.
There’s a lot more to it, but that’s a pretty succinct way to say it.
We don’t have to end the interview here. We can carry on if you like.
I can walk you through the model.
There’s land, but it sounds like you’ve discovered this massive untapped asset class that is undervalued that still even now, it gives people an opportunity to make money, passive income or active income. I’m interested because it’s a new model. I love new models as well. It’s newish because you’ve been doing this for several years, but it’s new to me. That’s all that matters in my world.
It’s the least sexy model in real estate you’re going to find. It’s a good thing because you buy raw, undeveloped land and people are like, “I don’t get that.” I get homes. I get multifamily. You don’t go to HGTV or the DIY Network and see me on flip this land, the before pictures of raw land, the after picture of raw land, it’s boring.
It may have mown grass maybe.
Probably not though knowing me. Let me walk you through it and then you’ll see why it’s arguably the best passive income model.
That’s quite a statement.
Let’s argue about it. I’m going to walk you through. You tell me what’s coming. Matthew, where do you live right now?
I live in North of Salt Lake City in Utah. I moved over to the US several years ago and started out in Orange County, but we moved to Salt Lake City a few months ago.
How do you like it?
It’s cold. It’s lovely. The reason we moved here is because there’s so much more land and it’s much more open. Orange County was getting a tiny bit crowded. I love it for that. I’m also sadly reminded of what winters are. Having come back here, I do miss the seasons. I realized quickly that I don’t. I love it here.
I’m going to assume that you own ten acres of raw land in Texas, and you owe $200 in back taxes. Essentially, you’re advertising two important things to me. Number one, you have no emotional attachment to that raw land. You’re in Utah, the property is in Texas. Number two, you’re financially distressed in some weird way because you haven’t paid your property taxes. We don’t pay for things. We don’t value them in the same way. The county treasurer in taxes keep sending you notices every single month saying, “Matthew, if you don’t pay your property taxes, you’re going to lose that ten acres to a tax deed or tax lien investor.” All I’m going to do is take the lowest comparable sale on your ten-acre parcel in Texas. Let’s say it’s $10,000 and I’m going to divide by four. That’s going to get me what Warren Buffett would call a 300% margin of safety.
I’m going to send you an actual offer on your ten acres for $2,500. For you, you accept it because $2,500 is better than nothing. In reality, 3% to 5% of people accept my “top dollar offer.” You’ve accepted it, I have to go through due diligence or in-depth research. I have to confirm you still own the property and the back taxes are only $200. I have to make sure there have been no breaks in the chain of title and there are no liens or encumbrances. I want to know what’s compelling about the property. I had this whole big property checklist.
My team in the Philippines will do my research for me. It cost me about $11. They’re connected to an American title company. If I was going to spend more than $5,000, I’m not going to take any risk. I’m going to closer to an American title company here, but because it’s $2,500, I have my team in the Philippines do it. Everything checks out. I’m going to buy the property for $2,500. I’m going to sell this property 30 days or less. I’m going to make a cashflow like a rental home. I have a built-in best buyer. Do you know who it is?
It is not going to be me. It’s probably going to be the people that live next door.
It’s the neighbors.
I suppose you could put a sign up there saying, “Plans for a nuclear power station.”
I sent out neighbor letters and huge opportunity. This nuclear power station might move in right next door, know your neighbor, protect your privacy, protect your views. Oftentimes, the neighbors will buy it. If they pass, I’ll go to my buyers list. My buyer’s list passes, I’ve got a little website you may have never heard of called Craigslist. It’s the tenth most traffic website in United States. I’ll go to an even smaller one. I’m pretty sure you’re familiar with the one called Facebook. I’ll go to the marketplace and buy, sell groups and then I’ll go to the lands, Landmodo.com, LandAndFarm.com, LandsOfAmerica.com, LandFlip.com, LandHub.com. These are platforms where people buy and sell raw land every day. The way that I’m going to sell it is where the magic happens. I’m going to ask for $2,500 for you to control this ten-acre parcel in Texas and then make it a car payment. Let’s say $449 a month at 9% interest in the next 84 months.
It’s a one-time sale. I’ll get my money out on the down payment or I might go 6 to 10 months out, and then I’m going to get a passive income of $449 a month at 9% interest over the next 84 months. Matthew, I have to deal with no renters, no rehabs, no renovations, no rodents. I’m not dealing with a tenant, I’m exempt from Dodd-Frank, RESPA and the SAFE Act, all these owners’ real estate legislation. The game that we play is we can create enough of these land notes where our passive income exceeds our fixed expenses. We’re working because we want to, not because we have to.
Raw land is an inefficient market. Nobody knows the value of their land. But that is what makes it great.
What does the landowner get? What not the landowner, you’re the landowner. You’ve bought that property. You’re on title. Let’s assume that you’ve paid cash. You cleared the liens, so you own it free and clear. What do you transfer across to the person that buys it? Do they become the owner of the land?
It’s only if they pay cash. I don’t want them to pay cash because I’ve got a problem and I’ve got to redeploy the cash. I want the passive income. Until they paid off their note, we have a promissory note, a land sale contract and a purchase sale agreement, they all say the same thing. Make your quarterly payments, no problems. If you miss a monthly payment, you have 30 days to cure your default. If within 30 days you don’t cure your default, we keep your down payment, monthly payments and we resell that property to somebody else.
Which is good because that means that you maintain control over the piece of land, which means potentially if someone falls into that same trap where they’re not keeping up the payments and that reverts to you. Some of the tiny bit of research that I did, if you look at some of these parcels, when you mentioned $2,500 for an acre plot, there are some plots that sell for far less than that. They’re known as platted lots. Is that the correct term?
It’s like a subdivision plat map.
You’ve got your equivalent of a square foot on the moon. In other words, it’s in the middle of nowhere, but it’s valuable to anyone else because you may not be able to build on it or you may not be able to do much with it. It doesn’t seem to have a great deal of value. You can, with little capital, buy yourself some insignificant amounts of land.
What I have found in the last several years is that there’s a lust for land in this country. I’ve done over 6,000 transactions. I’ve never been stuck with a piece of raw land. What I learned the hard way is I’m not the buyer. There is a pig for every barn. Just because I don’t think the land so great, it doesn’t mean there’s not somebody out there that wouldn’t love that piece of land.
Do you find that there’s been an increase in demand for these pieces of land because of COVID? I would have thought as these group of people known as preppers, people that are buying land to escape from whatever they want to escape from, has there been any impact or uptick in your business because of COVID?
It’s sad to say, because there’s been so much suffering, but 2020 was our best year. We couldn’t keep anything in inventory. It wasn’t just preppers. It was people that are wanting to buy assets. These are affordable assets. People who are buying gold, silver, Bitcoin, this has been an inflation hedge. When you have the government putting trillions of dollars into circulation on fiat money, it’s not backed by anything. There are always going to be people that want to buy real assets. You’ve seen asset prices increase this 2021 and in 2020 because of COVID. We were one of the beneficiaries of that.
The model itself is fascinating because you’re buying something that is truly undervalued. The way that you make money is you’re buying something at a discount to its, not as much as fair market value, but its perceived value.
Raw land is an inefficient market. Nobody knows the value of their land. It’s what a buyer and seller agree to. That’s the great thing about raw land and that’s the terrible thing about raw land. No one knows the value.
You can play on that, because if you’ve got someone that is a forced seller, then the value that they ascribed to their land is going to be less because they want to get rid of it, presumably because they don’t want that tax burden. You’ve got someone like me who lives North of Salt Lake City, who realizes that I’ve got an opportunity here to buy ten acres in Texas. I’ve always wanted to be a landowner. That’s my perception. There’s that tension or that dynamic between the two perceptions of what that piece. That’s where the margin is.
Our average margins are 300% on cash deals and 800% to 1,000% on owner financing.
With owner financing, you’re going to not offer the same discount that you would for a cash deal so you’re going to get more, but also, you’ve got that interest and the added cashflow. For some people, to spend a few hundred dollars a month to get their dream plot, even though it may take them a little bit of driving over rocks and boulders to get there.
It’s a legacy investment. They may even go out there. They like the fact that this is something that lasts forever. It’s going to outlive all of us. It’s the only thing that lasts.
You discovered this in 2001, I read somewhere. That was your first land deal.
2000 is when I started. I quit my job in 2001. I was a miserable, micromanaged, stressed out investment banker specializing in mergers and acquisitions with private equity groups. Matthew, it got so bad for me. I wouldn’t get the Sunday blues anticipating Monday coming around. I get the Friday blues and being the weekend going by fast and having to be back at work on Monday. My firm hired this guy. He’s telling me that as a side hustle, he’s going to these tax deductions. He’s buying up raw land pennies on the dollar and he’s flipping them online and he’s making a 300% return on his money. I’m like, “There’s no way.” I’m looking at companies all day long. A great company has 15% EBITDA margins or free cash flow. Average companies are 10%.
I’m looking at companies all day long, less than 10%. I had $3,000 saved up for car repairs. I go with him to New Mexico. I do exactly what he says to do. About ten half-acre parcels, an average of $300 each. I flipped them all in line the next week for an average price of $1,200 each. It worked, 300%. I took all that money. I went to another auction in Arizona where I live. Two thousand dollars, there’s all in the room, I’m buying up lots and acreage for nothing. Over the next six months, I sold all that land and I made over $90,000 cash. I go to my wife, I go, “Honey, I’m going to quit my job. I’ll become a full-time land investor.” She’s pregnant. It took me about eighteen months for the land investing income to exceed the investment banking income and then I quit. I’ve been doing it full-time ever since.
You also have a way to explain how this works. The programs that you run. You’ve taken the next steps rather than dealing as a principal. You’re now bringing other people in because there’s probably quite a lot of land in the United States.
I’m on vacation. I remember Tory Burningham, he called me up. He’s like, “Mark, will you teach me how to do what you do?” I said, “I don’t teach people how to do that.” He’s like, “What if I pay you this?” I taught him the business. He did well. I go to my wife and I said, “I’m going to start teaching people what I do because this is gratifying for me. I’m changing this guy’s life. He made $350,000 on one deal.” She’s like, “It’s a terrible idea.” I said, “Why?” She’s like, “You’re going to create your own competition. Why would you do that?”
I’m like, “Let’s look at this from my investment banking background. How big is the market?” There are billions of acres of land. There’s such a big market, a million people could do this. We’ll all run out of money before we run out of deal flow. The fact of matter is that the deals that we’re doing are so small. There are no private equity groups, hedge funds and big money. You have too much money. It’s a problem. You can’t deploy it fast enough. I’ve been teaching it now since 2011. It’s, professionally, the most gratifying thing I’ve ever done.
It’s not one of those businesses where you can be the pathfinder and then find a couple of years later when you’ve opened the market up when the Blackstone comes in. It’s because it is small deals. Each deal is probably different. The dynamics of each deal is different. Each city is different, each land auction or each title auction that you go through. Do you help people through not just finding the land, but the whole process of dealing with tax liens and land auctions? How do you get someone started?
We have two programs. If you’re the person that can wake up at 5:00 in the morning, you go to the gym, you work out hard, you have that self-discipline, we have a do-it-yourself course called The Investors’ Toolkit that gives you all the contracts, training and everything you need to be successful in land investing. If you’re the person that needs accountability and you’re busy and you don’t have time to get up at 5:00 in the morning and work out, we have something called Flight School where you go with your coach, Scott Todd. He has done thousands of deals. By week two, you’re mailing. He forces you in the group to do this together. Everyone’s accountable to each other because we did the math and there’s a 3% success rate on these do-it-yourself courses and 97% success rate on group coaching because you have to do it and you have that accountability. Flight School has been incredibly successful for people that do it.
What are the biggest challenges? You’re going through the processes, the acquisition of the assets or finding the land parcels, then there’s the process of acquiring it and making sure that the title that there have been issues with the title that you’re getting what you think you get. What are the challenges in selling? For someone who wants to be a real estate investor, this sounds to me like they need to be quite good at a number of things. They’ve got to be quite driven. This is a business.
This is volume. Ninety percent of it is automated with the software on the front end, inexpensive virtual assistants and then software on the backend. The other 10% that you can’t automate or delegate, you have to do. That’s going to be county research on the land until you can get yourself out of the sales and the county research, which takes a bit of volume to get to that point.
Once you’ve done it a few times like any business, you get the feel of it. Where’s the biggest point of failure where new people that come into the business? Where do you think they come and start with our expectations compared to what it works out to be in real life?
That’s what it is. It’s your expectation. People come up with an arbitrary goal that, “By twelve months, I’m going to have $10,000 a month in passive income by doing this.” If they’re at $5,000 a month, it takes the wind out of their sails. They’re not happy about it. The people that I see that do well in this business have beginner’s mind. They have no expectations. They’re impatient with their actions, but they’re patient with the results. They have something I call grit. In business, you’re going to get knocked down. Do you love business enough? Is your why big enough that you’re going to get back up? If you combine a strong purpose with this attitude of, “I’m going to follow this recipe and I’m going to do the action steps necessary, but I’m also going to realize this is a market. There are certain things I can’t control.” Those people do well. They worked the business joyfully. The other people that have to make it work in the next 90 days, “I’ve got to do this.” They don’t have much frustration tolerance. Those people need a lot more handholding.
Those that do well in land investments have a beginner’s mind. They’re impatient with their actions but patient with the results.
If you go back to where you were when you started this business, those are wise words that you said. That comes from experience. Is a lot of that your own experience in terms of going from an investment banking position where a lot of the stuff that happened, happened behind the scenes to finding yourself where you’re self-employed, you’re trying to build a business? What learning process did you go through?
I wrote all about this in my book, Dirt Rich. It talks about my story and the process. In a weird way, I got unlucky because when I first started land investing from 2001 to 2008, any monkey can have made money in real estate. I was that dumb monkey. 2008 comes around, we have the great recession, I had Parkinson’s Law of Money. The more money I made, the more money I spent. I had to get the big house, cars, vacations. My wife didn’t work. We have three kids. I had to have a nanny. I’d have a housekeeper. I created all this big overhead, and then one day in 2010, 50% of my income went away. We lost 50% of our notes. I had all this overhead. That was when I realized the ego kick in the head. I realized what was important to me in life, all that stuff didn’t make me happy. Once I whittled all that down, got a mentor and started taking it seriously, that’s when things came back. By 2012, I was back.
You mentioned this on some of your information on your website, it’s all about attitude. In my view, if you have a business, you talk about grit. Success is 99% perspiration, 1% inspiration. That’s true. That was what you’re saying. Do you see a lot of people coming through your courses where you can spot the people that are going to be successful and the people that aren’t?
I can’t spot it. We try. We do applications. We ask them what their purpose is, their why. I have a lot of grit. I went out and I was playing golf with my son. I’m a beginner golfer. He’s going out. He’s duffing the ball. He’s having a great time. He’s laughing, smiling, loving it. He doesn’t care if he hits it well or if he doesn’t hit it well. I’m getting frustrated and angry. I’m like, “Why do people do this?” There’s no joy in. In my head, I should be able to hit the golf ball. I have no business thinking this, but because I’ve been successful in other places in my life, I think, “How hard can golf be?” It’s hard when you’re a beginner. I saw this in myself. I saw how I was ruining my own time. It’s impossible to predict until you’re in it. You can step back and say, “Can I work at something and be a beginner at something again and do it joyfully and have that kind of patience?”
Do you come across other startups with all the people that you work with, not just in your real estate business? Do you find yourself saying to people that are starting businesses, “You got to watch out for this, or you’ve got to check that?”
Ten percent of this business is how to and 90% of it is mental. Having that grit and that patience, we can help them with pricing, marketing, sales and a script, things to say. The tactics and the how to aren’t the problem for anybody. It’s the fact that there are so many things we can’t control.
What complaints do you get? In any business where you’re dealing with people who want to make money, when it doesn’t work, it’s your fault.
Our training is so good and we’re so confident about it, we have a crazy guarantee. Our guarantee is we guarantee that any of our training isn’t going to cost you anything. You’ll make back that money 180 days or less. Show us your work. You do the work, follow the recipe. We’ve got skin in the game like you. I’ve never had to give anybody a refund because the market is that strong, but you have to stay with it. You have to do it. If you continue to follow the steps, you can’t lose. It’s the people that get frustrated, they go on another podcast, they’re like, “This is too hard. Screw it, ATM investing.” That’s what we see, is the shiny object syndrome is more common.
There is a lot of that, because with any formula, it only works if you apply an enormous amount of energy. It is the Second Law of Thermodynamics. Unless you put a certain amount of energy into any state, it always naturally falls into chaos.
Think about you and your first show, to now you’re in your second year. I bet you, if you listened to your first few interviews, you probably came and listened to them. I know I couldn’t. They were terrible.
I can’t. I look at it and my finger hovers over the mouse key to press click. It’s awful. It’s like seeing a drunk version of yourself.
There was something in you that said, “If I keep doing this, inevitably, I’m going to get better at it.” You did and you do. That’s what it is.
I was going to say at the beginning, I’d like to have a quick word for our sponsors, but sadly, we don’t have any. There are so many people that get into business thinking that it’s a formula. Once you’ve got the formula, that’s all you need. Every formula is the same. In other words, you’ve got a way of doing something. You got to where buying something that’s undervalued and selling it for a premium, but then you’ve got the other 90%, which is that day-to-day grit, determination, perspiration, pick yourself up and start all over again.
You’re going to have problems or you’re going to have newer, better problems, but the problems don’t go away. There’s always going to be more problems to solve.
Several years on, do you still wake up every morning with the same level of enthusiasm as you did when you first started this?
I do, because I look at this as a marathon, not a sprint. Mondays and Fridays are my terminal days. I wake up and I pretend this is my last day on Earth, because I don’t know my last day on Earth is going to be. What do I want to do with my life? A lot of this is doing these simple things. I meditate for an hour. I’ll hike or bike. I have lunch with a buddy. I’ll spend time with my family. I’ll read and think about business. I’ll learn something new that day. Tuesdays are my podcast days. Wednesdays are team meeting days. Thursdays are client meeting days. Fridays another terminal day, working intensely only three days a week allows me that time to think strategically and be the CEO and have this enthusiasm that can sustain myself for several years, so I never burn out. I take July completely off. I unplug. I’m playing the long game. I was talking to a friend, he’s in a startup. He works twelve-hour days. He’s exhausted.
This structure is probably the hardest thing to achieve if you’re an entrepreneur or if you’re running your own business, because it’s so easy to fall into that trap where you do work twelve-hour days. It’s not because you feel that there is so much you need to do. That in itself is probably one of the biggest challenges of being self-employed or being an entrepreneur.
There’s this Puritan work ethic, you work as hard as you can for as long as you can, you’ll get paid for it. Not necessarily. The corner grocer is working hard, probably as hard, if not harder than Elon Musk. One of them is a billionaire though. A lot of it is, are you in the right space even?
I’m going to bet that you didn’t do this from the beginning. Unless you’re going to prove me wrong and say, “You make me feel humbled that you did to this.” At the beginning, when you’re building a business and you’ve got other people that you’re accountable to, for example, you may have investors or people that you’re working with on the program. There is that drive. Was there a burnout point? That’s my question. Was there an inflection point where you went, “Unless I stop or change something, I’m going to end up six feet under soon?”
I don’t recall that. I learned that lesson early in life from my dad because my dad was a workaholic. I was more aware of it and more sensitive to it, especially having kids, that I didn’t want to do that.
You’re going to have problems all the time. There’s always going to be more of them to solve.
The way that I look at it is you know what it’s like a couple of days before you’re going away on vacation. Let’s say you’re working. You’ve got a job. You’ve got your two-week vacation lined up. The amount of work that you do in that 1 or 2 days before your vacation is equal normally to about a month’s work. You become hyper productive during that period because you know you’ve got to get everything squared away because you’re going to be out of the office for two weeks. If you can have that attitude and compress that amount of work into 2 or 3 days, you become hyper selective about what is important and what’s urgent. Finally, what’s the next few years? Are you going to continue to grow your business or is there a quantum leap coming where you’re going to significantly ramp up or change the dynamics of The Land Geek and how you operate?
I’m working on my second book on how to scale your land business. We always are doing this Japanese term called Kaizen, continuous improvement. We’re always trying to improve our systems, our processes continually. We’re also trying to improve the pain points in the community, either software services or as far as helping everyone along the economic spectrum. We’ve helped everyone along the economic spectrum, except for rich people. Rich people make a lot of money, but they don’t have any time. We’re helping the rich people become wealthy. We’re solving their time problems and their money problems and letting them invest with us. We’re doing that as well.
I have my list of quick-fire questions. We’re going to change gears. I have my ten questions here. Question number one, what is your favorite word?
What is your least favorite word?
What are you most excited about right now?
Publishing my new book.
What turns you off right now?
What sound or noise do you love?
What sound or noise do you hate?
People chewing with their mouth open.
What’s your favorite curse word?
I couldn’t imagine someone having more favorites.
It is all time, most flexible curse word ever invented. What profession, other than your own, would you like to attempt?
Maybe a conductor.
What profession would you not like to attempt?
Any profession where there’s no margin for error like a pilot or a lion tamer.
If heaven exists, my final question, what would you to like hear God say when you arrive at the pearly gates?
You did your best on Earth, now you’re worthy to enter heaven.
Mark, thank you so much for being on. What is the best way for people to find out more about you and what you do and how to get in touch?
The best place is TheLandGeek.com. We have a $97 course that teaches people how to double their money 30 days or less. I’d love to offer that to your readers for free if they go to TheLandGeek.com/WholeTailing.
To my reader, I would like to extend that offer. Mark, thank you so much. It’s been a pleasure having you on. I look forward to following your progress.
Thanks, Matthew. I appreciate it.
- Dirt Rich