MF 127 : Moving Forward with Passive Income and Raw Land, with Mark Podolsky (“The Land Geek&#
Mark Podolsky (aka “The Land Geek”) is a raw real estate entrepreneur and host of three hit podcast series (whoa!). Today, you’ll learn Mark’s top tips for creating passive income in raw land investing.
Successes at a glance:
Entrepreneur, specializing in raw land real estate and passive income strategies
Founder, Frontier Equity Properties
Over 5000 real estate transactions since 2001!
Founder, The Land Geek
Host of three hit podcast series!
Setback failure or time when things fell apart:
As you’ll discover in Mark’s “aha” story, things went really well for him. His transition was done in a smart way. He explored raw land as a side venture for 18 months (on the advice of his wife) rather than immediately jump into it after his initial success. Once Mark made the transition, he created a very successful passive income-based business, starting in 2001. However, Mark candidly shares that it wasn’t all his success but rather his timing, entering the market. This changed in 2008 when the housing and real estate bubble burst. However, because raw land is in the “long tail” of real estate, Mark’s business didn’t feel the effects of this for another couple of years. Mark was living a great life with a huge home, private school for his kids, luxury cars and more. As Mark describes, his personal overhead was “crazy high.” But then, in 2010, the passive income stream hit a wall. The market crash had caught up with raw land and all of a sudden, 50% of the land notes were being defaulted on. Mark soon found himself in a place where he could no longer maintain the lifestyle he had grown accustomed to.
The “aha” moment that sparked a pivot:
Before becoming ‘The Land Geek,’ Mark’s life was very different. He wasn’t smiling that mile wide grin in his photo. He was as he describes “a very unhappy investment banker.” Mark was involved in building other people’s businesses, specializing in mergers and acquisitions; analyzing companies all day long. And he was miserable! Mark’s days consisted of a long 45-minute commute, being micromanaged over long hours, high stress and zero control over his work-life balance. It was so bad that Mark didn’t get the “Sunday blues,” he would get the “Friday blues,” anticipating that the weekend would go by too fast! That’s pretty bad.
The first big “aha” moment came when Mark met a guy who his firm had just hired. It turned out that on the side, he was going to tax deed auctions, buying up raw land and flipping it online for 300% returns! Mark, being from St. Louis (in the “Show Me State”), and spending his days analyzing companies where 15% was considered a high return, was naturally skeptical. But Mark was also curious. On a whim, he decided to go to a small town in New Mexico. At the time, he had $3k in the bank which he was saving for car repairs. But Mark decided to take a calculated risk. He followed the guy’s outline and purchased 10-3 acre parcels at $300 each. Mark then put them on sale online and by next week, they sold for an average of $1200! The guy from the “Show Me State” saw first hand those 300% returns!
What is raw land? It’s basically dirt: undeveloped land with no improvements made on it; usually lacking any electricity, water or septic systems.
From this initial success, Mark reinvested the profits at another tax auction in Arizona, buying up as much as he could. On his next transactions, Mark made $90k+! Mark had his proof of concept. He went to his wife to have that “I think I’m going to quit my job and do this full time” conversation. His wife’s reaction? “Absolutely not!” Hearing a voice of balance and reason, Mark decided to continue part-time to see if this model had long-term staying power or was just a fluke.
Over the next 18 months, Mark balanced his demanding full-time job, his family and personal obligations, all the while exploring the potential of raw land as a business. Not an easy juggle, but Mark’s persistence paid off. At some point, the raw land income exceeded what he was getting paid at his day job. That’s when Mark knew this wasn’t just a fluke and decided to quit his day job and pursue this full-time. Mark left his job in 2001 and has been doing this ever since. Today, Mark has automated his business with systems, software and created scale using the latest technology, including drones. This is what we call moving forward in a scalable way!
Here’s the thing, Mark grew up like many of us did. He had the narrative programmed into him of: go to school, study hard, get a professional career and work hard for a pay check. Nothing wrong with that … if that is what you love. The problem was Mark didn’t love what he was doing. He made a good living, but he wasn’t living. He was miserable. He also knew nothing about raw land or real estate. On a whim, he decided to explore something new, immerse himself in it and the fruits of his labor speak for itself. As Mark shares, the missing element in the early part of his career was the happiness quotient. He had to create that for himself by redefining what his career and life looked like.
Flash forward back to 2010. For 9 years, Mark had been living a great life, building a highly profitable business. However, the market crash finally caught up with raw land and it was time for a pivot. Mark couldn’t afford to maintain the lifestyle with only 50% of the income that he had just a few months ago, been making. So Mark made a personal pivot. He slowly scaled back on the lifestyle expenditures. He admits this was a tough transition but he also calls this a blessing. He reflects that sometimes we all need to have our ego “knocked down” to give us perspective and evaluate the priorities in our life.
So what was Mark’s next big “aha” moment and pivot? He started treating his business like a business. Before then, it was easy due to the way the market was performing. During the high point years, Mark didn’t need to put much effort to put up a property and have it sell. This meant he could do well without worrying about relationships or customer interfacing. It was as Mark describes, “too easy.” Mark was forced to create systems and good relationships with customers, to create long term passive income streams, rather than rely on one-off sales. Some steps that Mark took to retool his business:
Creating greater customer interaction thru auto-responders and education pieces.
Creating a process to identify better, more solid land investors to reduce default risk on notes.
Teaching his customers how to be better land buyers, thus solidifying long term relationships with a foundation of trust.
The best part? All of this work has enhanced Mark’s business to establish him as an authority on raw land. Mark isn’t simply in it for the quick win, he’s in it for the big win – one that is long term, sustainable and benefits all involved. Mark went from moving forward in his own life to scaling the benefits so that his customers and clients could move forward too! Today, Mark has created a system with 90% automation that allows him to focus on creating long-term relationships thru education and a win-win mindset.
Mark’s automation formula: the “30:1 rule:”
If it takes you minutes to accomplish a task, it will take you 30x or 150 minutes to teach someone that task. That 150-minute investment will eliminate a 5-minute task from your to do list. Applying this rule has allowed Mark to automate his business so he can focus his time on revenue and relationship building.
Applying this rule, Mark closed 192 deals working 2 hours a week with Frontier Properties.
One piece of advice for looking at raw land as a side gig:
Get educated! It’s a simple model but not easy. There are a lot of pitfalls. So learn as much as you can but then take action. Or citing the famous adage “eat an elephant, one bite at a time!”
Here are some raw land pointers from Mark:
Do some county research.
Get a list of people that own raw land.
Scrub that list, eliminating residential homes, etc.
Send out those offers to purchase:
Do the comps to figure a price point.
Apply the “Warren Buffet margin of safety” of 300% (look at the comps, divide by 4).
Send out the offer!
Don’t be in the appraisal business so keep it simple.
Mark’s rule. Applying the 3x margin, your acceptance rate should be about 3-5%. If above that, you’re probably pricing too low. Below 3%, you’re probably pricing a little too high.
Due diligence checklist should include (but not be limited to):
Close the sale and now you own the property:
Do the deeds
Start marketing the property and aim for 30 days or less
Go to the neighbor
Go to Craig’s List
Go to land forums
Go to Facebook
Sell property on easy owner terms
Simple payment plan (monthly terms) – this will increase your passive income potential without renters, rehabs, rodents!
Big picture: once your passive income exceeds your expenses that’s when you are no longer working because you have to but because you want to.
Resource or cultural experience that inspired Mark to move forward:
Mark is an avid reader / content consumer. A recent favorite is Homo Deus by Yuval Noah Harari which discusses where we’ve come as a civilization and where we’re going.
For business, Mark recommends The One Thing by Gary Keller
Favorite app/website/resource or productivity hack:
Airtable (www.airtable.com): as Mark describes it’s the offspring of a spreadsheet and a database which is user-friendly with ready-made templates and is fun. Mark is running his entire business on this!
How Mark recharges when facing a roadblock or challenge:
Meditation. Mark recommends two apps.
Headspace: a fantastic meditation app that breaks it down into 10 minute chunks.
Sway: this one is great for those who love to move and can’t sit still.
Start Moving Forward with Audible and two free audio books:
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Advice to past self while going thru a difficult time:
Visiting his past self during the worst days of his investment banking career. Mark would tell himself, “Mark you’re going to die anyway, just go for it. What are you so scared of?” A practice that Mark shares is to do fear setting rather than goal setting. Consider what is the worst thing that could happen. Lose everything? Become homeless? What would Mark do? He would camp out at a 24-hour gym in Newport beach, go to the library and start over (and he has confirmed that his wife won’t leave him) so Mark has already figured out and accepted that even if the worst case scenario happened, he would be just fine! Moving Forward listeners, what’s holding you back? Is it fear of the unknown? Fear of the what ifs? Try Mark’s exercise. Play it out, write it out, take it to its logical conclusion. If you’ve made it this far in life, chances are, you’ll be just fine too.
Parting wisdom (in a few words):
“There is no try, only do.”