#164: Land Ventures
LISTEN AND SUBSCRIBE
Apple Podcasts | Google Play | Stitcher | Spotify
Welcome back to another episode of The Richer Geek Podcast. I'm happy to introduce Dan Haberkost, CEO of Front Range Land, who started his real estate investing journey at the age of 16. Dan has managed to build an impressive real estate business & portfolio that allows him the freedom to live & work where he wants well within his 20s.
In this episode we're discussing...
How Dan got started in real estate (managing rentals at 16!)
Why "low and no money down" strategies may not be realistic
The different niches within land investing (including Dan's specialty, horizontally developed land)
How to make high cash-on-cash returns by buying and selling land
How joint ventures (JV) can help you get started in real estate investing
Resources from Dan:
Dan Haberkost | LinkedIn | Front Range Land | The Big Picture Blueprint Podcast
Resources from Mike and Nichole:
+ Read the transcript
Mike Stohler
Hey everybody, welcome back to another episode of The Richer Geek Podcast. I'd like to happily introduce Dan Haberkost. He's the CEO of Front Range Land. He started his investing journey at the wee little age of 16. And he's managed to build an impressive real estate business portfolio that allows them the freedom to live and work where he wants well in his 20s. That's what we all want is the freedom to work when we want and where we want. How're you doing, Dan?
Dan Haberkost
Mike, I'm great. How are you?
Mike Stohler
Good. So let's start a little bit about how you got involved in real estate. What's your background?
Dan Haberkost
Sure. So that note about being 16, that's when I was managing somebody else's rental property. As a high schooler, I worked on a farm, and the owner of that farm would go to Aruba for most of the year. And he also owned a number of rental properties that he needed someone to deal with while he was gone. And so that person was me. I took care of his farm, his rentals, I didn't start investing till later still in college. I did that through high school. And then in college, I worked full time, went to school full time and was managing a landscaping company, around 20 years old. I've been working 40 to 50 hours a week, sometimes at full time school, that was not a whole lot of fun, I didn't have the typical college experience. I was frustrated with that. But I thought, "Okay, I've been managing people since I was 16." I know a little bit more about business than most people my age. how do I take that and apply that in some way to investing or a business of my own once I'm done with school to create, you know, put myself ahead create some sort of financial freedom. And I started reading different books. And like everybody else that was when I read 'Rich Dad, Poor Dad,' it was like the light bulb went off, you know. So then I was 21. And just finishing up my last year of college, I bought a duplex in Parma, Ohio, still owned it today. And I didn't want to stay in Ohio, moved here to Colorado Springs and bought another house. Still own that one today. And at that time, I realized the low and no money down stuff is great for selling books and courses and podcasts. But real estate is a cash intensive venture, right? You want to accrue a portfolio, you got to figure out how to make money, right. And so ultimately, that's where front range land came from Long story short, met a guy at the local real estate group here, which actually hosts now who had been doing land and development for 40 plus years, would drive an hour south down the Pueblo, Colorado every weekend to go help him in his business, learn from him just kind of follow him around. And over the course of time, we started doing deals together, he had me source land for his new construction. And then we started doing the projects together. And eventually that's where Front Range Land came in. And so that's where or that's my active day to day business, Front Range Land, which feeds the accrual of more rental properties.
Mike Stohler
It's funny that you say, expand a little bit on what you mean by you know, kind of what we call that we've been in the business long time seminar land. Because I'm sure a lot of our listeners are going to maybe some seminars thinking about it. And it's funny, where it's kind of like, you know, these are the HGTV episodes of, "Hey, you could buy this for free," you can just talk to someone and give them to your house and you know, all the stuff that you learned that doesn't work. So they don't make those same mistakes. And then what you found out that does work with doing joint venture (JV's) finding someone? What's the importance of going to your local RIA.
Dan Haberkost
Yeah, that's an important topic. So one or two house hacks without a lot of money is possible. But if you really want to accrue a portfolio of a significant amount of real estate, there are low and no money down strategies, but somebody needs to have money. And let me give you a great example. That first duplex I mentioned I bought in Parma, Ohio, this is just a small duplex, I had to replace the roof within the first six months of owning that. There's 10 grand settled. Things like that happen all the time. People look at averages and they think averages are reality. Well, no, no, an average is what you get over the long term. So they hear in a podcast that "Oh, I need to set aside 10% for capital expenditures (CapEx) or 10% for maintenance or whatever, depending on the age of the building. But what they don't realize is that the average you get over the course of 30 years, you might have a $10,000 expense in the first six months like I did that, then amortizes out and equals you know an approximate number over the course of decades. You have to have cash available for the things that will go wrong. You've got to have cash available for acquisitions. Sure, you can get sub two deals, you can get owner finance deals, but the irony of that, I got one of my rentals financed 100% owner carry. And the only reason he was willing to do that is because I did have cash. I had experience. I wasn't a newbie, I knew how to do construction. And if you're the newbie, you're not going to get that deal. He's going to tell you no, I'm not selling this to you and so it's a little misleading you yourself don't necessarily have to have the cash. If you're really good at finding the deals you can partner over someone who's got all the money, you just described how you did that you were the money you didn't know hotels, and you found someone in new hotels, and he got in with less cash. So there's an example. But somebody needs to have money because things are going to go wrong, there's going to be vacancies, there's going to be problems. And ultimately trying to create an entire portfolio on sub two and owner finances really hard. This is much easier, in my opinion, to find inactive business where you scale your income and then to use that income to purchase real estate. Yeah,
Mike Stohler
I only know of one person here in Arizona, he's a friend of mine, I think he has 50 or 60 homes that he did all sub to. Okay, but he also did 20 or 30, via conventional via (JV's). So then it got to the point where he knew how to find those types of things. And he has decades and decades of experience. So yes, you need that experience, because it's hard, everybody. You either if you go get a loan, the bank's gonna want experience. If you want seller financing, the guy's not going to give to you. If you say "Hey, I watched five episodes of HGTV, and I know how to do this. I'm an expert." He's not going to do it. So the importance of everyone is, and what a lot of people don't realize is if you get someone to do a joint venture with someone like Dan, you actually put that on your resume as an experience. Also, everybody. So now you're building up experience, but you're learning from someone who has experience like, Dan. So tell us, Dan, how people can do joint ventures with you, what are you looking for now? What type of markets and talk us through the process?
Dan Haberkost
Sure. So I want to make a distinction. Front Range Land is my way of scaling my income, right? And land investing in my mind is a misnomer. Most people aren't investing, it's just arbitrage you're just buying and selling or you know, improving it via build. And then the other bucket is the buy and hold which isn't passive, but it's more passive and doesn't take up the amount of time as my day to day for the buy and hold side of things. That's all here in Colorado, working on getting walk into a fourplex . Tomorrow in Pueblo, Colorado with the owner, we're getting on buying some fourplexes here in Colorado, and then on the land side of things for just the buying and selling. It's really simple. I'm doing business in New Mexico, Colorado, Florida, and North Carolina. And that's pretty simple. But I do want to highlight that I'm only going after horizontally developed land, I don't touch raw land. That's not my niche. And for people who don't know what I mean, a farm field, right? There's raw land. But if you see a house, and then a vacant lot, and another house next door, and a built out subdivision with a few pieces of dirt left, that is not raw land, you're dealing with land that's already been subdivided, there's probably utilities at the street, the entitlements are there that is different, that is horizontally developed land, and that is much, much easier to build on. And so I've stuck with that niche, because that's what I know. That's what I learned on subdivisions all over the country that were done decades ago, were never built out or only, you know, 10-20-30% built out. That's my niche. And that type of land is much easier to comp much easier to do your due diligence on. So I'm buying and selling that all over the place. Last kind of bucket is new builds and all my new builds are here. I definitely would want someone that I know and trust and partnered with on the ground if I were doing that and other states. As of now I just do it here in Colorado where I can go look at it myself.
Mike Stohler
Yeah, and those are some good distinctions about what type of land because there's all these other different things. We've had people that buy raw land, then improve them, and then sell them to do the development. Do the development, only, you know land that's been developed. And probably the easiest to control is, "Hey, this five lots in this development that's still left." You can either look up the developer, or maybe someone is holding it and wants to cash out. So that's very good. With land, it seems like a lot of people are hesitant, like, Well, I'm not getting any cash, and there's no cash on cash returns. All I'm doing is I'm holding this land and paying taxes on it. What are some of the things that you should tell people like, look, this is why you do land instead of some of the other stuff?
Dan Haberkost
Sure.
And again, I'm not saying it's necessarily a great long term buy and hold investment strategy, but just under the umbrella of land, there are endless, endless niches. I was helping my buddy with a deal yesterday. He got a piece of land in Colorado where he's going to rent it out to RV owners. So you can create passive income or mostly passive income with land but that's not my niche. So I think of it as simply a great way to make money. You reference some of the people who take the raw land, do the horizontal development and then sell it off to builders. That's a great way to make money. You can go to Richmond, go to Toll Brothers, figure out what they're looking for. And then you have an end buyer who pays market value, because that's not their niche. They're good at building. And so you can get contracts ahead of time for those sorts of developments. If you find the right people, the land acquisition people within these big companies, which is a whole nother conversation with what I'm doing, I'm buying and selling most of this stuff within a couple of weeks to a couple months, 30 to 100%. cash on cash returns in a few months isn't so bad. So it's a great way to just multiply your capital. And then on the new construction side of things, I like that because not only can I just build spec houses or presale homes, build them and make money. But you know, you can create your own rental inventory. And you can have rental inventory that doesn't have capex or maintenance, assuming you do your screening right for a long, long time. So you can do most of it, you can accomplish most any financial goal with land. And those are just a few of the niches I have friends in all different niches within land.
Mike Stohler
Some of the homes that you're building, and this is another niche is the build to rent market. It's kind of like a new thing. Are you doing any of that with your new builds? Are you selling them to homeowners?
Dan Haberkost
I have been selling them up until this point, but I'm working on. So Pueblo, West Colorado has been where I have done most of my builds. And up until this point, I've been just building specs or doing it on presale if a realtor brings in a client who wants the house on the land I have. But they are now almost out of water. And this is significant. So they have 290ish taps left this year, a 100 next year, and they're done. And so there's now a massive restriction on supply. So I am aggressively working. I'm doing due diligence on several pieces. Right now, I'm getting a multifamily lot and building a 24 unit. And I am really hoping to get one of these pieces locked down this week because buy and hold is now far far more interesting or building hold. In this case, that supply is majorly restricted. So working on that right now. But up until this point, no, I've just sold them either pre-sales or specs.
Mike Stohler
That's really good. Because there's all these different niches and we need people, if you can diversify and all these different things. There's some people that just hold the land. There's people that buy land for mineral rights, and there's just all this sort of stuff, everyone, it's just a matter of diversifying your portfolio and getting into all these just a little bit of money in all these different buckets. Dan, if they're interested, how can they find you?
Dan Haberkost
Yeah, danhaberkost.com
And same on all the socials and just launched a podcast with a friend of mine, The Big Picture Blueprint.
Mike Stohler
The Big Picture Blueprint. And what else can you tell people as far as you know, a lot of people might not know what a ( JV) agreement is. And that's kind of what you're doing. If someone's interested in partnering with you. I'll experience a little bit about that.
Dan Haberkost
On specific projects, I have investors who put up money, and they take a piece of the profits once we're done in return for lending on the project and do it via joint venture, which is pretty straightforward. It's a matter of just being equity partners in the deal.
Mike Stohler
That's usually they put in equity partners, and then you have the cost and you split the proceeds. And when you do a (JV) agreement with you is it just it's going to be like here's the land and all sudden it's two weeks you're going to sell it then the (JV) is over. Or you're looking at reinvesting and just keep on going. What can they expect, if they're looking for something a little more longer term?
Dan Haberkost
Yeah, it depends what they're looking for. There's a number of ways we could set it up. But I have a number of investors who they just find deal after deal or they take their cash, they get their profit, and then on to the next one, and it's just a matter of wiring the funds really. So yeah, you can keep the money moving with subsequent deals, and then they're not all that fast. Sometimes it takes three, four months to sell.
Mike Stohler
Yeah. Well, sounds good. Dan, thank you so much for being on The Richer Geek Podcast. Everybody, Front Range Land, Dan Haberkost. Thank you so much.
Dan Haberkost
Thanks, Mike.
The information, statements, comments, views, and opinions (collectively, “Information”) provided in this podcast are not intended to be and should not be construed as financial, economic, legal, accounting, tax or other advice. For our full disclosure, click here.
ABOUT DAN HABERKOST
Dan Haberkost, CEO of Front Range Land, is recognized for his expertise in real estate investing. Beginning his journey at the age of 16, Dan has amassed an impressive portfolio spanning multifamily, residential, commercial, and land investments. He has been featured on various podcast shows, sharing insights into the industry and his successful business model.