Real Estate Trends, Property Management and Land Investing

Speakers: Ronn and Martin

Guest: Nathan Poth

Martin: All right, and we are back with the multifamily podcasts with Ron and Martin. Okay, so this is going to be a pretty fun episode for me particularly, we’re going to be talking with Nathan Poth, who’s an established real estate investor, broker and property manager. He owns LoCali management group, and he’s also a land investor at LoCali ranch, and has been in the multifamily industry since 2004. Now, we will get into each topic today to leave our community with some thoughts and where Nathan believes the real estate market is headed. Breaking into the property management industry, and how anyone can find a nice piece of land to monetize no matter their budget. So, let’s dive in. Are you ready to rock and roll, Nathan?

Nathan: Yes, sir. Let’s do it.

Martin: Nice.

Ronn: Awesome. Thanks so much, Nathan, for joining us today. As you know, and Martin knows, we were excited about setting this up. Because you and I have known each other for many years, I think particularly when we were in our previous chapter in life, right? Having that, working for the man or having the entrepreneurial dreams. Really just like, you know, putting it front row center and saying we’re gonna do this. And what’s cool about I think both of our stories, I’m not trying to steal your thunder, but I believe that we literally were looking in the mirror at the same time, and saying, this is where we need to be and what we need to do and all the people we need to touch. So, I’m so proud of you, of everything that you’ve accomplished, you know, we talked about a day one, that what we were going to do together and individually and for the industry, and you definitely have set out and did it and then some, I mean, I know you’re currently in Tennessee, in your RV on a long distance trip, I mean, doing that, that’s something I should have put out there, because that’s what I want to do, too. You’re looking to move and shake, I’m not gonna take too much away from what you’re talking about. But I know you’re looking to move and shake and other states and already have. So, I cannot wait to find out more from you, about how you decided not only to get into LoCali and the property management side, but more on the real estate side, like you got your real estate broker. So, I want to hear about that.

Nathan: Sure. So, I mean, it’s kind of a long-winded story, but I, you know, originally went to culinary school, and I was in the back of the house, the kitchen. And, you know, in high school and stuff, you don’t really think about family, friends and things like that, you’re just kind of thinking about yourself and what you want to do. While being stuck in the kitchen, you know, whenever you guys want to go out to eat, or all of us want to go out to eat, it’s nights, weekends, holidays, all those things. And it just wasn’t for me; I had a girlfriend at the time. And you know, things were starting to get serious. And I started thinking about Warren. So, I ended up getting out of the industry altogether, and was selling office supplies with a neighbor who’s like something out garage, and my territory was Irvine.

So, I started knocking on all the doors while Irvine company was one of those doors, and just kept hitting them hard probably every week on Monday at 10 o’clock. I mean, every week, they never bought one single thing from me because they already had established big, huge contracts already with you know, some of the bigger name brands. So, but anyways, they ended up offering me a job because, you know, I was so persistent. And you know, they gave me a discount and rents and all these things, I was able to live, you know, multimillion-dollar life staring at the ocean and Irvine company property for a fraction of the class, so, and I made good money. So, it was it was it was awesome.

So that’s how I got into property management anyway. And you know, as with everything coming for a while, worked for a few other third-party management companies outside of that, of course, the grass was always greener. And that’s kind of when I think Ron and I kind of linked up just being in an industry anyway and ended up wanting to do my own thing. So, I started poke company. And it was like a consulting company. So basically, it was doing the secret shops and going through the whole spiel and putting my reports together. And ultimately, it kind of turned into a staffing company, which, you know, it’s a great industry, it just wasn’t for me. And these owners were saying, well, why are we hiring this, you know, management company when you’re coming in doing all the work? And, you know, it was difficult to, you know, keep that relationship with that management company because, you know, they probably just didn’t have that enough regional support at the time, you know, if it was like a smaller and midsize management company.

And, you know, that’s the hard part with property management is you know, you really depend on your people, you know, you learn about the four P’s people product, motion, price, that type of thing, and I just kind of had that instilled into me. So, I was just thinking, you know, just something really basic. And for my niche market, what it kind of developed into is, you know, these owners, maybe it wasn’t the institutionalize asset that they were asset managing and with a larger company, but maybe they’ve saw a good deal like a duplex or four plex or something like that. And then Something like that that was too small for the management companies I was working with. So, they said, well, why don’t you manage that for me? I said, absolutely what, you know, at the time, I didn’t have my real estate license or anything, you know, I was just kind of doing my thing.

And so, I ended up getting my real estate license, and then I was under a broker for a little bit and started just picking up more and more units. It was tough, I mean the first few years of any business is really hard. I was surviving off of a triplex was like 150 bucks a month, for a year, all my savings were done. Luckily, I had a great partner in life that was helping pay the bills and stuff but got through all of that. And then, you know, just keeping to the basics. You know, property management is very different from the sales side of things, you know, you have specialties, and a perfect example would be, you know, you have doctors, you know, if you have a toothache, you’re not gonna go to a brain surgeon, you’re gonna go to a dentist, all doctors, but they all specialize in different things. My specialty has always been property management.

So, I think, you know, for me, I like to refer to a local broker that does sales in the area, if somebody’s looking to sell because, you know, I may get potential business from them. And that’s a good way to start. Facebook was huge for me, I started grading Facebook groups to get other leads coming in, you know, just posting other people’s listings, giving them the credit, that it’s their listing, but usually on Facebook, you just kind of see the photo and just assume, because I posted it, it might be mine, I may have just let them assume it was my listing, but that kind of got the ball rolling. And then you know, I picked up, you know, 50 units, 50 doors, all fee Management stuff, and then worked myself up to about 350 units at one time. And it was insane. I mean, it was normally I mean, Ron, Martin, I’m sure you know, starting any business, you just throw everything into the wall, see kind of what sticks, and then you just kind of narrow it down from there, you got to deal with those hard clients, you got to deal with those hard residents.

I mean, you know, and then you can, then you can kind of sit back once you get kind of established and kind of cherry pick which ones you want to keep, maybe you need to kind of increase rates on certain things. And, you know, it just kind of naturally settles down a little bit. And that’s kind of where I’ve been for the past few years. I’m now, I tried to keep it about $150 or less. I am, you know, a single owner operator. You know, it is an LLC, I have somebody that helps me, Kristen, who’s been in the industry, she has a couple of kids, got her a pair of rainbow flip flops and tiller. Here’s your new work attire. And, you know, go ahead and you know, bring your kids with you, I built my business with my two kids in the back of my truck. My dogs are usually actually back here, right? Yeah. And so, it’s just, it’s a small operation and there’s tons of ways to make money on it. And so that’s basically where we are. I think I kind of got you caught up with how things started for me. And yeah.

Martin: yeah, it sounded like you really had to embrace social media in the beginning too as well. Right? You’re sharing other people list, other people’s listings that weren’t even yours. Right? And you were just kind of sharing it to kind of spread the love.

Nathan: Right, exactly. Social media is everything right now. I mean, everybody has a Facebook account, you know, for the most part I should say, or some type of profile online you know, when you’re applying, you’re usually applying online now you’re not really going to the door, I mean, there’s a, we’re in a different age. It’s not really door knocking anymore. It’s all social media for the most part. And you know, you have LinkedIn, LinkedIn is a great one you know, it’s kind of like a resume on like a resume type form Facebook, yes, I don’t know. And then you have Facebook which you, LinkedIn you prove anybody because you just want your network to be larger. Facebook is a little bit more intimate. You have pictures of your kids on there, you have pictures up your home, you have you know your dog and you know, cute puppies and you know, things like that, right? Like those are, that’s Facebook, so it’s a little bit more close. So, you have this closeness with Facebook, which I felt was good. So, I think you know how you work your social media and build your brand and build your image is everything I mean, me I’m scruffy, you know I wear my hats. I mean, I wear my, I used to wear flip flops a lot and I wear boots on the land thing but that’s kind of my thing, you know, and people either like it or they don’t like there’s millions of property managers out there. You know, there’s millions of people who can do social media stuff, it’s about that relationship. It’s about you know, pulling good work, having good work ethic and having a passion for it and it just, it comes off into your business.

Martin: Well, I had a question for you, how about property management in like screening residents and using digital like their digital media like say they have a Facebook profile like is that all legit to do like if they have any new residents? Are you allowed to like check their Facebook? If it’s public, LinkedIn? How does some of that work?

Nathan: So, you know, you are going to when you’re screening, and so this is California. So, California, we can only discriminate based on income in credit. You know, so that’s the biggest thing. And you can see a story based on the incoming credit, you don’t even really want to get a photo ID, unless you’re doing a tour or something like that. But that’s not part of the application process. Because that could be perceived, as you know, maybe they might have a certain color of skin or a national origin or something like that.

Martin: That’s in violation.

Nathan: Fair Housing violation. So, you have to be very careful. So a lot of people try to self-manage, and you know, you kind of go off your gut, and it seems harmless, let’s say as an example, like, oh, I don’t want kids there, you know, because it’s not because they don’t like kids, or are discriminate, or intentionally discriminating against them, but they just feel like they’re stairs, and they don’t want them to trip and fall. Well, that’s a huge violation in California. And so, you have to be very careful. So, it’s very important to, you know, have the right team on there and, you know, keep things fair and consistent across the board. And then you’re fine.

Martin: So really, your housing consultant, right.

Nathan: Yeah, I mean, yeah, you have to be very, very careful with all those things.

Ronn: No. And in many regards, that’s exactly why somebody should hire a Nathan, especially like more of the smaller companies, because they may not be abreast to the latest laws, or just things that they could be in violation of. And that’s where a professional property manager could really come in handy to, yeah, maybe it isn’t initial costs on the monthly for the management fee, but it can save you a lot in legal fees.

Nathan: Absolutely the reputation.

Martin: 100%.

Nathan: And building that reputation. I mean, that’s just what you guys do. You know, I mean, you guys know what you can and can’t post because you’re in the industry, you guys specialize in the apartment industry. And again, look, there’s millions of social media guys out there that can do this stuff. But you guys specialize in the apartment. So, you know, you know, to have a diverse array of types of photos to track that, you know, that credit and income type resident, right?

Martin: We like to say we speak multifamily.

Nathan: Yeah, you do. I think we are now Right.

Martin: So, there’s definitely a lot of chatter out there about a recession looming and opinion real estate crash? How possible do you think this is in our near future?

Nathan: You know, so I don’t want to claim myself as an expert in sales, I will say in property management, I have noticed that rents have gone up significantly, I’ve noticed that, you know, there’s more and more of my clients looking to purchase properties. Things are much higher right now. And they’ve been climbing. I’ve been kind of noticing it softening a little bit, things aren’t renting over a weekend anymore, or within hours, which was happening in the past couple years. And now, interest rates are starting to go up on, you know, the word on the street, supposed to go up again, I think August one. I’m hearing interest rates, you know, before June, it was like 2.95 to three point something. Now they’re getting closer to the 5, 4.5. And I’m hearing another point is going up. So naturally, what’s going to happen is, it’s going to make the buying, it’s going to cost more to borrow that money, which is potentially going to drive down those prices is the theory anyway. But who knows, you know, I mean, I wish I was the expert in that or could read the future. But that’s kind of the word on the street. I think the market is going to start softening as or at least level out anyway. And geez, if COVID didn’t take out the market, I don’t know what can and so who knows?

Ronn: Yeah, I think that those are, yeah, definitely, the rates are going above 5% already. And I think that those because did you find that you had a lot of people either competing against your own bids, or your clients’ bids paying cash? Because I think those buyers will still be out there and keeping the activity going. Right?

Nathan: Absolutely. So, I mean, you have a lot of foreign money that comes in and wants to place their money and they’re just waiting, you know, like the last recession. You know, they’re waiting to come in and, you know, somebody’s really starting to hurt, let’s say somebody’s got a creative arm type loan. And you know that 10 years is coming up. Well, you know, they were used to paying that 2% or 3% and now we’re what it could potentially jump to five have six, maybe seven. Can they afford that now? Are their rents where they need to be? are they managing the property properly? So those are all big concerns. So once somebody slips, you know, there’s going to be somebody there to pick up their fall, that’s for sure.

Ronn: Oh, yeah. I hate to admit it, but I’m kind of waiting for that right now. I sold one of my properties, and just sitting, things are getting attractive, but they’re not where I want them to be.

Nathan: Right? Yeah. And here’s the thing, I think you can buy it anytime, there’s really no bad time to buy real estate, there really isn’t, you just have to just revolt. So, if you’re buying high right now, and that’s fine. Like, for me, I’m looking actively for properties, I think Martin is and it sounds like you are as well Ron. You know, just if you don’t sell, you’re not taking a loss, the real estate market, we all know it goes up and down. I mean, if you don’t plan on ever selling it, and just building your portfolio, by anytime, you know, just know that you’re probably buying it maybe a little bit higher time, and everything is going to adjust accordingly. And 10 years or so, it’s probably going to come right back up. And then some, you know, we always kick ourselves like, oh, geez, I wish I would have bought that one, that was $100,000. You know, and now it’s what? 1.2 for that same property? It’s crazy. Yeah. I mean, we all kick ourselves work.

Ronn: Yeah. And or when you sell, like, I’ve looked at old properties that I’ve sold, and I’m like, dang it, we could have had an extra, yeah, X amount of dollars in the bank. But you know, but then you look at what you’re able to do with that once you do liquefy a little bit. And it’s always taking me to a whole another level personally, and so I always recommend buying and selling. So, with that being said, like, I don’t have a real estate license, do you think that it’s necessary to have a real estate license to buy properties these days?

Nathan: I mean, to purchase properties, no, you know, link up with a good real estate agent, and or broker, some form of brokerage. And, you know, if you have an expert on your site, then then you’re good. You can focus on what it is, what your lifelong goals are, you know. So that’s, I don’t think it’s necessary. No.

Martin: Yeah, I mean, the biggest perk for you Nathan, being a real estate agent broker is that you don’t have to pay the fee. Right? You know, the fees of the cost of real estate, but I mean, the I know, my mom’s a realtor, and she went through all that. And so, you got to keep up on all your licenses, all your fees, all the different things that come with that, right. So, if you’re just an investor, then it makes sense to just be the investor versus the real estate or the broker, you know.

Nathan: That’s right.

Martin: So, when it comes down to it, you know, the different types of real estate you know, you have single family multifamily, industrial, what are some that are the most attractive to you, or maybe for new investors, maybe just hitting the scene?

Nathan: Again, I think it really depends on what your brand is. If you’re, see, I like the boutique stuff, I like the unique properties. I like those things. And that could be across the board, that could be a unique piece of land. And that could be a unique duplex, it could be a single-family home, a condo, you know, I think every property has their own uniqueness. It could be a cookie cutter row, and one might have a lake view and the other one, you know, staring at a wall. So, every, I think every unit is unique. And you can adjust market rates based on what’s more desirable for each one. Yeah, a lot of people like the commercial wrap, the industrial stuff because it’s kind of more business oriented, you’re able to do a triple net lease on those and charge everything back, taxes, insurance, and you know, commentary, maintenance, things like that. So, all the so-called cam, so you can charge all those things back. I kind of like the craziness of multifamily. with the tenants and just having lots of drama and knowing all the ins and outs and stuff like that, you know, I mean, jeez, I could write a book in a week sometimes when I just take over a new property, you know, especially like those 20-unit ones with those, may or may not have onsite managers. It’s like all the stuff that’s going down. It’s juicy stuff. It’s great. Yeah.

Ronn: I’ve always said we need a reality TV program.

Nathan: Oh my god, we would probably break every fair housing law possible.

Ronn: Yeah, I know. We need some good editors right to stay like legit.

Nathan: Oh my god. I mean, every face to be blurry all the addresses like, yeah.

Ronn: Yeah. Well, for our audience, I really want to brag a little bit about you. Not only obviously, are you a property management, own a property management company. Real Estate Broker, you’re a superior Dad. You’re a dog dad, maybe partner, what else. You’re a road warrior, entrepreneur at heart. But you also were obviously recognized from some of our industry organizations such as the Apartment Association of Orange County, you’re an executive board member there, and from the SoCal Rental Housing Association. And this has been for years. So how did that come to be and how do you find the time?

Nathan: You know, it kind of fell in my lap. I never really wanted to get that in depth into it. But so, Frankie with buffalo maintenance, he actually, he’s done a few projects for me. And he’s always been bugging me, you know, you should join the Apartment Association. I’m like, well, you know.

Ronn: I love Frankie.

Nathan: He’s the best. Yeah. But, you know, I really didn’t have much interest. But I think Ron, you and I were doing these quarterly parties remember. And that’s kind of when we were starting. And these quarterly parties were getting larger and larger. And we would pick these, you know, very glamorous locations along the coast. And people would show up, and I remember, I would have to, I mean, this is when I’m first starting again, I’m like, surviving off, I got 150 bucks, and I would get my credit card. And just hoped that I’d find sponsors within the crowd. And Ronn was the man would easily pick up. But, you know, we’d get other guys in there too. And so, it always worked out. But it was always nerve racking. But what sold me on AAOC anyway, the Apartment Association Orange County is they said, well, we really need to up our ice cream socials, you know, or, you know, our little meetings in our library or whatever it was. I mean, it was, I’m sure it was fine. But I mean, kind of what we were doing was very different, right? So, they said, well, don’t put their credit card down. And then we can find sponsors for you and do all these things. I was like, oh, well, that sounds great.

So, I was able to kind of create the products and service committee, which is for basically, on the on the vendor side, any vendors that come in through the Apartment Association, they’re part of the AAOC. And that’s it. Well, thank you. Yeah. So, we’ve been, you know, now we’re doing like, cruises. And we’re doing, you know, all kinds of stuff. You know, we just had an Angels game, and you know, all sold out tickets and stuff like that, it’s been really fun. So, but, but yeah, so that’s really developed into that. And then it kind of worked my way up. I became a chairman of the AAOC committee, after Frankie kind of stepped aside. And so, I stepped up. And then they asked me to if I had any interest on becoming on the board. So, I said, sure. Yeah, I could probably do that. So, you had to get sworn in. And everybody voted me, and it was kind of nerve wracking. I mean, we got some big time. Big time guys on there. It was super nerve wracking. So. But anyways, I got on there. And we, you know, we meet every month and kind of talked about what we want to do with the industry. Specifically, in Orange County, there’s legislative slots side of things, and, you know, a bunch of different committees.

So, I kind of have my hands on a little bit of everything. I’m more of a fly on the wall, just to kind of, you know, and be in the know, of what’s happening in Orange County in a way just, that’s where I’m based. So, it works out. And then we needed a representative for the California Housing Association. And yeah, Steve Berger, you know, our main attorney for a AAOC anyway, and does great for evictions, if you ever need them, look him up. But he asked me to step in and do that. So, I started going in with sitting as a chairman for calorie J as well. We’re part of the National Apartment Association. So, we need to have a state representative association. So that’s how I got into the association side.

Martin: So, what do you think are some benefits for new people getting into the multifamily industry and being a part of their local Apartment Association? What are some benefits that they might be able to get out of it?

Nathan: So, for me, it’s the networking 100%, you know, it’s kind of nice to have on my resume that I’m, you know, on these committees, and I’m active and, you know, you have a lot of people coming together, the networking aspect is huge. If you’re working, a lot of people just like to throw money at it, you know, they get your one-page ad, you know, banner ads, things like that, that works to just to kind of have that exposure. Sure. But, you know, really working out and showing up to these, you know, we have a lot of free events as well. The forms, the legal support, the contacts that you have, it’s really, I think it’s important for anybody to be a part of any association in your local region, whether it’s this on this stateside or the National Apartment Association or you know really depends on where you guys doing business. Now you guys are with NAA and, you know, I know you guys get a booth there. How was San Diego you guys have a good time?

Martin: Oh yeah, it was awesome. Yeah, we had Ruben there as well, Ron’s brother DJing. So, we brought right everyone was coming from across, all the way across the land, all the way across from the conference, all the way over there. They’re trying to find, we’re the only place pumping music and yeah.

Nathan: I think I heard it from Tennessee.

Ronn: Always a good time with. Yeah, with Reubens there. Yeah.

Martin: Yeah, we’ll probably do an episode on AIM actually. We’ll probably talk about having, maybe having Ruben on talk about our experience. NAA.

Ronn: Yeah, we should we totally should. Yeah. No, I think that’s great advice, Nathan for the Apartment Association. The other thing that I’m going to add to is tell me if I’m wrong, but it’s also on the legislative side, you brought that up earlier, but I know that, you know, obviously for me, you know, we invest a lot of multifamily properties, also single-family properties. And when it comes to legislation, I think that it’s good to be part of a greater, bigger voice. And that’s what the association’s really do. I mean, you as an individual owner, or one person as an individual owner has, you know, power, but collectively, I think we can make a lot of good and progressive changes, you know, for our industry and residents alike, obviously.

Nathan: Absolutely.

Ronn: Yeah. So, knowing that, okay, I guarantee you running a property management company cannot be easy. You mentioned some of the woes already about some things. And I’m sure you can’t disclose all of this stuff. But what is it the daily challenges you face? And how do you overcome them? I think our audience could appreciate that.

Nathan: You know, it’s refreshing to get like a phone call once in a while when somebody’s just saying hello, you know, because that’s very rare in property management. Nobody wants to call the manager ownership. And they call you because there’s a flood going on, or there’s a fire, or there’s a naked woman running around with a laundry basket because they rented a room to Craigslist ads. So, it just, it’s crazy. There’re all kinds of stuff that goes on. I mean, you’re dealing with people’s lives, you’re not selling them a car and say in four or five years, you know, you’re talking to them every month, you’re making sure rents on time, you’re making sure that they have a nice, safe clean home, right. and surrounding areas. And you know, you get the barking dogs. Yeah, I just, there’s always something so, but I thrive in crazy. I don’t know what else to say.

Ronn: I think you have to, when you’re in on the side.

Nathan: That’s right.

Ronn: Multitasker.

Martin: You have one property management, horror story that you can mention anonymously.

Nathan: Well, so I kind of wrote the naked lady running around with a few baskets, I’ll get into a little bit more detail but that one, I won’t disclose the address, her name but yeah, so we, it was mid-day, this was a mid-day, this was probably last year. And there was a tenant in there. single guy, I mean, it was a two bedroom, two bath and he would basically find a roommate you know, and he was going through a lot of roommates I just thought maybe it was just an issue with his personality or whatever it was but now they would fill out applications through me once he found them on Craigslist and then they would stay there for about six months or so and then you’d request and everybody would sign off on the lease and stuff like that just roommate removal forms well then it just, it was quiet for a while and then I start getting these phone calls from some of the neighbors like there was women coming in and out of this apartment. And I didn’t really think anything of it maybe the guys dating, you know finally good job guy you know that’s what I’m thinking in the back of my mind. And it turns out that, then I get another call and it’s a heavyset woman walking naked with a laundry basket going down and doing the laundry in the laundry room, this is a common area laundry room, not a private and just walking through the hall down the stairs, you know and to the laundry room doing laundry and of course my phone is blowing up right and there’s a 16 unit building and everybody’s calling me, they’re like there’s this naked woman walking outside, I like call the guy I’m like hey Mr. tenant, Just so you know, there’s somebody nude leaving your apartment and doing laundry, I just wanted to touch base, let you know that that’s not okay. And you know if you can maybe get a towel or something and you wrap it up. I’m not on site, right? So, I’m trying to call this stuff in. And so, it turns out that she was responding to a Craigslist ad. He was looking for a female roommate. And for free rent in exchange of cooking, you know, and you know, doing laundry and all the cleaning and stuff like that basically hired wife, but stuff like that. It’s like, oh my gosh, like, I don’t even know how to respond to that just as a human being. So, he just bought the lease, and you go to it. Yeah, you’re causing a nuisance. You know that type of stuff. I mean, I guess I could probably kick somebody out for farting too loud or causing a nuisance, but yeah, it’s just, that’s one story of many. That could be a whole another podcast.

Ronn: You forgot to put their career apparel requirement?

Nathan: The obvious.

Ronn: That’s awesome. So not that we’ve shared enough horror stories. But if there was somebody wanting to break into the role of property management, what would be your number one advice.

Nathan: You need to have thick skin. You’re gonna have some, you’re gonna have some really good days, and you’re gonna have some really bad days. And you know, for I think I can say for any, even if they’re the worst tenant possible. evictions are not fun. I think just being fair and consistent and coming up with something that you really have to enjoy dealing with people because it’s a people business. It sounds like it’s a real estate business. But it property management’s not numbers. It’s for the most part, that’s probably a very small percentage of it is the numbers. It’s dealing with people. And you really have to be a people person to survive it long enough.

Ronn: Yeah, I think that’s great advice. I used to say, when I was on site that we manage people’s lives, not just apartments or building.

Nathan: Yep, absolutely. Right.

Martin: So, we’re going to be getting into the, probably one of my favorite topics to discuss and what we’ll be talking with Nathan about, and that is land investing and land hacking. So, Nathan, how did you get into land investing and tell us about your first project in Twentynine Palms California?

Nathan: Right. Well, Martin, and I actually got into the land business because of you, my friend. So, COVID hit, and, you know, government said, you don’t have to pay rent anymore. So, I got nervous. I’m a fee manager. If rents don’t come in, I don’t make any money. So, I was trying to figure out where everybody was going, I happen to be into off roading, and I’ve got a couple of trucks that are pretty built out and can take on anything. And I was noticing when I was ordering supplies that they were taking much longer, you know, to get, you know, not only because all the shipping attendants were behind, but because everybody was hooking up their truck and going off roading and getting dispersed and going out. Right and camping and things like that. So, the whole outdoor world was opening up even though you’re supposed to be locked down. Well, they were really locking down in big cities, right so everybody wanted to get out rural and I think that’s why everything kind of exploded to be honest, because now you don’t necessarily have to live in the same city that you’re working anymore. You know, you can drive two or three hours out and sit in traffic especially in southern California, but you can get a much more space outside but getting back into the land aspect of things. I found that there’s these campgrounds were closed, that was another thing, right, like all the major campgrounds were closed.

So, I was kind of reaching out, just kind of posting and putting feelers out there. I enjoy camping, I enjoy. I can sleep on a rock. I happen to have an RV because I have kids and you know, basically a portable bathroom. So, whenever there’s like a little piece stopped when we could just pull over and they can use the bath. But I enjoyed road tripping. I drove all the way out here to Tennessee. And you know, we went out to West Virginia, all these things. And that’s something I’ve always enjoyed. So, when I kind of put that out into the social media world again, social media helps. Martin shared some interest and mentioned that he owns some raw land as well. I said well, that’s great. Yeah, and he invited me to this place up there and I was like, oh my god this is amazing. I mean, there’s no cell service there’s no toilets, there’s no electricity. I mean, there’s no water and nothing I mean, it’s just completely empty. And it’s like, that’s happened for me. I mean, for my phone not to work for like an hour is awesome because my phone’s always off the hook about crazy nudists running around the neighborhood. Right?

So, it was kind of nice and refreshing. And I think people need that, you know, and I think COVID, If there was anything good out of it, it really got people back to the basics, you know, like, what do you really need in life? You know, I mean, there’s a lot of people getting sick, and it’s scary, and, but just getting outside and, you know, refreshing and it really kind of slowed everything down, you know, you don’t really need to be in that act of crazy city life. You could, there’s still life out there, you know, in the wilderness and stuff so.

So, Martin, I kind of came up with an agreement and we started using this app called HipCamp. And HipCamp is very similar to Airbnb, but it’s for campers. And you can put parameters in there when you’re searching on HipCamp. You know, you just, I have my own tent. I could drive there. Do I need four-wheel drive to get to the property? Can I get a 40-foot RV there? You know, is a glamping material for Ron? Is there full hookups, is their sewage and things like that? Right? So, we actually just kind of cleared out like a little 10 by 10 area, we found a few rocks and made like a little firepit and there’s campsite one, we put a stick in there and spray painted it and did, yeah, we call the camping locality. And we did a little deal on it. And you know, we started getting campers in there. And that’s a way to monetize vacant land, you know, and I remember Martin saying, as long as I could just make enough to cover my taxes and you know, taxes on land are not anything like houses, it’s a couple 100 bucks. I think we made that and then some.

Martin: Yeah, I think initially it was like a test run to see if like, okay, can we rent out this raw piece of land. And it’s just yeah, pretty much raw, I have a dry cabin shell 10 by 12. Bear shell is just like a shed to cabin type thing. And it was just raw, like a hunter Trapper cabin. And you know, some people want that kind of rustic wilderness type experience. And you know, some need the more established, you know, campgrounds and you know, that’s a place where I’d like to be someday. But for now, it was really just land banking, just invest in land, and I was able to get it on our finance too. So put 50% down, that was probably something that’s good to mention when buying land, which we’ll probably touch on that. But that’s how I was able to buy it with owner financing and put down half and then make payments and actually just paid it off. Literally in the last three months or so is recorded. All done. So, I own it free. I’m pretty stoked about that.

Nathan: Oh, yeah. Well, congratulations.

Ronn: For any new land investors obviously out there. Because there are definitely still some good land parcels out with no experience. What do you really need to consider before buying a piece of raw land?

Nathan: I think it depends on what your quote use would be. So, if you want that camp site, if you want to build something on it, if you know, it really depends on what your desire is, you know, there’s land everywhere. I mean, I’ve driven basically across the US, I’m always looking at what I feel is cool. Do you want green? Do you want desert? Do you want waterfront like creeks going through it. And if you want all those things, that’s great, but then you have to look at the zoning, you have to look at any legal roads, legal access to the property. I mean, there’s some people that just you know, buy a piece of property and it might be completely off of a road like four or five parcels in which they call it landlocked. And you know, they can, you can get to it, I can walk to that property, I could drive through that property. But legally, I’m trespassing through those 5 to 10 lots in between, usually, those ones are gonna be very cheap, because you’re landlocked, right? And you don’t really have legal access to it.

Now what you’re supposed to do in that situation, let’s say you inherit that piece of property, and you probably want to hold on to it because you remember going camping as a kid with grandma or grandpa or whatever. You would contact all of those owners in between and get a legal easement. Usually, they might want some money in exchange for that, but now you have a legal easement to it. But then let’s say you want to build something on it. So now you have your legal access to the property. So, it’s nice to find something that’s on a legal road already if you don’t want to go through those steps. If you’re out there looking, where’s your nearest electric, how are you gonna get power there. So, you want to see appeared near telephone poles in California, San Bernardino County anyway, it’s about $10,000 per pole. And per poll is usually about 50 to 60 yards away. So how much do you want to invest in that? Or you can go off grid if zoning allows.

Let’s say you want to park a trailer there. Well, some zoning won’t allow you to park a trailer there. Like if you’re in a neighborhood, let’s say you’re in Newport Coast, and you see a vacant lot, probably not gonna see a RV pulled up and camping out with campfires and your dog is running probably won’t happen, but out in San Diego County, possibly, you know, depending on the location of it. So just look at the zoning, I probably, you know, look at your listings, if you’re not licensed or not too sure about it. And contact that listing agent that’s on there, usually it’s nice to, that’s why listing agents like to get the listings, you know, they may or may not even show it, they’ll probably just put a lockbox or tell you to drive out there. But to have that listing, they’re usually going to be that local expert, because they’re calling all the local owners, they know that area, call that listing agent, they might, they should know what the zoning is, and at least give you the tools to see how to call the county or the city to see what you’re allowed to do. And when you call the county in the city, you’ll never get the same answer in my experience, everybody’s gonna tell you something differently.

And it’s hard to exactly say, you know, let’s say I want to build a tiny house, well, they don’t like to call them tiny houses in certain areas, they’ll call them an RV, because tiny houses really aren’t RV, but in their codebooks, tiny houses in the codes it’s RV is allowable. So, something that allows an RV may allow the tiny home or, you know, they might want a fixed structure and it might be 160 square feet minimum, let’s say. And then your bathroom needs to be a certain way. Well, now you can build a tiny house on a foundation that’s 160 square feet, but they don’t call them tiny homes, they just call it 160 square foot structure with bathrooms or whatever. But now you have to worry about your septic, you have to worry about your water supply. California does not allow those large water tanks anymore. Through grandfathered in, you can do that. But they’re not issuing any new permits for them anyway. So those are all the little things that you need to look at. So, if you’re buying a piece of property has a septic on there, it has a water tank, just check to see if it’s permitted. And you can call the county and get the records of anything permanent. Because that’s gonna be important. That’s what’s going to increase the value is when you have the infrastructure, they’re ready to build. And again, it’d be you might just want it to be raw land, and you don’t really care because you don’t want to ever touch it, you just want to visit it and see the beauty and that’s fine too. Just know that going into it.

Martin: Nice. Okay, so how did you buy your first piece of land? Was it a cash deal? Or did you do owner finance, I mean, it can be kind of hard to finance that. I mean, doing it with the bank is not really possible these days, from what I understand.

Nathan: I mean, it’s possible, but it’s usually going to be in that established neighborhood that already has the infrastructure there. And the banks basically, you know, want that construction loan and then that refinance on top of it. And you can buy something with 20% down on something like that. So let’s find, let’s say use an example you find a lot for 100,000, right, I’m just throwing out a number, you put your $20,000 down, and then you’re going to build 1500 square foot home, it’s gonna cost you maybe four or 500,000 to build that perfect home that you’re looking for, the cost to build, then you’ve got your $100,000 land, so your 600,000 into it, potentially, it’s probably going to be worth 800,000 You’ve got your 80% equity, and then now you can roll over into that, now you have your home. So that’s one benefit of having that land, you’re gonna build that equity literally, when you’re building it, and things like that. But you know, for guys like you and me that just want to go camping, you know, kick rocks, and, you know, whatever it is that we do. Yeah, play in the dirt.

Yeah. Yeah, owner financing is a great option. And there’s tons of online. Places that do it, land deals, I think is one of the big ones. You know, I personally look on Redfin, in California anyway, I like Redfin. I mean, obviously the MLS is good too. But if you’re just kind of if you’re not licensed or have access to that, Redfin is a great one. Zillow is good. is good. But whatever your favorite one is, so then you see it, and then you call the agent, and you say, hey, you know, I really liked this property usually land that will that lately, but usually land sits there for about a year before it sells, might be 15,000 for an acre, let’s say or whatever. And this is out in the desert, let’s say, I’m just using Twentynine Palms as an example. So, I found mine, it was listed at 15,000. I was sitting on the market for a little bit, called the agent and said, hey, and I noticed and sitting on it market for a little bit, I’m willing to pay that 15,000 versus coming down to 10,000 cash or something and throwing in a lowball offer. But do you think your client would be interested in doing owner financing, maybe I could put 3500 down, and then, you know, pay him 10% interest on that, over the next three years, I think you’d be open to that, back and forth a little bit and worked out a deal. And now I’m the new owner. So, in my situation, I’ve put 3500 down, and I paid about 350 a month, roughly over three years, and you know, the owner makes a little bit of money, it’s a tax benefit for them, they don’t get hit with all those taxes all up front, you know, just kind of spread out a little bit more on the interest and, you know, works out.

Martin: As a great way to get them and maybe they want more cash flow than like an upfront sum of money. Another podcast I follow is called the land geeks; I think probably like you can Google the land geeks or land But they’re all about land investing. And they actually buy up plots of land, it’ll buy him cash to like, send out mailers to people, other landowners and try to like pretty much lowball, get the offer. And you know, they just want to get rid of the land kind of thing. And then they sell it to somebody, and they do a good owner finance deal. So, they’ll buy the raw land, probably in lots and then just kind of lease amount and they get this nice steady cash flow. And good thing for them is that they don’t pay, the person who’s buying the land doesn’t pay the monthly fee, then they keep the bid no matter what. So, they it’s really, they can’t lose on that kind.

Nathan: Yeah. And that’s the flip side of, you know, kind of how we went in buying, you know, there’s a big business on the land side. I mean, there’s, you have the tax auctions that go on every county on an annual basis, people that forgot to pay their taxes after two years. And sometimes you forget, sometimes you inherit a property, you don’t even know that you did. You know, because it wasn’t in the will properly. But now, let’s say we have this property, and it goes up to the tax auction. You go there, you know, a lot of people, just the county, all they want is that that $200 in tax that was passed. So, starting bid is $200. Sorry. Yes, starting bids at $200. Let’s say you pick it up for 500 bucks, well, now you got a $500 property, eight in cash. And then you go off and sell it for 2500 you listed for let’s say, it’s a good deal on the market, you know, and it’s a good deal for you, because you’re making some profit there. And then you own your finances. So what you say is that $500 down, that’s what you paid for it. And you pay me, you know, 200 bucks, 100 bucks, 50 bucks for the next five years at some interest. And you do that over and over. And I mean, that’s a decent way to make money. And you don’t need to worry about tenants, because new people are owning it. And I mean, what are they going to do? Mess up your rock? Definitely so.

Ronn: What are options for monetizing your raw land? I know that I’ve been part of a investment group and there was an opportunity prior to the pandemic kind of glad I didn’t pull the trigger then but looking into it now again, about buying it, buying raw land and using it for either solar production or even the option where solar and or medical marijuana production.

Nathan: Cultivation, yes.

Ronn: Cultivation that is, Yeah, and you’re just the land or you just own the land, and then they run everything else and pay your rent. So, what are some options, uh, you know, for monetizing outside of the camping stuff you’re talking about?

Nathan: You know, I have not been in that side of land. I’ve been doing it for about two years now. And it’s mainly just been the camping stuff. But I know that the marijuana grows, and cultivation has been huge in the legal states anyway. And I believe you still need to get your proper permitting and things like that, I’m sure. And that’s probably a little bit harder to come by now. I know San Bernardino, there’s a lot of illegal growers that are growing underground. So, when they fly the drones over, you can’t really see anything, there’s just a stack. You know, for me, I just, I try to stay away from that. I know it’s legal, but there’s still an underground market that’s going on. And, you know, I personally would be a little nervous leasing to somebody that’s not legit. So, make sure if you are leasing it that way, make sure you have the proper paperwork, everything’s legal. And you could put that in your lease agreement, obviously, and, you know, if they’re, you know, getting outside the law, but even if you get with somebody that’s illegal grown, it could just be a normal person doing it, but we don’t know if it’s, you know, the Mexican Mafia coming up and, you know, how has all this money and doing that, and it’s like, you know, if you try to evict them, what are they going to do in return? So just, you know, just be very careful. That’s my biggest concern. Yeah, we got kids and stuff. I’m just, I don’t want to get into it just because that’s not my specialty, but I don’t knock it for anybody doing it.

Martin: That’s definitely a lot of yeah, a lot of red tape, a lot of money and permits and fees. I mean, I watch a lot of documentaries on the cannabis industry and they’re just like, being just bombarded with all these different fees, by the time they even get in the business, they’re not really profitable, so you have to be a pretty big boy to kind of compete.

Nathan: The legal, the guys that are doing it right or not making money, that’s for sure. It’s that gray area. It’s that gray area. That’s killing it right now. And unfortunately, it’s ruining it for the big guys that are doing it right, because it is so strict. I mean, sure they legalized it.

Martin: Now, but overall, when it comes to land investing, I think whenever you are buying a piece of land, it’s important to remember that you’re going to be, you’re becoming part of a community, right. So really get to know your local realtor, local broker, get in touch, you know, when you go check out land, any kind of real estate, obviously, you need to drive around the property, drive around the area, get an idea of how it is, you know, how people are living over there? Is there a lot of trash, is it clean? And you really, Google Maps is what I use primarily to buy land if I can’t really go there. And obviously, it’s important to actually go there to but Google Maps and Google Earth is a pretty big resource that I’m commonly using, obviously, your land zoning, whether it’s zoned for agriculture, residential, it’s really important to know what you can do with your land and you can usually look up, you know, like, for me, it’s look up Kern County, the different land zoning, and then they’ll tell you exactly what those lands lots can be used for. I believe in the power of land banking. So even though I’m buying a piece of raw land, it doesn’t cash flow right away. You can still earn equity; you buy the land now just like real estate usually appreciates over time. And plus, you have tons of cash flow opportunities, whether it’s Airbnb and HipCamp. Airbnb offers a hip camp style part of the listing. So, you could actually you know, host campers on Airbnb to whether you want to start a ranch, you know, raising goats, sheep, an orchard or garden, even my dad, he has a piece of land in Missouri, he’s actually getting into beekeeping.

And so, monetizing his piece of land by doing that rural storage facility, and then even water supply, you know, either usually got to dig a well, or buy a property that already has a well or shared access to a well, that’s gonna save you about 30 grand plus. And if you’re more rural, it’s going to cost you more anyways. And then if you’re in an area where you get good rainwater, rainwater catchment systems with a metal roof, or any kind of system like that, it’s going to be pretty invaluable. Other than that, you’re just having to haul the water, and even with gas and everything that can get pretty, pretty expensive. So those are just some quick tips that I had. So, Nathan, do you have any more plans to acquire any more land? And if so, what parts of the country are you most excited to invest in?

Nathan: You know, I am, and I’m always looking for deals anyway. For me, it’s having the access to. So, I have family out here in Kentucky and Tennessee. So, it’s kind of usually my annual destination anyway. So, for me taking the 40 from California, anything along there would be great. So instead of spending that, you know, it’s called 100 bucks for under 50 bucks at a hip camp in somebody else’s backyard. Maybe I can do that. And then I can share that same route with other people and have a destination to go to. And that’s what I would like to do with the land side of things. And then, you know, on the way, maybe I might pick up some properties, and I happen to know property management and kind of go from there as well. So, I don’t know, I’m always thinking wheels are turned in. And as part of being an entrepreneur, I guess, I just do what I love.

Ronn: That’s it, that’s where it doesn’t feel like work, right?

Nathan: It doesn’t, it really doesn’t.

Ronn:  It’s awesome. Yeah. Speaking of RV and all the above, you mentioned earlier that, are you allowed to park on your land or is it very rare that you can?

Nathan: So, in Twentynine Palms, so I’m not within the city limits, if I was within the city limits, I would need to have a primary structure there in order to be allowable. Yeah, so I’m on the county side and I am allowed to camp there legally. I want to say two weekends out of the month. So, I can’t do that. I may or may not have kept it there a little bit longer. I may or may not have purchased a large water tank, I may or may not have dug my own septic, I may or may not have done a bunch of irrigation and put trees and put in a structure. Nothing has been permitted, may or may not have been permanent. But I’m so off grid that you know, be it would be a hand slap basically. If something were to come to it or if it’s usually a neighbor that would complain again, driving around meeting your neighbors is always important you know everybody kind of looks out for each other where my locality ranches anyway, and I go there just for recreation. I initially wanted to do that Airbnb and HipCamp thing there. After putting so much work, you know, blood sweat and tears into it myself. I really don’t want anybody there. It’s my little getaway out in the desert.

Martin: Yeah, that’s pretty much where I’m at too.

Nathan: Yeah. Yeah.

Ronn: That’s awesome.

Martin: I probably have to wrap it up on my end over here because the dogs are freak out or something. I’ll just say our final goodbyes. We actually had a very long podcast, so yeah, it’s gonna be a good one. So, thank you, Nathan, again for joining.

Nathan: Thanks for having me, guys. Appreciate it.

Ronn: Nathan. You’re a rockstar, I’m so proud of you.

Nathan: I love you guys. Thank you. I’m proud of you guys too, you guys are killing it.

Martin: Well, I hope you guys all have a great rest of your day, and we’ll talk soon. I’ll keep you posted on when we put the podcast up. Thanks, guys. Bye guys.

Nathan: All right. Bye.