095: Creating Passive Income Buying Land with Mark Podolsky
Most people think that owning rental properties is the only way to generate passive income from real estate. However, there are many other ways to create passive income within the world of real estate. You can even create passive income without ever buying a property (writing a book about or creating a website for real estate). Mark Podolsky (also know as the Land Geek) is the guest on today’s episode of the InvestFourMore Real Estate Podcast. Mark earns passive income from land ownership. In this episode, we talk about how he got started investing in land, how he finds awesome deals on land, and how he creates a steady income from selling land.
How did Mark get started in real estate?
When he first learned about investing in land, Mark was an investment banker. He had a great job in the corporate world, but he hated it. One day, one of his friends introduced him to tax-deed auctions. This friend took Mark to an auction where he showed him how to buy land for pennies on the dollar. At his very first auction, Mark bought ten pieces of land in New Mexico. He was immediately hooked and ended up earning a 300 percent return on his investment. Yet Mark was not quite ready to leave the corporate world. Over the next 18 months, he learned more about land ownership and continued investing more time and money into it.
How did Mark make the full-time jump to real estate?
Mark was making more money investing in land than he was at his corporate job. He decided it was time to quit and focus on investing in land, where he did very well from 2001 to 2006. However, Mark admits it was easy to do well during that period—a period when it seemed like anyone who bought property was making a lot of money. Mark actually continued to do well until 2010, as land tends to take longer to reflect changes in the market. But sure enough, between 2010 and 2013, those market changes caught up. He suffered a huge drop in his income due to low demand for land. But, he survived and continues to thrive.
How does Mark invest in land and create passive income with it?
Mark tends to buy very cheap pieces of property. Some of the parcels he buys are less than $1,000, but these deals are not widely advertised. He must work hard to find them. Mark buys some properties from auctions but admits that, thanks to increased competition, deals are not as good as they used to be. Now, Mark focuses on finding his own off-market deals. He looks for property owners who are behind on their taxes and who live out of state. He seeks property owners who are often very willing to sell cheap. Often, Mark is able to buy properties at 25 percent below their market or initial value.
Mark then sells the property with owner financing by advertising it online. Usually, the down payment he earns from owner financing covers what he paid for the land. All the payments he receives become profit. Since he deals with raw land, he does not have to worry about Dodd Frank seller financing rules.
Is it hard for Mark to find buyers for his properties?
No! Plus, I assumed that most buyers of Mark’s land would be looking to build on the land. However, they are mostly people who want to use their land for recreation, a place to get away, or to be able to say they own land. Mark is buying land in the most-desirable states, like Colorado, California, Texas, and Florida. I asked Mark if he sells swamp land in Florida, and he does! Apparently you can grow some pretty awesome Shiitake Mushrooms on swamp land.
Mark sets a variety of terms to sell his land. On some deals he uses 5, 10, 15, or even 30 year notes. His interest rates can vary from 0 to 13 percent, depending on the land and the deal. If a property owner happens to default, it is very easy for Mark to take possession using the terms set in his land contracts.
How can you learn more about Mark’s land-investment strategies?
Mark created many programs and resources for people looking to learn how to invest in land. He loves land, and it’s the only thing he invests in. Mark has a very popular podcast and awesome website, and you can find any land-investment resource you could want here.