SRI

Interested in investing in your first piece of land but not sure how? Then this is the episode for you! Today’s guest is Mark Podolsky, aka The Land Geek, and the founder of Frontier Properties. He joins Shannon Robnett to discuss how to successfully create passive income through land investing! Mark is an advocate of helping individuals avoid solo economic dependency by investing their money the right way. He himself has found a way to become his own boss and work on his own time so this method is tried and true. He also shares how you can maximize income with minimal effort through automated businesses. Want to learn more? Stay tuned and get real estate investment advice from an expert!
 

I am interviewing Mark Podolsky. He is going to tell us how he is turning land into the right investment. He's going to show us how not to do land the wrong way, how to work smarter, not harder, how to automate your business to take advantage of the business instead of letting the business take advantage of you. You're definitely going to want to tune in as Mark and I talk about what to do to invest in land the right way here on The Real Estate Rundown.
I am with Mark Podolsky. How are you?

Shannon, I’m happy to be here. I'm doing great. My pulse is normal. My respiration is fine. Thanks so much for having me.
Mark, where are you in the world these days?

I live in Phoenix, but now I'm in La Jolla, California, because in Phoenix, it's scorching hot here at 70 degrees.

Mark, you're involved in the land investments, part of the real estate business. Tell us a little bit more about that and how you got involved in that?

If we rewind the tape to 2000, I was a miserable, micromanaged, overstressed, 45-minute commute to work, and back investment banker specializing in mergers and acquisitions with private equity groups. Shannon, it got so bad for me, I wouldn't get the Sunday blues anticipating Monday coming around. I'd get the Friday blues anticipating the weekend going by fast and having to be back at work on Monday.

My firm hire this guy. He’s telling me there's a side hustle. He's going to tax deed auctions. He's buying up raw land pennies on the dollar. He's flipping them online and he's making a 300% return on his investment. I'm looking at companies all day long and a great company has 15% EBITDA margins or free cashflow. The average company is 10%, and I'm looking at companies all day long, less than 10%.

I don't believe it. I went to New Mexico with them. I got $3,000 saved up for car repairs. I do exactly what he tells me to do. I buy up ten 0.5-acre parcels and an average price of $300 each. I flip them online, and they also offer an average price of $1,200 each. It worked 300%. I took all that money. I went to another auction. This is an Arizona where I live. It’s $2,000. There's no one in the room. I'm buying up lots. I'm buying up acreage for nothing.

Over the next six months, I sold all that property. They made over $90,000 cash. I go to my wife, she's pregnant. I'm like, “Honey, I'm going to quit my job and become a full-time land investor.” She's like, “Absolutely not.” It took me about eighteen months for the land investing income to finally exceed the investment banking income, and then I quit. I've been doing it full-time ever since. I've done over 6,000 transactions now, and I absolutely love it.
 

What do you say to the people that go, “That was 2000, that wasn't now. There are no deals to be had now. Nothing can be bought cheap. There are no auctions and COVID moratoriums.” What are your answers to all those questions?

We're doing deals every day. I agree, what I paid for, I'm paying 25% more than I was in 2020 for the same property, but the ratios are the same now. I'm marking it up 25% more than I was selling it for. The ratios are still staying the same. Shannon, let me walk you exactly through the model and then you'll see how this works. Where do you live?

I live in Boise, Idaho.

I'm going to pretend that you own 10 acres of raw land in Arizona, where I live, and you owe $200 in back taxes. You're advertising two important things to me. Number one, you have no emotional attachment to that raw land. You're in Idaho. The property is in Arizona. Number two, you're distressed financially in some weird way because you're not paying your taxes and we don't pay for things. We don't value them in the same way.

All I'm going to do is look at the comparable sales on that 10-acre parcel that you own for the last 12 to 18 months. I'm going to take the lowest comparable sale. I'm going to divide by four, and that's going to get me what Warren Buffett would call a 300% margin of safety. I'm going to send you an actual offer on that 10-acre parcel. Let's say it's the lowest comp is $10,000. Rescind your offer for $2,500.

Now, you accept the offer because this entire time, you've paid your property taxes. The county treasurer keeps sending you a noticing, “Shannon, if you don't pay your taxes, we're going to auction off that property to a tax deed or tax lien investor,” so you accept it. In reality, 3% to 5% of people accept my “top dollar offer of $0.25 a dollar.”

Now that you've accepted it, I'm going to go through due diligence or in-depth research. I'm going to confirm you still own the property. I'm going to confirm that the back taxes are only $200. I'm going to make sure there have been no breaks in the chain of title. I'm going to make sure there are no liens or encumbrances. I'm going to find out what's compelling about the property. Is there legal access? A big checklist that I outsource to my team in the Philippines that's connected to an American title company.

If I am spending more than $5,000, I'd bypass that process and close through a traditional title company, but for $2,500, I'll trust these guys. Everything checks out. I'm going to buy the property from you for $2,500. Here is where it becomes fun. I'm going to sell this property, three days or less. I would make a cashflow like a house. Shannon, I have a built-in best buyer. Do you know who it is?

I have no idea.

The neighbors. I'm going to send out neighbor letters saying, “Here's your opportunity. Protect your view, protect your privacy. Know your neighbor.” Oftentimes, the neighbors will buy it. Now, if they pass, I go to my buyer's list. If my buyer’s list passes, I'll go to a little website you may have heard of called Craigslist. It's the tenth most trafficked website in the United States. I'll go to even smaller one, Facebook, the Buy-Sell groups, Marketplace and then I go to the lands, LandModo.com, LandAndFarm.com, LandsOfAmerica.com, LandFlip.com, LandHub.com, all these platforms where people buy and sell raw land.

The way that I'm going to sell it, I'm going to make it irresistible. I'm $2,500 into your 10-acre parcel. All I'm going to ask for is a $2,500 down payment for you to control that 10-acre parcel. Let me get a car payment, $449 a month, 9% interest over the next 84 months. It's a one-time sale. I'm going to get my capital out on the down. I might go 6 to 10 months out.

I'm then going to get $449 a month, 9% interest over the next 84 months. No renters, no rehabs, no renovations, no rodents and because I'm not dealing with a tenant, I'm exempt from Dodd-Frank RESPA and the SAFE Act, all this owner’s real estate legislation. The game that we play is to create enough of these land notes, where our passive income now exceeds our fixed expenses, and we're working because we want to, not because we have to.

Can you offer the no road and guarantee, or maybe in Arizona, it's the jungle rat, the horned toad or something like that?

No roads because it's just raw land. What do I care?
 

Most pieces of raw land have some WhistlePig on it or something like that, but that's an interesting model. What does that entail? When you are looking to find your land, what percentage of the people that you're sending letters to are opening and responding?

3% to 5%. Under 3%, I came in too low on my offer. If it was over 5%, I probably came in too high, and I have to retrade it.

Yet you're not the one sending out the offers. Isn't that your virtual assistants, or are you actually doing that?

This is my whole philosophy in life is essentially, I can always make more money. I can't get more time. I'm going to automate 90% of this business with the software on the front end, inexpensive virtual assistants in the middle, software on the backend. I use a program called LGPass.com. We upload our lists into LGPass. It does the mailings for me. It's about $0.60 for first-class mail. It will do address verification automatically.

Once that mail comes back, we get our offers back. We then have our team handle that seller. Sometimes the seller wants to yell at you, curious about the offer, want to renegotiate. That intake manager handles that piece and they take it through the software. There's taking notes down, all the way down to closing, with what used to take me twenty minutes in paperwork, purchase sale agreement, land sale contract and promissory note. It takes one second, pressing a button, and we automatically send out the paperwork.

On the backend is GeekPay.io that automates the note collection. We get our down payment, and then we do on a recurring basis the ACDA to the checking account from our new buyer. That handles all the notifications. It does all the journal entries, all the math, everything that we're going to want. Our borrower can go in because it used to always annoy me, “Mark, what’s my current balance?” Now they can go, “Can I make a pre-payment this month?” They can go in, self-serve and do it themselves.

In between there, we have our virtual assistant team in the Philippines doing our due diligence. We have our acquisition manager closing the deals and managing the marketing team that's also based in the Philippines, marking the properties. We have a small team but this way, we can scale and we can do about a deal a day for volume.

How long did it take you? You said it took you eighteen months, but you were working full-time while you were working more than full-time. You were working 65 hours a week. What is the typical timeframe if someone wants to do this to be able to send out the letters, get the responses, start to build that high pipeline? What does that typically take?

We tell our clients to spend about two hours a day not checking email, social media, that can really focus two hours a day working in the business, learning it and building it out. My goal is to get everybody out of the solo economic dependency, which means if they're not personally working, they're not making any money. This is the way to get out of it. The last thing I want anyone to do is to build another job for themselves. We want to get them out of business entirely. I work about two hours a week in Frontier Properties.

Were you one of the principals in LandGeek, or is that just software that you found that works for your purposes?

LGPass I develop as well as GeekPay.io. It's made by land investors for land investors.

That's what I thought. When you were talking about it so comfortably, I got a sense that you probably had a lot to do with how exactly it processed. You came from an investment banking background. You get into land deals. Now we'll send you to find yourself as a software developer. How did you pull all that together to build your own software?

LGPass was basically, “I need this.” I'm a geek and I have a mentor who's also a geek. He comes from Silicon Valley space, so he could help me find the right people to develop this out. I was then using a solution that I thought was good to manage my notes but they're nickel and diming me. If you ever watch Curb Your Enthusiasm, I created my own Spite Store. I'm like, “I can do this better,” and so I did. I created The Spite store and did it.

Necessity is the mother of invention. You needed this. You needed it to work properly. The reason that I asked that question is there's so much software out there that is built by people who build software, not by people who actually do the work that the software is supposed to help with. You wind up beating your head against a wall, trying to figure out how to make this stupid software do real-world things. That's important that people know that this is built by a land investor for land investors in order to make sure that they make the right decisions, that this thing actually has a flow and a pattern to it that makes sense because so often that's not the case.
 

It's nice to know that when you have something that you want, you're talking to the owner, who's actually using the same software in their own business like, “That is a good idea. Let's do that.” We're continually making updates that everyone can benefit from because I benefit from it, and then they benefit from it.

Do you only buy the land from the mailings, or do you actually then go to the auction still now and go through that process as well if you get no response?

In a market like this, I don't want to go to the auctions so competitive. I want to get the property before it goes to auction. Now, let's rewind the tape to 2008 where auctions were great. No one had a lot of cash. The only reason I survived during the Great Recession was I was doing all-cash deals. I was at leverage like my buddies who use leverage. They had bigger houses and cars than me, but then they were out of the game because they were over-leveraged where I took it a much slower approach. Now, I would say I'm avoiding auctions. I'm doing the mailers. I'll buy wholesale from people as well, as long as they leave enough meat on the bone for me as the retailer.

This is more advanced, and most people don't do what I do. If I'm doing a bulk deal because I've got more capital to deploy, maybe I'll go to a tax lien fund. They've got a bunch of lands, they've got a spreadsheet off their books, then I can buy in bulk there. There are always deal flow sources depending on what part of the Monopoly board you're planning.

Are you still putting in two hours a day into this business, or have you completely automated it and essentially stepped away?

I'm probably more than two hours a week now in the business. Mondays and Fridays, where I call my terminal days, feed my week. I always pretend this is my last day on Earth. How do I spend that day? It's usually doing very simple things. I want to spend time with my family and my friends, meditate, work out, connect essentially with my important relationships. Tuesdays are my podcast days, and I have my own podcast. On Wednesday, I have my team meetings and we do talk to the team. Thursday is going to be client meetings. Friday is my terminal day. Within Frontier Properties, it's about 30 minutes a week. Making sure that the numbers are going the way they need to go.

If I were to ask you, what was the last deal you did? Would you even know?

No, I wouldn't know the last deal I did. I can tell you that we're doing well.

That is truly automated.

I had a meeting with my acquisition manager and he said, “We're killing it. We can't keep anything in inventory.” He feels like Marty Byrde, if you ever watch Ozark, we don't want cash. Cash is trash. There's a lot of pressure, like get that money out of that account, buy land there's pressure.

How many transactions are you doing a week?

We wanted to do a deal a day. Our goal is a deal a day.

Everybody hears about the tax strategy sale. Everybody hears about these strategies and takes them out of context as far as when they work. I'm curious, you're even in as hot a market as we have, you’re still doing a deal a day, you're still getting a 3% to 5% return on the mailings that you send out. Every day, you've got a guy paying his last 84-month payment. You've got a guy paying his first 84-month payment. You're getting a down payment. Every day, one of these things is happening for you and is continuing that in perpetual motion, and has automated for the last, how long?

Several years now. I didn't figure this stuff out until maybe 2010.
 

You actually worked nine of the last several years, is what you're saying?

I worked nine for the last several years.

Everybody, break out the files for Mark. That's so great. The original guy that you went to the auction with that showed you how to do this, is he the mentor you mentioned?

He wasn't a mentor like he was blindly in the blind. He just knew it before me. We were just doing it together. He then started doing his own thing and I started doing my own thing.

Is he still doing it?

He's still doing it. If you're a deal jokey, you don't ever stop doing this.

That's what I've heard, but you go to the title agencies and you see the old guys still doing deals. I'm hoping I'm one of those guys that's still doing deals. As people get involved with this, what is the right way to get started? Where do you get a list?

First of all, you’ve got to figure out what county you want to be in. Shannon, let's face it. Nobody wakes up, thinks of themselves, “Buy some raw land in Minnesota now,” unless you live in Minnesota.

I was hoping you weren't going to say Idaho because I actually did wake up with that thought. I'm glad you threw out Minnesota.

Idaho is nice, but I'm going to focus on the Southwest. I want New Mexico, Colorado, Arizona, Texas, California, Nevada, a little bit the Northwest Oregon, Washington, and then Florida. We're doing a big development deal now in Tennessee. I'll do some deals in Arkansas, Missouri. Those are pretty areas. For the most part, I want my biggest buyer pool. We're going to get the biggest and best buyer pool in those areas. That's where we want to focus on first. From there, getting a list isn't difficult. It's public information.

If let's say it's an older county, maybe I'll have to buy a list, and I'm going to DataTree.com. If you're reading this, you can get a discount, DataTree.com/thelandgeek. You can do that as well and you can get a list. Any list feeds no less essentially and then use software to automate it. If you're super cheap, you don't want to automate it, get your kids to handwrite the envelopes, whatever you want to do, but get that mail out.

When someone wants to start with this, how big of a list do you need to start?

It depends on how much capital you have. Let's use some round numbers. If we're going to a 3% to 5% response rate after due diligence, maybe we got a 1% close rate. For every hundred offers, we're going to do a deal.

If you're wanting to do 365 deals a year or do you take Saturdays and Sundays off?
 

No time off.

Three hundred sixty-five deals a year, you're going to need to send out 365,000 letters. You're going to spend $0.60 on each one, so you're going to be about $200,000 in expenses in that first year to do 365 deals.

You're calling it an expense. I'm calling it an investment because my return on that mail is massive. If I was a newbie, the way that we trained our clients, it's like a seven-minute workout. If I said, “You're going to start and you do a two-hour workout now.” How many people are going to drop out? If I say, “Seven minutes is all I want you to do.” We recommend twenty offers a day because if you're starting out and you're doing a thousand offers a day or something, you can't handle the due diligence. You don't have the team built out. You want to start out slowly. You want to manage your growth. Twenty offers a day is what we recommend to start.

That's something that ends those. Do you repurpose that list? Do you hit that list more than once? Do you send out one letter and call it a day?

We email every 90 days to a profitable county.

You're about teaching people how to automate that process, get your list, get started and move forward with this with a minimal investment. You call it what you want. There's a minimal upfront cost because, by the time you've made your offer, you may have spent a couple of hundred dollars in mailers before you've got offers that are coming back and being accepted. If I do the numbers correctly and you're talking about twenty a day, I'm going to be several months before I've hit my 300, and I'm going to have three active offers just by the numbers.

If you want to shortcut it, we've got a free course. I'd love to offer to your readers, TheLandGeek.com/quickdeals. It's a wholetailing model. You can eliminate the mailings and just buy wholesale from somebody and then sell at retail so you eliminate the mailing investment upfront but you speed up that process.

You can make instead of maybe 300% to 1,000%, maybe you're making 200% to 500%, but then you can use that money and reinvest either into more wholesale or start investing into more traditional retail deals in joining through that process. The best way to learn anything is to do it. You can dip your toe in the water that way with minimal risk and effort. See if you can double your money in three days or less and then decide, “This is something that resonates with me,” and go a little bit deeper into the model.

Why is it so simple but not very many people do it?

It's not sexy. You're not going to go on HGTV or the DIY Network and see them flip this land, the before and after pictures of all land.

You don't go out and see every single one and pick up, “This is Caliche. This is good building material clay.”

It's boring. That's number one. Number two, it's not a visual medium that we can all understand in the sense that everyone needs a place to live. Nobody needs all land but 99% of what we have in our lives, people want it, but they don't need it. That's also another varied entry. Number three is if we look at Robert Kiyosaki's CASHFLOW Quadrant, you got the EES employee as a self-employed, think doctor, lawyers, small business, these big business, and then ICE investments.

We're asking you to start in the S quadrant and quickly go into the B quadrant, which then leads into the I quadrant and become a full-time investor. It's starting a business. To build out this team, build out the automation. If you're not entrepreneurial, this is an active investment strategy. It's not like other ways to build passive income for sure.

If someone's looking to get started and they're just your average person, it sounds like this thing is ideally suited for the average person. What capital do they need to get started on this journey?
 

I start with $3,000. I tell people you get $500 to $5,000. You can get going. If you don't have $500, you probably need to get something else going on.

Some people might need that step to get motivated to get the $500 to get in the game. After that, you've made your first step. Now, this can be your second.

Mike Zeno started $40,000 in debt, and he was able to get out of debt in his first year just doing cash flips. Started building up his business from there.

Mark, this is super interesting just because of how you never hear about it. It's almost a conspiracy theory because you never hear about it. You're right. Nobody's on DIY with this. Oprah's not talking about it. There are not book deals involved. What do you say to the naysayers? Everybody has those. People don't want to believe it, but what do you say to the people that say, “Mark, this can't be done?”

Investment Mark says, “Okay.” The hopeful part of me, the person that wants to help you get off solo, economic dependency, maybe you can buy into that. Maybe this model isn't right for you, and that's okay. I'm more interested in people living their best lives and becoming totally free to work when they want, where they want, with whom they want.

I'm teaching a model, which I think is great, but maybe it's not great for them. As long as they're doing something like that, and then once you've solved your money problems and your time problems, you can move up Maslow's Hierarchy of Needs in self-actualization and figure out what you want to do in life. That's the big problem that I'm trying to solve. I'd like to say, “Figure it out for yourself, try it yourself.” I'm from Missouri, and I didn't believe it either. That's what I would say, but I don't want to be in the convincing business.

Mark, your answer is perfect because what I've found is that the more someone tries to sell you on something, the more it is exactly that it's a sales job. Where someone is trying to inform you and go, “I can lead a horse to water but I can't make them drink.” I showed you the opportunity if it's for you, great. If not, no big deal. It's interesting because people will discount it before they even try it. That's one of the things that I love about doing this show is that I get to interview all kinds of people.

I'm a real estate agnostic, from insurance agents, to property managers, to guys like yourself that are talking about land. I've been a fortune generation realtor. I should have heard of this, but this is my first exposure. That doesn't negate it and make it unreal, and that's the thing that I love about this show because even I'm able to learn something new.

Teaching an old dog like me is pretty substantial. New tricks are not something I hear about all the time. This is great information. I appreciate you giving this to our readers. Where can they find you in the great wide world of the internet? You mentioned it a couple of times, but I just want to get it out there. Where can they find you?

The best place to start is TheLandGeek.com.

Thanks for being with us, Mark. I'm looking forward to everything that you've got on your stuff here and seeing, digging into it a little bit deeper. The Land Geek and LGPass are already bookmarked on my window browser here. Thanks, guys, for reading The Real Estate Rundown. Don't forget to like, share and subscribe in Podchaser, Spotify and iTunes. Wherever you get your blogs though, you'll get automatic updates.

You can also find us on Instagram and YouTube. Leave us a review. I love to hear your feedback. If you like what Mike had to share, go ahead and give him a follow on Facebook, LinkedIn, Instagram. You can also find him at The Best Passive Income Model anywhere. You can check out TheLandGeek.com. Mark, if you want to say any closing words.

I like to close off of the Zig Ziglar quote, “If you do, for the next three to five years, what other people won't do, you'll be able to do for the rest of your life what other people can't do.”

It's an awesome way to close this out, Mark. I sure appreciate you showing up on the show. I hope you guys got something out of this. We'll see you next time on The Real Estate Run Down.
 

• Mark Podolsky
• Craigslist
• LandModo.com
• LandAndFarm.com
• LandsOfAmerica.com
• LandFlip.com
• LandHub.com
• LGPass.com
• GeekPay.io
• Podcast - The Art of Passive Income Podcast
• Frontier Properties
• DataTree.com
• TheLandGeek.com/quickdeals
• CASHFLOW Quadrant
• Instagram – Real Estate Run Down
• YouTube - Shannon Robnett
• Podchaser - Real Estate Run Down
• Spotify - Real Estate Run Down
• iTunes - Real Estate Run Down
• Facebook – The Land Geek
• LinkedIn – The Land Geek
• Instagram – The Land Geek
• The Best Passive Income Model