Decreasing the size of land to increase returns with JD Hill & Aaron Shumaker

We didn't do any development, no improvements. We literally just made the parcels smaller and they were now worth more because that's what the market said they were worth. And I think that's what about what we're doing is that it's simple, it's easy and we're able to remove so much complexity from most syndications that are out there. Right.

Welcome to the Next Level Income show where it's our goal to take your income, your investments and your life to the next level. I'm your host Chris Larsen. If you haven't yet, get a copy of our book free for free at our website nextlevelincome.com. that's www.nextlevelincome.com. just click on the book link and I'll even send you a copy if you put your address in. On today's show we have Aaron Shoemaker and J.D. hill with land X. Aaron is a trailblazing entrepreneur and investor with a knack for transforming startups into industry leaders. His career took off at Goldman Sachs, setting the stage for an impactful journey in the business world. Aaron left Goldman Sachs to found and lead FrontPoint, a tech driven DIY home security company. From an ID on a napkin to an industry giant. With Aaron at the helm, Frontpoint grew to over 125 million in annual revenue and amassed over 250,000 subscribers nationwide. Aaron also co founded Landex with JD Hill. It focuses on advanced land developments. JD followed a series of highly successful land subdivision projects and has nearly 15 years of experience in the financial industry and over half a decade of real estate investment expertise. JD Embarked on his real estate journey by flipping a single home in 2018, quickly expanding his portfolio to encompass over 200 residential real estate transactions by the end of 2022. His diverse real estate ventures include short term rentals, long term rentals, creative finance and land development projects. Known for his keen eye of on identifying lucrative opportunities and meticulously underwriting deals, JD now leverages his expertise to assist others in growing their wealth through strategic investments. He collaborates with investors to achieve strong risk adjusted returns while maintaining a focus on integrity and transparency. Both JD and Aaron are going to join me today and talk about their journey to Landex and how they are helping investors get outsized returns through land development. Gentlemen, welcome to the show.

Man, we are so excited to be here. This is awesome.

I'm excited too. I just, I don't know how we're going to handle all these personalities on one screen though. So we're gonna have to do A little bit of juggling, but I think we'll make it work.

Well, let's be honest, the biggest personality here is yours. So I think we'll be good.

All right.

How to juggle. And JD was a juggler in college, so there's that. We'll leave it to JD if you're.

If you're needing an assist, man, we gotta, we gotta do that next time we get together, man. I did a little juggling and more and more middle school when I was like at the height of my, my coolness. But it's kind of faded. It's kind of faded since then. But yeah, gentlemen, I, I'd love to. I want to really dive into Landex and what you guys are doing. I know you got some exciting stuff coming up here, but you both have fantastic backgrounds. You know, jd, you and I have worked on the, the infinite banking side of things, structuring some different things. You've been a real help for me, Aaron. Now we've had some fantastic conversations. You've done some really cool stuff in multiple different areas. And now you guys have collaborated on the real estate space. So why don't you guys take turns sharing a little bit about each of your backgrounds.

Yeah, so I'll start since Aaron is a tough act to follow. So I have been in the financial services space for almost 15 years and started with big well known financial firm called Northwestern Mutual and spent seven or so years there. Yeah, yeah. Building a team. And quickly figured out that their model for financial planning was not the model that I wanted to ascribe to long term. So basically left and went independent. And that's when I got introduced alternative investing and infinite banking and those types of things. And, and so I had actually had a client of mine that wanted to flip a house and he needed access to cash. And I said, I want to get into real estate, but I don't have time. Why don't we collaborate? I love the back end stuff, the, the spreadsheets, all those types of things. So write the deals, raise the money if you find them. And we flipped one house and then raised some more capital, ended up flipping 6. The following year was actually whenever I met the genius on the other side of here, Aaron. And we flipped 45 houses that year after connecting with Aaron, and then went on to flip over 200. And so what's interesting is the first deal that we actually did together was a land deal. So that's how we got connected was through our first deal together was not actually flipping houses, it was flipping piece of property doing exactly what we do today.

Love that, love that.

My background. So I went to Georgetown Washington D.C. and while I was at Georgetown they actually had the student run credit union that was on campus. So managed about 12 million of customers, you know, mostly students and some alumni money. This was entirely student run. So my, my foray and my introduction to entrepreneurship was as an 18 year old kid on Georgetown's campus just running this bank. So we had maybe another for another time or we can dive in more to that on the podcast here if you want. But so I was CEO of this bank my senior year and I because all the people that did this got to get great jobs on Wall street which is what I've had my heart set on at the time. And once I graduated I purchased my ticket to Wall street at the credit union and then got my ticket punched at. Goldman Sachs is where I spent my first couple years of my professional career was in a group that would do LBO transactions. So we'd help private equity firms buy companies. We'd raise the money and advise them.

So it did that just for the audience. Aaron lbo. It's a leveraged. Leveraged buyout.

Yeah, it's leveraged buyout. It's. It's basically buying a house or buying a multifamily. It's just like an operating business and what the leverage is like. It's like the mortgage on the house but it's a mortgage on a. So they're able to make their equity go further by using that, that leverage. So it's, that's the similarity to, to real estate. So I spent, you know, good couple of years there. If I had nine careers, I would have loved to spend one of them at Goldman. Gets a bad rap sometimes, but I loved it. So after that I ventured and started a company called FrontPoint DIY Home Security Company. One of my best friends and another Goldman guy and I left to start it in. This is right in the. Right. Heading into the storm of the financial crisis, the banking crisis, the Great Recession I guess as it's called. Yeah we moved back from New York, Washington D.C. and we started a home security company called FrontPoint. Started as two guys with an idea in a basement, my uncle's basement. We got a deal on rent. We built it up to about. There were about 300,000 subscribers we had across the country. We had about 125 million in revenue time we sold. We grew it organically, just the two of us over the course of about a decade grew to about 800 employees at one point in time, and that was the roots at this bank came all the way back to helping me and my partner at this company. So sold it in the fall of 2020, right in the midst of COVID We're right at the, I guess it was middle of COVID And then after we exited, decided to open a. Essentially invest my own capital. And I'm investing with JD and Landex. That's one of my primary focuses. And then my other primary focus is investing in helping entrepreneurs grow small businesses into medium sized businesses. I look at the, you know, the real estate investing we do inside of Landex, you know, it's, it's investing, but it's also building a business. And every investment, every, everything you do on the investing side has a business at the, at the heart of it. It's a business too. So that's me and that's my, that's my professional background.

Yeah, I love it. And what I, what I love is both you guys are true entrepreneurs at heart. You know, Aaron, I guess, you know, a lot of people be like, wow, Goldman Sachs, like, why did you, why'd you leave such a prestigious career, you know, to, to go pursue something on your own? Obviously at the end you're like, okay, I sold, you know, sold exit. Grew a business to over nine figures of, of revenue. That sort of thing. But why, what, what kind of made you think, hey, I'm gonna, I'm gonna leave this.

Yeah, there. I mean, some of the Goldman partners that I was telling when I was, you know, giving my resignation tour for all the folks I was working with, some of the folks were like, do you realize you're an idiot? Like, you're literally an idiot. And if you want, we can spend the next 20 or 30 minutes talk through why, and I'm happy to show you all the reasons. But I, you know, decided to stick to my guns.

It.

I would say I was 23 at the time, so ignorance probably was a good thing for an entrepreneur not knowing all of the storm weather that an entrepreneur will face and have to persevere through. Um, but it was really just, you know, at the heart of it, it was the American dream, something that was mine, getting the financial freedom faster. And I think at the heart of a lot of entrepreneurs, what, what sits at the true core is freedom. So absolutely was really just trying to get my freedom maybe 20 or 25 years ahead of when, when it would come from like Goldman or never come.

I love it. Yeah, it reminds your story. Reminds me of one of my friends when I told him I was leaving, leaving my role in the med device field. I was at several good years. And he goes, what's wrong with you, Chris? Do you hate money? Like, it's, like, what is. But, you know, life's an adventure. And, you know, I think, you know, being an entrepreneur is, you know, it's, it's really one of the ultimate adventures in life. In addition to, you know, as we were talking before the show, you know, having a family, you know, children, those sorts of things. But. But what. What is life if we can't make an adventure? Jd, I wanna, I wanna jump back. And you're right. I can see now why you let. You, you volunteered to go first because, you know, that's a, that's a leaving Goldman Sachs. That's kind of like a drop the mic moment. Right?

But that's. Right, that's right.

But actually, Northwestern Mutual, I, I had, I had a contractor work with them as well. I don't know if we ever had that conversation.

No, we didn't.

Yeah, I. Life. Life. Life's adventure took a little turn and I ended up not. Not going that path. That's funny how things come full circle. But when you started flipping those homes, were you using. Because we just did a webinar last night. Were you using the infinite banking concept to fund those house flips? Were you integrating those two?

Not at the moment, no. It was, you know, it was interesting because I've. I've talked to a number of people since, you know, the journey that we've taken and we've had, um, largely just because of obviously great relationships. But for the first three or four years of, of my career in flipping real estate, she used a dime. In my own money. It was literally all other people's capital. Um, and so that's how we were able to create the capital necessary for the me to, to create the infinite banking contracts that I, I use now for Land X and for the other real estate stuff that we do.

Gotcha. So tell. So again, we, We've talked, we've talked about this multiple times on the show, but talk. Talk a little bit about how you use those policies, because that was, that was kind of how we got started. My wife and I using our policies for investments. You know, we said, hey, we have this cash value sitting in our policies. And we wanted to give my wife an opportunity to leave her role as a, as a salaried or contract architect, and we started building spec homes. We bought a piece of land for 50,000, you know, built a home, turned a profit of 50,000 on that. 50,000. Rolled it back into our policies, which I don't know if everybody listening understands, you know how that works. Maybe you could share a little bit about that real quick.

Yeah, you bet. So, so infinite banking is. It's a. From my perspective, it's a cash flow management system. Right. So everybody uses a checking account. You know how they use a checking account? Money comes in, money goes out. But what people don't recognize is that when the money goes out, it is never earning an interest rate ever again. Right. And so my perspective is that cash is very expensive, but cash sitting inside my infinite banking system is not expensive because it's actually earning something or I use it or don't use it.

That's right.

So the benefit of implementing infinite banking is that whether I'm using the capital or not using the capital, my money's always at work and doing something and earning something. So from a real estate perspective, what's great is that when I leverage my infinite banking system to go put money into land, let's say I'm earning a rate of return inside of that life insurance policy in addition to the crazy returns that we get in land, which we'll get into. Right. But I'm getting both at the same time with the use of basically $1. And so I think that's what's really unique about infinite banking is you're simultaneously getting two returns for. For $1.

Yeah. No, I love that. And I think, you know, this is one of those concepts that I think it's abstract because people are like, oh, life insurance, whole life insurance. Oh, it's expensive. But when we look at the amount of money, like Nelson Nash talks about the amount of money we pay in terms of financing, most people don't realize that their number one expense in life is taxes and number two is interest. What if you could recapture that interest? And the other thing, my wife and I, before we started using our cash value and our policies to buy the land to build those spec homes we started to use for our kids for their college expenses. And we people are like, oh, you know, you're going to give it to your kids? I said, no, no, no, no, no. Like, we're going to teach our children the cost of capital. And, you know, right now you can earn. As you were alluding to, JD Cash is expensive. Like, it's expensive just to have cash sitting around and not using it. You know, today, you know, I think our policies are similar. We're earning about 6% and essentially a tax free return in our policies. So it helps you kind of understand, hey, if I'm not earning at least 6%, maybe I shouldn't be making that investment. You don't have that compulsion necessarily. Go put your money somewhere. And Aaron, you understand this is how business look at things. It's a cost of capital. So there's always a cost of capital and net present value whenever you do a project. And I think a lot of investors that are starting out, they don't fully understand this. So that's one of the key concepts that I'm setting out to teach our children. So if you want to learn more about that concept, you can check out the banking link on our page and we can talk more about that. Obviously we could do a whole podcast on this, but I'm excited to kind of kind of jump in. I don't know. Did you have anything to add to that, Aaron?

My only request would be if you can figure out how to do a mega IBC policy for businesses, you know, let me know. I'd love to actually parlay what you said into, into what we're doing with Landex. JD Maybe we can talk offline and you can actually show me how it's done.

Problems. Yeah, that's easy.

There you go.

There's already a solution to that.

There's already a solution.

Well, and just follow up with jd.

He'S got where's the staples easy button. Right?

That's right.

Push that right now.

Well, and, and I think, you know, just to, just to kind of wrap that up, you know, if you, if you read Nelson Nash, who was really the, the father of this concept, you know, he ultimately says you, you should have all of your cash flowing, you know, through this system. As you talked about at JD and you and I, when we first got together, I was like, let's talk about, like, what would that look like? Unless that's how I can, that's how I kind of back engineered or reverse engineered what, what I ended up doing, you know. But the idea is, hey, if you can, you know, if you can flow all your money through this system and then you can tap into it, this is how the ultra wealthy do things. They're not actually spending their cash. They're using their assets to leverage off of so that their assets continue to earn money. Right, right. It's kind of like owning your home and then saying, okay, I'm going to take cash out of my home for expenses and those sorts of things. But if you own a million dollar house and it's appreciating at 5% a year and, you know, your house, you don't have to erode the value in that. So I think a lot of people understand the value in real estate and how that works, but they don't understand how to necessarily apply it. Which is. Which is exactly what you can do with an IBC policy.

Totally.

Yeah. So, okay, so real estate, a lot of people, as we talked about, understand real estate. You buy a property, you leverage a property, you have cash flow coming off that property. I want to talk about how, how and why you all started Landex. But let's talk about, like, why, you know, is land really a good investment? Because land, like I bought a piece of property in 20. When did I. 2013. So what we built our house on and the property probably doubled in value. But I bought it at a great time. But during that period, the land, it didn't make me any money. It just, you know, it cost me money, essentially. Right. But it doubled in value. So it was a quote unquote, good investment. Why is land a good investment if it's not actually producing income or how can you turn it into an income producing asset?

Well, it depends what you do with it. So the highest and best use of land, there's all sorts of different uses of land. And I think where we look at it, we like to think we're reasonably creative, but we're trying to do things that people have done before successfully. We're not necessarily trying to recreate the wheel, trying to do, you know, follow the model, like private equity does, of repeating what works. So if you on the one end of the spectrum, if piece of land, and you let it sit there and appreciate, it's going to cost you money. And you better hope that it's going to appreciate over time. And it will. It probably will appreciate that 4%. And it might, you know, if you're borrowing in today's money, that might be a negative spread for a period of time. I would call that probably not the best use of capital if you're just buying to appreciate it. But you can buy that piece of land and the first thing you could do on it is a house on it. So, you know, that piece of land might be the base for you to add value by, you know, doing the first thing you could do with it, which is kind of an obvious, you know, an obvious situation. You take that all the way to the other end of the spectrum and where we're playing is, let's say you buy a really big piece of land. So Instead of just one house, you bought enough land to put a hundred houses on. Well, you can cut that land up into smaller pieces. And you, interestingly, if you're buying a piece of land, let's say 100 acres, it might cost you an acre. And when you cut it up into smaller pieces, it might be worth three or four or five. So it depends on how you're looking at things. Some people look at real estate really creatively, some people look at real estate pretty transactionally. And we found an area of real estate where you can really take land and force appreciation. And that's largely what we do at Landex, which is we buy big pieces of land, we cut them into smaller pieces. So the analogy I love to give is you go, it's just like Costco. JD I don't know if you want to share the analogy.

Yes.

When you go to Costco, you buy huge case of what, water. So one case of water, 24 waters, one case, call it 10 bucks, so. Or call it, call it 12 bucks, 50 cents of water. And then you take those waters, much like you take the land and you buy the bottle. So you don't sell it by the case, you sell it by the bottle. And you'll have people that, on a good, good day, it's hot outside or it's cold outside, they'll pay anywhere from a $50 to, you know, three, four or five dollars if you've got the, you've got it. But you're able to force that appreciation just like you can with case of water from Costco. With a large plot of land, you buy 100 acres, it's a th.000 an acre. You can turn around and sell it for, you know, 2, 3, 4, 5 an acre. And that's, you know, you're just finding a better, higher and best, you know, highest and best use of that, that property. And that's what we're, that's largely what we do at land, is just find those opportunities.

I love that. That's a great analogy. And I'd take it a step further and say, hey, let's, let's go like to a lacrosse tournament on a hot day and stick it in some ice. Right now you can get, you know, like you said, that three or four.

Dollars of water. If you're at the, if you own the land, the baseball stadium.

Yeah, one of Lon, what was Lon's last name? He would buy mobile homes. And so he'd buy them. He'd say buy wholesale and finance retail. Say buy wholesale and finance retail. So we take that a step further, right, and say, hey, let's buy the case of water. Let's sell each bottle for, you know, two, three, four bucks. And then let's say, well, hang on, you don't have the money to buy it. Let you pay that back over time with a little bit of interest, right?

There are so many. And interestingly, that is what we'll do on some of these projects where at the end of, you know, we'll, we'll take a thousand acres or 100 acres and we'll, you know, you know, we'll break them up into 1 acre, 2 acre, 3 acre parcels and we'll allow people to pay over 5, 6, 7, 8, 9, 10 years. So that's the final part of the transaction is finance retail. So I think you've encapsulated really quickly here, Chris.

Well, I think it all started with that water analogy, to be fair.

Podcast over. Thank you. That was good.

That's right. All right, gentlemen, thank you so much. Okay, so, all right, so you kind of described in a nutshell what Landex does. So but let's. JD why don't you expand on that? So why did you start Landex? And then exactly what are you all doing? Are you a high income business owner or professional earning 2, 300,000 or even more a year, but still feel like you're living paycheck to paycheck? Are you comfortable working until you're 65 or 70 to retire? Or do you want to achieve financial independence and live life on your own terms? You could join myself and Matt4 and learn how we both became financially dependent in our early 30s. We will teach you how to make, keep and grow your money, teaching you strategies to maximize your earnings, keep your income that you've earned through tax strategy and legal structures and ultimately teach you how to grow it by determining your personal investing strategy as well as teach you how to analyze investments so you can grow your passive income to the point to live life on your own terms. Terms. Our coaching clients reliably do this in seven years or less. To learn more, check out our coaching program at nextlevelincome.com forward/coaching. That's nextlevelincome.com forward/ coaching.

Yeah, we, we started Land X. Not because we had great success in flipping houses, because we did. I mean, we, we, we killed it when the market was crushing during, during pre, what is it, 2021, 2022. And interest rates went up.

Interest rates. Yeah.

Thank you.

Yeah, thank you, thank you. Jerome. What Was interesting, though, was as we looked back, right, because we took an inventory over all the success that we had had, and we were like, where did we have the most success with the least amount of risk? Because as investors, that's constantly. What we're trying to do is how do we get the most and highest return with the least amount of risk possible.

Right.

Warren Buffett's rules for investing is don't lose money. Right. You can encapsulate rules one through 10 is don't lose money. And rule number 11 is make a profit. Right. And so our, our focus is don't lose money and then let's make a profit. And so when we look back over, we realize that the, the, the projects that we did that had the least amount of risk, the least amount of, of, of like, nuance and detail and the things that was happening with it. Much like flipping a house, where you got to come in. Simplest, simplest. Thank you.

Right.

Like it was land. Land was the, the simplest projects that we did where, candidly, we didn't do anything to them. Like, much like to that water analysis we did was just open the case of waters and just sell them by the individual parcel and it magically was worth more. Like, we didn't add a structure, we didn't do any development, no improvements. We literally just made the parcels smaller and they were now worth more because that's what the market said they were worth. And I think that's what's about what we're doing is that it's simple, it's easy, and we're able to remove so much complexity from most syndications that are out there. Right.

What I, what I would add to, to what JD said is the, you know, the, the model is not very difficult.

It's.

There are opportunities that are out there also. The most important part of what we're doing is selection for what's the market with which we're doing this, in which particular pieces of property are we investing in? And that's the real trick of the trade, is knowing which projects to do and which projects to not do. And when we pick the right ones, they really go well. And when we pick the wrong ones, we try and buy low enough such that there's plenty of margin for safety, not just to get all our money back, but also to make the return we're promising.

Yeah. So where. Where in the country are you seeing this strategy work the best currently?

It works. It works all over the country. We're not in every part of the country, but we're, we're focused in the, you know, we, we like to say west of the Mississippi, east of Nevada and all the way north to south and, you know, along. Some, some places along the East Coast. So there are pockets in there. And we have a particular liking to JD's. JD's home.

That's right. Texas.

Texas.

Yeah.

Nothing wrong.

Nothing wrong in Texas, I'll tell you that much. Yeah, we like, we love the Southeast, love Texas, all those.

You know, what else is great about land? Chris, just to final button on this is they're not making any more of it.

That's. That's right. Who said that?

I did. I don't know.

I did. I said that.

No, I'm kidding.

Mark Twain.

But they're not making any more of it.

Well, you did just say it, to be fair.

I did, I did.

Thank you.

Right.

But I think that's right.

So it's a, it's a limited supply.

Yeah, yeah.

Right.

Especially in places that, yeah, there's demand. And that's. I think that's one of the great things. So, I mean, I, I think, you know, I look back and, you know, you look at the demographic wave that really supported multifamily over the past decade and now, you know, immigration. It's funny, I was going back and updating some stuff for a. An upcoming newsletter I'm writing here, and I was looking at how immigration had kind of stalled two years ago when I wrote it. Now we've seen an explosion. Right. What are we looking at? Another. What was it? How many million, 10 million more people into the country? Do you guys know off the top of your head? It's no, jd. You know, they run right through your backyard. Right. Yeah.

Thank you for that. Yeah, thank you for the reminder.

Yeah. I'm just saying it's, you know, and, but immigrants, immigrants rent like 70% of the time, so it's a. We've had a big influx. And look, one of the, one of the benefits of being in America is that a lot of the developed countries around the world are actually shrinking in population. We're seeing, you know, a continued growth in population, little bit. A little bit around replacement population from. What would you call the current Americans? You can't say really indigenous. Right. But then you also have the immigration that's coming in here, so that's, that's certainly supporting, I think, you know, both home prices, you know, household formation that's going out there. Are those the same demographics that are supporting land? Who, who are you seeing is typically buying the land that you guys are selling through Landex.

Yeah. So we're, we're doing different types of, of subdivided projects. So that population we were just talking about is supported by the projects we're doing. So we work on, you know, two, we work on a couple ends of the spectrum. And I'd say that that is certainly one end of the, one end of the population that we're, you know, we're supporting. The other end of the population is, you know, folks that are a little bit more fluent and can, you know, can spend some, some money on, you know, property that they're, they're looking to put a home on or they're looking to have some fun with. So it's, it, it does vary project by project and it's also, you know, arranged, but we're, it's, it's pretty project specific.

Gotcha. Gotcha. So there's not, it's not like a cookie cutter in terms of size, cost. It varies. Is that true?

Yeah, for sure. And I think that's, that's one of the great things about what we're doing is that again, it's not cookie. Right. So.

Gotcha.

We allow the market that we go into to kind of dictate what the exit strategy is going to look like. Right. Based on what the market is demanding, what the market is wanting. And so, you know, to Aaron's point, we've done, you know, in, in certain parts of the country, you know, we, we've bought 150 acres and, and sub that into one and two acre lots, you know, and then in other parts of the country, we purchased 5,000 acres, you know, and chop that into 80 to 500 acre lots. Right. And so it really just varies based on where we are in the country and what type of property we're actually buying.

Gotcha.

And we've got a targeted strategy where we're looking. So, you know, especially, you know, we're looking to continue to repeat the deals that have worked out well and to this point, all of them have, have fortunately worked out well. So we're, we're looking to repeat the, you know, the strategies that we have in play. And we've got, you know, some, some areas we aren't, we aren't targeting, we aren't targeting the, the left coast, if you will. It's not a place we'd, we've done any, any transactions, but we are, you know, we'll, we'll find a success pocket and then we'll mine that pocket.

Yeah, no, I like that. What is the average turnaround time so you guys put a, put a piece of, you find a piece of land, put it under contract. How long does it take to turn something like this around?

Yeah, so very simple. Yeah, it's, it is very simple. It, it takes about 12 to 18 months. Is, is what we target, 12 to 18 months to be able to get in and then completely exit the project.

So our, we're looking to drive what type of return, JD in that 12 to 18 month time period?

Yeah, 25 to 30% ours in that 12 to 18 month time frame.

12 to 18 months, 25 to 30% IRR. And every deal like that we're underwriting, we're looking to, you know, to fit into that mold. If it's below that threshold, then that means there's probably not enough margin for safety. And we're really looking to overshoot so that, you know, some things can not go perfectly according to plan. We still have plenty of room and still in the, the range we're targeting.

I like that because you get, you get in, you get out. I think, you know, one of the questions as an investor that I like to ask is, you know, first off, all right, you know, how are you creating value? How you're forcing appreciation like you guys are talking about? It's kind of like the value add strategy in real estate. Right. You know, what's the financing look like? How does that work? But then also, when. What is the return and when do I get my capital back? And in some cases, you don't get your capital back in some investments, right. It's all cash that comes back. You know, this comes back in, in both. Right. It comes back in terms of.

Yeah.

As well as that.

It's a really interesting product for, you know, we found that it's had a lot of interest because you don't have to lock your capital up for, you know, five, seven, ten years. And with our projects that we do, as we start selling these subdivided plots, some, some of these projects will have leverage on. So the banks will, will get paid back first and then you get your capital back second. Either first or second, depending on the. If there's leverage or not. We're targeting to return capital in anywhere from eight to eight to 12 months. It depends on the project. Some will be even less serve that we had done. That's wrapping up now that we had 100% of capital back in just about five months. And we had a 37 IRR within six and a half. And that one will probably go well into the 50s as an IRR percentage. And the investors love it because it's a velocity of capital game. And it's kind of antithetical to some of the. The other options. Great for other reasons. But one of the ways they aren't great is I have to say goodbye to my capital for a good five. Seven.

Yeah. So let's play devil's advocate to that. The flip side of that is now I got to repeat the process and do that and obviously the returns are great. Are there any depreciation benefits? Are there any tax benefits with land? How does that work? How does that look?

So I would, I would submit if you could depreciate land, it would be the all time best investment ever. Without a doubt.

We will look at some point into seeing if there's a way to combine conservation easement in it. I'm sure there's. If there's somebody out there that knows how to do this, please find us. And then we will create literally the perfect investment.

That's right. We can chat about that afterward. There's. Yeah, there's certainly. You could kind of do a barbell strategy and combine something like a conservation easement or a. What are the deed? Simple. Oh, shoot. What's it called? There's. It's kind of a variation.

Be simple.

Be simple. Thank you for simple transfer. Yeah.

I will say though, we loved it. To your point, Chris, about, you know, playing the devil's advocate is. No, you're right. Because now when the 12 to 18 month time frame comes to fruition, now you have this capital, now you have another option like what do I do with this money? The good news is that we're not going anywhere. And so we've always got a deal that you can put it into. Right. So you can certainly roll another deal.

That was a softball. That was a softball, to be fair.

Well, thank you. Thank you. Yeah. And I wanted to make sure I stepped up to the plate and hit it. So, yeah, thank you for that.

If you didn't. Yeah, we were going to pull you from the game.

That's right.

Put Aaron in. That's right. There we go. Awesome. All right, so talk a little bit about how you work with investors at Landex.

Yeah, so.

We.

So one, you can find us at Landex Land. That's our website.

Landx Land. Okay. Yeah.

Land X Land. Yeah, that's our website now.

It used to be Land Twitter. Right? Used to be Land Twitter. Then you guys.

Yeah, it was Land Twitter. And then we, we, yeah, we did a brand, a rebrand to Land X Land. Yes. Thank you. For that.

Aaron, tell me that's not the first time you've heard that. Is it on?

No, it, it actually is the first. Yeah, you get the, you get the original. I guess we, you guys gotta hang.

Out with more, with people that are more witty, man. Like, this is. Come on. That, that, that seemed like a softball to me. I was just waiting for that one.

I, I appreciated that you get the first, first one to call sl Twitter. I appreciate.

Yeah, thank you for that. But, but no, so, so, I mean, our process is, is fairly straightforward, right. We want to engage with people they'll send a call with. We'll walk them through what we're working on. You can certainly go to our investment portal as well to look up all the deals that we've done in the past and certainly make commitments that way. And then we send out updates, email, and then we do, you know, all of our payments that we make out to investors are all done via ach. All through their online portals. You can see exactly what your returns are, you know, what deals that you're invested in, all those types of things. And so all of our current offerings are for accredited investors only. So you do have to be accredited, fortunately for your cast, that's not going to be a problem for your audience. But so. Yeah, so, so. And usually what I find is that most of the folks that are really interested in what we do, they really like. They're either the outdoorsman, right. Much like you. Right. So they like the outdoors, they like land, they like recreation, they like the idea of something that's not traditional. Right. So whether they're, they're outdoors and whether they're hunters, right. Whether they're. Whatever that looks like, they like that, that aspect of it. And so it's, it's been a lot of being able to engage with these particular investors in a way that, that they can get involved in something that is different, I believe, than what's really out there in the marketplace on, on a scale. Right. Most of the stuff in the marketplace is just, is just not doing what we're doing.

Yeah, no, I love it. And I think that's a great point you make, JD So if, if you're out there, you got investments in multifamily mobile homes, other different things, and you're looking for something to complement that. This could definitely be worth checking out. So check out JD and Aaron@landx.land. we'll have that in the show notes. Any final thoughts here? Aaron.

Put me on the spot. Yeah, I. Piggybacking off of what we were saying, we find that people love, love Landex for a couple reasons. One, it's simple. What we're trying to do is understandable. We're, we're largely trying to follow, follow past that. You know, we didn't, we're not the first people to do this and we.

Won'T be the last.

But we're trying to be very, very, very good at it. We like to keep things simple. So as JD was saying, we're targeting projects turn around in 12 to 18 months and deliver 25 to 30% returns IRR. And we have fun. You know, we had fun doing. So we're, we're really enjoying this game. I like to think of it as a very serious endeavor that we entrusted with others capital and we take that extremely seriously. But we have a lot of fun doing what we do at LE Index and I guess the last is a great so for folks that are looking for another way of sort of non correlated diversification, it's another asset that doesn't have strict correlation to everything else that's going on in say multifamily. So it's good for diversification and it's good for a high velocity with a really, really solid rate of return that's hard to find.

Yeah, I love it. J.D. aaron, thank you guys so much for joining me today. It's always a pleasure to see both you and having you both in one place is, is double the treat here today. So thanks for sharing with the audience. If you want to check out more again, we'll have everything in the show notes today. JD and Aaron with Land X Land X Land. Thank you gentlemen. Hey Chris, here again. I hope you found this episode valuable. Now I have one more thing to give to you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also please like share and take just 90 seconds to give us a rating on Apple Podcasts.