Table of Contents - Make a Passive Income without Renters, Rehabs, Renovations or Rodent with Mark Podolsky
Dave Debeau [00:00:08] Hey, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. And today we're up for a real treat because not only are we interviewing an interesting enough fun fellow and Mark Podolsky, but also Mark is doing, at least for me, kind of a different style of real estate investing that I I don't know anything about. So I'm very, very curious about getting Mark's perspective on these things. And that's all about investing in land. All right. And and how he manages to do this and create that great cash flow from investing in land. So welcome to the podcast. Mark, how are you doing today?
Mark Podolsky [00:00:50] Dateable. I'm great. I'm great. Thanks for having
Dave Debeau [00:00:52] me. My pleasure. Where are you calling it from today?
Mark Podolsky [00:00:55] I'm from Phenix, Arizona.
Dave Debeau [00:00:57] Oh, I love Phenix, Arizona. Beautiful, beautiful, beautiful city, beautiful state, great place. And is that where you have most of your land holdings?
Mark Podolsky [00:01:07] No, actually, most of my land is going to be the Southwest a little bit, the northwest, California and Florida. I mean, let's face it, nobody wakes up and thinks themselves or plays a role in Minnesota today unless you live in Minnesota. So don't want to go those fast growing sunshine states makes sense.
Dave Debeau [00:01:26] So, Mark, tell us a little bit about how you got started in real estate investing, how long you been doing this stuff? And more importantly, what kind of attracted you to investing in Rowlatt?
Mark Podolsky [00:01:38] OK, so basically I started in 2001 and I've been doing it full time ever since. I've done six thousand land deals. Wow. Now the way I got started it, I was working as an investment banker specializing in mergers and acquisitions with private equity groups and I hated it. Dave, I wouldn't get the Sunday blues into spending Monday coming. I'd get the Friday blues anticipating the weekend going by really bad.
Dave Debeau [00:02:05] That's that's when, you know, your job sucks bad and that's when you know you really need a career change.
Mark Podolsky [00:02:10] Yeah, absolutely. So this guy at my firm tells me that as a side hustle, he's going to tax deductions. He's buying raw land, pennies on the dollar. He's flipping them online and he's making a 300 percent return on his investment. So I'm looking at companies all day long in a great company has 15 percent EBIT margins where free cash flow average companies, 10 percent. I'm looking at companies all day long, less than 10 percent. So I don't believe them. So I go to New Mexico with them. I've got three grand saved up for car repairs. I do exactly what he says, about 10 1/2 acre parcels, an average price of three hundred dollars each. I flip them all online at an average price of twelve hundred dollars each. It worked three percent. So I took all that money, went to another auction in Arizona where I live and there's no one in the room is two thousand. And I have lots of acreage. And the next six months I made over 90 grand cash on that one auction. So I go to my wife. I'm like, honey, I'm going to quit my job and I would be a full time, late investor. And she says, absolutely not. She's pregnant. So it took me about 18 months for the land investing income to exceed the investment banker income. And then I quit. I've been doing it full time ever since.
Dave Debeau [00:03:29] All right. Well, now that starting all kind of fall into place in my in my noggin, I know a gentleman named Ted Thomas, who's very well known in the all tax lean taxed world. So now I'm getting the gist of of what you do on that. That makes a lot of sense. So are you basically doing that same idea? You've just kind of blown it up even bigger? Is that pretty much.
Mark Podolsky [00:03:52] No, no, no, it's completely different. You know, my philosophy is I can always make more money, but I can't get more time. So we're 90 percent automated now with software systems, virtual assistants, delegation automation and software in the back and geek pactio automates getting paid for my borrowers. So, Dave, where do you live?
Dave Debeau [00:04:15] I live in a place called Kamloops, British Columbia, Canada.
Mark Podolsky [00:04:19] OK, Kamloops, British Columbia, Canada. And let's say for our illustration that you own 20 acres in Texas. Right. But you're in Canada, so you're in, let's say you about two hundred dollars in back taxes. Right. So basically advertising two things to me. No. One, you've no emotional attachment to that, Roland. You're in Canada properties in Texas. And number two, you're distressed in some way because we don't pay for something. We don't value it in the same way. And so you've got two hundred dollars in back taxes. The Treasurer sending you notices every month. If you don't pay your taxes, you're going to lose that property to a tax deed or tax lien investor. So what I'll do is I'll look at the comparable sales on that twenty acre parcel, the. For the last 12 to 18 months, you take the lowest cup and divide by four, that's going to get me what Warren Buffet would call a 300 percent margin of safety. So I'm going to send you an offer on that property because I don't want to be like the housing guys. I mentioned buying your land because they were in the negotiation business than an actual offer. Let's say Oscorp was 10 grand. The most I'm going to pay for your property is twenty five hundred. Right. So you take it now, in reality, three to five percent of people accept our quote unquote top down offer. So then we go through our due diligence, are going to confirm that the property taxes are only two hundred dollars. You still own the property. There's been no breaks in the chain of title. There's a Lean's or incumbencies legal access. All these things that due diligence, checklists. Right. And I outsource that to our team in the Philippines. We pay about eleven dollars. And at the same time that they're doing due diligence, they're creating my marketing package. I'm getting plat maps, gigas maps, aerial maps, photos, videos, everything I need for my marketing. So then after I buy that property from you, Dave, I'm going to sell this property three days less, go by
Dave Debeau [00:06:21] for 30 days, 30
Mark Podolsky [00:06:22] days, 30 days. I've got a built in best buyer for this parcel. You know, it is that the neighbors be smart. So I send out neighbor letters saying, here's your opportunity, expand your holdings, protect your privacy. And so oftentimes the neighbors will buy it. Now, the way that I sell it is where the magic happens is now I'm going to get a down payment of twenty five hundred dollars, but I can about six months and then going to finance it for, let's say, a car payment for eighty nine a month, nine percent interest or eighty four months. So I created cash flow of forty nine a month, the next eighty four months. No renters, no rehabs. No renovations, no rodent's. And not dealing with a tenant, I'm exempt from any onerous U.S. real estate legislation, Dodd-Frank, RESPA with a safe act. So the game that we then play is can we create enough of these land notes where our passive income exceeds our fixed expenses and then we're working because we want to, not because we have to.
Dave Debeau [00:07:29] My goodness, my friend, you are able to put that in a synopsis that's very, very concise and easy to understand. Sounds like that's not your first time explaining how this whole thing works. So that's that is smart.
Mark Podolsky [00:07:41] So you're creating my third time, Dave.
Dave Debeau [00:07:44] Yeah, I know you're getting your initial investment back immediately. As far as the down payment, you're creating a note around this at a pretty darn good interest rate. Nine percent's pretty good. What are the terms usually? How long are you usually financing this for?
Mark Podolsky [00:07:59] You know, they can go out between typically thirty six to you know, it's a really big deal. I might go out 180 months.
Dave Debeau [00:08:09] Yeah, OK. And then you can. The other thing you do is you can take that note and you can go sell that at a discount and cash out if you so decide.
Mark Podolsky [00:08:18] Exactly. So what I would do is I would sell partial on that note. So 12 months of the cash flow to an investor, I get my money out or I make a profit, I redeploy it, but I get to buy to the apple because then that note reverts back to me after 12 months and I'm getting that beloved passive income back into my portfolio.
Dave Debeau [00:08:38] I had never even heard of that before. So there you go. That's that's I didn't know you could do that.
Mark Podolsky [00:08:43] So this is why you have me
Dave Debeau [00:08:45] this this is why this all dog loves learning new tricks, that's for sure. That's fantastic, Mark. Very, very cool stuff. So I don't imagine you while you're an investment banker before. And so you're a sharp guy, very, very creative around different things. But how long did it kind of take you to develop this whole process? I'm out of it must have been a
Mark Podolsky [00:09:05] bit of years here. I don't imagine I need this, but no, I mean, unfortunately, I didn't have a mentor, so which was like one of my biggest mistakes also. But I didn't know. I just thought, oh, this is these are great margins. You know, we're making three hundred to a thousand percent and I an inefficient market. But there's all these little nuances in real estate and deals and money I didn't know. And then just running a business. So I had slow economic dependency, which means if I wasn't working, I wasn't making any money. This isn't this is another job. So essentially I created all the systems so that I worked two hours a week in front of your properties, just looking at the numbers so that I can go on and do things that I
Dave Debeau [00:09:56] really want to do in life. Well, yeah, because you've got it dialed right in. It's all by the numbers is absolutely no, not of your emotion tied up into anything. You're just saying, OK, if I make one hundred offers on one hundred different properties this week, chances are I'll probably get three of them. Is that what you said? About three. Well, except well, goodness knows how many offers you're sending out every week, but it's probably a lot. And then it's just a numbers game. OK, you'll you'll pay up to twenty five percent of minimum value on that property. And if they accept it, then you start your due diligence. What those three that accept, give or take, what do you think are how many of those actually turn into properties that you purchase?
Mark Podolsky [00:10:40] I'd say on average about one percent.
Dave Debeau [00:10:43] So one out of the three.
Mark Podolsky [00:10:45] One out of three. Yeah, because sometimes we'll be in a state they haven't done their probate. It's a probate deal just passed. I mean, are like a bus. There's another one right down the pike.
Dave Debeau [00:10:56] And the nice thing is you're not even really you know, your vas are figuring stuff out for you. Right?
Mark Podolsky [00:11:01] They're doing everything for me. Yeah, absolutely.
Dave Debeau [00:11:04] Oh my goodness. God love the Philippines.
Mark Podolsky [00:11:07] I love the Philippines. I love software. I used to have a woman in South Carolina handwriting my envelopes, sending out of my offers. We use an API with lob dotcom automates it. It's amazing.
Dave Debeau [00:11:19] And it just it looks like it's handwritten as well.
Mark Podolsky [00:11:22] No, it doesn't look handwritten, but one day you'll get the answer. Yeah, but, you know, we're not it's that there's really no competition. I mean, this is like the least sexy niche on the planet.
Dave Debeau [00:11:34] So what makes it so sexy about.
Mark Podolsky [00:11:36] Yeah, that's exactly like I was just watching the DIY network with my wife. I'm like, can you imagine seeing flip this land we roll in the after picture, roll in and just me in front of my computer geeking out?
Dave Debeau [00:11:51] Yeah, it does. It's not going to make sexy reality TV, that's for sure. But no, it in my mind that sounds very, very, very sexy. So now that you've been doing this for a while, I imagine your you've got a lot of people that have been asking about it. And have you started training people and teaching people how to do this stuff, too?
Mark Podolsky [00:12:08] Yeah, I. I love teaching people, because I'll be honest. I mean, nobody ever really said to me, Mark, you know, you change the trajectory of my life by helping me by this wrong end. Like that never happened. They like the land. But now that I've helped people retire, their spouses, quit their jobs, be able to retire. It's been the most gratifying thing I've done professionally in my entire life, is helping people get out of the economic dependency, create passive income so they can truly move up the ladder of Maslow's hierarchy of needs in the self actualization. It's amazing.
Dave Debeau [00:12:46] Yeah, that's that definitely is what we all get a kick out of, that's for sure. So now that you're showing people how to do this, what are some of the biggest mistakes you see people making when they're getting into buying all that?
Mark Podolsky [00:12:59] You know, one of the biggest mistakes I see people making is really going to be picking the wrong county. Right. They think, well, you know, I live in Iowa and I know this area in Iowa, but the world doesn't want land in Iowa. Right. So picking the wrong county is oftentimes a big mistake, not being persistent with getting the lists. So I called the county and say to the county assessor, hey, can I get the list of people on your property? So, you know, that's five hundred dollars for us to give that to you in a city, right? Well, the NewBay would then hang up and say next county. I would call back and ask for the IT department. Can I get that list in Excel format? And they'll just say, here, I'll email it to you. So getting the list is the second big hurdle. And then I think the third biggest hurdle is in the marketing. So they go on to ads is going to do it. No, you've got to be like Geico and you've got to just show up consistently every single day in market property. And that is going to move the needle.
Dave Debeau [00:14:13] Oh, I can see especially the kind of volume and guys are probably doing. I mean, that's just a that's a whole science in and of itself. It sounds like you got a lot of stuff on the go. Mark, what would you you know, you're obviously a very smart guy. You come from investment banking in the first place and you've done very, very well with this. What would you think? What would you say is your unfair advantage?
Mark Podolsky [00:14:33] I think my unfair advantage is. Probably my mentor, actually. So I've got a mentor. He sold his company for 360 million. Nice. His mentor is a billionaire. So being able to have that sort of resource where he's he's very tough on me. And I'll never forget I was talking him about, you know, doing this and doing that and doing this. And he's like, Mark. He's like. You remind me of one of those kids when we were little kid, and you take the the magnifying glass out and you try to kill ants. Yeah, he's like, you know, if you just keep moving the magnifying glass around, you create a lot of heat. But it's not until you hold it down in place, you kill it. He's like, you need to kill that in focus and and really having somebody to bounce ideas off of and, you know, kind of tell you the honest truth about your weaknesses and where, you know, you just don't know. You don't know. I think that's my unfair advantage. That along with meditation and love meditation.
Dave Debeau [00:15:44] Nice. Nice. Very nice. It's the first time I've heard somebody say meditation, but yeah, I can see that being a big advantage. So as we're wrapping up here, I told you was a fast interview and I had jam packed. And I love that man. I mean, my brain's kind of tingly, tingly here. What's with the opportunity? There are some, but what if somebody wants to find out more about you and what you're doing? Do you have any free resources for people, anything people can take a look at?
Mark Podolsky [00:16:13] Yeah, I've got a ninety seven dollars passive income launch kit. I'd love to offer your listeners for free. If you just go to Languedoc, come forward, slash launch kit, they can really dove in a lot deeper and see if this is something that fits well with them or not.
Dave Debeau [00:16:31] Perfect. That sounds good. Now, you're definitely an action taker from all your years of experience. You've been doing this since 2001. What would be one valuable, actionable tip you would give somebody besides going and getting your kit and taking a look over it? They just want to kind of get their feet wet and start the process there. What what would you suggest
Mark Podolsky [00:16:53] for two ninety nine? They can get the Kindle book Dirt Rich, which talks about my story. I mean, that is kind of self-serving. So let me give you something else. Sure. I would say the first thing they would want to do is go to I would say so. I wish investing were a little simpler as far as like that first step is going to be kind of research. So there's three thousand seven US counties. I would say, look where other people are buying raw land and start there. Mm hmm. That might not be worth checking out. I know it's counterintuitive. You think? Well, I don't want to go where there's any competition. There's really no competition.
Dave Debeau [00:17:34] Yeah. And that shows there's demand, which is really what you kind of need, right?
Mark Podolsky [00:17:39] Yeah, exactly. Exactly. I was the one doing it. Yeah.
Dave Debeau [00:17:44] Yeah, that's fine Mark. So again, what's the best website for people to find more out about
Mark Podolsky [00:17:49] the Landgate dotcom forward slash launch kit where they can just start on the dotcom?
Dave Debeau [00:17:55] Perfect. And we'll have those links in the show notes. Mark, it's been a lot of fun. Thank you very much for your time today, my friend Dave.
Mark Podolsky [00:18:02] Thank you so much. I've been trying to save property profits real estate podcast 10 times as fast as I can. All day still struggling. Got it. I got it. I got it.
Dave Debeau [00:18:11] All right. Well, you say watch, because I if I tried say it twice in a row, I screw it up. All right. Very good. I really like you. All right, everybody, take care. Talk to you next time. Well, thanks very much for checking out the property profits podcast. You think what we're doing here, please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.