Apr 01 2024 24 mins 6
Today’s guest is Mark Podolsky.
Since 2001 Mark has completed over 6,000 raw land deals with an average return on investment of over 300% on cash purchases and over 1000% on land deals that he financed.
Free Book: https://landgeek.samcart.com/products/dirt-rich?utm_source=how-to-scale&utm_medium=podcast
October 2021 podcast: https://directory.libsyn.com/episode/index/id/21693923
Show summary:
In this episode, Mark shares his journey from hands-on management to overseeing his business in just 30 minutes a week by building a capable team, establishing efficient systems, and utilizing technology for automation. He stresses the importance of delegation, staying focused on high-impact activities, and operating at a strategic level.
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The importance of focusing on your comparative advantage (00:00:00)
Introduction to the show (00:00:39)
Mark Podolsky's impressive track record (00:00:52)
Mark Podolsky's return to the show (00:01:04)
Recent developments in land investing (00:02:08)
Automation and scalability in land investing (00:03:30)
Different methods of buying land (00:05:27)
The value of cash flow in financial security (00:08:51)
Adapting to economic cycles and mitigating risks (00:10:54)
Land as an inflation-resistant asset (00:13:44)
Strategies for land acquisition and investment focus (00:14:55)
Time management and life philosophy (00:16:37)
Scalability and automation in land investing (00:18:26)
Achieving business efficiency and learning from past experiences (00:19:35)
Leveraging comparative advantage and delegation (00:21:10)
Mark's offer (00:22:31)
Link in show notes (00:23:06)
Contact information (00:23:39)
Closing remarks (00:23:53)
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Connect with Mark:
Linkedin: https://www.linkedin.com/in/thelandgeek
Web: https://www.thelandgeek.com/
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → [email protected]
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
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Want to read the full show notes of the episode? Check it out below:
Mark Podolsky (00:00:00) - Let's say, for example, you are, you know, the best at finding deals, right? Right. Like that's how you're making your money. You're, you're you're finding these deals, but you also type 135 words per minute. Right. And so you're like, well, I can I can hire someone at 80 words per minute. But they're not. I mean, they're fractionally as good as me. I might as well type it for myself. But the answer is no. You're comparative advantage, even though you're might be the best typer is going to be you're only should be focusing on deals, right? And letting everything else go.
Intro (00:00:39) - Welcome to the how to Scale Commercial Real Estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
Sam Wilson (00:00:52) - Since 2001, Mark Podolsky has completed over 6000 raw land deals, with an average return of over 300% on cash purchases and over a 1,000% return. That sounded like I just hit puberty.
Sam Wilson (00:01:04) - My goodness, Mark, where did that come from? 1,000%. Let's try that again. A thousand. Hey, whatever. We're going to leave it in there. I like this man. You made 1,000%. I don't care how you say the number. That's a lot on land deals that you financed. Mark, welcome back to the show.
Mark Podolsky (00:01:17) - Sam Wilson. Brother. Great to see you again. And look, I. You know, these these little puberty things. That's pretty cool.
Sam Wilson (00:01:26) - It is until you're until you're 42. And,, you know, you don't want to be there anymore. Hey, man, it's great to have you back on the show. For those of you who are listening. Today, Mark came on the show two, two and a half years ago. I don't have the episode number right in front of me. If you want to go back and listen to that, I would highly advise it, because what Marc does in that show is really breaks down the land investing business and what that looks like.
Sam Wilson (00:01:48) - We probably won't spend as much time on the nuances and kind of not the new, but maybe more time on the nuances today, but last time, kind of explaining what the land business is. So go back and listen to that if you want a primer for this episode. But today, Marc, it's great to just have you back on the show. We got lots of things to talk about. So tell me, I guess in the last two and a half years, what's been going on?
Mark Podolsky (00:02:08) - Well, I'll tell you that it's a good time to be a land investor. And the reason being is when we are doing our deals, we're paying cash. And so interest rates can do whatever they want. And it really doesn't matter. And so for us, it's been a great, you know, sort of bull market in in raw land investing. And we've seen our note portfolio increase now., gosh I don't even have the percentage. But it's it's really been exciting last two, two and a half years watching our clients get out of what I call civil economic dependency, which means if they're not personally working, they're not making any money and seeing how they've been able to quit their jobs, it would retire their spouses and have that security, knowing that when their passive income exceeds their fixed expenses, they're working because they want to, not because they have to write.
Sam Wilson (00:03:07) - No, that's hey, man, that's that's a great,, a great thing, certainly to strive for the land business, at least a lot of times what we see and other guests that we've had on the show that talk about the land business, it's a very active. It's like flipping houses, but without the house. I mean, is it how how does how does what we've kind of heard some people talk about versus how you do it, how do those two differ?
Mark Podolsky (00:03:30) - Yeah, that's a great question. So really, the last thing anyone wants to build from this build for themselves is another job. Right. And we see this happen all the time where people come in, they're enthusiastic, but then they don't have the wherewithal to start building systems, processes, playbooks, swim lanes to say, okay, how do I leverage my time for the highest impact activities? So the way that we teach this, and the way that we set up our own business is using software on the front end, inexpensive virtual assistants and software on the back end.
Mark Podolsky (00:04:10) - 90% of this business is automated and is scalable. And so it actually said, I've got my my second book. It's just about ready to come out in a few months. Dirt rich too. The plot thickens. How to scale your land business. And so I talk all about the pieces that you need in order to to grow, scale your lab business without making yourself crazy. And this really can be applied to any business that you're trying to grow., it's just it's just one of those things because. We think, well, we should be doing all of it and we don't scale. And so it kind of gets back to that sort of Michael Gerber E-myth piece as well. And, you know, are you the technician? Are you the,, you know, the other pieces of it and most people are coming in the technician and we want to become the CEO of our business.
Sam Wilson (00:05:08) - Right? Absolutely. Yeah. And the land business is a it's a is a very interesting business because there's a thousand ways you can do it.
Sam Wilson (00:05:16) - Like what I know you mentioned here, you mentioned early on a note portfolio like what's right. If there is any one particular strategy that you like to employ, what is it?
Mark Podolsky (00:05:27) - Yeah. So I like really three buying. Sort of simple ways to start to buy land. The first one is direct. So what we'll do is we'll do county research, we'll pick our county, and then we'll start looking at comparable sales. And essentially we'll take the lowest comparable sale in a county. We'll divide by four. That gives us what Warren Buffett call a 300% margin of safety. And we'll send direct offers to those people. And why are we doing that? Because we don't want to be in the appraisal business. If we send out a blind offer, then next thing you know, we're spending all our time on the phone appraising and negotiating. So this is just an offer. Take it or leave it. Maybe there's some room for renegotiating, but not much. Right. So that's the first way we can buy.
Mark Podolsky (00:06:14) - The second way we can buy is we can totally eliminate the aspect of getting a list, scrubbing a list, pricing a list, mailing a list, and we can go straight to a wholesaler. They've already done all this front end work, and now we're buying it at a premium of what the wholesaler bought it for. But they've left enough meat on the bone because our margins are so high that we can go in and make. Maybe 100 to 300% on our investment. So you've got retail, you've got a wholesale. And then let's say that you're really cash constrained. And you just want to sort of dip your toe in the water or you're just. Your capital is really dwindling. There's something that we have been teaching now called land arbitrage. And so land arbitrage is typically when someone like me will buy a piece of land, let's say the market I bought it in, let's say I paid $10,000 for it, and I started selling it for $400, down $400 a month. And after, say, ten months of receiving payments, I've gotten 50% of my capital back.
Mark Podolsky (00:07:28) - Right. And then someone defaults. Well, I've already established here's the market. It's $400, down 400 a month for $10,000 a piece of property. Well, what I'll do is I'll use a land arbitrage technique. And so I'll say, Sam. Hey, look, I know you don't have $10,000, and what I'll do is I'll land arbitrage this to you. So instead of $400 down, $400 a month, I'm going to sell it to you for $8,000. $200, down 200 a month. And now you're going to flip it $400, down 400 a month, and you're going to make the spread at a $10,000. So because I've got my almost all my capital back out, I can afford to do this. And then you can lock up a piece of property for only $200. And so let's say it's three months and you couldn't sell the property. Well, now you're only out 600 bucks, so you've mitigated your risk and you've been able to keep your capital. So those are three really simple ways of buying land.
Sam Wilson (00:08:38) - Got it. No I love that I love that yeah. The, there's there's lots of different ways that you can do it, but it sounds like you've been building and will continue to build a note portfolio of your own because you like that monthly cash flow.
Mark Podolsky (00:08:51) - Yeah, I mean, I, I prefer cash flow over cash.. I think it's the antidote to financial insecurity. I really do. I think cash is great. And I think there's certain circumstances where you want cash. But ideally, if you can get to cash flow and you have steady cash flow, it's the antidote to financial insecurity because, you know, you don't have to go hustle for your next deal. You know, you can get sick. You know, life can throw any curveball it wants at you. And you have the steady cash flow coming in every single month without you having to put in too much effort. I mean, let's face it, nothing's completely passive. If, you know, if I gave you $1 billion, you'd still have to do something with that capital actively.
Sam Wilson (00:09:40) - You absolutely would. I've always said that that, you know, the misnomer of passive investing. It's like, no, it's not passive. I'm still vetting sponsors. I'm still, you know, making sure distribution I'm still entering those bond spreadsheets to track the performance of sponsors. I'm still I mean, there's still a lot of still getting tax return documents. I mean, there's nothing passive about passive investing. Maybe less.
Mark Podolsky (00:10:02) - Nothing. Yeah, it's it's less active, but there's nothing passive.
Intro (00:10:06) - Right, right.
Sam Wilson (00:10:07) - Absolutely. So you're a big fan of the cash flow which I couldn't agree with you more, man. I don't know where you were ten years ago, Mark. When? Our 11 years now, when I got into real estate, of course, I read the purple the purple book. And you know, that's all Robert Kiyosaki talks about. It's cash flow. And I'm like, that doesn't make any sense. Like, I want the big lick now. Like, and.
Intro (00:10:25) - Yeah, you.
Sam Wilson (00:10:26) - Know, 11 years later I'm like, man, he was on to something. Cash flow makes a lot of sense. So. Right. It's it's funny how your,, how your perspectives change. When you came on the show a few years ago, you had mentioned that in 2008 you were in the land investing business and got crushed. How are you positioning yourself differently now in light of kind of wherever, whatever we are, wherever we are in the economic cycle that no one knows?, what's different now for you?
Mark Podolsky (00:10:54) - I think I think when you get crushed the way I got crushed. And so it wasn't that the the land business was still profitable, but what I didn't understand was I had Parkinson's law of money. So the more money I made, the more money I spent. And it's an interesting thing because I was I was listening to a podcast recently where Americans feel that how things are going now, they'll continue in this trajectory, where in Asian countries, they're always waiting for the other shoe to drop.
Mark Podolsky (00:11:30) - And so I'd like to take the more Asian approach now because I've felt it. And I know that anything can happen. There can be any kind of black swan event. Nobody could predicted Covid, right, in most of the things. And really that's the definition of risk is when you've thought of everything, what's left, that's risk. And so to me, knowing that I've thought of everything and I can't think of everything, how am I going to mitigate that inevitable risk? And so I probably have more cash on hand than I that I should. Right. And I probably am more conservative with my personal debt than I should be. And. That's really how I think about it. And I'm constantly looking at the market. I'm constantly asking myself that Jeff Bezos question if everything's going to change, what's not going to change, and sort of position myself in the land business in that way. So I think that's just sort of being a little bit conservative, paranoid and having enough cash on hand so that I can weather the inevitable financial storm.
Mark Podolsky (00:12:43) - That's that's coming. It is coming. I don't know when, but I can tell you right now it's been a great, you know, ten year or what. How long has it been since the.
Sam Wilson (00:12:55) - 16.
Mark Podolsky (00:12:56) - Is it.
Sam Wilson (00:12:57) - 6000? Eight was 16 years ago. Yeah.
Mark Podolsky (00:12:59) - Yeah, yeah. So you could say. Okay, Covid was, was a big dip for some sectors, but other sectors, it was crazy. And you have this huge government bailout. They throw trillions of dollars into the economy. You've got massive,, inflation now. And now we're trying to set that back. I mean, it always feels a little. An unsteady to me. And so I want to prepare myself,, for that.
Sam Wilson (00:13:29) - Absolutely. What about. What about the the. Who am I going to ask this? The recession. Inflation. I would imagine that land would be considered inflation resistant in the sense that it's dirt, right?
Mark Podolsky (00:13:44) - Yeah. Yeah. So so when in when you know, we we benefit in a, in a high interest rate environment.
Sam Wilson (00:13:51) - How's that.
Mark Podolsky (00:13:53) - Well because the the the land is a is basically a fixed asset, right? So just like gold or silver, you're,, it's a great inflationary asset. In that sense. So as I said, interest rates, I mean, we're finding interest rates because we're not using debt, but also in an inflationary environment. We do really well as well.
Sam Wilson (00:14:15) - Right. Because you can just reprice to whatever that now.
Mark Podolsky (00:14:18) - Yeah.
Sam Wilson (00:14:19) - Value is.
Mark Podolsky (00:14:20) - Exactly.
Sam Wilson (00:14:21) - Well are there, are there. Ways of. I know you said you buy everything in cash. Is there a particular size or a particular use or., you know, are there things you're staying away from in the land business like development projects or subdivides or infill lots or you name it? Is there anything right now that you're like, yeah, you know what? That style of land investing is not for me because of where I see us, where you perceive us to be in the cycle.
Mark Podolsky (00:14:55) - Yeah, I'm agnostic when it comes to these different strategies of acquiring land.
Mark Podolsky (00:15:00) - What I focus on is where can I get an asset 25, $0.30 on the dollar. And in today's market, it's not going to be an infill lot. I'm just not going to get that right. I might be able to get an incredible deal in, say, a rural area where I can subdivide. Absolutely. I'll do that deal all day long, a development deal. I'm not going to go through the the risk and the process and the headaches and, you know, the years of of, you know, going through that process of getting a piece of land shovel ready. Right? Right. I think it can be a great model. It's just not for me. And so I don't necessarily avoid them. I just sort of I'm an inch wide and a mile deep. I just keep doing what works for me.
Sam Wilson (00:15:55) - That makes a lot of sense. That links, I mean, which essentially you said, hey, you don't see there's anything wrong with those. It's just not necessarily the one that you want to be personally investing in.
Mark Podolsky (00:16:06) - Yeah, absolutely. It's just not going to be in my buy box.
Sam Wilson (00:16:10) - And a lot of those require a very, very unique skill set like the one, you know, where you just talked about the risk, the process of getting, taking a parcel, subdividing it and then getting it shovel ready for whatever you perceive may be the best, highest and best use of that that can be. A lot of years, a lot of gray hair and a lot of,, a lot of time that maybe you could have spent otherwise, you know, on on your business. Doing what,, what you're what you're best at.
Mark Podolsky (00:16:37) - No, absolutely. And I'm, you know, vicious with my time. Right? So,, I've got an app called Y croak, and it reminds me five times a day of my death. And so I. You know, I'm very conscious of the fact that, like, it's really short. It's terrifyingly short. And so how I spend my days is how I spend my life.
Mark Podolsky (00:17:02) - And I want to have the most enjoyable day as possible, doing what I love to do the most. And so if there's something I'm doing that I don't love, well, I either, you know, delegate it, automate it, or eliminate it and that's it. And sort of taking this inventory of, of how I'm spending my time to make sure that,, I can live, you know, the best life I can.
Sam Wilson (00:17:30) - That is, I've never heard anyone mention that we croak. That's,. That's pretty funny. I mean, but it's realistic. You know, I always joke and say that this is just a rental suit. Like, I don't get to keep it, you know? Yeah, you wear it for a while, and then it's all it's over. So. Yeah, that's,. That's pretty funny. Delegate. Automate. Eliminate I love that., okay, so we've talked a little bit here about kind of what your philosophy is right now, how you're positioning yourself, the types of things maybe that you guys are buying, what works for you.
Sam Wilson (00:18:04) - We've talked about your note portfolio,, some strategies for offers on land, the ways you can, different ways you can buy land. What's the what would you say to somebody,, you know, on the scalability of the land investing business. I know you mentioned 90% of this business you think you can offload to other people. Talk to us about that.
Mark Podolsky (00:18:26) - Yeah. So I personally spend about 30 minutes a week in the land business and I'm meeting with my team. We're having a meeting and we're looking at how many offers went out. How many deals are pending, what have we sold and then what playbooks do we need to update? We're where have things changed so that team knows how to run the playbooks,, for each aspect of the business. And that's really it. And just sort of keeping,, my finger on the pulse of the health of the business. And where do we need to add resources? Where do we need to take away resources? Where are things changed? Where can we,, utilize technology? How can I help us do a better job?, and really looking at those types of things as a CEO would look at, at the business.
Mark Podolsky (00:19:17) - So I'm trying to stay at that 30,000 foot level.
Sam Wilson (00:19:21) - That's really smart, I love that. How long did it take you to get that set to where your business runs? Basically? I mean, 30 minutes a week. It's it's running without you, man. I can burn 30 minutes on a phone and, you know, short order. So how did you get there?
Mark Podolsky (00:19:35) - I would say, you know, it took many, many years, I want to say at least five years and then constantly tweaking and doing that and then. Yeah, I mean, it's at least five years to build that.
Sam Wilson (00:19:51) - Right, right. Are there any things you could have done or anything you could have done to kind of shortcut that process as you look back on it and say, man, if I'd implemented.
Mark Podolsky (00:20:00) - Well, if my my clients are doing it in a year, I just didn't know what I didn't know. Sure. So I and I also had this,, I think Chris Tucker from Virtual Freedom calls it,, superhero syndrome, where I thought, oh, no one's going to do it as well as me, right? No one's going to price as well as me.
Mark Podolsky (00:20:20) - No one's going to do due diligence as well as me. No one's going to market as well as me. No one's going to sell as well as me. And it's it's totally wrong. Right?
Sam Wilson (00:20:29) - Totally wrong there. Well, okay, I'm going to be devil's advocate here and say maybe it's not totally wrong, but there because I think there are unique strengths each of us has. I've got a guy no, no.
Mark Podolsky (00:20:43) - 100%.
Sam Wilson (00:20:44) - Right now. And the dude is amazing. Like he can take the most angry seller in the world and suddenly before they're over there, like, you know, high five. And it's like, I'm like, dude, you need to keep doing that. Because for some reason, like you turn angry callers into just happy go lucky people and they want to, like, be at your kid's birthday party before the call is over. Like, that's weird.
Intro (00:21:02) - So yeah.
Sam Wilson (00:21:03) - Yeah, Matt. I'm like, let's let's move all the other pieces or take those off your plate, but we're going to leave that.
Sam Wilson (00:21:08) - We're going to leave you in that seat. So.
Mark Podolsky (00:21:10) - Right. But but as an entrepreneur, I mean, let's say for example, you are, you know, the best at finding deals, right? Right. Like that's how you're making your money. You're, you're you're finding these deals, but you also type 135 words per minute. Right. And so you're like, well, I can I can hire someone at 80 words per minute. But they're not. I mean, they're fractionally as good as me. I might as well type it for myself. But the answer is no. You're comparative advantage, even though you're might be the best typer is going to be you're only should be focusing on deals, right? And letting everything else go for sure.
Sam Wilson (00:21:52) - You hire two people that can type at 80 words a minute and suddenly you're whatever it is, 25 into 135. What? That percentage is more in speed. So now you're 160 words a minute. 135. Understood. No, that's absolutely great.
Sam Wilson (00:22:04) - Mark, this has been fun having you come back on the show and really just banter and talk about the land business. I wish we had a little more time today because there's there's more stuff I want to talk about, but we'll leave that for our investor or for our investor, for our listeners to come to you and and investors to come to you and find out how to invest in the land business. I know you had mentioned something to me, and I've already forgotten what it was, but you mentioned on the show before we started recording, actually, that you had something for our listeners. Can you tell me what that is?
Mark Podolsky (00:22:31) - Yeah, I'd love to offer them a free book called dirt Rich. And so I've got a link for them to click on. It'll, it'll take them,, to our page. They can get dirt rich for free, which will actually just give them a nice overview of the land business. Also talks about my story, my cautionary tale. So you don't have to make the same mistakes I did in life, which could save you a lot of,, time, money and heartache,, as well.
Mark Podolsky (00:23:01) - And so all you have to do is pay for the shipping,, and get dirt rich.
Sam Wilson (00:23:06) - Dirt rich. We'll make sure we include that link there in the show., show notes rather for Mark's book, dirt Rich, which is really cool. Thank you for offering that to our listeners and shipping that out. It takes a lot of time and effort to write a book, by the way, and just to send that to you for free is a really great gift. So, Mark, thank you again for doing that. The link for that free ebook will be in the show notes there on our website, which again, you can find that,, there at the Brick and Investment group.com/podcast. Mark, one more plug for you though. If our listeners want to get in touch, we learn, touch with you and learn more about you. What is the best way to do that?
Mark Podolsky (00:23:39) - I think the best way is to go to the land geek. Com. Com and start learning more.
Sam Wilson (00:23:47) - Than geek com.
Sam Wilson (00:23:48) - Mark, thank you again for your time today. It was great to see you again.
Mark Podolsky (00:23:51) - Thanks, brother. Good seeing you.
Sam Wilson (00:23:53) - Hey thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
