This is episode number 1,958. We are talking about why these mountain towns. Jill and I are in Carbondale, Colorado. Why these Mountain Town real estate pricing is messed up in Jill’s words, and then how can ultimately profit from it? It has to do with taking a look at land values versus housing values and things like that. A little bit later on, we’re going to talk about how being a business owner is the only real viable way to create wealth.
I’m excited about this topic because this is fascinating to me. I have a lot to share, and I’ll save it for the actual show here.
Jill and I are in week 2 of what’ll end up being a 3 or 4-month national RV trip. We’re in the center of Colorado right now. We tow a little Jeep around and what we always do is drive to these little towns and look at real estate, not because we intend to look at real estate. It’s just by default.
That’s who we are.
We figured we’d talk about what we’re finding. We’re looking for an opportunity in finding it.
It’s amazing.
In each episode of the show, we answer questions from our Land Academy member Discord Forum. We review land acquisitions from our weekly member webinars, and we take a deep dive into two land-related topics by popular request. If you want to sneak peek at what goes on on Discord, it’s interesting, go to LandAcademy.com. It’s free in a view-only mode.
We pull questions from there. We also pull questions directly from you via texting to us. Feel free to do that. If you want to text us a question that we can answer here or want to get involved in our community, we read them all, the number is (480) 530-7383. Check it out. Michael wrote a question, “I am new and researching counties and zips, but I need funding for whatever I buy. I want to know what size property, and at what price point on the sell side would be attractive enough for a funder to go in with me and hold my hand in the process. Obviously, the split is negotiable. I’m looking to learn the process but make a little as well. Also, what questions should I be asking here that I am not?”
Finding A Funding Partner
Jill’s going to answer this question, but I have to tell you, you have the absolute right attitude. Take it a little slow. Learn a lot. Talk to a lot of people, funders. See what deals they want to do. I love this question on how it’s worded, and I think you’re absolutely on the right track.
Here’s a good example. I’m looking at a deal right now that you don’t even know about. It’s a buy for $100,000 and sells for $300,000. I think that’s a little rich. Honestly, the deal funder who presented this to me talked to a local land broker who thinks it could list it. They think they would start listing at $330,000. I’m like, “I look at it this way.” If it all goes sideways and we bought for $100,000 and sell for $200,000, are we both happy with that? I’m like, “I think we probably would be.” That’s enough for me to get involved. It doesn’t even have to be that much. I’m going to say, “Here’s the thing. Don’t worry about it, Michael, because there are many people of all levels in Land Academy who are very happy to split $5,000 free with you. There’s some that are happy to split $50,000 with you.”
If you need more experience and you’re willing to say, “I realize I’m going to need more handholding here. I’m happy to take less than 50%. I’m happy to take 25%, whatever you guys work out.” You say it like, “I’m open to it. I understand that the more help I need, the more percentage you’re going to want because you’re doing the deal with me here too, or maybe more of the deal, then I get it.” That’s exactly the right way to present it. Don’t worry about the money part because there are all levels in here. That’s it. Whatever makes sense to you, even. That’s what I’m going to say.
End it on this, if you’re happily splitting $5,000 with somebody, then you will probably find somebody. If you say to yourself, “There’s no way I’m going to work that hard for $2,500. Now I need to split at least $10,000 with somebody.” That’s your starting point, and you should be mailing like that. That means you want to target properties where maybe you buy for $20,000 and you sell for $40,000 or $50,000. That’s a great place. That’s a good sweet spot, then everybody gets happy with those numbers.
You know you’re going to walk away with at least probably $10,000 however you work out the percentages. That will get you going. Think about it. You do 3 or 4 of those. Now you have $40,000. Now you can start making some different decisions. Maybe you start looking at different properties. Maybe you don’t need anybody else’s funding anymore and soon you’re the bank for somebody else too.
There are people at all levels in our group. There are people at the tip-top who have limitless funding. Jill and I have done some pretty large, not recently, but large housing. Buy for $400,000 and sell for $480,000. We’ve got multiple people that are in our group that are asking for more. We do rational splits there. Real quick turnaround time. There are more people in our group that have an extra $5,000 because they’re buying and selling land, and they want to get into the funding business. If you need $5,000 to do a deal, you’re going to split $10,000 or $15,000, there are lots of people that are interested in doing that. There are people in our group who have no intention of ever sending a mailer out. They want to fund other people’s deals. No matter what the situation is, you’ll find it.
They know how smart this group is. That’s the bottom line. Our topic, Why Mountain Town Real Estate Pricing Is So Messed Up and How You Can Profit From It. Here’s a little bit of the backstory and this always happens. We don’t set out to do this, but as I said earlier, Jill and I are dragging this little jeep around in a large RV. We get tucked away in the RV park, usually detach the Jeep, and then we take a look at a map. Jill and I sit down and, and plan out time-wise, what little towns we might go to, depending on where we are, whether it’s going to be a fishing stop, we don’t know, or a shopping stop.
Bike riding.
It happens to be that we are in the center of Colorado in Carbondale at the time of us recording this. We decided both of us, we have to go to Aspen. We drove out to Aspen about 30 miles away.
There’s a bike path. I want to point that out.
I’ve been to Aspen in the very distant past a long time ago. It’s all built up now. What shocked us about this town specifically is that they have property listings and house SFRs listed for $40 million and $50 million.
That’s more than beach prices.
It’s $2,000 a square foot.
That’s like on the coast of Santa Barbara Beach. That’s Montecito on the water beach prices, which I can almost justify.
There are neighboring towns all around that area. There’s a little town called Redstone, one called Marble, where literally they mined marble for the monuments in Washington DC.
Like the Lincoln Memorial.
There are houses for $300,000 or $400,000. You can buy a $1 million house, but you don’t need to. This is 15 miles away. Jill and I in the car had a very long conversation about this and decided to talk about it on the show, “Who’s buying these houses?”
That’s the whole thing.
“Why? What’s this all about?”
Here’s the thing for me. I’m having a hard time justifying it. Think about this. A) You don’t want to be in downtown Aspen because it’s busy and noisy, but you want to be in the area where you can get to things and have some land too. These prices are almost not even making sense. Who parks their money there? Why would they do that? What’s the difference between a $4 million house and a $45 million house? Nothing. I can drive 20 miles and find the same house for $4 million, and it’s $45 million there and my $4 million house might be on a bigger lot.
It’s very safe to assume that if there’s a $40 million house in any environment, there’s a market for it. The question is not how the house is being used. For me, what the hell the house looks like, I couldn’t care less. I’ll leave that stuff to Jill. For me, it’s the math. Let’s start with the math. For a $5 million house, your mortgage is going to be around $28,000 principal interest, taxes, and insurance. All of it and anesthesiologist because we’re asking ourselves why and who’s using this real estate and what’s the deal? The top-end anesthesiologist makes about $600,000 a year, and they can afford a $25,000 a month mortgage. With the rational interest rate, I’ve got 6% in here. That’s a market for doctors on vacation. We all understand that.
Where’s their primary residence? We didn’t even factor that in.
Probably somewhere where there are hospitals.
They got to afford that too.
I’m getting to all that. They’ve got their primary residence. Hopefully, they have some equity in it already, but how do they get here? It’s a job. These towns have to have a commercial airport in general where you can get a flight in from Los Angeles or from Las Vegas, or where there are large markets for people who are employed. I did the numbers on $5 million. At $50 million, add a zero to everything. Now the payment is $300,000 a month. Doctors’ groups can’t afford that. That’s not the market. the Fortune 500 CEO, their average salary is $16 million this year, I looked all this stuff up. They can afford a $600,000 mortgage a month. This is $300,000 at $50 million, but there are only 500 CEOs in the Fortune 500, and the Fortune 1000 and on and on, the salaries go down, but that’s not a target market. This is such a tiny little micro market.
These are good numbers. I love this. He’s got a spreadsheet here that I’m peeking at.
The average of all people, in this country, is $130,000. That’s two people making divide by 2. They can afford about $3,000. 25% of that is about a $3,000 mortgage. We’re running the numbers on a $5 million house. If you take a zero away, it’s a $500,000 house. They can almost afford that. It’s shy of that. That’s not the market. Who’s buying these houses? It turns out it’s us. It’s all the people who own companies like Land Investment Companies, small manufacturing companies, government contractors, large-scale cleaning services, or an IT company. There are tons and tons of what everybody likes to call small business owners, but I don’t feel like a small business owner at all.
Not today.
If you make $5 million a year, let’s start out at $1.5 million. The last Career Path Jill and I did, where we taught Career Path, we asked everybody in the very first module, “How much money a year do you want to make?” This last career path was pretty rationally said, “I’d love to make $1 million a year consistently.” At $1 million a year, you can afford one residence with a mortgage of about between $20,000 and $40,000 a month. That fits right in with that $50,000 mark. That’s the real market.
What’s the $50,000 mark? If I could afford a $20,000 to $40,000 mortgage, how much is my house?
The low end is $5 million to $9 million for one residence. If you want two of them, you can get two $4 million houses very easily. Any bank, if you have rational credits and you have a consistent track record of making $1 million a year buying and selling land, they’re going to finance that as a mortgage. We’re not here to make $1 million. I’m not. At $5 million a year, now you have, 20% of that disposable income is $100,000 a month. Now you’re approaching a much higher number. It’s $100,000 to $200,000. You can easily afford a $20 million house. They’re building these houses for us.
Are we spending it? Jill and I would never do that ever. I have a top number on any piece of real estate I’ll ever spend. It’s way lower than $20 million. It’s closer to 10% of that because they had a benefit. You don’t get it. What’s the real deal? Jill and I went and looked into what’s going on. Here’s what’s happening. If Jill and I go buy a $10 million house that we maybe used five times, we don’t do any VRBO nonsense. In a very predictable way with a reasonable amount of risk, that house is going to be worth $5 million more in a few years. It’s inflationary. I’m hedging against inflation because it’s real estate. Plus we don’t go out on the MLS and pay top dollar for anything. We go and buy undervalued real estate. This whole market is for us.
Isn’t that amazing?
Mountain Town Markets
That’s part one. Part two and now this is for everybody. I don’t mean Jill and I, I mean people who buy and sell land or anybody who’s got a small business that generates some dough. Part two is what I love about these mountain town markets, even the small ones and the inexpensive ones, the variance. This is all on the MLS. I would encourage you to go out and look at it. Start with Aspen. The variance in the land prices that are on the MLS and the housing prices are massive. If you see five $8 million house values in a town like Aspen, and you see $100,000 infill lot prices on the MLS you can go and buy those for 25% or 30%.
Now you’ve got $30,000, $40,000 or $50,000 infill lot pricing and you can probably sell it for $100,000, $200,000 or $300,000 and still be well. The variance is my point, the volatility/variance in some of these markets is amazing to me. It’s rooted in a massive amount of opportunity. To pour sugar on top of that, there’s a huge affordable housing issue in a lot of these markets because there’s a lot of support staff that’s needed in these places. They have to drive out of town pretty far, substantially far to rent a place or own a house. There are lots of opportunities there. Mobile home opportunity and all kinds of undervalued real estate opportunities in these places have huge disparities.
It’s interesting. In some of the towns, not Aspen of course, but some of these little mountain towns that you’re mentioning, they need the cleaners, the waiters, all the staff to run a resort, run a restaurant fill in the blank and all these services, service industry stuff, they’re having a hard time affording it, which is interesting.
Some of these small towns, I got to tell you, have passed very interesting laws that are allowing things like tiny homes/RVs on lots in town to at least give people places to sleep. I’m not necessarily, I think we need to do more obviously, and come up with some good housing solutions, but they’re trying to be creative I do appreciate that. That’s the hard part. That’s great. we’re talking about Aspen.
Where do all those flipping people work? Where do they live? Where do they work there? They got to drive and it sucks. That’s the hard part. What if the weather’s bad? Now we even have more problems. It’s interesting to me. I love your chart. I loved your explaining. Part of me feels, “That means that we can do that,” but I’m like, “I don’t want to be in that.”
I can hear it in the back of Jill’s voice how much this topic, talking about $5 million and $10 million houses, motivates her.
It makes me mad.
It makes her want to sell more, buy better real estate, and sell for more. I love that it motivates you because it motivates me. Not that we’re ever going to do anything about it. We’re in our sleepy little class A RV, and it’s fine for us.
Do you know what’s nice about it? Knowing what’s possible. That’s the bottom line. You spelled it all out, and that’s who it’s for because I left the other day thinking, “Who the heck can afford this stuff?”
Did that explain it?
I got it. It’s like, “It’s us. It’s designed for us.” I’m not necessarily sure we should be doing that just because we can’t afford it. That’s the point. Love it.
Let’s take a look at one of our favorite land acquisitions from our weekly Thursday member webinar.
County, North Carolina, 2 acres. We have access inherited from her dad. Houses are next to it. A new subdivision is a few minutes away. No flood zone and very private area. Concerned about the railroad tracks. Accepted price is $38,000. I love your pricing. You’re aiming to sell for $65,000 to $80,000. The neighboring lot sold for $54,000 in 2019. Dug into the HOA, and the owner knows nothing about it and appears to be inactive. The margin percent isn’t very high, but I’m confident we can make $25,000 quickly. We didn’t hear back from a real estate agent because you’re going to fund it yourself. If I make $25,000 quickly and I don’t do a lot of work.
That’s what I think.
I’m okay with that, especially if somebody else is going to sell it. I feel confident about that.
Acreage access is adjacent. Acreage, 2 acres. Relatively, it’s a larger property compared to others around here. Access, let’s see if this road exists.
The number of parcels available across the street concerns me a little bit too.
It stops right there. There are properties here. I think access is great. They’re coming in here. We’re going to check the value of this in a second.
How old is that house?
$540,000 next door. I’m going to check this.
They sold in 1995 for $90,000, then put a house on it for $84,000. That was a while ago. That makes sense to me. Numbers now are not what they used to be. I totally buy that. I’m good with that. These people are jumping up and down because their home went up at Colonial Heights.
These guys have chosen very interesting markets. Both of these properties are, I think, very urban. What happens when properties are very urban is, in my opinion, not Downtown Raleigh, but adjacent to the metropolis. There’s the right side of the tracks and a different side of the tracks. The neighborhoods can become very different even 1 or 1.5 miles from each other. What’s important is to find microscopic value, which Jill’s alluding to. We need to see how many properties have sold. This is the comparison value area. Let’s see how this is doing.
Look how different they look. Access is easier over there versus coming off an Almond or whatever that street is. I have a few concerns. I think that might be reflected in the price.
I’m going to do the Jill test here. In 2013, this property was sold for $45,000, and then they built a house in 2016 for $320,000. Jill’s question is if this is all working, “Why aren’t these done?” This is a single-use property. You’re only ever going to put a house on it. The question you have to ask yourself is what’s the price of this property given all this stuff? On both of these deals, I would take them to the next level at the price and everything it passes. I would do an extra level of due diligence to see if you can sell these things.
My universal rule, and I’m on the fence about this, is that if everything works but I’m not sure, then it’s got to be cheap. Jill and I are getting the initial results from a mailer we sent out. In probably 50% of the properties that came back where they said, “We’re going to sell it,” because of what’s happening now in this market and a bunch of other things that I know about that micro market, we’re all going back in there and saying, “That’s got to be cheaper.” We don’t just save it up for Thursday. We’re personally going through this too.
We mean it when we say we’re doing deals right there with you.
On both of these, I understand $38,000. I would want to get this for $10,000.
That’s my thought. This is what the Thursday calls are for. We have the same concerns.
Jill, do you have something to share about our new Career Path dates?
Career Path
I do. Thank you for bringing that up. We have announced Career Path 7 and Path 8, which are the last two sessions that we will be having for 2023 for Career Path. What is a Career Path? It is our highest-level advanced, in-person, small-capped coaching program taught by us. It’s designed for someone who wants to make this a career. Whether you are coming from another industry and you’ve had other companies, you know how to run companies and manage people, and you want to make land investing your focus now, or you’ve been working your way up, you’ve done deals, you know what you’re doing, and now you’re certain this is what you want to do, Career Path is for you. It will be at the end of September. We have Saturday sessions as well as Wednesday sessions. There is lots of amazing flexibility.
Where can you find out more? Go to LandAcademy.com/CareerPath. You can see all the details. You can schedule a call. You can fill out an initial application there. If you have any questions, always send a note to Support@LandAcademy.com.
There are usually between 20 and 40 people in the Career Path sessions. They range from people who’ve never done a deal to people who make $6 million a year and want to make $10 million. You’re surrounded by people who have a lot of experience.
This one will have 40 caps. We’re going to do 15 to 20 people on Wednesday and 15 to 20 people on Saturdays. That’s all we’re doing because we want to give you the attention that you deserve.
My point is if you want to be in a room full of people who are making a lot of money buying and selling land, this is the best place. Let’s take another question posted by one of our members on the Land Academy Discord online community. If you want a sneak peek, go to LandAcademy.com. It’s free.
First, we have a comment and then a question. We have a little note from a suite member named Sid. He wrote, “My partner and I were fortunate enough to purchase a 160-acre ranch last January 2023 with the help of a couple of investor friends. The purchase price was $65,000 plus another $15,000 for a contractor to clean it up and mow all the pastures. We closed about two weeks ago at $1.15 million cash. The biggest check I’ve ever had in my account. My partner couldn’t believe this could be a business after all. We are now back to normal size acreage, but always on the lookout for an elephant to wander through.” I love that.
Sid was in our most recent Career Path. Good job, Sid. He’s also very vocal on Discord.
Here’s our question. Daniel wrote, “I am new here. I’m looking at a 12.37-acre commercial property. The local realtor says it’s worth anywhere between $100,000 and $150,000. The commercial land is heavily wooded with no permits on record but is in a fantastic location off a major highway. There are nearby houses. The seller wants $75,000. Would a funder buy it at $70,000 and go through the county process to get the permits to ensure that we can sell it around $150,000? There’s an expired listing on the property for $200,000 back in 2020. Is getting permits to add value a common way to do this before selling?”
No.
Here’s the thing. The seller wants $75,000. I’m not sure where the $70,000 is coming from. You can talk him down $5,000. I’m not sure how much of a difference that’s going to make. If he’s at $75,000 and it’s been listed for $200,000, why is it not sold yet? I have a lot of questions.
It turns out I’m not going to have to help you at all.
Commercial Property
No. My $75,000 is like, “I wouldn’t even pay that.” Now it’s like, “If he knew he would take $75,000 and he hasn’t got $75,000 yet but listed it for $200,000, with all these problems going on.” Who’s this local agent hanging in there with nothing for $200,000 when he knows the seller would take $75,000? I think at the end of the day, if he had the right broker, he would’ve listed it at $85,000 knowing the seller would’ve taken $75,000 and it would be sold right now. What does that mean to me? That means I want to buy it for $25,000 and sell it for $75,000. I don’t think there’s a deal here at all.
Commercial property, especially if it’s in a great location and posted where it should be, like on Crexi or LoopNet, is going to be sold to one of two types of people, 1) The end user. Somebody wants to build a building, like a spec building. Maybe they manufacture parts for airplanes or something like that, or there’s a distribution center. The owner of the company is going to use the property. It’s not as common anymore as it used to be. It used to be you had to own the real estate lot back in the day. It’s not off-balance-sheet real estate anymore. Off-balance-sheet real estate is how big companies do things these days.
This brings me to buyer type number two, which is a real estate investor like us. They would build a warehouse and lease it to Amazon or to another business, usually on a spec basis. $50,000 on a 12-acre incredibly well-located property makes no difference at all. I’m backing up what Jill said. If you have a broker saying it’s worth $100,000 to $250,000 and there’s an expired listing for $200,000, it would’ve been sold.
I goofed on that one. I realize now that was from 2020, but still, you’re right.
$50,000 is peanuts compared to what the rent factor is going to generate for that person. If somebody wanted it, they would’ve bought it. I think it’s way overpriced. We’d have to look at it to give a great opinion, which is what we do on the Thursday calls.
I hope he brings it up there.
The final point is we almost never do anything to the land before we resell it.
Can I say why? Because we’ve tested that, and every time we do it, we kick ourselves, asking, “Why did we bother doing that?”
What if you pull permits for the wrong thing? It could be a $300,000 square foot warehouse instead of a $30,000 square foot one. You have to go through the process anyway.
How do you know what someone’s going to want? You don’t. You have to buy it cheaply and sell it inexpensively so that your buyer can go off and do whatever they want. Properly convey, “Here’s what’s possible. I haven’t done it, but I know you can go in this direction, that direction, or another direction.” That’s the best way to sell it.
Daniel, I know you’re new, which is great. Welcome. This is a compliment. It’s very difficult for people to realize, “All we do is buy and resell. We don’t improve.” What Sid did in the comment earlier was great. He hired somebody to clean the ranch up. It was probably all overgrown. For $15,000, you could do that to make it presentable, just like you might paint your house to resell it to make it a little more presentable.
It sounds like we’re eating our words a little bit. It’s not because Sid did it and it worked.
That’s not an improvement, that’s clearing weeds.
They could still see what’s possible.
A permitting process is going to take you a year.
You want to make sure people can access it. That might’ve been what Sid did, making it so that someone can drive out there and access it. I understand that.
Creating Real Wealth As A Business Owner
You’re on your way though. Good for you. It’s good. Our second topic is called How Being A Business Owner Is The Only Viable Way To Create Real Wealth. This topic is an extension of our first topic. I want to drive this point home. If you are bent the way Jill is, and I have always been wired to create wealth for yourself, you’re not going to do it in a W-2 job, even if you’re an anesthesiologist. The chances of you becoming Michael Jordan are pretty slim, about as slim, in fact, maybe slimmer than being a Fortune 500 overpaid CEO.
Forget about those things. For the rest of us who are breathing in and out reality every day, you start your own business. I don’t care what it is, I don’t care if you want to make airplane parts out of your garage. I know somebody who started a business like that, and he’s doing extremely well. He’s a lot older, and it took his whole life, but it paid off. Starting your own business is your only real way to create wealth.
What’s creating wealth? What does that mean? Here’s a very brief, probably boring, less than 30-second description of what this means. In accounting, there’s an income statement and a balance sheet. On your income statement, it’s how much money you make. That’s what it’s called. I bought a property for $100,000. I sold it for $200,000 and deducted my expenses. How much mail did I send out? I had to buy a computer, and so on. I’ve got a bunch of money left at the bottom of that income statement, which is how much money I have left. I pay my taxes on it, and then I move it over to my balance sheet. My balance sheet, when I start out, is zero. Now I’ve got approximately $75,000 on that balance sheet. Then I do it again. I run it through the income statement. I generate $75,000 again. Now I have $150,000 of wealth.
This is the way it’s been going since before the Civil War in this country. It’s basic accounting. Now you’re creating wealth for yourself. What happens when you’re an anesthesiologist and you make $500,000 a year? You’ve got a bunch of money left over, you spend it, and you get taxed into oblivion. W-2 tax rates are atrocious. If you have any money left over, and you talk to any W-2 employee, almost none of them do. You shove it into your balance sheet, usually in the form of a savings account, a retirement account, a 529 for your children, and so on. It’s very difficult to accumulate wealth any other way than being a Fortune 500 CEO, a Fortune 1000 CEO, Michael Jordan, or us.
Creating A Good Life Through Financial Freedom
Here’s what I want to talk about. We’re discussing the money and, in the first part of this show, we talked about, “Who can pay for these dumb houses? Is it even worth it?” You realize, “That’s me. Maybe I can’t afford it. Do I even want to do that?” Let’s all take a step back here. My whole point is having a nice life. This is my goal, and I hope it’s your goal too. There are many things going on in the universe right now that my head is still spinning. Every day I get up and read the news, and I’m more confused than I was the day before. I’m not kidding.
I’m like, “Do we go to the office or do we not go to the office? Are we doing this? Are we not doing this? I work for myself. How come the DoorDash guy doesn’t get to work from home? I’m working from home. I expect DoorDash not to work from home. My mechanic can’t work from home, but I want to work from home.” Elon Musk says, “Nobody gets to work from home.” I thought, “I love Elon Musk. Maybe now I don’t like Elon Musk. I don’t know. It’s confusing right now.”
You have to decide.
Here’s what I think, “What kind of life do you want?” I know what I want for myself, and I want to live a nice life. I want to have a lot of fun. I want to travel. I want to be outdoors because I love land. I love looking at land. I love taking adventures. The only way I can do this is to be my own boss. The best way that I’ve found to be my own boss and not have to work that hard is buying and selling something that doesn’t take a lot of time but brings in a lot of money. What if I had my own restaurant? I couldn’t be doing this. If I was in the manufacturing business, I couldn’t do this. I even know a lot of hardcore, very successful house flippers. They can’t do this because there’s always an emergency where they have to be there to tackle it because nobody showed up, and it’s on them now. They are physically tied to these locations.
That’s the whole thing. What a beautiful life we’ve carved out. I’m telling you this because I want you to know this is possible. What’s great about it is when you find something that you can buy for $20,000 and sell for $50,000 and do it once a month and live on $30,000, it’s a pretty easy, nice, sweet life. I want you to know that’s possible. I still haven’t found anything else. We’ve tried all kinds of interesting industries. What’s funny is we gave up that location thing. We tested this, knowing that we’d give up the location, we’ve got to be here to do it, but do we get the same returns that we can get? We can’t. I can’t find anything. This is great. I’m not willing to do the stock market thing, especially because I can’t stomach it. I can’t get the same returns.
I’ve looked at that fifteen different ways, and there’s a risk factor in all that. That doesn’t meet my criteria.
I can’t count on it. I can count on this. You could buy the best stock in the world and then, next thing you know, there’s an earthquake in that country. It’s something you can’t account for. That’s with our land and how well we spread it out. It’s the greatest thing.
My point is you will not create any substantial wealth in your life in general by buying rental properties. The only way to create wealth with rental properties is by reselling them. You buy a ten-apartment building, lease it, maybe clean it up, allow pets, and raise the rental rates. This will take years and a lot of crying.
Multiple years, you’re going to raise rents. Nobody likes that. You’re selling it on a cap rate, probably the same cap rate you bought it at, but with a higher rental rate. Your fixed mortgage is the same. That’s a long way to go. Property management, managing other people’s stuff, you can get 500 management contracts if you’re somebody like Jill pretty quickly and create an amazing amount of wealth for yourself. My big point here is you have to be a business owner to create any real wealth, especially if you want to do it quickly, which we all want to do. It’s true. Her point is it’s a frosting on my point is how many opportunities do you have where you don’t have to be present? Manage a team of people. If you’re a property manager, you’re going to be running around all day. Stuff’s blowing up. Your day is packed with fires.
You are married to your phone. I don’t want that.
I’m not saying buying and selling land is the only way. It’s the way that works for Jill and me. I think there are other opportunities out there. My point is to motivate you to understand that having a job is not an exit, and being a Fortune 500 or Fortune 1000 CEO, probably for most people, certainly not me, is not an exit, and playing professional basketball is not either.
Let’s think of other occupations that would not work for us. Jockey? Nope. Couldn’t do that.
Anything that requires a tremendous amount of attention and intelligence is not going to work for me.
You could have gone the race car driver route. That might have worked.
I’m not good enough. I tried on two wheels. I just didn’t have it.
I can’t stomach that.
Think about the number of people who want to be a race car driver and then the number of people who are, and then think about the number of people who want to be a land investor and are. It’s a much bigger number.
What’s great about this too is what we do, and we didn’t have to grow up to do it. Think about the drummer we were talking about the other day. I can’t remember what country he’s from. He started playing drums when he was two years old. People say he’s the most technical drummer of all time, but he started at age two. That ship has long sailed. You want to be a Stewart Copeland level drummer? You’re not going to be that good. You needed to start a long time ago. Fortunately, in our world, you can start late and have a good life and a nice income.
Jill and I, behind closed doors, have long said this sentence to each other. It comes up often in all kinds of contexts, “If you can’t live on $5,000 a month, something’s wrong.” We have a different life now. We live on much more than that, but we lived on $5,000 a month long before we started Land Academy, when we joined forces during the real estate downturn around 2008. Happily. We took some saved-up money, both of us, and bought an old town condominium in Scottsdale for a dramatically reduced price. We lived there for a couple of years together and had a rip-roaring blast. Mortgage-free. Some months, we probably didn’t even make $5,000 buying and selling land and doing some other stuff.
We created some wealth like anyone. I’m putting my money where my mouth is. I started to see what Jill was capable of sales-wise. I ramped up my acquisition process. She ramped up her sales process, and we created a huge amount of wealth quickly. It allowed us to start Land Academy, which was a massive time-consuming and expensive venture that we had nothing to show for years. You can do it.
Don’t be afraid of it. I was going to say, I’ll end on this for me, because this is a common topic in Career Path. A lot of people in Career Path are like, “We’re ready to be at your level. That’s why we’re here,” or even in Land Academy, “We’re here to learn.” That’s what Land Academy is. All Land Academy is us sharing how our own businesses run. You can copy it, cookie-cutter it, and do it for yourself. That’s it. That’s Land Academy. Career Path is taking it even further, “We understand the basics. Now we want to bring it home.” That’s Career Path. But one of the things that we talk about a lot is, “Hiring is one thing for myself to make this income and do it on the side.”
That’s one hurdle we have to overcome. The next hurdle is, “I quit my job. Now I’m living off this. My wife doesn’t work too. We’re living. This is great.” The next hurdle is, “Now I’m going to bring on employees or a staff or something else that I’m going to contract,” which is Land Academy Pro. Anyway, more about that later, “I can be the owner and do all that.” It’s scary. These little things can be scary. I’m here to tell you, “Don’t worry about it.” That’s a whole other show we can talk about.
That’s the reason you surround yourself with people who’ve already done it, even if they’re scary.
We’ll get you there. That’s why you’re reading.
Let’s take a look at another one of our favorite land acquisitions from our weekly Thursday member webinar.
Owen County, 0.58 half acre. We have paved asphalt access. Everybody’s alive adjacent, depends on who you ask. Public water, septic. There is an HOA that gives you access to the boat ramp. Purchase price is $2,000. We can buy it for $2,000 and $2,600 in back taxes are coming with it. Think we can sell it for $11,000. Is that working out for you?
Not yet.
Here are our concerns. Ready for this? A is probably a huge red flag. We can’t build on it because of a 25-foot setback requirement from the sides.
That’s good you know that.
The first 75 feet is steep, red flag number two, then the land flattens out. A mobile home would have to be placed sideways.
You can get a mobile on it.
As long as the HOA allows mobiles. Have we seen mobiles in there?
I can see that there’s this gully here.
I had no land to get back to me because it’s too small, and the comps all have their own unique attributes, but the land might be too steep to get a mobile down to the flat area even if the dirt road was bladed in. It seems like a good property. I’m not sure on the price. Next door, the prices range from $5,000 to $40,000. What are you seeing?
There’s a variance of 20 feet. This has four red flags to it. There’s an HOA. You can’t build a house, but maybe potentially a trailer.
If it can handle that.
If everything goes great, it ends up being $3,000 and you’re going to sell it for $11,000. You take this one. I would not play in this sandbox.
Here’s the reason why, Victor. I think your time is worth more than this. I think you can spend it on better deals. I think I’ve seen you present better deals, and all the questions we have. You’re going to be hitting your head on your desk every time you’re trying to overcome these hurdles with the next caller thing for $11,000. You got better deals. I’m glad you brought it up. This is what Thursday is for. You already had your own concerns, and you are correct. Great presentation. I’m glad you figured all that out.
Jill, do you have something inspirational to share?
I do. As you and I were driving around in the last several weeks, it hit me. I don’t know if it hit you first or hit me first, but I realized I was born to do this.
You can tell Jill and I have been in the car together a lot.
The good news is we have a nice new class A. We have all of the Air Force 1. You guys know what this is. We could hook up our Jeep with all the Blue Ox and Air Force 1, that’s what we’ve got. So we can tow our Jeep so we can travel in the same vehicle. Here’s the bad news. We travel in the same vehicle. For a while, you remember in the fall we picked up a Jeep, and I lovingly drove that thing 5,000 miles home behind you because we didn’t have all the setup yet.
We missed each other. Not anymore.
I was going to start my show back there, Jill From The Jeep. It was cute. We were talking about that. We do spend a little too much time together. That’s another problem anyway. We were talking about how both of us, at young ages, saw the potential in real estate. That’s one little piece of this. It’s one thing to know that there’s money to be made in real estate. I grew up in Orange County in Southern California. My dad was a pilot. He flew Don Cole around for a while. He flew many other people that he chartered and flew for.
It’s funny that you think anyone knows who that is.
There’s one person reading right now, and it’s my mom. Just kidding.
You’ve noticed that people from Southern California say things and expect the entire world to know what that is. Where the hell is Orange County?
I said Southern California.
Where the hell is Don Cole? I grew up in Detroit.
He was a major developer in Orange County and Newport Beach.
I appreciate that.
Do you need me to tell you where Newport Beach is?
Yes.
Southern California.
In relation to Disneyland, because that’s what everybody knows.
Twenty minutes South.
It’s close to Disneyland on the coast.
My point is, I grew up in this area watching all this stuff being built around me, and I always knew, “There’s money to be made in real estate.” That’s a side note. Later on, I didn’t know how much I would love land. That’s what’s funny. My first real full-time job that allowed me to move out on my own was working for some developers. I didn’t even then know how much I loved land. I loved the work. I thought I loved this environment.
I was learning to read blueprints because they were building things on the land and leasing it out. It was interesting, but I didn’t know until now that we are driving around. I love looking at it. I love getting out and standing on it. I love riding our bikes. I love the smells. I love the trees. I love the sounds. I love the wildlife and I love acreage. I know that at some point, every time we find a beautiful big piece of land that we think we could keep for the long term, I get an offer and I end up selling it.
The motivation to buy it at that price was all in your soul. It’s in mine too.
I love it. It all goes sideways. I have all this great land. We’ve been there before. The Lord knows we’ve been through recessions before. Even together, we know how to buy it well, and if I have to sell it for less than what I thought I was going to sell it for, that’s okay. I’m still making money and keeping food on the table. That’s the thing here. My point is, I love this. I love land. I love driving around. I love looking at it. I never get tired of it. It’s amazing to me. I can stand on any piece of dirt and find something beautiful about it. I don’t care where it is or what it is. I’ll find something great.
I love land. We’re in the middle of the Rocky Mountains right now. Until the sun goes down, we’re like, “I can’t believe we’re land people.” We don’t necessarily dislike creating a ton of money for each other.
How about you? Do you have something ManPlan.com you want to share with us?
My title today is Pinching Pennies on your Way Up to Fortune. Is that good? Here’s what I think, and I can tell you from personal experience. I made a small fortune, got cut down to size during the 2008 and 2009 recession. Jill and I joined forces and rebuilt it all. I can tell you that saving money personally, not driving a really old car, I think is a great idea, not having a mortgage and not paying rent because you own real estate that you can live in. These situations and pinching pennies on a personal side is very smart. Pinching pennies on a business from a business perspective is a bad idea. I think there are several comments from very new people in Discord about sending out 400-unit mailers to test everything.
I want to be clear about this. This is a bad idea. Full disclosure, Jill and I own the printing company, Offers 2 Owners, where you send these offers out. Not 1% of what I’m saying is profit-motivated because we have tons of customers at 020 who send out 10,000 and 20,000-unit mailers every single month. Your 400-unit mailer versus a 4,000-unit mailer a month isn’t going to change anything at 020. That’s not financially motivated for me to say this, but spending money on a 400-unit mailer to make yourself feel okay is not a good plan. You’re not going to get the results that you want. It’s going to discourage you, and you’re going to feel like you wasted money.
You want to send out, at least I think in the beginning, 5,000 units, not pinching pennies on this. Buy a piece of property and resell it. The light bulb’s going to go off over your head about how this is what you want to do for the rest of your life, or you’re going to say, “The five components to this thing suck, and I don’t want to do it anymore.” Either way, you won. If you send out a 400-unit mailer, nothing’s going to happen. You’re going to get very discouraged. Pinching pennies on things, all businesses have this. If you start a convenience store, you’re going to have to buy a ton of inventory, sign a huge lease, or buy a building and set up racks. There are all kinds of upfront expenses. There’s no business that I know of that has fewer upfront expenses than buying and selling land. If you’re budget-conscious and you consistently send out 5,000 units a month, I understand that we’ve all been there. This is not the right time for you to do this. I don’t want you to fail.
Thank you. That was awesome. Don’t forget you can reach us for questions and help simply by texting (480) 530-7383.
Join us next for another interesting episode. You are not alone in your real estate ambition. Information and inspiration to buy undervalued property.