Today’s REI Classroom Lesson

Mark Podolsky talks to us today about just how big the land market is and where it makes sense to buy.

REI Classroom Summary

Mark discusses what sellers you should be marketing to and how it can be easy to get lots of small deals coming your way if done right.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Mark: Hey, it’s Mark Podolsky, The Land Geek with I’m so glad to be back on REI Classroom. I want to talk of something that’s very near and dear to my heart, which is how big is the land market?
Mike: This REI Classroom real estate lesson is sponsored by, FlipNerd’s private investor coaching program and your blueprint to investing success.
Mark: Often times when people start investigating different real estate investing niches, the first thing they want to know, and this is not just in the real estate, this is for any business, how big is the market? Right? So it’s a really important question to ask because obviously if you’re in New York City and you’re flipping houses, that market is going to be very much influx, it’s going to be a very local.
The land investing market is a little bit different in that sense because number one, there’s very low competition, there’s no private equity groups, there’s no hedge funds, there’s no REITs that are investing in raw land in our niche, and the reason being is if I gave you a million dollars or $2 million to go and deploy and start investing in raw land, you wouldn’t be able to deploy it fast enough. So big money shies away from this niche, as well as the fact that they don’t think that raw land cash flows even though we do make good cash flow. So let’s just take a look at how big this market is, and then do some math.
So number one, there’s 3,007 US counties. From there we have over about 1.2 billion acres of raw land available to actually buy. Now, of that 1.2 billion in my niche, what we want to look for are areas of growth, because nobody wakes up and think to themselves, “Boy, I’d really love to buy some raw land today in Minnesota,” right? Unless you lived in Minnesota. So we want to be in areas like Texas, Arizona, California, Nevada, New Mexico, Florida, Colorado, or even Washington.
So let’s just kind of focus on states that have an abundance of raw land, they also have good weather going for them, they also have some additional benefits as well as far as growth and just recreational activities. So what we’re going to look for are properties an hour to three hours from a metropolitan area. Of that market and looking at that criteria, we have several millions acres of parcels to buy.
Now, what we do are offers and the way that we do that, we talked about this in another classroom, is we look at people that live out of state and owe back taxes, and then we’re going to send them an offer “$0.20-0.30 to the dollar.” It’s a top dollar offer. Now 3-5% of those people will accept your offers. So if we send out 1,000 offers a month, on the low-end we’re going to have about 30 deals, on the high-end we’re going to about 50 deals. Of those that we can actually close, let’s be super consecutive. Let’s just say we can close 1%. So we send out 1,000 offers in the month, we’re going to get 100 deals. Right?
Now, if you do 100 deals in one month that’s a lot. And I would make an argument that you will run out of money before you run out of deal flow. For example, I have close over 5,200 deals since 2001. It’s about a deal a day, right? And as the niche has grown and we’ve seen more people come into the market place, my business has only grown, because what’s happened is, as more people wanting to get in raw land investing, we have different opportunities.
So now I can actually wholesale our properties to other investors that don’t want to go through the hard work of sending out direct offers. They’ll just come to me. So now we have a different mode of our different channel of actually selling. So to make a long story short, there’s literally an unlimited supply of raw land deals, of good raw land deals that will move the needle in your life in this niche. That being said if you want to be a billionaire, this is not the niche to be in, because to be a billionaire you will literally have . . . These are too many small deals.
So I would say that this is good gateway drug to have your passive income grow behind your fix expenses. Let’s say you make $120,000 a month in passive income, you can take that money and then start going into bigger multi-family deals which I would make argument if you want to keep it simple go into mobile home park investing. It just starts do lot rents and getting the dirt on that and having another income stream from that. But if you want to keep your life simple, you don’t want to get ulcers, you don’t deal with tenants, you don’t want to deal with toilets, you don’t want to deal with termites, you don’t want to deal with trash, then you can build up enough passive income in the raw land investing niche to really move the needle in your life and hopefully that really answers the question about how big this market is and really there’s virtually no competition.
Anyway, this is Mark Podolsky, The Land Geek with Thanks again for hanging out with me on REI Classroom. I’ll see you another time.
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