Mason McDonald 0:00
If you’re sending five to 10,000 pieces of mail a month, you’re gonna have a seven figure business flipping land, depending on where you’re sending the mail to. So I tried to my goal is right around there about 7500 to 10,000 pieces of mail a month, my mail cost me 57 cents a letter, I anticipate a one to 4% response rate dependent on the market. And then a deal close rate, you know, varying from there of, you know, one out of every 15 leads, we’re closing deals on, you know, and that math might not sound great for some people, but if you can spend, you know, four or $5,000 on marketing and get, you know, four or five deals that net you anywhere from 10 grand to up to you know, we had one that just hit the market we paid 350 For it’s going on the market for 675. And that came from a 57 cent postcard saying Are you tired of paying your property taxes?
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J Darrin Gross 1:16
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is a podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
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Today, my guest is Mason McDonald. Mason is a former hospital CEO turned full time land flipper that utilizes his profits to invest in commercial real estate. And in just a minute, we’re going to speak with Mason about how you can profit from land flips.
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With that I want to welcome my guest, Mason McDonald. Welcome to CRE PN Radio.
Mason McDonald 2:57
Darrin Great to be here. And you know if you don’t want to check it out the video version we both have it the face for radio and the voice to match. So
J Darrin Gross 3:08
Gotta put the teaser out there you never know.
Mason McDonald 3:10
Oh, yeah. Oh, yeah.
J Darrin Gross 3:12
But anyway, hey, Mason, thanks for doing this. I am looking forward to our conversation. Before we get started, if you could take just a minute and share with the listeners a little bit about your background.
Mason McDonald 3:24
Yeah, absolutely. Um, so I grew up in a house where the expectation was get as many letters behind your name as you can and go get a corporate job and work at that corporate job. So you turn 65 and enjoy retirement. So that’s what I did when got a undergraduate degree in neuroscience with the intent to become a physician decided that was not the route for me and went into healthcare administration got my master’s degree in that and jumped right into corporate America worked my way up to the top very rapidly. You know, year after year got a promotion became the CEO of a hospital out here in Colorado Springs when I was 26 years old and hated my life. I love my employees loved my patients but I was working constantly. I was hypertensive Stage Two at a 2627 years old and just couldn’t do it anymore. And we’re despite the title and the recognition and the community and the pay and everything associated with it. I wasn’t happy. So that’s what led me to real estate investing had always been interested in it read all the books, listen to the podcast and everything and stumbled across land flipping and, you know, got started in November of 2021 quit my job soon after getting started and on my first deal made 114 grand and never looked back since. So here I am now a year and a half or so in and doing better than ever.
J Darrin Gross 4:53
Well, a win like that on your first deal that’ll make anybody a believer that’s that’s awesome. That’s congratulations on that.
Mason McDonald 5:00
Appreciate it. And I don’t recommend people quit their jobs before they even sell the deal. So I quit my job. Before I before I sold it. I just knew the value, but it was just time for me to get out. That’s great.
J Darrin Gross 5:12
Well, I appreciate you sharing the background story. Let’s talk a little bit about land flips. I guess the first thing I would like to hear from you is, what what kind of land are we talking? When we say land flips? We’re talking forest farm pasture desert, what are you dealing with? When you do? What are you looking for? When you do your raw land flips?
Mason McDonald 5:40
Yeah, I look for land that makes me money. You know, I, I don’t overly specify the criteria, I cast a wide net. And that’s not how I started. But you know, the deals so far this week, you know, in May of 2023, that we’re recording this one is zoned for multifamily. One is zoned mixed use commercial, and one is a vacant infill residential lot. So kind of all of the above, you’re gonna get different returns, depending on the type of land and a different disposition or exit strategy. So I do everything. But for the most part, my business is vacant infill lots in, you know, either suburban or kind of rural subdivisions. And then commercial land, love commercial land, because there’s only so much of that. And if you can purchase it at a discount, sell it at a discount. Builders are building like crazy right now. So, you know, it’s a valuable product to put on the market.
J Darrin Gross 6:39
So you said you’ve been doing this since 21. So that not not quite two years, it’s like a year and a half is is the?
Mason McDonald 6:49
Yeah, buy my first deal November of 2021. So right up the years, so I’m about about a year and a half and give or take.
J Darrin Gross 6:57
Okay. And so, tell me a little bit about the I guess, you’ve kind of mentioned in anything that will make you money. I think that’s that’s, you know, it’s a good rule to play by Are there specific areas you look for? Or what are some of the the, you know, the tells are you what are you looking for? Are you looking for land that people have? Are behind on their taxes? Or how is it your, your identify in a province?
Mason McDonald 7:31
Yeah, absolutely. So from from a macro perspective, what I look at is transaction volume in the area, is there land for sale, and are people buying it more than it’s coming up. So and there are certain ratios you can utilize to determine the competitiveness of a market. So first and foremost, I look at transaction volume. Second, I look at more nationwide trends, you know, get on the Census website and see what the net migration is, and target counties where people are moving aggressively towards, as well as the county surrounding that area and cities and neighborhoods surrounding that area is kind of the the larger lit level that I look at. And then to get more granular of the specific ownership criteria. So all my marketing is direct mail. You know, it sounds like I’m selling snake oil when I talk about land flipping, because it’s so the strategy is so simple, but I mean, we direct mail market, and I target people that have usually about 10 plus years of ownership on on the property they own. As I do more marketing campaigns, my ownership criteria changes, because there’s so many inherited lots and stuff like that, that have happened over the past few years. But minimum of 10 years of ownership. And typically I talked to target out of county out of state owners. So you know, you can vary your marketing strategy by years of ownership and location and proximity to the property, that’s going to get you a greater response rate. But where I’m at in the business is I tried to cast a wide net. So I, I have motivated sellers that are happy and willing to get rid of it. And I have unmotivated, sophisticated investors that are willing to part ways that their property to claim a loss. So it’s, it’s kind of anyone and everyone. And, you know, for people getting started, I recommend, you know, picking an area that you understand where, you know, I’ve got my markets that I know if I invest in on this street in this neighborhood. It’s a great deal if I invest one street over so you know, as the crow flies, it’s 1000 yards away. It’s a horrible deal. So, you know, intimacy and knowledge of the individual market is helpful, but there’s over 157 million parcels of land in the United States you can find deals everywhere.
J Darrin Gross 9:39
So speaking to that? The the intimate knowledge. Are you? Is there a specific area that you focus on or it sounds like you’re kind of far and wide? How do you get that intimate knowledge if you are going for and wide?
Mason McDonald 9:53
Yeah, I think it’s just after, you know, doing a certain number of deals in a particular area for me You know not not to like, give away my honeypot. But I’m, I’m an abundance guy, I invest heavily in Pagosa Springs, Colorado, to small mountain town just outside of Wolf Creek ski resort, that’s where I got my first deal. I own a commercial building there, my parents just moved there, I want to move there. So I know it, I understand it, I love it, I’m going there tomorrow to go visit and have fun down there. So I know that market really well. And I’ve developed great relationships with my realtor down there, because I don’t sell the properties myself, I pass them off to a realtor, you know, the title reps, I’m gonna bring a breakfast on Friday, you know, you get to know a market like that, and you start getting more deals, just developing community, you know, community relationships in general. So just, once again, it’s transaction volume, the more I do in the market, the better I get to know it. You know, I’m at a stage now where I have an Acquisition Manager that manages all acquisitions for me, and I kind of target the market. So we’re able to share that knowledge. And you know, he has his own markets, he knows too, so able to grow that way.
J Darrin Gross 11:03
Got it. So, you mentioned that everything you’re doing is direct mail. And sounds like you’ve you’ve zeroed in on a market. Are you are you did I hear you then are you looking for other markets as well based on kind of the demographics? And then is it?
Mason McDonald 11:18
Yeah, so I invest in Colorado and Arizona right now. People are moving to Colorado and Arizona, you know, eventually will expand to where where everyone is moving, which is you look at the data, and people are moving to Nevada, and Texas and the Carolinas and Florida, you know, to name a few of them, Bozeman, Montana, and you know, some other places, you know, Boise, Idaho had a great run for a couple years there and everything. So you look where people are moving. So when I say I’m in a market, I’m in probably, you know, four does and within Colorado and Arizona, depending on your definition of a market. But that’s kind of where I’m at and where I focus right now.
J Darrin Gross 11:56
Got it. So I’m always fascinated about marketing. And, you know, strategies in doing it direct mail, is there a, a, a number of mailers that you find you need to get out to create a pipeline of opportunities? Or is it more of in the qualifying that you’re able to, you know, create more of a I don’t know, a response piece that you know, people are responding to our he told me to tell me about how many numbers are you are you feeling like that you need in order to be to get some responses.
Mason McDonald 12:38
Yeah, so if you can scrub your data to a certain extent, using some of that ownership criteria that I was talking about, if you’re sending five to 10,000 pieces of mail a month, you’re gonna have a seven figure business flipping land, depending on where you’re sending the mail to. So I tried to my goal is right around there about 7500 to 10,000 pieces of mail a month, my email cost me 57 cents a letter, I anticipate a one to 4% response rate dependent on the market. And then a deal close rate, you know, varying from there of, you know, one out of every 15 leads, we’re closing deals on, you know, and that math might not sound great for some people, but if you can spend, you know, four or $5,000 on marketing and get, you know, four or five deals that net you anywhere from 10 grand to up to you know, we had one that just hit the market, we paid 350 for it, it’s gone on the market for 675. And that came from a 57 cent postcard saying Are you tired of paying your property taxes, give me a call. And it’s it’s it’s insane. And you know, the guy that sold that, to me was former hedge fund manager out in New England, and he just wanted to get what he put into it. And you know, the markets changed. But you know, why people sell to me is I offer quick cash and convenience. And I think a lot of people try to glorify what they do, whether it’s in real estate or anything in life. And for me, I’m a pawn shop, you know, I buy land for cheap and I sell it for more. You know, I never tried to screw anyone over. I tell him if you want top dollar, go to a realtor. But if you want quick cash and convenient and you want to get rid of that headache, I’m here, I’m here.
J Darrin Gross 14:23
I love the kind of the simplification of of your model from the standpoint of the way you position yourself. You know, I think there is a lot of people and we all fall victim to it at some point about trying to elevate our status in the world by you know, whatever it is title or training or have, you know, however you do it, but the reality is and this one thing is one of the things that’s always been an appeal of mine in real estate is just how simple it is. It’s where a buyer and seller meet.
Mason McDonald 14:56
You’re in you’re right on and it’s saying men agreed where self certainty is one of the most off putting things for me, you know, in a person in general where, you know, I have a strategy, and it works. And it works great for me and it works great for my life doesn’t make me better than anyone or makes me smarter than anyone. It’s just and I’m not certain that it works. I’m, you know, I tried to change my mind all the time. But I think that’s something that at the beginning of this business actually caused a lot of slowdown is I saw what everyone else was doing. And you know, I, you know, sold that first deal made, made a ton of money. And you know, my wife said, sit on the couch and get your blood pressure back to normal after you left your job. And so I did that. And I got overly creative, I started texting, I started calling, I started doing direct voicemail, and email and all this other stuff, and I didn’t get a deal for four months. Then I sent 1000 mailers, and I got five deals that made me another 100 grand, and some are still paying me because, you know, offered seller financing on it. And they’re still paying me today. So it’s, it’s funny, you know, you got to stick to what works when you see it, but don’t necessarily think it’s the right strategy, you know, get creative, like from a split testing perspective, but, you know, stay consistent.
J Darrin Gross 16:09
Yeah, well, I just, again, the simplicity of it. And I think that what I find is one of the common things that I find when I speak with investors, most can remember their first deal. And most can remember where they were, like in that stage of life, or whatever it was, when they they committed to it, and whether there was an amount of fear, or they didn’t know if they’re going to be able to do the deal, or just the, you know, they were stretching or whatever, whatever it was, there’s something there’s an emotional tie to that. And it’s a very base level thing. It’s not about some high level, you know, debt swap, or, you know, suddenly, you know, things like that, it’s more about just like getting in the deal and getting the deal done. Kind of thing. And I think there’s that common thread there. And I would think that a lot of your approach would appeal to a lot of people, just from the fact that it is simple, and it’s it’s very clean. And you know, it’s not an anticipation of a big number we’re or maybe somebody encourage you to, to list for something for a bigger number. And then then all the while they’re beating you up on you got to take the number down, because the markets changed. And, you know, all that good stuff. So
Mason McDonald 17:21
Oh, yeah, I mean, you’re right on, I remember exactly where I was, whenever I bought that first deal. It was my 27th birthday, actually, and my wife and I flew, flew out to St. Croix that next day. So I remember every emotion that went through my head, especially with the idea of leaving an executive position, which couldn’t have done it without my wife, she’s the stable software engineer that pays the bills and allows me to go be the, the risky entrepreneur out there. And I, I think whenever you’re you’re looking at things, and you can take emotion out of the decision making and just look at numbers, then it becomes a lot easier, where I look at some of the numbers of more properties that have maybe been sitting on the market for like 30 or 60 days, which is normal. Now, we might have been spoiled a little bit in 2020, and 2021. But I look in it’s like, Hey, dude, if you sell it at market price, you’re gonna get a 276% cash on cash return. And six months, you annualize that you start seeing what the APR is? And it’s like, Well, okay, I could reduce it and get, you know, because we all think about that disaster case scenario of like, okay, well, if I had to liquidate, I could still make all my money back plus 20 30%, which is you get spoiled in this business with the returns, but 20 to 30% is fantastic. Still, you know, assuming of supporting your operating costs and everything, you can factor that in?
J Darrin Gross 18:42
Yeah, absolutely. I mean, in any market, if you could hit 20% people, you know, dodge hit a homerun. So Oh, yeah, that’s great. So, you talked a little bit about your approach in finding the properties? Can you talk a little bit about how you structure your offers? Or is there any kind of is it basically just a conversation, what they’re looking for? Or do you have some sort of a, you know, kind of a, how do you view that, you know, going in, is each one individually different? Or do you have some sort of a baseline formula that you work with?
Mason McDonald 19:20
Yeah, so So both, each one is different. I do have a formula that we kind of, you know, work off of, and basically I attempt to acquire the purchase price. I never sell clothes, I go through a title company for everything, which a lot of people in land flipping say self clothes, I disagree. One wrong signature on a warranty deed ends up in more problems and I care to deal with but I tried to target that acquisition price for 50% of what the median value of sales over the last 90 days in that particular neighborhood, or particular market is, you know, where I’ve actually made the good Fiesta returns, because I can’t think of a better word for it has actually been where it’s a little harder to price of, okay, there’s not a lot of transaction volume. But I know it’s a very desirable area where people have these beautiful homes. And you know, it’s a great community, but there’s just no data. Because, you know, one lot comes on the market every two years. So, you know, there’s a little bit of nuance there. But in general, I tried to target about 50% of what I expect it to sell for. And I can go up and down from there, depending on the amount of transactions in an area where some places I can get for 20%. And then I can sell it at 60%, you know, in the margins end up kind of being the same and everything. So there’s various formulas that I use, depending on the competitiveness of the market, because I’ve got the big deals that will make me you know, 100 200 300 grand per deal that might take six to nine months. And then I’ve got the transaction business where it’s, you know, and that’s what I’m kind of working on building up more of, you know, the more active of the active business of, hey, I know, if I buy this property, it’s essentially liquid cash, because I could put it on the market in the middle sell in 12 seconds, type of thing. And, you know, I’ve got friends that are doing this, and, you know, markets in Florida, that I mean, it’s liquid cash for them have, you know, from initial conversation, to under contract to buy to bought to under contract to sell to sell is sometimes a 10 day timeline. So it’s, that’s like cash out there.
J Darrin Gross 21:24
Ten days, it’s fast.
Mason McDonald 21:27
J Darrin Gross 21:28
So so let’s talk about how you are the sale of the property. We’ve talked a little bit about the acquisition, when you go to sell a property, is it a cash sale? Or do you do any kind of land contracts? Or do you? Or do you offer any kind of financing? Or how are you setting that up?
Mason McDonald 21:52
Yeah, it varies, once again, on the individual property, where a lot of times I don’t know who the end buyer is, just because I give it to a realtor to sell, I’ve got a handful that I will offer seller financing on just because you know, a 20% down payment, will give me most of my cash back in the deal and pay off the realtor. And then it gives me monthly cash flow to support the operating expense of the business. But I don’t, I don’t do contract for deed I do, you know, note and deed of trust, where you know, I have come close to having to foreclose on on people. But, you know, one of the big beautiful things about it, you know, is there’s so many people that just want the American dream of owning a piece of land that they can build their own house on, but maybe they have bad credit or anything like that. So I don’t do credit checks, I just do, you know, provide a proof of income, you know, ever everyone goes through hard times. And I had one person that I did a seller finance deal with, and he just stopped paying, I tried to personally get in contact with him, my escrow company, no servicing company tried to get in contact with them. And found out he had family members passed away, and he’d been scrambling. So what we did is, finally, when he communicated with me, I was able to reduce his payments to about one one quarter of what they were because he wanted to keep paying he wanted, he didn’t want to lose the land and never missed a payment sent. So it’s fun being able to help people that wouldn’t be able to get help. And, you know, I’m making money. And you know, cash flow is nice in a business that is, you know, a purchase and sale business. And so it’s it depends on the necessary steps that you need to take to get the desired return. But, you know, I’ve got, you know, a piece of land that we closed on this morning, that is the only multifamily piece of land that’s going to be on the market in Garfield County, Colorado. And I could develop it and turn my six figure profit into a seven figure profit should we decide to so so many disposition exit strategies make land a really attractive place to be.
J Darrin Gross 23:53
And so you strictly do the through the realtor. I mean, you list all the properties you sell, and then realtor brings you a deal.
Mason McDonald 24:05
For the most part, I’ve sold a few, you know, off market, Facebook marketplace or Craigslist, you know, when I was driving out to take pictures of myself whenever I first got started, and there was a contractor working on it, and you know, he said the neighbors would be interested in so I paid him a referral fee and the neighbors bought it and I didn’t even have to put it on the market. So it varies. But as as I’ve grown and scaled and you know, I look less at the, you know, 510 20k profit deals and look more at the 50 to 500k profit deals. I’m not sophisticated enough and I left my job to not have a real job so I don’t like sales. I give it to people that like sales that understand it better than I do.
J Darrin Gross 24:46
Got it. So where do you get your your capital to buy the properties or is this all self funded? Are you raising any money or how are you doing that?
Mason McDonald 24:57
Yeah, absolutely. So I started by using all my on money until I recognized that I would limit growth and I was tired of the entrepreneurial life cycle of, I’d buy a bunch and I feel really bored, and then I couldn’t mark it anymore. And then I’d sell a bunch, and I’d feel really rich, and then I go buy a bunch and over and over and over again. So I learned the value of other people’s money pretty, pretty quickly. So I have a few opportunities where you know, you know, within my network, I’ve got a pretty high net worth network just being at the executive level for a while. So I’ve got people that give business loans where I, you know, just pay them interest only payments and everything. And then I do a lot of joint ventures where, you know, I had an investor JV with me on a deal, they kept, they provided all the cash, they and I gave them 35% of the profit of the deal. And their cash on cash return after 73 days was I think, if I remember, right, 62% for, you know, pretty minimal investment. So they were stoked with that and ended up investing, you know, 10 times as much actually 15 times as much with me on the next deal. You know, so we do profit split joint ventures, and there’s some some companies out there that offer financing to, you know, people flipping land, but the rates, and they’re all JV deals because the rates would be considered usury. And banks won’t lend to people like me doing this kind of stuff. So that’s one of the pros and cons of this businesses, there’s minimal competition, because there’s lack of access to institutional capital. But that’s also a pro a bit of if you can find the capital, there’s more deals than people know what to do with. So that’s something I’m working on, kind of on the side is creating a company that will be able to fund everyone’s land deals that’s doing this, you know, I’ve got some big time investors that are willing to invest with me on a venture like that. And so that’s something I’m excited about whenever, whenever I’m able to actually speak more about it.
J Darrin Gross 26:51
Now, it sounds exciting. That’s cool. So, you know, there’s a lot of talk, and I mean, we’re, we’re we are recording this in May of 2023. And, and the economy is been chugging along, there’s certainly lots of inflation and interest rates have gone up quite a bit. Does any of this affect your ability to find or sell raw land deals?
Mason McDonald 27:27
So So yes, and no. The answer yes, is because, you know, from like a slowing down, there’s this typical slowing down at the market a little bit right now, depending on where you’re at some markets have remained consistent. So we’re getting back into like the correction phase within real estate. But luckily for land, from a sales side, you know, the last date I looked at, it was March, and I probably should have been better prepared. And I think April data is out. March, you know, we were down 6.5 million single family homes in the United States from an inventory perspective of what needs to get built. For point are, we’re up 4.5%, historically, over building permits, and we’re doing construction at a more rapid rate than historically. So there’s buyers out there, from the the higher level, the commercial level of builders are building like crazy right now, because there’s still an inventory crisis, specifically in markets where people are moving to so you know, from a buyer perspective, it’s slowed down a little bit, but there’s still tons of buyers out there. From a seller perspective, people are hurting, you know, my wife and I will go to Chick fil A, and maybe we eat a lot, but cost $30 For us to go to Chick fil A. And for the average American that maybe they inherited a piece of land or they owned a piece of land that they planned on developing 1020 3040 50 years ago, they’re happy to get the cash for it because then they don’t have to keep making property tax payments whenever cost of living and inflation is so high so and then once again from the retail seller side. You know, Mark Twain said buy land, they’re not making more of it. So in a recession, people are typically going to flock to safer investment strategy. So you know, it’s the idea of a land bank of typically most land unless something weird happens will appreciate in value over time of I’d rather park my land or my money with land and you know, you hear stuff in the news, you know, Silicon Valley Bank, and all the other stuff that happens and they’re scared of bank so, you know, what do we invest in, we invest in dirt and stuff that comes out of dirt, you know, minerals and stuff like that. So it varies, you know, I’m not I don’t have a crystal ball or anything like that. I can tell it slowed down a little bit, but you know, still getting interested in stuff it’s still selling.
J Darrin Gross 29:37
Got it. Do you find there are more people looking to sell? Or have you seen like your your response rate increased to your marketing is the you know, the economy slowing down a little bit or is that not necessarily..
Mason McDonald 29:55
Not not overly you know, it all it all depends because the past you know, I I can see the past few months as we’ve moved into newer markets, you know, we’re getting a significant response rate. So I think it depends kind of where it’s at. And what’s happening. It’s so market dependent. So some of them like some counties in Arizona and cities in Arizona, that we’re marketing to there, our response rate is insane, like 10% response rate for a silly little postcard that we sent, and we’re getting a certain amount of deals out of it, but a lot of people are looking at retail prices. So to us, it’s just, you know, it’s math. So we haven’t seen from an acquisition side, any sort of slowdown, but not necessarily seen too much of a pickup. So depending on the market, that is
J Darrin Gross 30:47
Got it. So looking forward, do you have any sense of is there anything that would affect the market, you know, increase or decrease? Or is it basically there’s just unlimited demand and plenty of opportunities? And as long as you find one, and the numbers work, they’re going to work?
Mason McDonald 31:08
Yeah, I, it’s so hard to say, I think in general, you know, it’s location, location, location, where, you know, I, I have one piece of land that I paid, I don’t know, 15 102 grand for that’s been on the market at 15,000 for seven months now. And I don’t really care because I forgot about it. You know, and that one, right, there is one that I’m gonna end up selling, and I’ll have to do like 5% down, you know, a percent interest for 10 years type of thing, which is fine. But that was a more speculative market for me, where I kind of wanted to test it out a little bit. And whenever the dollar amount, you know, I mean, you look at that return if it sells at 15 grand on a $2,000 investment, you know, minus realtor fees, I, you know, whatever that math is I allotted. There’s a lot of return there. So, I think it depends, you know, on the location specifically, but if you buy a vacant infill lot and a beautiful neighborhood in Oro Valley, in Arizona, you’re gonna be able to find a buyer, even if you have to do a price reduction, or you just hold it for a while. And let them the scariness of the market, you know, go away, which it will. It always does.
J Darrin Gross 32:21
Yeah, no, I think the one thing I’ve learned about real estate is time. I makes it all work. long as you get time. That’s, that’s good. So Mason, you’re making the money in the land flips. Tell us how you’re going about investing in commercial real estate with your winnings?
Mason McDonald 32:39
Yeah, absolutely. So one of the benefits of investing in raw land. And the way that I do it is there’s no capital gains taxes that’s paid, I’m taxed as this as if the land is inventory, which it is. So currently, you know, working on building my commercial portfolio, I own own one building right now, that’s getting renovated into workforce housing. It’s in a small mountain town. So there’s an affordability crisis in so many of these mountain towns in Colorado and along the all of the Rocky Mountains. So you’re able to do kind of a rent by the room rent by the door model that’s going to give, you know, you know, far breaks the 1% rule. But what’s more attractive to me is depreciation, you know, this year, you can take advantage of, you know, front loading the depreciation at 80%, you know, after doing a cost segregation study, so, that’s kind of where I want to park my money is just commercial assets that both cashflow appreciate, and you can depreciate. So right now I’m looking at, you know, after the pains and struggles of going through a renovation on a property in a mountain town, I’m looking for more simple passive, investing, like single tenant triple net lease, put something on a 15 year lease type of thing and take advantage of that, that true depreciation to offset all my other income.
J Darrin Gross 33:54
Hey, Mason, if we could, I’d like to shift gears here for a second. By day, I’m an insurance broker. And as such, I work with them to assess risk and determine what to do with the risk. And there are three strategies we typically consider, we first look to see if there’s a way we can avoid the risk. When that’s not an option, we look to see if there’s a way we can minimize the risk. And when we cannot avoid nor minimize and we look to see if there’s a way we can transfer the risk. And that’s what an insurance policy is. It’s a risk transfer vehicle. And as such, I like to ask my guests if they can look at their own situation, could be interest rates, the Fed inflation, you know, whatever you identify as what you consider to be the biggest risk. And again, for clarification, while I’m an insurance broker, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you Mason McDonald, what is the BIGGEST RISK?
Mason McDonald 34:58
Yeah, um, I expect my answer to be a little different than what people might expect. I mean, I was the CEO of a psychiatric hospital. So in terms of a risk management perspective, there’s, you know, in terms of over regulation and high risk, there’s about, that’s about as high risk of an environment as you could ever imagine. But for me, the greatest risk that I have is, I fail at this entirely and have to go get a job again. So, you know, me being my own boss, and, you know, getting to live life on my own terms. And having financial and geographical freedom, the biggest risk for me is I fail, and I have to go get a job again, which is what 99% of the population already does, because the margins in this business where if I set my Buy Box criteria based on market data, which is what’s available to everyone at 50% or less, I could liquidate and get all of my money back all of my investors money back and be able to walk away, but that’s not going to happen, you know, or should it happen, it’s not the end of the world. But yeah, the riskiest thing to me is ever having to get a job again. So maybe not not exactly the answer, you know, that that’s expected or wanted, but that’s what it is for me.
J Darrin Gross 36:17
I love it. I love the, again, kind of the grounded answer in that, you know, hey, look, this is working. But the the risk is that, you know, there’s a chance that couldn’t work, you know, or might not work. But you’ve got a plan B. And that’s, that’s kind of part of managing risk is, you know, what, if something happens, so,
Mason McDonald 36:37
Yeah, so we’ve got the liquidation plans should that ever happen or anything like that, you know, so I don’t over leverage myself, you know, I have good relationships with my investors. And, you know, if I have to, you know, my wife and I talked about it of, you know, if we have to sell everything, excuse me, and start over, you know, the amount of lessons that I’ve learned over the past year and a half, should, you know, crap hit the fan. There’s no way we’re going to start over and it’ll take as long to get back to where we are. So yeah.
J Darrin Gross 37:11
That’s all good. And Mason, where can listeners go? If they’d like to learn more connect with you?
Mason McDonald 37:18
Yeah, I’m most active on LinkedIn. So if you you know, I’m sure it’ll be in the show notes. If you look me up on LinkedIn, Mason McDonald, you’ll find me there happy to engage with anyone there that wants to talk about land investing, or, you know, investing in commercial real estate, or subdivides, or any of the bigger deals we have going on on the side, you know, happy to chat with anyone, and everyone talks about my story and see if I can help you. I also do coaching and consulting within the land space. So if you don’t reach out to me on LinkedIn, I have a website Coaching with Mason.com, where I take on people that have a successful track record, either in their own business or in corporate America and teach them exactly what I do. So I’m having fun doing that. I went from, you know, two dozen direct reports and 500 employees to one employee now. So I’ve got a, you know, an extroverted personality, and I love teaching people how to do it, because getting to see the coaching students have success and realizing they can leave their corporate job. You know, it’s fun and really, really, you know, inspiring to me.
J Darrin Gross 38:21
No, I love it. Well, Mason McDonald, I can’t say thanks enough for taking the time to talk today. I’ve enjoyed it. Learned a lot, and I look forward to doing it again soon.
Mason McDonald 38:31
Darrin, thank you so much for having me.
J Darrin Gross 38:33
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