Latest / Glovisor Podcast / Land Banking Explained: How Investors Profit From the Path of Growth [Ep 98]

Transcript

Land Banking Explained: How Investors Profit From the Path of Growth [Ep 98] · Glovisor Podcast

• 0:00
  Speaker 1: I'm looking at making over 100% return every single year.
• 0:08
  Speaker 2: Welcome to the Glowvisor podcast, where we explore business growth, communication,
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  Speaker 2: and personal development through real conversations with people who make
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  Speaker 2: an impact. Our guest educates investors and real estate professionals
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  Speaker 2: on land banking, investment opportunities, and the economic factors that
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  Speaker 2: influence land values. Glowvisor welcomes Marcela Silva.
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  Speaker 3: Hello, everyone.
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  Speaker 1: Thank you for having me.
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  Speaker 2: It's a pleasure. So, Marcela, let's start it off. Tell
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  Speaker 2: us what you do and who do you serve.
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  Speaker 3: Absolutely. Thank you.
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  Speaker 1: And yeah, so land banking, that's not a term that
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  Speaker 1: most people have heard about, and it brings up all
• 0:44
  Speaker 1: different sorts of ideas. So let's focus in on what
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  Speaker 1: exactly that is. Land banking, by definition, is the practice
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  Speaker 1: of buying affordable, pre-developed land located in the path of growth.
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  Speaker 1: So what does that mean? As an example, Joe, if
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  Speaker 1: you imagine where you grew up, it's highly likely, unless
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  Speaker 1: it was literally the middle of nowhere, that there's been
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  Speaker 1: a lot of growth and development that's happened in that
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  Speaker 1: area over the years since you were a kid, right?
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  Speaker 1: Where once was a bunch of land, now is covered
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  Speaker 1: in development. Most people have witnessed land banking in their lifetime.
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  Speaker 1: They just didn't know there was an actual term for it.
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  Speaker 1: or even more so how to invest in it. So
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  Speaker 1: getting ahead of development in high growth areas where development
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  Speaker 1: is going to happen, acquiring that land at affordable prices,
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  Speaker 1: and little secret for you guys, they're not making any
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  Speaker 1: more of it. So over time, the value of it
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  Speaker 1: just continues to rise. That is the basic concept of
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  Speaker 1: what land banking is.
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  Speaker 2: This is extremely interesting, but can you share with us,
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  Speaker 2: how did you get into this?
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  Speaker 3: Sure.
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  Speaker 1: So I actually used to be a software engineer working
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  Speaker 1: for the government laboratory in the nearby area.
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  Speaker 3: I live in the San Francisco Bay Area.
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  Speaker 1: And I was actually recruited out of college to go
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  Speaker 1: work at the lab as a software engineer. And in 2007,
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  Speaker 1: that laboratory went through a major transition. So as a
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  Speaker 1: result of that transition, they completely changed their benefits.
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  Speaker 3: Including retirement.
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  Speaker 1: So I had to make a decision at that time.
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  Speaker 1: Do I take the old 401k program and roll it
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  Speaker 1: into the new 401k program, or do I do something
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  Speaker 1: else with it? And Joe, I vividly remember sitting at
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  Speaker 1: my kitchen table, looking at my statement, thinking to myself,
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  Speaker 1: The only way this goes.
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  Speaker 3: Up is when I put money into it.
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  Speaker 1: This is ridiculous. I'm never going to be able to
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  Speaker 1: retire at this rate. And what the heck is it
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  Speaker 1: even invested in?
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  Speaker 3: I mean, let's be honest.
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  Speaker 1: When was the last time we heard about someone making
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  Speaker 1: it rich with their 401k?
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  Speaker 3: Yeah, doesn't happen.
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  Speaker 1: So I knew I didn't want to continue down the
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  Speaker 1: same path. I wanted to take that money and invest
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  Speaker 1: it in something different. real, something tangible, something that would
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  Speaker 1: actually go up in value without me having to add
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  Speaker 1: money to it. And so real estate was the obvious
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  Speaker 1: choice as far as a real asset. And that started
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  Speaker 1: me on the path to learning more about real estate investing.
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  Speaker 3: I even got my real estate license.
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  Speaker 1: And along the way, I was really disenchanted by the
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  Speaker 1: tenant toilet termite aspect of investing in real estate. Not
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  Speaker 1: that that's bad or that it's wrong. It just wasn't
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  Speaker 1: for me.
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  Speaker 3: I didn't have the.
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  Speaker 1: Time, patience, or resources to deal with rental properties. Fantastic
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  Speaker 1: for those people who do. And I just wanted an
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  Speaker 1: asset that I could literally just set it and let
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  Speaker 1: it do its thing without me having to effort over it.
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  Speaker 1: The other options were like fix and flips. And again,
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  Speaker 1: that sounds like a job. I wasn't into that. I
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  Speaker 1: just wanted an investment. I had a job. And so
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  Speaker 1: that's when I finally found land banking. I met a
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  Speaker 1: lady and she started telling me about it. I was like,
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  Speaker 1: oh my gosh, this sounds like exactly what I'm looking for.
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  Speaker 3: And land, it's.
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  Speaker 1: The original investment on earth. I mean, everyone and everything
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  Speaker 1: needs it. And I actually grew up watching my parents
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  Speaker 1: invest in land and they did very well with it.
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  Speaker 1: But I didn't really like pay attention to what my
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  Speaker 1: parents were doing because they didn't teach me those things.
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  Speaker 1: But I was like, okay, I have that natural affinity
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  Speaker 1: towards investing in land because of my parents. And this
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  Speaker 1: was again in 2007, right around 2008, beginning of 2008,
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  Speaker 1: I took my old 401k, rolled it into a self-directed
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  Speaker 1: IRA and bought my first property. And you guys all
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  Speaker 1: know what happened in 2008, right? I mean, major downturns.
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  Speaker 1: 401ks turning into 101ks. Luckily, divine right timing for me.
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  Speaker 1: I pulled my money out of the stock market before
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  Speaker 1: I lost it all, bought my first property. And not
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  Speaker 1: only did the value not go down like so many
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  Speaker 1: other types of real estate, the value more than doubled
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  Speaker 1: because of what was happening in that area. So that's
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  Speaker 1: when I fell in love with land banking because I
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  Speaker 1: became an investor myself. and decided to retire from being
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  Speaker 1: a software engineer to do this full time and let
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  Speaker 1: other folks know about the opportunity.
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  Speaker 2: These investments, are we talking about massive tracts of land
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  Speaker 2: or are we talking about smaller lots?
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  Speaker 3: Good question.
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  Speaker 1: And it's all different sizes, but it's individual purchases. So
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  Speaker 1: as an example, I have some friends just bought two
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  Speaker 1: and a half acre parcel for $ 28, 000 yesterday.
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  Speaker 3: Very affordable.
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  Speaker 1: At the other end of things, we can get to
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  Speaker 1: much larger sizes and prices as well. So our goal
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  Speaker 1: is to help the average investor create wealth with land.
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  Speaker 1: You don't just have to be wealthy to be able
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  Speaker 1: to do this.
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  Speaker 2: So now they purchased that piece of property, two and
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  Speaker 2: a half acres, for the $ 28, 000. What are they hoping
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  Speaker 2: to do?
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  Speaker 1: So for that specific type of land, and this is
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  Speaker 1: for Well, all land in general, when it comes to
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  Speaker 1: land banking, it's buying land in the path of growth,
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  Speaker 1: whatever that growth might look like. Most people think about
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  Speaker 1: like housing and community growth, right? There's also the aspect
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  Speaker 1: of industrial growth. So think massive distribution facilities, manufacturing facilities.
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  Speaker 1: The Amazon effect is well in place with online shopping. Well,
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  Speaker 1: goods don't just pop out of nowhere. They have to
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  Speaker 1: go to major distribution facilities and out from there. So
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  Speaker 1: like owning the industrial land needed for industrial buildings. And
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  Speaker 1: then there's the aspect of what I call green energy land.
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  Speaker 1: So you might be able to see my background here
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  Speaker 1: is covered in massive utility scale solar projects. Well, that's
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  Speaker 1: a tremendous amount of land needed to make that happen.
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  Speaker 1: And what happens is whatever the development is, a developer
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  Speaker 1: will come in. and put together, consolidate larger acreages of
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  Speaker 1: land by consolidating all of the land around it.
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  Speaker 3: So in that two and.
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  Speaker 1: A half acre example, right, that's likely to be part
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  Speaker 1: of a larger project. Well, as the landowner, I'm in
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  Speaker 1: their way. They need my land. You can't just run
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  Speaker 1: off to Costco and buy another piece of land. There's
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  Speaker 1: only so much of it available in these areas. And
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  Speaker 1: that is a very powerful position to be in.
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  Speaker 2: How about zoning? How does it impact your investment?
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  Speaker 3: Absolutely.
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  Speaker 1: So there's going to be different types of zonings, right?
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  Speaker 1: Like me personally, I own close to four and a
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  Speaker 1: half million square feet of land of all different types
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  Speaker 1: and sizes of parcels. So I own residential zone land.
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  Speaker 1: I own mixed use zone land. I own heavy industrial zoning,
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  Speaker 1: light industrial zoning. and a tremendous amount of green energy land.
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  Speaker 1: So all different zonings, that's just going to depend on
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  Speaker 1: the type of development that goes on it. And it
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  Speaker 1: comes back to land is needed for everything. So having
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  Speaker 1: that right land in the right area, again, powerful position
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  Speaker 1: to be in when it comes to getting big returns.
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  Speaker 2: Now, I've had the opportunity to purchase different size of
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  Speaker 2: lots from small lots all the way to 48 acres.
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  Speaker 2: But they're all the way in the north, closer to
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  Speaker 2: the Canadian border. And then I've also heard of other
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  Speaker 2: lots that are available in Texas that most people most
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  Speaker 2: likely will never build there. Is that the case? Or
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  Speaker 2: do you think that one day those will be built
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  Speaker 2: out as well?
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  Speaker 1: So that's where our expertise really comes in. If we
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  Speaker 1: go back to the basic idea of what land banking,
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  Speaker 1: buying land in the path of growth. I know a
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  Speaker 1: lot of people who own the land, but it's not
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  Speaker 1: in the path of growth and may never be for
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  Speaker 1: various different reasons, including lack of available, developable land. maybe
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  Speaker 1: surrounded by government land, that type of thing, or there's
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  Speaker 1: no infrastructure out there. There's never going to be infrastructure
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  Speaker 1: out there. You know, there's a lot of aspects to it.
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  Speaker 1: So what we're doing is we're looking at where is
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  Speaker 1: there limited land that's still affordable, and there has to
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  Speaker 1: be not one, not two, not three, not four, but
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  Speaker 1: multiple At least seven different economic trends causing an area
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  Speaker 1: to grow before we consider investing there. And are you
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  Speaker 1: also within about 60 miles of a deep water port?
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  Speaker 1: There's a lot of economic factors that have to be
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  Speaker 1: considered in growth. investing in land or let's call it
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  Speaker 1: land banking, doing that correctly. It's not just any land anywhere.
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  Speaker 2: Now, if someone works with you, are they contacting, they
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  Speaker 2: can contact you from anywhere in the U.S. and you
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  Speaker 2: will be able to provide them this information and some guidance?
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  Speaker 1: Yeah. So kind of what I do is educate people
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  Speaker 1: about what land banking is, where we invest, why we
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  Speaker 1: invest there, all the economic trends, etc., And I work
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  Speaker 1: with a company, so my broker has been doing this
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  Speaker 1: for 47 years. They have perfected the process of acquiring
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  Speaker 1: the right land in the right areas, taking it through
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  Speaker 1: due diligence to make sure it's quality, developable land. Because
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  Speaker 1: I could go buy land in a quote unquote high
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  Speaker 1: growth area, but it doesn't mean it's going to be
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  Speaker 1: developed or even can be developed.
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  Speaker 3: And that's why people have been coming to us for years.
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  Speaker 1: Over four decades, because we have the research and knowledge
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  Speaker 1: how to do this correctly.
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  Speaker 2: Are you able to share with us a success story
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  Speaker 2: of a case that you've worked with in the past?
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  Speaker 3: Yeah, sure.
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  Speaker 1: I mean, just over this past weekend, actually, I have
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  Speaker 1: an investor who he purchased a parcel for $ 50, 000, less
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  Speaker 1: than an acre of land, zoned industrial. And right where
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  Speaker 1: he's located, he's right now, there's a developer who's trying
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  Speaker 1: to consolidate 80 acres of land. He has a little
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  Speaker 1: sliver of that, less than an acre, but he's very
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  Speaker 1: strategically located right on the frontage of the road. And
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  Speaker 1: so right now, the price that he's looking at getting
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  Speaker 1: is around $ 645, 000.
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  Speaker 3: Wow.
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  Speaker 1: Yeah. Yeah. And that's just for industrial, right? So this
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  Speaker 1: is going to be a huge industrial building. In the
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  Speaker 1: case of the green energy and what's happening behind me
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  Speaker 1: in that screen, your listeners might be aware of our
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  Speaker 1: energy needs increasing rapidly, not just here in the United States,
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  Speaker 1: but globally. It's a huge issue for various different reasons.
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  Speaker 1: And New technology and emerging trends are also causing our
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  Speaker 1: energy sources to increase rapidly, like AI as an example.
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  Speaker 1: So a lot of energy is needed to power all
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  Speaker 1: of these things. And you have to have the right
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  Speaker 1: land in the right areas where these projects are coming.
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  Speaker 1: And some of our investors are getting either outright purchases
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  Speaker 1: for huge equity gains or long-term land leases. leases looking
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  Speaker 1: like 25, 35, 45 years that are increasing every year
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  Speaker 1: by a certain percentage. And some of these are investors
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  Speaker 1: like myself. I just got one. I'm looking at making
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  Speaker 1: over 100% return every single year.
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  Speaker 3: Every year.
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  Speaker 2: That's a great deal.
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  Speaker 1: I'm getting my money back and more. And I just
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  Speaker 1: own the dirt. I don't have to go fix a
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  Speaker 1: solar panel or anything like that. So it's mind-blowing what's
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  Speaker 1: happening right now and the green energy opportunity that's available.
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  Speaker 2: Now, if one of our listeners wanted to work with you,
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  Speaker 2: what would be the process?
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  Speaker 3: Sure.
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  Speaker 1: So first up, get educated. We always lead with education.
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  Speaker 1: So I do regular webinars that folks can hop on
• 14:03
  Speaker 1: and learn all the details, the who, what, where, when,
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  Speaker 1: why situation. Dirtisgold.com is my website. So you can go
• 14:13
  Speaker 1: there and watch one of my on-demand webinars. And that's
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  Speaker 1: the first step. And then you're in loving hands with me.
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  Speaker 1: I want to help you just expand portfolio. This is
• 14:26
  Speaker 1: all about diversification and get into real estate without some
• 14:33
  Speaker 1: of the real estate hassles that can come along with it.
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  Speaker 1: So first step, educate yourself.
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  Speaker 2: And then connect with you.
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  Speaker 3: And then connect with me.
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  Speaker 1: And I'll take them through the process all the way
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  Speaker 1: to closed escrow where you own a piece of land.
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  Speaker 3: Okay.
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  Speaker 2: So that brings up a question. How soon can I
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  Speaker 2: purchase one of these if I'm really, really interested in
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  Speaker 2: getting going on this?
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  Speaker 3: Absolutely.
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  Speaker 1: So how soon can you purchase it? You could probably
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  Speaker 1: open escrow and close escrow and have a property within
• 15:01
  Speaker 1: a week, a week and a half.
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  Speaker 3: I mean, we can get it done very, very quickly.
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  Speaker 3: So which.
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  Speaker 1: On that note, I have a lot of investors who
• 15:11
  Speaker 1: are using 1031 exchanges. So people who are tired of
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  Speaker 1: maybe the rental aspect of things, or hey, maybe you
• 15:19
  Speaker 1: sell a rental, buy another rental, and then there's $ 50, 000
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  Speaker 1: left over.
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  Speaker 3: What are you going to do with that?
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  Speaker 1: Give it to Uncle Sam or let that money continue
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  Speaker 1: to grow for you. So $ 50, 000 property, I can get
• 15:32
  Speaker 1: you a fantastic green energy parcel as an example. And
• 15:36
  Speaker 1: we can get those done quick because I know there's
• 15:38
  Speaker 1: short timelines on those things. Yeah.
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  Speaker 2: If you don't mind getting us on the same page,
• 15:42
  Speaker 2: what is a 1031 exchange?
• 15:44
  Speaker 3: Sure. Yeah.
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  Speaker 1: Great question. 1031 exchanges is, and I'm not a specialist.
• 15:51
  Speaker 1: I'm not a tax or CPA person. My understanding of
• 15:56
  Speaker 1: a 1031 exchange is an IRS code that allows people
• 16:00
  Speaker 1: to take real estate investment monies from a sale and
• 16:04
  Speaker 1: Let's say you had a gain, and instead of paying
• 16:07
  Speaker 1: capital gains taxes, you go through what's called a 1031
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  Speaker 1: exchange to then buy another real estate investment, whether it's
• 16:16
  Speaker 1: a rental, a commercial building, or land, as an example.
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  Speaker 1: Land is also real estate, and that prevents people from
• 16:24
  Speaker 1: having to pay capital gains taxes on the positive sale
• 16:30
  Speaker 1: of some sort of real estate investment.
• 16:33
  Speaker 2: And then land qualifies and you can then roll over
• 16:36
  Speaker 2: the money to the next piece of land as you
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  Speaker 2: purchase and sell.
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  Speaker 3: Exactly. Exactly.
• 16:41
  Speaker 2: Now, Marcel, are there any final thoughts that you want
• 16:45
  Speaker 2: to share with our listeners?
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  Speaker 1: Well, just on the aspect of funds that people use,
• 16:51
  Speaker 1: you know, there's the 1031 exchanges. Like I said, another
• 16:54
  Speaker 1: aspect that people are not aware of are there's IRAs
• 16:59
  Speaker 1: or 401ks, right? Like what I did in the very beginning,
• 17:02
  Speaker 1: I took my old 401k, rolled it into something that's
• 17:05
  Speaker 1: called a self-directed IRA and use that to purchase my property.
• 17:10
  Speaker 3: So when you do that and you buy.
• 17:12
  Speaker 1: With a self-directed IRA, this is a wonderful thing because
• 17:15
  Speaker 1: now you can diversify outside of traditional markets with self-directed IRAs.
• 17:22
  Speaker 1: So I'm in contact with several different IRA custodians. If
• 17:26
  Speaker 1: that's something you're interested in, But again, we start with
• 17:30
  Speaker 1: education first. So I invite you to watch one of
• 17:34
  Speaker 1: my webinars to learn more about this opportunity. And I'm
• 17:38
  Speaker 1: happy to support you in your wealth journey if this
• 17:40
  Speaker 1: is something that you feel fits with your overall family goals.
• 17:44
  Speaker 2: Please tell us again, where can people connect with you
• 17:46
  Speaker 2: and find out more?
• 17:48
  Speaker 1: Sure. So DirtIsGold.com is my website. You can also find
• 17:53
  Speaker 1: me on LinkedIn, Marcella Silva. You can also find me
• 17:57
  Speaker 1: on YouTube. Dirt is Gold is my YouTube channel name.
• 18:01
  Speaker 1: So I got plenty of videos on there. And I
• 18:06
  Speaker 1: highly recommend go to my website and watch one of
• 18:10
  Speaker 1: my webinars, either an upcoming one that I'm doing live
• 18:14
  Speaker 1: or one.
• 18:14
  Speaker 3: Of the recordings, which you can access right through the website.
• 18:17
  Speaker 2: Thank you so much for joining us.
• 18:19
  Speaker 3: Thank you, Joe.
• 18:20
  Speaker 1: I appreciate it. And it's been a joy. And thank
• 18:23
  Speaker 1: you to all of you for listening.
• 18:26
  Speaker 2: Thank you everyone for listening. If this episode inspired you,
• 18:28
  Speaker 2: make sure you share it with someone. And don't forget
• 18:30
  Speaker 2: to follow the Globalizer podcast for more conversations that make
• 18:33
  Speaker 2: an impact. Till the next time.