How To Increase The Value Of The Asset In Land Development with Cody Bjugan

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, thelandgeek.com and on this week's Art of Passive Income podcast, I'm really excited to go into an in depth discussion with Cody Bugin at Vestrite. So if you know Cody, he is, he is a 20 plus year veteran land developer, home builder, but he's dispelled the myths and shows real estate entrepreneurs how to capitalize on the unprecedented demand for, yep, raw land with development potential and learn how to create life changing wealth in the process. So what's also cool about Cody is he's achieving his mission of purpose, impact and fulfillment to help change the lives of those willing to step into a new business model and follow his lead. Land development and investing is a blue ocean of opportunity and there's currently nobody else who's teaching the methods Vestrite uses to create massive windfalls on every single lead. Cody, welcome.

What's up, brother? Thanks for having me. I appreciate it. I've. Over the years I've seen your name here and there, so this will be fun.

Yeah, yeah, absolutely. I see what you've been doing and I'm always intrigued to learn about a new model when it comes to raw undeveloped land. But before we get into that, let's just rewind the tape a bit and, and tell us how you even got started in land development. Hoe building.

Yeah, yeah, for sure. Well, I won't rewind too far. I'll just go back to high school. I'll just say, well, not so I got my high school girl from pregnant. Let's just start there. Okay.

Okay.

So instead of going off and doing the degree, I was going to go to ASU actually, where my daughter goes now and, and do the whole college thing. And instead I went to the school of hard knocks, you know, reality check. And I went right into the trades. I went into the flooring union because I could qualify for health insurance after three months and to, to quite frankly be able to pay for my baby boy that was on the way. Spent about five, six years in the trades, right in the flooring industry and got to know a lot of the home builders and land developers and got to a point in the flooring industry where I needed to do more. I was running someone else's company. We were one of the fastest growing companies in the industry. Things were great. Young, eager, driven, workaholic, which I don't recommend to anybody. But I had a choice either to go open my own flooring store or to go do Something different. And so me and another gentleman, he. And we partnered up and, and I went for it. So I went into the homebuilding industry and I started building homes and quickly got into the land game. I think the Lord's hand was definitely a part of me seeing the opportunity more on the land side than the homebuilding side. And so for years did both and, and then even coming out the other side of the Great recession, did both home building and land development. Today, as of say, the last probably five years, we've just been strictly land side. And so we've just continued to. And we can get into my business model, but we've just continued to fine tune our space and our niche within, within land development and really, you know, are thankful and blessed about the business model we've created. So.

All right, fantastic, fantastic. So let's, let's just dive into land development.

Yeah.

What, what is it? Why are you so.

Let's just talk about them. Let's just get into it. Right. So yeah, you're a land guy, so I can mark. So you understand land and then I assume a lot of your listeners understand bits and pieces of land as well. And, and whether it's you. Now, I just came to find out you and I are neighbors. I didn't even know that, that we both live in Scottsdale, Paradise Valley. And then what's his name also lives in Paradise Valley that teaches land. Jack Bosch. Right?

Yeah.

Right. He invited me to lunch a few months ago. And so there's a few of us out there teaching the land play. Right? Right. And I'm not putting down anybody else's play on land. There's, there's lots of different things you can do with land. But I'll just say as far as the upside, as far as financial freedom, or as far as large profits or payday, I think my model's hard to beat when it comes to land. Okay.

I love it. I love it.

So like when Jack and I met, you know, he was thinking about, of a way like my program as a way for it to be like a leveling up process for his students. Right. Because he's teaching them basically how to flip land. Wholesale land. And the word wholesale, just so you know. And I got a lot of friends of mine that are wholesalers, and by the way, the wholesalers are the best prospecting people in the world. Best off market prospectors in the world. But wholesaling is a cuss word here in my headquarters. And the reason for that is that if we can't bring, if we can't bring value to the asset. We are not interested, right? And the definition of wholesaling really is I bring no value to the asset. I mean, wholesalers don't bring value to the asset. So if you want to make substantial money in real estate, you've got to figure out a way to increase the value of the asset, okay? You can also buy and hold and. And there's some ways to generate cash flow with land. But understand that cash flow. And people use the word passive so inappropriately sometimes. Because remember, passive and cash flow are two different things, okay? And oftentimes people mistake cash flow for passive income. And they're not the same thing. Right? Is the reality is if you are in that business, working that business, it is not passive, it's cash flow, okay? And so. And I love cash flow. Like I think what you teach a lot, I love cash flow, but I think cash flow alone doesn't work for me. I think everybody should have a cash flowing model or residual income model. But then I think you need to have another model where you generate a substantial amount of capital, okay? Less of the long game and more of. I don't want to, it's the wrong way to say it, but instant gratification. And also when you generate a substantial amount of capital, it allows you to grow the cash flowing side of your company that much quicker. So with all that said, what do I do? Okay, I specialize in finding raw land mainly off market, but we do on market deals too. But it's raw land that has development potential. Let me say that again. Raw land that has development potential. Because with that development potential, it provides you the opportunity to increase the value of the asset. And what do I mean by that? We specialize in it. We've done tons of land development, tons of home building, but what we've really carved out is our specialty. And where the home builders of America, the big publics, all of them, they love what we do. They love our business model because they are no good at what we do, okay? And it doesn't like homebuilders of our country, okay? They specialize in home building. And guess what? We need them to stay focused on home building because the housing shortage is real, okay? And it's a crisis. And with these low rates that everybody has on their existing homes, you're going to see more and more pressure on new construction, okay? To help solve this housing crisis or this shortage. So what we do is we go find that, that raw land that has development potential and we take it through what's called the governmental approval process, often referred to as entitlements. Okay? And we get this land approved for development because just because land is zoned for development doesn't mean it's developable, okay? Is that until you get it approved, the development approved, you got nothing. Okay? All you got is what's sitting there. So we specialize in that governmental approval process called entitlements. And then we get it all approved, tied in a pretty little bow, nice little beautiful present. And we deliver those to the home builders of America and then they go and actually develop the land. We no longer develop the land. They develop the land just to have the lots to build homes on. And here's Mark. What you got to hear very closely is, is that home builders that are not willing to self develop, and what that means is a home builder that's willing to actually develop the land, put in the streets and the utilities and the curbs and the sidewalks, all that, any home builder that's not willing to do that, in my opinion, is a dying breed, okay? Is that they are not going to be able to scale their company in at any substantial volume. Because all I sell to today, our home builders that will go develop the land just to have the lots to build on. And, and, and I'll say this publicly, the profits we make are more the profits we used to make having to develop the land and sell the finished lots to the home builders. We are now making a similar profit exiting after approvals. And that is so, so key, Mark, because where the real risk and the real capital or substantial capital and substantial risk starts is when you decide to put a shovel in the ground.

Right?

Okay. Right. Because the other thing, Mark, you gotta hear me, is, is that we are in the business of controlling real estate. We are not in the business of owning real estate. So we. If I'm gonna pay the property owner for a diamond, I gotta make sure it's a diamond and it's not a diamond until it's approved. Okay? And what I mean by that is, is that I have the land tied up and I'm paying the property owner maybe three, five, maybe more than what the land's worth, as is. But I don't close until after the approvals are in place.

Right?

What that does, that puts me in a position where I can use my buyer's money to pay my seller and I make my profits out of the middle through what's called a double closing or simultaneous closing. That makes sense.

Totally makes sense. I love this model. I've got a Buddy who would go through this entitlement process in Florida. And I think his average payday was about $400,000. Once it was, once it was done. And so what, you know, what's sort of the, the risks involved in, in the model? Because I, I know for my buddy it would be time, it would be money for him to, to go through the process and then it wouldn't get approved. And he was taking some, some risk in that.

Yeah, yeah.

Good.

Great. Great question. First, let me say, and knock on wood, thank Jesus. In my 21 years in the industry, any deal that I've attempted to go get approval on, I've gotten approved. So I don't know how many guys have that track record, but I have a track record of batting a thousand. Any deal that I've went and tried to get approval on, I've gotten approved. And I can get into why that is. So, but we, right up front we have, after we put a property under contract, we go through a 90 or 120 day due diligence process is what we call it. And we're crossing T's and Dot and I's and we're, we're really figuring out what we're getting ourselves into. And, and if we exit out of our due diligence and head towards approvals, then we are very confident in the deal. Okay, but I think where most people get themselves in trouble, where they don't get projects approved, it's I, I believe a lot of it is, is mindset. Right. And it's also picking your battles which we can get into. But if for us, what' risk? Okay, what's the risk for us? The risk for us mainly is the entitlement costs. Okay. So that we'll give the seller some earnest money, some non refundable earnest money after our due diligence and then we'll spend some money on entitlements. But to give you an example, like in our, we have a, we have investors invest with us through Allied, it's called Allied Land Fund. And, and in like we just launched our second fund and inside that there's a slide and we show an illustration of kind of the traditional model versus the Allied model. And we use this example of where our traditional model that we used to do all the time. In this example, I would have to have about 4 million capital in the deal plus about another, what was it, about another 15 million of debt. Okay. Give or take. Is that right? Is that what the numbers were? No, about 10 million debt. I'm sorry about 4, 4 million of capital, about 10 million of debt. So my total exposure be about 14 million. Okay, okay. In that same example, if you remove the fees, because it's complicated with the fund and fees, but if you remove the fees and you look at just my earnest money out and my entitlement costs, it's closer to about, closer to about 500,000. Okay, okay. And so, and with the traditional model, I'd make about 4 million. And with my model, let's just say I make about 2 million. Okay, about half. All right, so it's pretty simple. Would you rather spend 500 grand of capital over the course of 18 months, get your 500 back to make 2 million, or would you rather go have 14 million of exposure, you know, over the, say the course of three years?

Right.

And make 4 million? Right. I mean, it's pretty simple. Right, Right. But the other thing we do too is usually we get enough earnest money from our buyer, non refundable earnest money from our buyer, where as long as we don't default and say the market crashed and everybody walks from everything. Well, the non refundable earnest money they put up more than covers our total capital end of the deal. And so see, where that's very, very important is that, thank Jesus, we have a track record of always getting deals approved. And so as long as I perform and if the market crashes, my buyer's earnest money will cover all my capital I have in the deal.

I see.

Okay. Very, very important.

Right.

Also understand that I said I control real estate, I don't own real estate. And so when I control real estate and the market takes a turn like it just did, we went through a market correction. And by the way, in my opinion, single family bottom is gone. It's, it's, it's past us. Okay, but. Or behind us, I should say. But. And I'm being long winded here. But understand the reason my fund will still see amazing returns in 23 and 24 combined IRR is because we control real estate. We don't own real estate. So what does that allow me to do? That allows me to renegotiate prices to current market, allows me to renegotiate terms if I want to get on the other side of a market of scarcity and everybody running in fear. And then worst case scenario, I can kill the deal. I had to kill, I think seven deals between fourth quarter of 22 and first quarter of 23. But my fund is still going to see phenomenal returns because I control, I don't own. Does that make Sense.

Yeah, yeah, yeah, absolutely. So, so when you say you control, you don't own your, your, your buyer is, let's say, Dr. Horton, right. Or Lennar, some big.

Sure.

Public home builder. And then they come to you and they say, cody, we need, you know, 120 acres for this development in this area. Where you come to them, you say, this is the developable area and we can get it approved for this many single family homes. And you can spreadsheet it out. You can see, here's the money you can make, or they're going to spreadsheet it out. Am I thinking about this correctly? And then.

Yeah, I mean, basically, I mean, we're at a point now with some of these clients where they will actually bring us deals or tell us, hey, go get us a deal in this area. But for the most part, it's because we have cold callers on staff, we do direct mail, all the different marketing procedures, much like off, off market. Right. And so we more, we, we have our buy box down, we understand where our clients want to be and where they are, and we're across the country, west coast, the whole country to east coast. And we just more bring them a deal that we have under contract. And we've already done layout work on it. We, we've done all the work. I mean, we don't have a due diligence work, I should say. And then we send that out to, you know, a bucket full of our clients. Okay. And we say, send us an offer on this deal. And then we look at all those other eyes and we hone in to say, the top three. And then we figure out which buyer we're going to put into that deal.

Okay. Okay.

Yeah.

So now you're, you know, since 2019, you teach people how to do this?

Yeah, I do.

And so I would imagine that the average person isn't going to have enough capital to, to lock up the deal. So how do you, how do you solve that, that problem for them?

Yeah, great question. So let's first start off by saying if we order a wine, 21 years ago, I was doing deals that were two, three, four lots. So today I don't really look at anything that's less than 100 lots. So as I'm like that illustration, that example I gave you a moment ago, that was an example of 150 lot project. Okay. This is that. So remember, you can go do two, three or four lot projects and the capital's substantially different, but let's just say it's irrelevant. They have no capital okay, well, can I tell you, in all my years of real estate, whenever I found a deal, I've never not been able to find the money. Okay. If you have a good deal, you can find the money. Is that I was friends and family capital up until about three, three years ago. Okay. We didn't open our first fund until about two and a half years ago. And so.

And is that fun? Accredited investors only.

It is unless you have a relationship with us. Then we have a. A506B where we can let 35 non accredited but sophisticated in. But for the most part, yes. Like with your audience or it would be. They need to be accredited. Okay. To go into our 506C. But. But you know, friends and family is how I did it for years. Right. Go get a JV partner and an investor. Oh cool. I don't know any investors. I don't know. Okay, you know what? Go learn how to do the model through Vestrite and bring the deal to Allied Development and we'll be your partner and we'll put up the capital. We'll even run the project. You just bring us a ready willing seller and we will run the whole thing, capitalize the whole thing, sell it and we will cut you in on our profits. That's what we've started to do with some Vestrite students because they kept asking over and over again to be my partner. And so now you know, is that, you know, some students are out there doing it completely on their own, others are doing the deals with us. But at the end of the day, capital should never be your excuse or your reason to not take action because you can always bring the deal to us for capital. Or Mark, maybe they can bring the deal to you for capital. I don't know. But my point is, capital has never been the issue for not getting good deals done.

Absolutely.

And by the way, ninja move, ninja move. And we teach this in our course and I've only done this once just because I haven't needed to do it. But I have students that this is all they do is they actually get their buyer to put up the capital needed to get the entitlements. Even though the student does all the work. The. So then you don't have investors, you don't have partners because your buyers putting up the capital needed to get the deal approved.

Amazing, Amazing. So what should I have asked you? I didn't ask you.

What did you, what did you. I don't know, man. I get asked all kinds of questions on these shows but you know, I would Say timeline, right? Like, you know, so, so many people, they, they want to get, Everybody wants it now, right? Now, now, now, now. And I'm going to tell you that one of the hardest things that, that I've come to figure out in the last four years with teaching, what I do, is how few people are actually willing to put in the work. Right. Is, is that, and I found this out with many educators that are friends of mine or gurus, influencers, whatever you want to call them, is that, you know, half the people will never even finish the program and if the half that finish it, single digit percentages will actually do something with it. That's been really hard for me to swallow because I've put my whole career into vestrite. Right. I mean it's been my whole career and it's, and it's been hard to watch people not be willing to put in the work. But so I would just say this. On average, our deals from the time we income to the time we get paid, if we take it through the entire process is somewhere around 18 months. Okay? But there's numerous points in a deal when you can exit and, or get paid. But the key is though, getting to a point of inking a deal. And so, you know, you could ink a deal tomorrow and lock out or it might take you a year to find a deal worth inking. But the question is, are you willing to put in that work, those reps, are you willing to fill the funnel? Because you know, we are not a get rich quick scheme. Right. And then I had someone say to me the other day and sorry to be long winded, but he said, Cody, well you are a get rich quick scheme team. I'm like, what do you mean? He's like, you show me how many other business models out there where I have no clue what I'm doing and I can get educated, come in and become a millionaire on one deal within, you know, call it a two year period. Right, right. There's not very many business models out there. I mean we had a student recently, Mike Foley, who made, who made $10.1 million on one deal. Right?

Yeah, yeah, that's.

We won't even look at a deal unless we can make at least 2 million on it. Right? So. And I'm not guaranteeing those paydays or anything of the sort. But my point is when we market six and seven figure paydays, that's not marketing, that's real. Does that make sense?

100%. 100%. Well, I love the model and I certainly Want to learn more. I know the listeners are going to learn more. So, yeah, Cody, your, your, your mentorship has been fantastic, but now we're at that point where I'm going to ask you for your tip of the week. A website, a resource, a book, something else actionable for the art of passive income listeners to go improve their businesses, improve their lives. Before you tell us, just have to give a shout out to our sponsor, which is flight school. Learn how the next 16 weeks can transform your life. Go up that mountain quickly, safely, efficiently, with Scott Todd as your Sherpa. He's done thousands of deals, and we're going to start building that passive income with no renters, rehabs, renovations, or rodents. Learn more. Go to landgeek.com forward/training. Cody, what is your tip of the week?

Well, I mean, I'm gonna. I'll give you a link in a second where you guys can go learn more about my model, but I would say.

Wait, no, that. Don't give them that. That's my tip of the week. Yeah.

Okay, so you do that. Tip of the week. So I'm gonna give you my. No, I, I know that, but I would say I would go read a book called the Speed of Trust.

The Speed of Trust.

The speed of Trust. And I've just come to realize more and more that trust is the foundation of any healthy relationship. This is hobby. Yeah. You want to put more. You want to put more deals together. Figure out a way for that seller or that property owner to feel comfortable with you. Give them a reason to trust you. Right. I have absolutely concluded there's no better closing tool at how to close deals than building trust. Trust is, Is absolute key. And in our training room here at our headquarters, we have build trust. And underneath it, it says transparent, authentic, and educate. Right. Like, it's just take the time. Right. And be real, be transparent, be authentic. Take the time to educate people on how the business model works or how the industry works. Because people all the time are like, how do you get people to wait 18 months for their payday? Well, it's because we take the time to educate them. Right, right. You know, and so I would just. I would go read that book, the Speed of Trust and just realize if people don't trust you, you have an uphill battle. You just do.

Absolutely, absolutely. It's. It's the foundation for every good relationship.

Yeah.

It. It takes years to build, and it can take seconds to go and, and be destroyed. Well, my tip of the week is learn more about Cody and his model, you can go to vestrite.com but I'd say the best place to start is Cody Gives Back dot com. We'll have a link to it. You can check out his land calculator. Seven figure raw land paydays, they're all free. And again, I mean, you know, when you put things in perspective like it is a get rich quick scheme, I mean, that's life changing money in 18 months, 24 months, 36 months. And I, you know, it reminds me of that Zig Ziglar quote. If you'll do for the next, you know, three years what other people won't do, right. You'll be able to do the rest of your life what other people can't do. So I'm a huge fan of Raw Land because this is again, you know, you're not dealing with any of the typical headaches. It's just raw land and it's, it's really just a phenomenal model as far as you control the land. You're, you're not taking outside risk. You have a massive market. This country needs you to go out and find these deals. And in exchange for that work and that value, you're making six, seven, maybe eight figure paydays on it. So definitely learn more Cody Gives back. Com. Cody, are we good?

Yeah, brother. Thanks for having me on your show and it's good to connect with you. Like I said, I've seen you around over the years, so appreciate you having me on.

Yeah, yeah, we're neighbors, we'll have to get together for sure. And I want to just thank the listeners, remind you the only way, the only way I'm gonna get the quality guests like a Cody Bugen if you do three little favors. Follow rate, Review the podcast, Send us a screenshot of that review. Support thelangic.com I'm gonna send you for free a signed copy of Dirt Rich. All right, thanks everybody and let freedom ring. Thanks for listening to the Art of Passive Income podcast. Are you ready to learn how you.

Can start building a passive income without renters, rehabs, renovations or rodents? Schedule a free consultation@thelandgeek.com training let freedom ring. Sam.