It’s crazy to think that many of us real estate investors are duking it out and competing against one another…but we’re surrounded by potential opportunities that have little to no competition at all! It’s been in front of us the whole time, and we didn’t even see it. Jack Bosch sees it though. In fact, he’s been the principle in over 3,000 land transactions that cash flow like you wouldn’t believe. Watch this episode of the FlipNerd.com Flip Show to learn more.
Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright. On this show, I will introduce you to VIPs in the real estate investing industry as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes store or by visiting FlipNerd.com.
So, without further ado, let’s get started.
Hey, it’s Mike Hambright with FlipNerd.com. Welcome back for another exciting VIP interview, where I interview some of the most successful real estate investing experts and entrepreneurs in the industry to help you learn and grow.
Today, I’m joined by Jack Bosch, who’s been a principal in over 3,000 transactions where he’s primarily buying and selling land on the outskirts of town that most real estate investors don’t even want to touch, me included. Maybe after this, that will change. It’s a fascinating topic, and personally something I’ve never heard anybody else talk about. Jack teaches others to do this as well, so listen closely. He’s also a best-selling Amazon author with his book, Forever Cash.
Before we get started with Jack, let’s take a moment to recognize our featured sponsors.
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Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.
Hey, Jack, welcome to the show.
Jack: Hey, thank you very much for having me, Mike. I’m happy to be here.
Mike: I appreciate your time. So, you’ve got a fascinating topic that, like I said, personally, I haven’t heard anybody else really talk about doing this. In my business of buying and selling houses, we periodically get calls for land, and we just say, no, we don’t buy land because we don’t know what the heck to do with it.
I know you’ve got a really interesting topic to talk about here. Before we get into the land investing, why don’t you tell us a little bit about your background and really how you got into doing what you do.
Jack: All right, absolutely. As you can tell from my accent, I’m not from around here. I’m not from Ohio or anywhere there, and certainly not from Texas. I’m originally from Germany, so I came from Germany in 1997 to the U.S., literally just armed with two suitcases and a bunch of student debt and a dream.
I finished my college degree here, and then got a job and started working the 8-to-5 – actually, in my case, it was more like 8-to-midnight, traveling a lot and just not liking it, hating it after a while. I was traveling 100%; I was away from home all the time. I had just gotten married to my wife, who I met here in the U.S., who was a foreigner herself. Now, actually, we’re both citizens of the United States, so, yay.
But we basically didn’t like it. So, I looked around, and after a long search, we found real estate and after an even longer search within real estate, we stumbled upon land. We started flipping land, and the first land deal we got we paid $400 for a piece of land, free and clear, no mortgage on it, and flipped it literally to the neighbor the next day for $4,000.
Mike: So, in your job – I’m always interested in this because I too am what I refer to as a corporate refugee – so you kind of left the corporate world. What role were you in? What general function?
Jack: I was in the business department of an IT company. The thing is, I don’t know anything about computers, so that in itself was a challenge because I was in an environment that number one, I wasn’t comfortable with, that I didn’t understand. And the only reason I had gotten the job was because I had kind of worked as a student worker at a similar company in Germany, and I was able to show that I had some experience in there. This company was growing back then so fast that I was employee number 500, and a couple years later, they had 7,000 people working for them. So they exploded.
But then also what happened was then the dot.com bubble burst, and 3,000 people got laid off in a year. Luckily, I wasn’t one of them, but I saw the writing on the wall, and I just basically prayed to God I could make it to the moment that I had my Green Card, my permanent residency in the United States, because once you have that, you can actually leave the job, you’re just like an American except that you can’t vote. But up until that point, I couldn’t even leave that job. So I was working at that technology company, I didn’t like it, and I wasn’t really comfortable with it. I felt like I constantly had to learn and struggle just to keep up with what seemed to come easy to everyone around me.
Mike: So what year was this when you ultimately went out on your own and you started investing?
Jack: I quit my job in October of 2003, but my first deal I got accepted, I got the notification that I got it accepted on Christmas day of 2002.
Mike: And that first deal was land?
Jack: That was land, yeah.
Mike: There’s a lot of people who are interested in real estate investing, and I can’t say that I’ve ever heard somebody say, what I’m interested in land. It’s always houses, because somehow, those are sexy, until you get into the business and you realize that it has nothing to do with the houses. How did that even come about?
Jack: Well, the first deal actually – to correct myself, the first deal I got under contract was a triplex, three units in one. We got it in Phoenix, Arizona, where I live, and we got that thing under contract for $45,000 in a pretty sketchy area of town, and I figured it was worth about $80,000, $85,000. The problem was, I had bought a book and got some from the library on how to do a wholesale, which I had no idea about, and I put it out there and I got about 25 phone calls on it and nobody wanted to buy the thing. So, in that moment, I realized I had two choices. Either I buy that thing and fix it up myself, and in that moment I realized, I didn’t have a clue about real estate. I didn’t have the first idea about how much it costs to repair a kitchen; how much it costs to repair a bathroom. I mean, somebody could have given me a quote of $20,000 for a kitchen, and I would have perhaps said yes, because I really didn’t know anything.
So I did the next logical thing, I took option number two, which is I freaked out and I backed out of the deal. I realized that wasn’t for me at the moment, because I wasn’t about to take on a second mortgage, I wasn’t about to learn all this stuff. It just wasn’t in my comfort level at that moment.
But then, it just happened that the next thing I focused on was actually tax delinquent properties, meaning tax liens and tax deeds and those kinds of things. And even though I didn’t buy this property through a tax lien or tax deed, I liked the fact, the sheer fact that people don’t pay their property taxes and let their properties go through tax foreclosure, that they’re willing to walk away from these properties for absolutely nothing, completely blew me away.
So that first deal that I got was a deal where I sent some direct mail, some letters, to people that owed property taxes. I didn’t want to attend the auction, because if you attend the tax lien auction, it’s going to take years before you get the property, and if you attend a tax deed auction, like you do in Texas, well, there’s a lot of competition for these properties. So, I figured, why should I attend those? What if I could figure out how to get to these people directly? So I did. I sent them a letter.
I sent out like 200 letters, and I got a bunch of responses, and one of them was that property. It was a piece of land, a lot, a house here, a house there, a lot in the middle, and the owners just didn’t want it anymore and gave it to us for $400. I figured it must be worth more than $400 if there are houses on the properties next door; it should be worth $8,000, $10,000, $20,000 or something like that. So I felt comfortable. It was in my comfort level to say, well, if I can get it for $400, why not? And the worst thing that can happen is that I lose $400, right? My credit is not ruined; my life is not over, right? It’s $400.
So I bought it and literally put out a sign on the property, and the neighbor comes over and says, like, what are you doing? It’s like, well, I’m selling it. He’s like, how much do you want for it? And I didn’t even negotiate with him. He offered me $4,000, and I said I’d take it, because I was just so happy.
Then the next deal that happened to come was also a land deal. We bought 40 acres for $500 in the middle of nowhere in Arizona, but still a great deal, and we sold that online for $9,500. And all of a sudden, it was like, I like land, because if I can get it for $0.05 to $0.25 on the dollar, I don’t actually have to know much about real estate and I can still do a bunch of deals.
Mike: We’ll get into this a little bit more, but on these deals, are you typically taking possession of them? Are you taking ownership of them, or are you trying to effectively assign?
Jack: Well, I didn’t even know when I started that I could assign these deals, so I always took possession, because it’s only like pocket change.
Jack: With pocket change, the nice thing is you can buy it, you can go on a vacation, you can come back and then sell it whenever you want to sell it, versus in the wholesaling or assigning deal, you’re operating in that window of time that you have until the contract expires, so it’s more of a hustle. When you just buy it, it’s not a hustle. You just buy it and you turn around and sell it.
Mike: Right. So, from there – it sounds like one of your first deals was in the middle of nowhere, so what did you tend to, over time, focus on? I know now you primarily focus on the outskirts of town, right? You’re not necessarily buying lots in town and in neighborhoods, right?
Jack: Right. I do, but I have like three, three-and-half different areas that I like to focus on. My favorite area is the outskirts of larger cities. So, big metropolitan areas are great, but even smaller, mid-sized cities of a couple hundred thousand people are fine. I like the outskirts of those because that is where land is cheap, yet is still attractive. People buy it because they can’t afford to buy something in-fill or something that costs millions of dollars, so they want to buy something a little bit outside of town, hold on to it for 10 or 20 years, and then wait for development to come in and then play the appreciation game. In the meantime, it doesn’t cost them any property taxes. Most of these properties only have a few hundred dollars a year in property taxes, so it’s easy to hold on to, easy to keep.
That’s area number one, and indeed, some of my buyers have made tremendous profits. They bought a property and sure enough, within a few years, a property that’s worth $20,000 is now worth $150,000. They’ve done really well.
Jack: The other area we focus on is small towns. Small towns, for example, especially in the Midwest, there are a lot of small towns, and a lot of the land outside of the small towns is actually used for farmland. But in the small towns, there are lots of empty lots that you can buy, and they’re perfect candidates to sell to the neighbor to expand their backyard. So, you can buy those, and then we also like to buy, especially in the southern half of the United States where not everything is used for farming, we like to buy large acreage in rural areas. Because large acreage, I mean, how would you like to have 40 acres out in the countryside? Wouldn’t that sound good? With a little creek going through it, with some trees, something where you can put a little cabin on for the weekend. I mean, a lot of people are attracted to that.
Mike: Yeah, what’s interesting is I think a lot of real estate investors historically, in their mind, for one reason or another, assume that the land is very illiquid.
Jack: Right, and it is – you are somewhat correct, if you do it the wrong way. Most people do it the wrong way. So, to do it the right way, for example, if you put a $100,000 piece of land on the market asking $100,000 for it and not offering any kind of financing help or anything like that, it’s going to sit there for a while before it sells. It’s going to sit there for a year, perhaps even two years before it sells. However, what if you buy this $100,000 piece of land for $20,000 and you can sell it for $45,000? Wouldn’t that move much faster? I mean, it’s less than half price.
Jack: Anyone in that market is going to jump on it, because they’re going to want to have it at half price. In fact, that’s how we sell a lot of our properties wholesaling. The buyers take the properties and they go perhaps sell them on the market and then they wait two years before it sells and they double their money in two years, but we took our money and more than doubled it in a matter of a month or three weeks.
Mike: Sure. Talk a little bit about how you’re marketing this land. Back to the kind of illiquidity part, are you selling them through commercial brokers, or are you finding people who own land around the plot that you bought and marketing to them? How are you effectively marketing this?
Jack: It’s really all of the above, but usually we market them ourselves online. We have a website that anyone is welcome to go to and check out and verify. It’s called Sunnyland.com. So, the opposite of rainy land, Sunnyland. Sunnyland.com is where there’s a bunch of land for sale that we own, but some of our students own some land too, because I’m teaching this and sharing this now too.
We’re putting it out there, and we’ve built up a big buyers list, but there’s also other websites. So when somebody’s starting out new, what I usually recommend to them is to not start their own website, I tell them to use what’s already out there. There’s websites like Landflip.com and Landwatch.com. I always say that if you have a piece of land and you want to flip it, wouldn’t a website called Landflip sound like a good place to put it? And indeed, it is. It gets hundreds of thousands of visitors, so we sell them there in terms of channels.
But I think what’s more important is how we sell them. We make them really affordable, and we make them really affordable in two ways. Number one, by wholesaling them, discounting the price, often by over 50%; and number two, by offering seller financing. That’s kind of our secret weapon in the moment and has been for years, because when selling with seller financing, you actually don’t have to discount the property by a whole lot. You still can, of course. You can do whatever you want. We do seller financing and we allow people to put a low down payment, perhaps only 10%, so therefore, that $50,000 property that you bought for $10,000, you can now go and sell it for $45,000, and ask for, let’s say, a $5,000 down payment, and carry $40,000 in financing at $500 a month. So at the end of the day, you get all your money back within 10 months, and in many cases, you get all your money back with just the down payment, and now you have cash flow from land, which is two words that really never have been put together.
Mike: Right. So from a business perspective, are you getting loans on these and then wrapping them, or are you just self-funding them? What are you typically doing?
Jack: We’re self-funding them, because you really don’t usually need outside financing. In 3,000 deals that I’ve done, I’ve never talked to the bank, never ever, ever, because you can do this kind of ratio where we sell a bunch for cash and another portion with seller financing, and if you do it right on the seller financing front, often the down payment pays for what you paid for the property.
Jack: Especially for cheaper properties, something really cheap, that’s worth $10,000, you might have only paid $800 for that thing. Well, asking for $1,000 down payment, you’ve got your money back, and $100 or $150 a month for seven years. You’ve got a nice little cash flow coming in and you have no hassles because you’re not dealing with tenants, toilets or termites, and basically it’s just mailbox money coming in. You have no maintenance and no hassles whatsoever. So we’ve used it to build, at the peak of it, almost $100,000 a month in cash flow from these land deals.
Mike: That’s fantastic.
Jack: So you can build it up as little or as big as you want.
Mike: So, is it just me, or is this a very uncompetitive space? I mean, the house buying business couldn’t be more competitive. I’d say that’s at one end of the spectrum, and you’re the first person, literally, that I think that has ever talked about buying and selling land this way. That obviously benefits you that you don’t have a lot of competition.
Jack: Yeah, it’s actually not you. It is probably the most uncompetitive space in the entire real estate area, because literally, I mean, these properties that we’re targeting are not listed on the MLS, they’re not in foreclosure because they never had a mortgage in the first place. They might have some back taxes. Actually, two-thirds of my deals I bought without any back taxes, free and clear. So they have 100% equity in many cases, and nobody goes after that market. So when you send out the letter, you get the people that might have owned these properties for 30 years, might have inherited it from their parents; they don’t want them, they don’t need them, it costs them property taxes every year, so they’re hyper-motivated to sell these properties, but nobody sends them a letter.
So we’re the only ones doing that, and as a result, we’re getting response rates of up to 20% from people consistently after one letter. Not multiple letter campaigns, just one letter, and a 20% response rate of people saying, yes, I want to sell my property.
So, yes, it’s great and also it makes other aspects of it much more easy to deal with. For example, in the house world, as I’m learning, because now I’m also doing some house deals, in the house world, if a seller calls you, you jump on that lead, right? You have to jump, because by tomorrow, he’s called 500 people and they’ve taken the deal from you.
Now, in the land world, if somebody calls us, whoever picks up the phone fills out the form, we ask them all these questions, that form gets emailed to us and gets entered automatically into a spreadsheet, into order-making software, and we only look at that once a week. So if somebody calls us on Saturday, there they get somebody to answer the phone in our call center, we don’t even look at that deal and make an offer until six days later, because I only make offers on Fridays.
Mike: Wow. I presume there’s not a lot of sales activity in the type of land you’re talking about. I guess you’re buying it so cheap that it maybe doesn’t matter, but how do you kind of comp that out? Traditionally, real estate investors are looking for recent sales to find their comparables to calculate what the value is. How are you doing that with land?
Jack: There’s actually a surprising amount of sales activity going on in land. If you look at a website like Landwatch.com, they get several million visitors every single month just looking for land, so there is a fairly active market out there in land, it’s just that the average real estate investor doesn’t go after it. It’s just a few people that do that, and then there’s the average Joe out there, who’s our typical customer, who wants to just buy something outside of the city that they can put their RV on and they can hang out.
So, the question of how do we get comps, yes, the issue is not so much about a lack of sales activity, there’s a lot of it, the issue is really more about getting access to the sales comps all over the country. You’re probably operating in your local market and you have access to the MLS and you have access to any kind of other data services that give you all that’s listed and all that’s sold.
Jack: Well, I do deals all over the country. I live in Phoenix, Arizona, but I do deals all the way from Hawaii to Florida. So if I do a deal in Florida, I don’t have access to the MLS, so the solution is that – one interesting thing that I’ve learned about land, land typically doesn’t sell for asking price; land typically sells about 20% to 25% below asking price. So, therefore, what I do is I go look at what people are asking for their properties right now, so what’s the listed price of the properties, and if I find 10 properties on the market that are all listed at $40,000, then guess what? I subtract about 25% of that and I come to a market value of $30,000 and I’m done. I have my comp.
Jack: It’s really as simple as that.
Mike: That’s interesting. So you can’t say that you’ve bought land in Hawaii and not elaborate on that a little bit, so talk about that. There’s not a lot of land in Hawaii, so talk a little bit about a deal like that.
Jack: Well, you’re right, if you want to buy land in Honolulu, good luck. I’m sure you can find the occasional treasure hunt kind of deal, but that’s not what we’re talking about.
However, the Big Island, the biggest island of them all, the island of Hawaii, has the fewest people living there, and then there is some fee simple land available that you can actually buy there. So there’s actually subdivisions, and these are not the prettiest subdivisions. I mean, they’re fine, but it’s where the lava streams run down, so there’s nothing growing. There’s a lava stream and it’s all black and then there’s some spots where something is growing and so on, but people have carved out acre-sized lots out of there, and there’s lots of houses there. Now, these houses, these lots are only worth about $20,000 to $35,000, which is surprising that in Hawaii you can buy land for $20,000 to $35,000, but they’re really far away and they’re kind of on the side that the tourists don’t get to, and dirt roads and so on, but still, people who want to live in Hawaii low cost, they go live there.
We buy them typically for anywhere from $3,500 to $5,000, and then we flip them quickly for cash, usually for $15,000, $17,000, or if we do seller financing, we flip them typically for about $25,000 with a good $2,500 to $3,000 down payment which covers almost all of our cost, and then perhaps $400 a month payment, so within four or five months, we get all our money back, a 100% return, and then the rest is just profit, and a cash flow of $400 for another seven or eight years. That’s a beautiful thing.
Mike: That’s fascinating. So Jack, are you only wholesaling, or do you keep any for yourself to speculate? What else do you do? What are some of the other exit strategies you might use?
Jack: Well, the exit strategies are interesting. That’s what I talk a lot about in my book, Forever Cash. Yes, I do keep some of them. Some of the gems, they’re just too good to pass on. For example, I have almost an acre of commercial property on a main road in Phoenix getting 40,000 cars driving by, and I paid $0.22 on the dollar for that thing. I just hold on to it. I’ll build a medical plaza or perhaps a little food court kind of thing, like a little strip thing with four or five stores, with a Subway and a couple of things, sometime down the road there. I think that’s probably the best use of it, and I’ll just lease it out. I own it free and clear, I’ll build the building with cash, and then I’ll just probably make $10,000 a month or so on that thing. That’s an extra $10,000 a month, or what I call in my book, forever cash.
So I have some of those. I have some properties in the outskirts assigned where I know the city is growing towards, so properties that I bought for $5,000 that are worth $30,000 or $50,000, and I expect them to be worth $200,000 five years from now. So yeah, that’s an extra little retirement insurance that I have there.
Jack: But other than that, what I use as an exit strategy is I use my land business to make money. Like any business, if you actively flip, the moment you stop flipping, money stops. So therefore, the seller financing gives us a mid-term stability. Seller financing gives us cash flow for an average 5 to 15 years, with an average of about 8 years. So if somebody builds up $10,000 in cash flow, they can stop doing what they’re doing and for the next 7 to 8 years, they get $10,000 a month coming in, which is a beautiful thing without any repairs.
But what I’m ultimately doing is I’m taking any excess cash that I’m getting in from cash sales, from wholesales, and from seller financing, and at the end of the day, I am going into the residential properties and commercial properties and I’m buying basically rentals.
So as a result of that, I’ve used my land business, and I continue to use my land business as a cash cow to feed my other investments so that whenever I want to stop doing this someday, whenever that may be – I love my land business; I might want to do it forever – but if there’s ever a point where, I don’t know, I get ill, I get sick, I get hit by a truck, God forbid, that my family is taken care of by 100% passive cash flow just from real estate investments managed by property managers. So basically, that’s kind of my wealth philosophy. You’ve got to have multiple streams of income, and you’ve got to have something that brings in the cash and you take that cash and you turn that into something that brings forever cash, as I call it. Cash that comes in forever.
Mike: Yeah, that’s fascinating. Awesome. I know that you teach other people how to do this and you have a training program. If folks want to learn more about what we’ve talked about here today, which is basically flipping land, which is fascinating, I need to learn more about it myself, where should they go to learn more?
Jack: Sure. If you want to learn about how exactly I do this land flipping, you can go to Landprofitgenerator.com. There’s a couple of videos on there on how we do that and so on; and they can also go to my other website, JackBosch.com. If you want to get the book, you can go to Amazon and grab it there. Forever Cash is the book. Or you can go to Forevercash.com too, there’s a website, there’s a whole bunch of resources and articles and things.
Mike: Okay, we’ll definitely add links for all this stuff down below the video for folks who want to learn more.
It’s fascinating, and what’s been interesting to me is that the market has gotten more competitive certainly over the past year to 18 months, and there’s a number of folks that I’ve talked to that competitively – and this is why it’s interesting for folks who just invest in one market versus those who invest in other markets – is competitively, they just pick up their ball and go play in another playground somewhere, so they go learn how to do something else in another market maybe, so that’s fascinating.
Jack: Right, yeah. I never had to do that, because this one worked from the beginning. It worked before the boom, it worked during the boom, and it worked after the boom. Some of our largest checks were made after the boom and in the middle of the bust, when prices were really low, and the market is now coming back. And it works because when you buy properties at $0.10 to $0.20 on the dollar, it doesn’t really matter so much what the market does. It matters when you hold on to them, but if you don’t hold on to them and you just flip them, it doesn’t really matter too much what the market does.
Mike: So Jack, any kind of final words for folks who you might have piqued their interest in investing in land about some of the opportunity that exists?
Jack: Sure. Generally speaking, one of the things that I want to encourage people to do, particularly if they’re beginners in real estate, I would encourage them to pick something that they can wrap their brain around, that they can handle. There’s a lot of great real estate techniques, it’s easy to get overwhelmed by all of these different techniques that are out there, but make sure you ask the question to yourself and whoever teaches it to you, in terms of what are all the different people and all the different things involved that I have to learn and I have to juggle doing a deal? When you do a commercial deal, for example, or a multi-family, there’s a whole bunch more complexity in there, but also much more profitable. You can make a lot of money in there, but if you are just dabbling in real estate, you might want to start with something that is really, really simple.
That was my story. I couldn’t fathom to understand – I was traveling all the time, I couldn’t remotely rehab the thing, I didn’t have a clue what it all cost, I had no time, but with land, I didn’t really have to learn anything. I literally had to just realize how to value a property, which I told you already kind of how that works, and if I get it for $0.10 on the dollar, I mean, the worst case scenario is that I get my money back, or I get my money back and make a little profit. There are no banks, there are no inspectors, there are no termites, there are no toilets, there’s not all that stuff. Whether it’s land or something else, as you get started, I would suggest that you pick something that’s easy to get your first sale done because the confidence building that comes with this is kind of incredible. Then over time, you start doing the house deals. Now I wholesale houses, now I rehab houses, my own houses that I have. Now I have a commercial property, but back when I started 10 or 12 years ago, I wouldn’t have been able to do any of that because it would just freak the heck out of me.
Mike: Yeah. Awesome. Well, it’s fascinating, Jack. Thanks so much for sharing your story and some more information about flipping land, and again, we’ll add the links down below for folks who want to learn more. I think I’m going to check it out myself because it sounds like a great opportunity to go where there’s not a lot of competition.
Jack: Right, absolutely.
Mike: Awesome. Well, thanks for joining us today, Jack.
Jack: Thank you very much for having me.
Mike: Stay in touch, my friend.
Jack: Thank you.
Mike: Thanks for joining us on today’s FlipNerd.com podcast. To listen to more of our shows and hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions of our shows by visiting us at FlipNerd.com.