How a $41K Land Deal Produced a 65% IRR Without Visiting the Property | Ep 96

James: Of all the different investments I've done, this is probably the number one thing that people ask me about and always get interested in. Huh? For some reason I don't totally get it though. It is super awesome, and we're gonna talk about that this week on the Furlo Capital Real Estate Podcast, where we dive into the intricacies of passive real estate investing, and our mission is to equip people to invest wisely in both properties and people so that together we can build wealth while improving housing.

I'm James, and this is my wife, Jesse. That's

Jessi: super intriguing. I, yeah. I don't know why this made, that made me pop into my head like crosswords, but I've been Okay. Okay. So you subscribed to the newspaper. Yay. Yeah, like and it has been kind of fun to have actual, like sheets of paper and Oh, I know, right?

You pull the comics out, you read the business section. Yeah. You flip through and get like updates on Baker City. 'cause that's, we just brought a place anyways. I'm hopeful

James: that'll become my new, like number one that everyone asks about. 'cause it's really cool. Yeah. Yeah. That

Jessi: is a cool property. Yeah. But anyways, that made me think there was this line in one of the crosswords that was state wars, state slogans are recorded.

I don't know, something like that. And I was like, state slogans. And the answer was license plates. Okay. And I was like, do license plates have the state slogan? I know they have states. I don't know. That got me thinking. And then we were talking about Indiana. 'cause that's Talk about, yeah. You know, I was like, what is Indiana known for?

I don't know. Colorado's like colorful Colorado, I guess. Or I don't know. I don't know. Like the cheese state, the honeybee state. I don't, I don't know. There's all sorts of them.

James: It's probably not the cheese state. Colorado, Wisconsin is like the tea stake. Taste the Rockies. Ooh. Yeah. Wait, that's the isn't not the quarters tagline.

Jessi: I mean, that is in Colorado.

James: I do remember, so fun story. I was in Colorado visiting with you and your family. And I've, I think we were married maybe. Yeah. Yeah. I think we were married. Yeah, we're married. Anyway, so we went up to some fancy restaurant and I remember I was talking with the lady and and I was like, I, I, I don't drink a lot, but if I do, I'm like, I want something interesting.

Sure. And so I asked her, I was like, Hey, do you have any good, like local beers? And she looks at me and goes, Coors. And I was like. Touche. That is a local beer. I'll have a Coors, which I don't think I'd ever had one previously. All right. There again, I always go highfalutin fancy stuff, but which is fine.

It was good. But yeah, it was pretty, I was like, yes. That is the local beer around here, isn't it? Taste the Rockies of so funny. Oh, it was amazing. Yeah. So, yeah. Yeah. I primarily buy land or buy property in Oregon. Yep. But back in some date, I don't remember now. Let's think about this. We were living here.

Yeah. So it was within the last 10 years ago.

Jessi: Yep. The last, the last eight years.

James: Yeah. So anyways, we found ourselves in this interesting position where I had about $50,000 to invest and I didn't actually know about this whole passive investing mm-hmm. World yet. And the biggest problem that we ran into was that we had just, we had moved here and we liked here, and we were gonna stay here.

Yep. And so for me to buy another multifamily. Was just gonna be difficult. Mm-hmm. Because we weren't

Jessi: gonna owner occupy. Yeah.

James: We weren't gonna owner occupy, so we had to have 25% down. Yeah. And so I was like, man, what do I, what do I do with this? Well, I was following various people, bigger pockets, stuff like that.

And there was this one guy, he wrote a bunch about multifamily things. Mm-hmm. And I followed him, well, he had this webinar where he was like, Hey, come listen to this guy talking about flipping land.

Jessi: And,

James: And I was like, Hmm, what is this? That was very interesting. And so so that was what I did. I joined the webinar and I'm, I'm a sucker for that kind of stuff.

What's that guy's name? Jack Bosch. Jack. Jack Bosch.

Jessi: Jack Boosh, that's right.

James: Yeah. She's, I remember

Jessi: like seeing snippets of it as you were watching the videos and Yeah. Yeah, he was just classic. He's a character man. He was a classic you know, sales. Oh, seminar. Yeah.

James: But I'm like, I was in, I'm like, this is amazing.

And yeah, his whole thing, it was like, no tenants, no toilets, noran tantrums. That was his, I was like, I love the alliteration so good. But I was intrigued by it because it was this idea of, because you don't have those three things. Mm-hmm. You can buy anywhere in the world from anywhere in the world. 'cause you don't have anything to deal with.

Yeah. You're not managing a property. And he was like. Depending on the size of land that you get, you could get something for little, like for as little like 25,000 or 50, 50,000. A tiny little plot. Okay, interesting. Yeah. Just like a single track. Mm-hmm. Type of thing. I was like, huh, okay, maybe I can put my $50,000 to work doing this.

So I bought his $2,000 course and took it and I gotta tell you, man, it was amazing. It was it was probably. My first step into like, okay, you're doing 'em on your own. Mm-hmm. You're not necessarily relying on agents anymore. Mm-hmm. To do it. And this course, like, again, it was fantastic. Yeah. It, it did talk about the idea of land flipping.

Mm-hmm. But then he got into the whole like, here's how you market and here's how you find people. And, and he got into like, here's how you write letters, here's how you send letters.

Jessi: Oh, yeah. All of

James: that stuff.

Jessi: Wait, was he, oh, I think it was a different course. The, the, the people that I have taken a couple of them or the, oh.

It was like driving for dollars. That's somebody else

James: probably. Or like That's a lot of people. That's pretty classic. Yeah. Okay. Don't have any money. Yeah. Drive around, look, drive around. Look for,

Jessi: look for a dumpy place and make an offer. Yeah. Or like, yeah, the letters, yellow letters.

James: That's a thing. Uhhuh.

Yeah. So, but for him it was, it was interesting. He actually said like, don't necessarily do the yellow letter thing. He was like, just send a regular mail. Because that was part of his thing is like, he's like, no one's competing in this area. And he's like, so it's pretty like it's just this,

Jessi: yeah. It's, it's just not weird side market thing.

James: Yeah. So what I also liked about it, he's like, because you can invest anywhere in the world, they could do some analytics, find out where the best place is. And so he described. Where you wanna look at the MSAs, he's like, focus on the us. It's okay. But look at the top MSAs in the US and you're looking, what's an msa?

Metropolitans, statistical area. Sure. Big cities and around the big cities. Okay. So Portland is one. Got it. San Francisco, Los Angeles. Big cities Denver. Got it. Those kind of things. Okay. And so I went and I pulled some stats for all of them and I was looking at steady population growth solid unemployment.

Jessi: Mm.

James: And shrinking unemployment. And I, there were a couple other factors as well. Mm-hmm. But here's what's the, here's the idea. You don't buy in the big city. Mm-hmm. You buy around the city because you're looking for people who, maybe they're living in a small apartment, they've got some money. Oh. And they're like, oh, I wanna maybe build my dream house.

Yep. Just outside of the city. Yep. And so it's like, so that's what you're sense you're looking for, for, so for me, I identified Indianapolis at the time. I was like, man, this place, like it, it was hit all the stats and then I knew what my budget was. Mm-hmm. So I was like, okay. I'm, I'm looking for land that is available in my budget size, and so Indianapolis and Chicago are relatively close to each other, and there's a corridor in between them that land's really expensive.

I was like, none of this like, interesting, which makes sense, right? It's the, it's between the two big cities, but Oh, south of Indianapolis. It was significantly cheaper. '

Jessi: cause it's not like a main thoroughfare or something. Yeah, yeah,

James: exactly. So, you know, it's quote out of the way. Okay. And so I identified a few counties mm-hmm.

There. And, and they talks about different, he even gives you like, go to these websites, do these types of searches. Mm-hmm. Like he was like, paint by number, here's how you do this. And then obviously he was like, Hey, if you do a lot of this, here's my software. You can get onto my software subscription and it automates all this for you.

Which I was like. It was kind of brilliant. And yeah. And so so yeah, so I identified that area and then sent out 2000 letters. And what was also interesting about the land thing is, so typically when you're sending out letters to owners mm-hmm. You want someone who. It depends. My thinking on this has evolved, but typically you're looking for people who have owned the properties for a long time, because then they might own it free and clear.

Mm-hmm. And you can make it either a low cash offer or you can do seller financing mm-hmm. Of some sort. You don't need to do that, but like that's typically what you're looking for.

Jessi: Mm-hmm.

James: But they go for land. You don't necessarily want that because a lot of times there's people who inherit land and they're like, I don't know what to do with this.

Oh, they don't. They don't want it. They just wanna get, they don't have a purpose for it. Yeah. So they just wanna get rid of it. Which honestly, the person who I ended up buying my piece of land from, she hadn't just had inherited from her dad. She'd owned it for like a couple of months and it was like, ah, I just want, I just wanna cash out.

Mm-hmm. And so I was like, dang. All right. Cool. Mm-hmm. And, and he was talking about some of his stats where he's like, look, when you're normally sending out letters, if you get like a half a percent response rate. You're happy. And he's like, ours are like 10% response rate. He's like, its, which is phenomenal.

It's unreal. Relatively speaking. Yeah. So I was like, yeah, let's go. And then the way he set up his system is you sent out a letter and then you have like a phone number that people call and you leave a very detailed message like telling people, Hey, we buy, we, you know, cash for land and blah, blah, blah, and you know, whatever.

Mm-hmm. Have a whole script for it. I took it a step further. I actually created a website that had a video, which then they could watch the video and then click the link to gimme their information. It was just a Google form mm-hmm. That they filled out telling me about the property and a bunch of stuff, which they were supposed to leave all that information in the voice message.

Yeah. And then I could do all the research ahead of time. Call 'em on the phone and be prepared to make an offer on the spot. Mm. It's how I did it. Mm-hmm. I've had a bunch of stats. Where did I write those down? Yeah. So I so that was what I did. Hmm. So I actually, so I didn't, I didn't actually send out the full 2000, I'm sorry, I had 2000 on my list and I started with just a.

With 1000 instead of the two. 'cause I was like, you did half, because I was like, I just wanna like I don't really it test it. Yeah. Yeah. Not that he test it, but I was like, I don't know if I can handle oh, 2000. Because he was like, so his thing, he goes, if you send a thousand, he's like, you'll probably get one deal.

Okay. If you send 2000, I guarantee you that you'll get a deal. Okay. So I was like, so send out 2000. Yeah. I was like, well I bought the list for two, lemme start with one. And then in a few weeks I'll send the other. Mm-hmm. Tranche. Yeah. See what happens. So I did that. I had 86 visits to my website. Hmm. So that's not quite 10%.

10%, but you know, but pretty good. 8.6%. Yeah. Yeah. Of those 86 visits, I had 22 people watch the video. Oh, I know. This is a nice part about the website, right? I have all the stats. Yeah,

Jessi: you

James: can track it. All of those 10 people filled out the forms. Interesting. Oh I also had six people call me uhhuh and three people leave a voice message.

Okay. So

Jessi: interesting. Yeah. So you had some, some follow up to do.

James: Yeah. So actual leads. Oh man, leads are good.

Jessi: Oh my gosh. Yeah,

James: so like I said, there was this lady, she had recently inherited a piece of land from her father and she wanted to move to Mexico and was looking for some cash. Yep. So I bought it for $40,000 plus $1,100 in closing costs that I paid.

Mm-hmm. And I just paid her cash, you know, and it was for an acre and a half of land in Bargersville, Indiana. Hmm. And I never visited it, I never saw it outside of Google satellites. Yep. Yeah. So here's another little tip that he talked about, like, this course was honestly, like, I, it sounds super detailed.

I, I have used so many of the things I learned in this course just in regular property investing. Yeah. 'cause he just like, he goes, here's the blueprint on how to get it done. Yeah. So his other thing, 'cause he is like, you don't wanna visit. You don't need to uhhuh. He goes, but how do you like, so you have an agent, he's like, just pay the agent fee to have, have them listed.

I mean, the buyers pay the commission anyway, so who cares. Sure. And and he's also like, well, he says like, you can do a couple things. Like first put it on Craigslist. Discount it. Like if you can buy it at like 50%, its value.

Jessi: Mm-hmm. Put

James: it on Craigslist for 70% of its value. And you might have someone who comes along and is like, yeah dude, I'll pay cash for this.

And it's like, done deal. Just move on to the next deal. Yeah. Like velocity of cash. He's like, or you know, if you're looking to get a little bit more for it list it with an agent and he goes, here's what you do. Go on to Zillow and just look up any property that you can find. In, you know, in like in the area.

Mm-hmm. He goes, and then in the on the side column, it has a list of like agents who are advertising on Zillow. He goes right for that area. Those are people who seem to be successful enough that they're willing to spend money on ads, and he goes. Pick the one that has the highest number of ratings in the area.

Yeah. He goes, they're the move shakers. And so that was what I did. I found a guy and I called him up and was like, Hey, I'm looking at buying this piece of land. I'm thinking about buying this much. He knew the piece of land that I was talking about. Yeah. And I told him the price. And he goes, if you can buy it for that, that's amazing.

It's like, that's a, that's a steal of a deal. Like, good, cool. That's my plan. And so that was what I did. I bought it and then. Called him the next day and was like, all right, man, let's list it for sale. And that was what we did. And and so so he, he listed it let's see here. I sold it, it took six months and which is long, and the land flipping game, like they try to do things like in weeks.

Wow. But I was like, whatever. I also bought it the like. Winter time of year. Oh, anyways, I sold it for I think it was just un it was, it was like $75,000. Mm-hmm. So, which is usually why people are like, tell me more about this land. Yeah. Like what, what, because you didn't build anything, almost double your money there.

How does that work? Didn't

Jessi: really change anything at all. Oh, I

James: did nothing. It was just, I was taking advantage of an market arbitrage or like, yes, that and just well know what is it? It's, non-perfect information. So one of the hallmarks of the stock market is it has quote perfect information.

Anytime information comes out, it instantly becomes accessible to everyone and gets incorporated into the market. Mm-hmm. And so no one can get ahead. Yeah. Because you all get, get the same

Jessi: thing and react similarly outside of

James: like, there's some people like. One of the things that Warren Buffett is known for is that when he wants to invest in a company, he dives deep onto the leadership team.

He reads all newspaper articles about them. He reads their annual letters, he tries to get into the heads of their strategy, long-term stuff. So at that point time, he genuinely, he's making some very educated guesses on where they're, where they're headed. Where they're headed. Yeah. And it's more, he's making a bet on the leadership.

As opposed to making a bet on the act like where they're currently at.

Jessi: Yeah.

James: And that honestly was his big, like, that's what he's good at. Yeah. And he's learned. Yeah, I just gotta invest the time to learn about these people. And so it can be done in the stock market, but typically it's very, very hard.

Jessi: Yeah.

James: Whereas with this, there's just, there's an asymmetry of information out there. Like, here's this person, she bought this land and she's like, I don't, you know, I'm trying to figure out what to do with it. And it's at that point in time, I sent a letter and the people who ultimately bought it were from California.

Wow. And they were moving over, I'm assuming, to be closer to some sort of family. Sure. And they were able to. Take whatever they had in from their California house and build a brand new awesome house on this. Yeah. You know, their dream home, that kind of thing. Like, so for them it was

Jessi: a, a deal too. Yes. Yeah.

James: Yeah. And, and so like this lady and these people, like never would've connected. So I was that interconnector piece and she just wanted to cash quick and I was able to give her that. Right. Whereas they were like, well, part of why it took six months was they took a couple months to, to run through the permits and to see if they could actually build what they wanted to build.

Yeah.

Jessi: Makes sense, which is fine. Mm-hmm.

James: And so that's one of the interesting things about just real estate in general is there isn't perfect information in the market. Mm-hmm. And so if you're willing to put in the time and effort you can get ahead of it.

Jessi: Hmm.

James: Yes. I mean, even think about like for passive investing stuff, right.

I do a 5 0 6 B investment.

Jessi: Mm-hmm.

James: When I have an offering I cannot publicly

Jessi: Right.

James: Advertise about it. Yeah. So the only way you find out about it is by being on my email list and then I tell you about it. Yep. And us having conversations and me knowing what it's that you're looking for, and then I come to you mm-hmm.

Like. And like, that's it. Like normal people don't know about those kind of deals, right? They happen all the time. And most people, like you never hear about it. Yeah. You wouldn't even have an idea. Yep. And so that's one of the things about real estate, that's not the stock market. Let's see here. So I sold it, made some money yeah, my total capital invested was $41,000.

And, when it was done after all of my expenses and everything. How come I didn't write that down? No, that's all right. I, I made, I'm trying to do the math in my head 'cause I didn't make the 75, 'cause I did have to pay commissions and some other stuff. But it was like an 86% return mm-hmm. At the end of the day.

Which is pretty good. Yeah, that's, yeah. Yeah.

Jessi: For like very little. Work.

James: Yeah. And then

Jessi: it was time that you put in and

James: ultimately my goal in buying it was not to keep doing land flipping. Mm-hmm. Though it was intriguing. Yeah. But I was very much in like, ah, this is kind of a feast or famine type of deal.

Mm-hmm. And, and at the end of the day, like we were reaching this point where we were starting to talk about what does it look like? For me to quit my job. Mm-hmm. We just need another rental or two. Yeah. And so that was ultimately where we were headed. Yeah. That made more sense. And so what we ended up doing was we we took the funds from the money that we made on that and we did two things.

Number one, I did go off and buy another five unit place. Mm-hmm. And then since I didn't use all the proceeds, which was awesome, I spent money on repainting an apartment building. And and then we refinanced it and then we used the cash from Nat to buy another place. Mm-hmm. And I also bought a new computer and I think we had one more student loan mm-hmm.

That we, that we just finished

Jessi: paying off.

James: We're done. Yep. And and then that was that. And so just

Jessi: like snowballed everything.

James: Yeah. And so that gave us enough that we were able to, that I was able to quit my job. Yeah. So that was where I was like, eh, I don't need to keep doing this. Also,

Jessi: why it's an intriguing deal because it allowed all of this other movement to happen.

James: Yeah. Yeah. It was really, it was a catalyst, it probably sped up mm-hmm. Where we were already headed. By like a year. Yeah. Which is kind of cool.

Jessi: Yeah.

James: And it's funny, like now that I'm doing some house flipping stuff, I'm like, man, you know, like getting into the land, flipping deal's, not, not a horrible thing, but the Yeah.

The trick is like, you just gotta buy it for the, for the right amount. Yeah. But

Jessi: I like that perspective that you, I don't remember how you said you were like the bridge between this disconnect and information.

James: Yeah.

Jessi: Because in my mind, for some reason, it, it, it feels a little like. Okay, so you bought this land and you just listed it and you did nothing.

Yeah. And you made a bunch of money. It was like, I didn't add value. Are you swindling someone like here? Like No. You know, which is like, no, you're ling not, but such a but in, but I'm like, dude, why didn't the lady just list it for the higher price? Yeah. And she had hired, she had different priorities. Never.

Yeah, she never would've, like, that wasn't what she wanted, you know? It wasn't like,

James: yeah, dude, she wanted,

Jessi: she just wanted to sell it for cash and. Be done. Yeah. You know, which is like, okay, cool, if that's what you want. Which I don't know. To me, I'm like, perhaps it would feel better if, if you like wrote the letter and you were like.

Hey, now that I have shared this with you, we will split the profits because I have this cool deal and you can actually get a lot of money from it, and you just didn't know. And now, you know, but I don't know.

James: Yeah, that's, I've, I've actually written deals like that with people Sure. Where, what I'll say is like, if they want a certain amount mm-hmm.

Right? And I'm like, Hey, I can't necessarily give that to you, but it's like, I'm willing to partner with this on you, where why don't you, you sell it to me And, I will put in, I will front the money to do all the repairs and fix it up. Mm-hmm. Yeah. And then once I get reimbursed for that, we'll split whatever the profits are.

50 50. Yeah. And I haven't had anybody take me up on that one yet, so I don't know if it's gonna Huh. But I, but as that has been one, it's, it's usually people are like, nah, I just want the cash. Yeah. All right. Which

Jessi: I, which I totally get, you know, so

James: here's your low ball offer, and they go, okay, cool. Sure.

Okay.

Jessi: Yeah. Which I mean, yeah. That's just, that's part of the market is people's motivation.

James: Yeah. You know, but yeah, no land flipping. It's super tricky. Change time every time. Every time I talk about it, I'm like, that was cool. It's like, and it's just that dream of like, you can do this on a beach. Like there's no Yeah.

Tenants toilets or tantrums. There you go. It's it's, it's pretty nice.

Jessi: Tenants, toilets

James: are tan drove. Yeah. I can, I just, I've never visited, never been there.

Jessi: Yeah. It was super, I remember going through it and, and being like, you're gonna, what? Okay, but you haven't, how do you know what it looks like?

You're like, oh, there's an agent there. You know, they know the piece of land. I'm like, okay. Okay, but you're not gonna verify anything like yourself like, no. Why would I need to? Like, it's a piece of land. There's no, yeah, there's no property, there's nothing, there's nothing to inspect. It's ground.

James: Yeah. I was like,

Jessi: oh, they did say like, you could

James: go to like, you could go into like Fiverr or something like that and hire someone in the area to like, Hey, could you just go take a photo of this?

Just drive by.

Jessi: Yeah. Gimme some, gimme some pictures of this. Like, I need third party. You

James: don't care. Is this thing real?

Jessi: Yeah.

James: Yeah. But all of them be like, so funny. You go through escrow and stuff like that. Sure. And so like they're verifying that. Yeah. It's

Jessi: a, yeah.

James: You're actually transferring title, actual

Jessi: real property.

Sure. No,

James: there's no address on Lands. Right. Dude, that's a, a plot. It's kind of weird, like doing all APNs and that's like parcel number stuff. Mm-hmm. Yeah. So like I said, I use a lot of the things that I learned from that today, like when we're going out and getting deals like we've got a whole system where when we do ads that people come in and they give us their information and it's like, it's that same process.

It's that same video, it's the same kind of message. Mm-hmm. And, and so we're, I, I'm doing those kind of things. I am looking at land now to buy and, but oftentimes the question is like, okay, could we flip this? Mm-hmm. Or does it make sense to build something on this? Yeah. Like, what's the highest and best use for this land?

Interesting. And you know, and, and those kind of conversations. And so there's a lot that that I use that I learned from it. It's very cool. So it was a cool course. It was worth, it was definitely, it was. It was like, you know, at the time I was like, man, cheap ground's got a lot, but yeah, no, a hundred percent it was worth every penny of it.

Totally worth it. And yeah, for, that's the one that paid for itself. Like most people like, tell me more. Which I, which I get. Yeah. But yeah, I, I enjoy the, the rentals and the physical properties and doing syndications. You, you enjoy the

Jessi: toilets, tenants and tantrums. Dude, I totally do. I do. It's kind

James: of fun.

I enjoy like the yeah, the psychology and how you approach it and, yeah. Just loving on people and leading people, like, I don't know. That part's fun.

Jessi: Yeah. Ultimately, it's a, it's a, a hospitality business, I guess, kind of. I mean, it's a people business. Customer service. Customer service. Yeah. Yeah, sure.

James: I mean,

Jessi: yeah.

James: All business is personal, right? Isn't it the Michael Scott? Exactly. All business is personal. Business is the most personal thing there is. Yeah, no, definitely. But yeah, no. Anyways, that was it. Just a fun little venture. That was one of one of the many steps that we took. Yeah. Along the way of our investment.

Super interesting. Life and like I said, that was my first like truly getting into the off market. Like alright. Yeah. And pursuing it myself. I had done an off market deal with the line apartments, but that was kind of like, that just fell in my lap. Mm-hmm. And I was like, oh, cool, I guess I'll take this.

Yeah. Let's, but this, this is one of me intentionally going out and finding it. Right. And, and it worked. Learning

Jessi: something new. Yeah.

James: So it was great. Mm-hmm. Yeah, he still puts on the class and now his tool is, you know, awesome AI stuff built in and he, I. Still get regular promotional messages from him all the time talking about him putting on this, this seminar.

Maybe you should, maybe you should get another one. I mean, check out this software if

Jessi: that land thing was worth it.

James: Dude, I, dude, you're like, don't tempt me. I, I was just about to say, don't tempt me. Frodo man. So true. No, it's all good. No, I, like I said, I enjoy bringing on other investors. Mm-hmm. That was actually probably the first time too, by the way, where I had people come to me and say like, can I back you?

Like, can you buy a place and I can fund you? Yeah. I was like, whoa, this is a thing. I don't know. Okay. But again, I was like, well, I'm out like. I achieved the dream, right? So I don't need to keep going. Yeah. And so you know, whatever. But yeah, I don't know. Maybe, maybe someday. But yeah. But anyways, I love doing syndications.

I love having people invest with me. And if you are interested in learning more about what that looks like with us, you can check us out at furlo.com. And so with that, thanks for listening. Have a great day.