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    ChooseFI

    449 | Rubber Ducks and Systems for Land Investing

    Mon Aug 07 2023
    Financial IndependenceReal Estate InvestingLand InvestingEssentialismPersonal GrowthPricing StrategiesCommunity Engagement

    Description

    This episode features JT Olmsted, a land investor who shares his journey to financial independence through real estate investing. Starting with a desire for financial freedom, JT and his wife developed disciplined saving and investing habits. As they had children, their vision for the future evolved, leading them to explore real estate investments. After initial setbacks, they found success in land investing and built a business around it. The episode covers various aspects of real estate investing, including personal growth, essentialism, transitioning to land investing, strategies, insights, and pricing. JT also shares personal reflections and life hacks. The episode concludes with community engagement opportunities and recommendations for further learning.

    Insights

    Financial Independence through Real Estate

    JT Olmsted achieved financial independence by building a successful business in land investing, which allowed him to continue playing the game of life until it is no longer fun.

    Evolution of Goals

    JT and his wife's vision for the future evolved as they had children, leading to ongoing discussions about their financial journey and redefining their goals beyond retirement.

    Importance of Essentialism

    JT emphasizes the importance of essentialism in avoiding mediocrity and not trying to do everything. He shares his experience of shutting down a business that was causing imbalance in other areas of life.

    Transitioning to Land Investing

    After losing money on their first real estate investment, JT identified as a real estate investor and discovered land investing as a potential avenue through a podcast. He took a course to learn about land investing and found success in this type of investment.

    Insights into Land Investing

    Land investing offers convenience and speed, attracting buyers who are willing to accept lower prices for a hassle-free experience. Different subcategories exist within land investing, allowing investors to tailor their business structure and offerings.

    Pricing and Market Strategies

    Determining the appropriate price for land involves feedback from the market, experience, marketing, and expertise. Different approaches can be taken when sending offers for properties, such as a neutral approach or a data-heavy approach.

    Personal Reflections and Life Hacks

    JT reflects on personal experiences, including moments of uncertainty and the support of his wife. He shares a life hack of using a to-do list to stay organized and reduce stress. Additionally, he discusses his art collection of pre-2000 animation cells.

    Community Engagement and Recommendations

    Listeners are encouraged to engage with the ChooseFI community through various channels, including the Facebook group and local groups. Recommendations for further learning include specific podcast episodes and courses on financial independence.

    Chapters

    1. Introduction
    2. Evolution of Financial Goals
    3. Personal Growth and Essentialism
    4. Real Estate Investing Journey
    5. Transition to Land Investing
    6. Lessons Learned in Real Estate Investing
    7. Transition to Land Investing Business
    8. Land Investing Strategies
    9. Land Investing Insights
    10. Pricing and Market Strategies in Land Investing
    11. Business Operations and Recommendations
    12. Personal Reflections and Life Hacks
    13. Conclusion and Community Engagement
    Summary
    Transcript

    Introduction

    00:00 - 06:32

    • JT Olmsted is a land investor and has built an amazing business with incredible systems.
    • JT discovered the FI community through Mr. Money Mustache in 2011.
    • He was inspired by the concept of financial freedom and saving money.
    • JT and his wife were financially disciplined from a young age.
    • They started saving and investing when JT's income significantly increased.
    • They had conversations about their goals and how much they could realistically save.
    • Their vision for the future evolved as they had children, leading to ongoing discussions about their financial journey.

    Evolution of Financial Goals

    06:06 - 12:22

    • The couple's vision for their future evolved over time as they had children and their lives changed.
    • Initially, the goal was to make $100,000 in one year, but as they reached that milestone, they realized there were more goals to strive for.
    • They attended a Chautauqua event where they reflected on what they really wanted and discovered that retirement wasn't their ultimate goal.
    • Financial independence allowed them to continue playing the game of life until it is no longer fun.
    • Many people in the financial independence community don't stop at reaching their number; they are driven by curiosity and a desire to keep learning and growing.
    • The couple constantly evaluates what they want personally, morally, and how it can benefit their family and society.

    Personal Growth and Essentialism

    11:54 - 18:08

    • Always trying to determine what I want to do personally and what is the law to do
    • Striving to be the best possible version of myself
    • Recognizing that there is a greater version of me available in the future
    • Being content with where I am in some areas of life and pushing forward in others
    • Understanding the concept of 'enough' and making choices
    • Saying no to things that may have been unquestionable yeses in the past
    • Realizing the importance of essentialism and not trying to do everything
    • Shutting down a business because it was causing mediocrity in other areas of life

    Real Estate Investing Journey

    17:41 - 23:52

    • The speaker is impressed by someone's ability to let go of a website that was causing mental baggage.
    • The speaker shares their frustration about not being able to shut down or sell their own website.
    • The partners were initially shocked but eventually understood the decision to let go of the website.
    • Chad Carson's concept of prioritizing properties based on trouble and stress is discussed.
    • The importance of having a discerning mindset in all aspects of life is highlighted.
    • The speaker acknowledges the challenge of maintaining this mindset and avoiding mediocrity.
    • It is emphasized that nobody is perfect and everyone should strive to be better.
    • Real estate investing is introduced as the main topic of discussion.
    • The speaker started with researching real estate options for retirement planning.
    • They realized that including real estate in their portfolio would speed up retirement goals.
    • Initially, they planned to invest in single-family properties but later shifted focus to commercial space.
    • Their first real estate investment was a small office complex in Phoenix, which resulted in a loss of $100,000.

    Transition to Land Investing

    23:25 - 29:42

    • The speaker started with an office complex as their first real estate investment, but it turned out to be a bad idea and they lost $100,000.
    • Despite the loss, this experience made them identify as a real estate investor and look for other investment opportunities.
    • They discovered land as a potential investment avenue through the Fire Drill podcast in mid-2018.
    • The speaker took a course by Seth Williams to learn about land investing and it broke them into this type of investment.
    • The return on land investments can range from 300% to 1,000%, which may seem extreme but is plausible.
    • The speaker's heuristic for investing is that if something claims to return more than 10-12% per year, there is likely more risk involved.
    • Despite losing money on the office complex, the speaker continued investing in real estate because they saw success in land investing simultaneously.
    • Commercial real estate requires relying on agents and contractors, which can make it more challenging compared to single-family real estate investments.

    Lessons Learned in Real Estate Investing

    29:14 - 35:44

    • Analytical approach to retirement modeling
    • Mathematical calculations involved in real estate investment
    • Challenges faced in finding tenants for an office complex
    • Miscalculations and lack of knowledge led to selling the building empty
    • The concept of resulting and unforeseen circumstances affecting outcomes
    • The importance of financial independence in transitioning to real estate investment
    • The role of savings in providing a safety net during the transition period
    • The power of having a backup plan and learning from mistakes
    • The tendency to catastrophize worst-case scenarios
    • Lowering expenses during the career transition for increased financial security

    Transition to Land Investing Business

    35:19 - 41:21

    • The speaker reflected on their life and realized they needed to make changes.
    • They downsized from a large house to a smaller one with a rentable guest house, reducing their expenses significantly.
    • The speaker wanted to have more financial security for their businesses and avoid feeling stressed.
    • Despite the smaller space, the speaker feels that moving was the right decision and plans to stay there for a few more years.
    • The speaker started land investing in 2018 and had early success, which gave them confidence in their ability to succeed.
    • They realized that land investing was actually running a business rather than passive investment.
    • The business model involves buying low and selling high, focusing on convenience and speed rather than price.

    Land Investing Strategies

    41:02 - 47:23

    • Specializing in direct marketing for vacant land
    • First deal was proof of concept and boosted confidence
    • Sent out 500 postcards and got one good deal
    • Increased to 5,000 postcards but got zero deals
    • Used public databases to find property owners' information
    • Bought data from aggregators who collect and standardize county records
    • Customized offers based on property criteria
    • Optimized for convenience and speed by offering lower prices

    Land Investing Insights

    46:58 - 53:33

    • Land investing offers convenience and speed, attracting buyers who are willing to accept lower prices for a hassle-free experience.
    • Different subcategories exist within land investing, allowing investors to tailor their business structure and offerings.
    • Land is a less efficient market than houses, resulting in more fragmented listings and fewer lenders for land transactions.
    • Most land sales involve cash transactions, with financing options available for smoother transitions.
    • The inefficiencies of the land market create opportunities for specialized investors to offer discounted prices and handle the hassle of selling closer to market value.
    • Purchasing land requires focus on systems, team, and capital, while selling land can be more difficult due to potential illiquidity.
    • Investors need to balance scaling up their land purchases with the capacity of their team and available capital.

    Pricing and Market Strategies in Land Investing

    53:13 - 59:10

    • There is a limit to how much land can be bought due to team and capital constraints.
    • Determining the appropriate price for land is more complex than houses due to unique attributes and varying market values.
    • Finding the right number that moves land quickly without sitting on it for years requires feedback from the market, experience, marketing, and expertise.
    • Different approaches can be taken when sending offers for properties, such as a neutral approach or a data-heavy approach.
    • The data-heavy approach involves determining the value of the property upfront and sending a draft contract with a price.
    • Negotiations on the price may occur before finalizing the contract.
    • The process of pricing land involves months of work and custom pricing based on characteristics and individual properties.
    • The business focuses primarily on two states but has done deals in about a dozen states in total.
    • Establishing a marketplace in specific states allows for efficient systems and relationships with key partners.

    Business Operations and Recommendations

    58:40 - 1:05:09

    • Focus on two specific states for business operations
    • Established marketplace with a team and system in place
    • Building systems and resources in existing markets is preferred
    • Expansion to other states may happen in the future
    • Recommendation to start with real estate investing podcasts like Casual Fridays REI and REtipster
    • Learning timeline depends on prior business experience
    • Commitment to learning leads to long-term success in the business
    • Book recommendation: 'The Comfort Crisis' by Michael Easter

    Personal Reflections and Life Hacks

    1:04:51 - 1:10:58

    • I reflected on whether quitting my job was the right move
    • I had a moment of uncertainty in the bathroom, but my wife reassured me that it would be okay
    • She promised to support me even if we faced financial difficulties
    • The support she showed was remarkable and emphasized what's truly important in life
    • A favorite life hack is using a to-do list to stay organized and free up mental space
    • Recurring tasks on the to-do list are particularly helpful
    • It reduces stress and ensures important tasks are not forgotten
    • An art collection from Anime Expo has added value to my life
    • I collect original production cells from pre-2000s animation
    • These hand-painted celluloids are unique and bring me joy

    Conclusion and Community Engagement

    1:10:28 - 1:14:37

    • The speaker collects pre-2000 cells of their favorite anime and considers them amazing pieces of art.
    • The speaker and their family enjoy traveling internationally for a few months each year.
    • They have 10 years of travel planned out, with their next trip being back to Japan in 2024.
    • The speaker is planning a precursor trip to hike Mount Fuji next month.
    • They express their excitement about hiking Mount Fuji, which is a life goal for them.
    • To connect with the speaker, the best place is the ChooseFI Facebook group or through Homestead.Properties website's contact form.
    • Listeners are encouraged to subscribe to the podcast and the weekly newsletter for further engagement with the community.
    • There are ChooseFI local groups in over 300 cities worldwide for in-person community connections.
    • For those new to financial independence, Episode 100 of ChooseFI is recommended as a starting point, along with the free Financial Independence 101 course on choosefi.com.
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