To Cash Flip or Cash Flow for Maximum Profits in Today's Uncertain Market

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, thelandgeek.com and on this week's roundtable podcast, we have almost all the usual suspects. We've got the Zen master, Breathe in, the mailing, Breathe out. The marketing, Mike Zano. Mike, how are things?

Going well, Nice to see you, Mark.

Good to see you. We've got the land shark, Landon Harris. I do like surf and turf. You've got surfing, turf landed Harris, Landon. I don't know.

We can roll them all in.

I feel. I feel like it's like. It's like a menu item. Oh, I'm going out for surfaces.

I may change next month.

Could change. We've got the technician, Eric Peterson. Eric Howard, Things.

Hey, Mark. Let freedom ring.

Let freedom ring. Absolutely. I love it when you call me Big Papa. Tate Litchfield. How are things in Sin City? Good to see you. Good.

Yep.

And last but not least, you know you love him. Scott. Todd. Scott todd.netlandmoto.com Learn anything about anything. Investor ninjas.com Scott Todd, how are you?

I'm great, Mark. How are you?

I'm obsessed with a new YouTube channel. And if you guys haven't seen this channel, check it out, because you too will become obsessed. And it's not just the topic of a father and son competing with only a thousand dollars to see who will make more money. The stock son buying and selling stocks, or the wise, more mature father buying and selling raw land. Eric, it's an amazing channel. Tell us a little bit about it.

Yeah. So my oldest son, Elijah, and myself started a Thousand Dollar Challenge in September. Basically, each of us took $1,000 and decided to invest in our favorite asset classes. And, you know, mine is land. And I am working to build that thousand dollars to $100,000 by the end of 12 months. And Elijah is going to invest in stocks, crypto, options, etc. And he's going to try and grow that thousand dollars to as much as he can before the 12 months is out. And we have a weekly recap to talk about what's going on and where we're at along the way. And it's been fun. It's been a good way to kind of talk to the kids about finances and get them to start thinking about how are they going to invest their money in the future and so on. And I should mention that my youngest son, Ezra, who's 14, he does all of our editing and filming, so he's all behind the scenes. Every now and then. He'll he'll be in a video, but he's. He's the one doing the hard work of putting all that stuff together. And it's. He does a great job.

Yeah, it's an amazing job. The video editing is great. But as it sort of segues into our topic, which is not if you had $1,000, but if you were starting land investing, you're in land investing, would you want to start with these bigger land deals in this current market, or would you want to invest for cash flow? So cash flips versus cash flow in a market that seems to be heading south in real estate, why don't we start with the person who loves going first, the Zen master. Am I even. Even framing this question properly?

I think so. I mean, it's a common question we get when people are coming in. It's like, hey, you know, what are the size deals that you work with? And I lovingly call them the. We're in the penny stocks of real estate, right? We're in this little, little area where the returns are crazy. We're not bumping into realtors. We're not bumping into big money. The people that own these properties, if they want to sell them, Mark, they sort of have a hard time, right, because not a lot of commission on an $8,000 property, right? So realtors aren't going to touch them. You know, they're not going to go out, put a sign on them. So when you look at the option of am I going to do like a big cash flip, or am I going to come in and do some smaller deals and create cash flow? Well, I think the simple answer is if people say cash is king, it's cash flow is king. I mean, seriously, right? That's. That's what we're looking after. You don't have to go out every month and, you know, hunt every month to try to earn your food. It's going to come back to you continually, month after month. And I think there's a lot of risk, too, particularly in this market where things are really uncertain, right. There's a lot of volatility, I might say, you might say, in the market. And when people go after bigger deals, since they are competing with realtors and so on and so forth, the 25 cents on the dollar model doesn't play play out as well, right? So they're buying higher and higher, closer, closer and closer to that retail price. And if the market shifts, I feel like they could be holding a bag of problems there, right? We, as you lovingly say, buy with the Warren Buffett margin of safety, right. We buy 25 cents on the dollar. If the market tanks, we might just, you know, in the worst case, double our money, which is not a bad day. So I don't think it's really, I don't, I don't see how there's any question as to what's better. But some people, they like to go after the bigger dollars. There's bigger risk, and I think that's it. Like, what, how risk averse are you and, you know, how much consistent money do you want coming into every month?

No, absolutely. I, I love that that's, that's a good explanation. But I wonder what the land shark Landon Harris thinks about it.

Well, like Mike, I really, I feel like this is the safer play, especially with this kind of market. I remember back when I was doing flipping homes and we were in a little bit of a dip and I was really sweating that I was going to lose a lot of money that we had put on some of the homes that we were flipping. I look at it now and we are, we're collecting terms and the default rate is not very high. I mean, most people can afford a couple hundred bucks a month. So I think keeping, you know, you're keeping your terms, you know, at what people can afford. I think when the market goes into this volatile up and down shift, I don't think you can, I just think you can sleep a little bit better at night. And I think just with just the, the land geek model, like, I just feel like this play will last a lot longer than that, you know, that big hit. And then when you think about it, how quickly are you going to keep making these big hits? They don't always come that quick. They come very spread out. So, you know, if, if you're, you know, you're living your day to day life, I think this model just works so much better. And just taking the hit, they're taking the base hits as opp. You got to hit a grand slam every single time you go out. I just don't know that that's sustainable right now.

Yeah, I have some thoughts on it, but I don't want to really just throw those in yet because the irascible, you know, he's no longer irascible these days. Eric the technician Peterson, I'm sure, has his own thoughts about it. And Eric, what's interesting about your YouTube channel is that you're seeing this week to week, this fluctuation of cash growth versus cash flow with what Elijah is doing.

Mm, yeah. I mean, I guess thinking about what we do and why we do it, I think there's a lot of security in the model that, that we operate under this idea of taking these base hits and doing them over and over again. So these lower dollar properties that we're going to sell for $100 a month or $200 a month, and do that 10 times, 20, 50, 100, however many times. Right. And we're creating this passive income. And if the economy does get worse and things slow down, maybe people start having financial struggles. I expect we're going to have some defaults. But If I have 10 notes or I have a thousand notes, I'm not likely to lose them all. I'm likely to lose a portion of them. But then what, what can I do with, with that? Well, now I've got inventory again. And that might mean that, well, maybe if I was selling those properties for $100 a month in the economy is bad, I might not be able to get $100 a month anymore, but maybe I can go sell them for $50 a month. And yeah, that's less than I was getting before, but maybe I can do it for a longer term and still get the same return. It's just slower with my money coming back. And when I start to think about it that way, I think there's so much security in what we do versus this idea of taking a more expensive asset and trying to flip it at a smaller margin. Now, those numbers may be drastically bigger. Maybe you're making 30, 50, $100,000 on a sale. However, as Landon was saying, those might come every six months or every three months, or if the economy gets bad, you know, maybe you lose that margin you had and now you're only maybe going to make 10,000 or break even or worse yet, you know, could you lose money in that scenario? So, I don't know. That's, that's kind of my perspective on it. I think that, you know, tying it back to our YouTube channel, which by the way is, is called Father Son Investments. You know, there's a lot of volatility in what Elijah's doing in the stock market.

Right.

He's got to read his, his decisions just right and time them just right in order to maximize his profit, because the volatility that happens in the stock market and so many times now, um, we're only like two months into this challenge. He's missed out on some, some really great opportunities because he sold too soon and, you know, could have made a lot more money. But on the other hand, he did take profits, and that's a good thing, too. So I don't know.

That's.

That's my thoughts.

All right, who's currently winning?

You know what? Elijah just sent me a text about an hour ago. He's beating me right now. He's at sixteen hundred dollars, and I'm at about fourteen hundred right now.

Okay, well, you know, given where this. This economy is going, can we put side bets on you?

Absolutely.

I love how you call me Big Papa. Tate, Litchfield, what are your thoughts?

You know, I know that there's certain investors out there who are really, really panicked right now, and I'm not one of them. That's what I know. I don't know what the future is going to hold, but I can tell you that my job and what we specialize in is making owner financed properties affordable for everyone. And the way that we do that is we buy our properties, right? We're buying at 20, 30 cents on the dollar, and we're keeping our monthly payments irresistible. As long as I continue to do that, come what may, we'll still sell land.

I'd love it. Short, sweet, profound.

Yeah, I mean, that's kind of how I view this. Like, if I want to take on more risk, well, that means I'm going to spend more money. But look, I don't know a single land investor who has had to quit the business because they bought a $2,500 property, right? Like, right, those are the properties that we sell and they move. And you work those numbers appropriately, you're going to have capital recovery in 12 months. Maybe not entirely, but even if you bump 12 up to 16, guess what? I'm still winning, right? Like, it's still a good deal. And at the end of the day, it's taken me, I learned this lesson many years ago that it's not what I want, it's what the market wants. And I would love to sell a certain type of property, but guess what? Supply and demand make it so that's not feasible. So instead, I focus on what my buyers want. As long as I keep my attention on those people, the ones that I'm serving, we're going to continue to do business and have success.

Absolutely. Absolutely. Scott. Todd, I know you love going last after everyone has put in their thoughts. Now you have to come up with something even more original.

You know, there's not much more to say, right? Because at the end of the day, I think cash flow always beats cash. One lump sum of cash. I could. You can go Back to stocks and point to that. You know, the, the stocks that have performed the greatest over the longest period of time are those that pay dividends.

Why?

Because the dividends come in every month, every quarter, annually, however they're paid. And they help to leverage the stock market or to the basically keep it so that it's growing even in downtimes. So, you know, even when the stock market's down, there's this old thing, hey, buy dividend paying stocks. No matter what happens to the stock, you're still earning, you know, 3, 4, 5% on your money, no problem. If you're buying more stock, great. If not, you know, you still have money coming into it and it helps to offset any losses. And you know, I just think that cash flow is king more than cash. And like everybody else has said or like others have said, the, the fact that I'm buying something for kind of pennies on the dollar versus just, you know, I don't know, 20 cents or 30 cents off just makes a much better, much better kind of, you know, margin of error that allows me to sleep at night. And then the thing that I know people love, man, is that, and I see it all the time on land moto is they love the fact that there's owner financing. They don't have to worry about a bank. Someone I was talking to an end user the other day actually, and they were telling me that they went to a bank for a loan and the bank told them no. And it's not because they had bad credit. It's because they did not meet the strict repayment terms of the loan, meaning that this was a secondary property for them. So they didn't have the debt to income ratio that the bank needed for the short period of time that the bank was going to loan them the money. So they didn't qualify based on the bank terms. And they said that the thing that they loved was the fact that the owner didn't ask them how much you make. They didn't care about that. What's your debt to income ratio? They just made the down payment and it's basically like, hey, you know, we know that we're going to be okay, you know, because we're the finance source, we know we're going to be okay. And if for some reason someone can't afford the land, that's on them, it's not on on us. So I think that, I think the term steals win at the end of the day.

Yeah, I mean if we take like, let's just take a sexy Industry. Let's just take Silicon Valley crypto. I used to be really sexy, but let's just say, like, I feel like it's, it's almost like the difference between getting a job and being an entrepreneur in a, in a way where if you get a job like, oh, this seems on the surface like I'm going to get this big salary and I get all these benefits, right? So we could say cash. You're going to get this big cash hit maybe $30,000 on a flip, and if you do it 12 times, you make $360,000. That sounds great. Same thing if I went to Facebook and I got a job at Facebook and they paid me $360,000 and I got all these perks and I got all the fun food. And then one day, Mark Zuckerberg looks at stock price and looks at the, the market and lays off 10,000 people. And now you step back to square one versus what if, as an entrepreneur, I could work with every company in Silicon Valley, and if one or two start to struggle, that's okay. I've got all these other customers. So. Eric made a good point. When you have a portfolio of notes, well, a percentage of them might fall out, but you're, It's. You just go back and resell it and you can get that cash flow where when a complete market drops, it's almost the same thing as getting unemployed. Plus, you could lose your capital because you don't know where that next flip is coming from. So it's the difference between, I think, financial security versus financial insecurity, where I would make the same argument to Elijah. Great, if he wins in 2023 versus, you know, buying stocks. But what's he doing with that cash now? He's going to pay taxes. He's going to keep doing it. And what happens if he makes a bet on crypto when he's wrong? Right. And he loses all of it one day. Where slow and steady Eric keeps building his portfolio day in and day out. Maybe someone falls out. Big deal. They've lowered his cost basis. And he does it again and again and again. And it's the difference between compound interest and growing slowly and growing your wealth versus, say, being rich, which is, you know, maybe a little bit more sexy because you can see it. But wealth is invisible and allows you to solve not just your money problems, but also your time problems. I don't know anybody does it. Is that a good analogy?

Take.

It's like, it's okay.

No, I like it.

I think it makes perfect sense. I mean, look, at the end of.

The day.

I trust the asset class that I'm investing in, the asset class that I'm buying and the asset class.

I'm bringing to market.

And you guys know what I like to do with it. You know how I like to price it. And as long as I'm staying in those, that comfort zone, you know, there's not a lot that can deter me from pressing forward. Right. Defaults aren't always a bad thing.

Exactly.

And when they come, we don't stress out.

Yeah, well, I thought it was a really good topic and I'm glad that we, we brought it up because it, it does seem to be on people's minds. And you know what else is on people's minds? Who is going to do the tip of the week to provide value of a website, a resource, a book, something else actionable for the art of passive income listeners to go improve their businesses, improve their lives? I know it's the land shark's turn this week, but before we go to him, let's give a shout out to our sponsor, which is flight school. Learn how the next 16 weeks can transform your life. Start building that passive income with no renters, no rehabs, no renovations, no rodents. And have that cash flow coming in month in, month out. Sleep well at night, but do it safely, quickly, efficiently with Scott Todd, who's done it thousands of times as your Sherpa learn more. Go to the landgeek.com forward slash training. Thelandgeek.com forward slash training. Oh, and by the way, I know what you're thinking. Well, how much is it going to cost me? It ain't going to cost you nothing. Guaranteed. You're going to make back that investment in your flight school tuition. 180 days or less, guaranteed. Just show us your work. Landon Harris, the land shark. What is your tip of the week?

Okay, so now that I'm retired, I have all this free time, so I'm reading a lot more. I've never read this much in my life, so I just have all this free time. So I picked up this book. I don't know, have you guys seen the movie up with the.

Yeah, yeah, yeah.

Okay. All right. So Teria calls me the dog and up the talking dog because she's. I'm always just talking and then I'll squirrel a little bit, just get distracted. So, so I, I started looking for something that would help and I actually stumbled upon this book. It's called Master your focus and it's by an author called Thibault Mohist. I think that's how you pronounce it. I'll put it in the chat because it's not spelled the way it's pronounced. But basically it's a book that kind of gives you step by step instructions and strategies of how to kind of focus and focus on the things that you need to complete. And it also gives you a point of way, a way to kind of put things in order of what's important now. And also, as I'm reading through this a little bit further, it's also taking you through a point of where some people start one business and then they get distracted and then they go and want to jump into another business. And I hear that from people all the time. And even in this business, they start this and then they get distracted by.

Oh, well, that's better.

I mean, I can tell you that this business is great, but this book is actually a really good book to kind of ties that in. So I'm, I'm recommending this book to everybody. It's just been a really good book so far. I'm about four chapters in, but I'm loving it so far. So something cool to check out. And like I said, I'll put it and put it here in the chat.

Yeah, I see it. T H I B A U T Maurice. He's got a lot of books too, but this one's like blowing up on Amazon. It's got 738 four and a half star ratings.

Yeah, it's been pretty good. Been. I've been really impressed with it so far. So that's what I struggle with. So I was like, somebody's got to be dealing with it.

I love it. I love it. All right, well, I do want to just thank the listeners and remind them that the only way we're going to be able to continue to basically metaphorically twist Landon's arm to do these tips of the week, because none of us could actually do that in real life, is if you just three little favors. Follow, review and rate the podcast. Not in that order. Follow, rate and then review the podcast in that perfect order. Send us a screenshot of that review support@thelangic.com I'm going to send you a signed copy of Dirt Rich, which right now is worth about 3 bitcoin on the secondary market. So please do so. They actually, even if you're not doing it for the free book, it just helps us and we appreciate it, so. So please do it. Are we good, Mike? We're good.

Yes, Very good.

Eric?

We're good.

Landon.

We're good.

Tate.

Yep.

Scott Todd, awesome. All right, well, let's do this. 1, 2, 3.

Let's let.

Not bad, not bad. So before the. The podcast, we talked for about 20 minutes about traveling, and Scott Todd's got an amazing tip that he won't share.

It's not my tip. It's not my tip. I'm just telling you what I saw.

But if you are ever curious about. If you. Let's just say that you're on a flight with Tate and he reclines, there's a way to get him to stop reclining.

I'm not. I'm not taking this bait.

It's only okay not getting me today.

Now, Cherie is not. Was a recliner too, right?

Yeah.

Oh, yeah. She's team recline. Tate's team recline. The rest of us are team a half recline. You owe you half recline.

I'll have. I won't go all the way. I'll give a little nugget.

Is it really a half?

Is it really a half? I give some room.

No such thing.

I don't need a little space.

I. I feel like you golden rule it now. But what do you do, though, when the person reclines and then do you recline? Well, here. Okay, here's. Here's the. Here's a topic for you. Let's say the person behind you reclines and the person in front of you reclines. Do you then feel like, well.

I.

Can go and roll it. I can recline? Eric says, no, no. Can't break the rule in that scenario. Would you still recline?

I don't even. I don't ever consider reclining. It's just not something I do. I'm non recliner.

I don't know.

Do you like, on like. Like, let's say you're flying to Phoenix and to visit me. It's a 45 minute flight. Would you recline?

I don't know. I mean, probably 50.

50.

I mean, I don't know. Come from first man.

Like I figured you paid for it.

You have a laptop.

No, no, no, no.

As soon as they recline, it knocks your laptop down. I mean, come on.

It's not cool.

Look, first of all, I like the Hayes tape. In all seriousness, the guy gives the best travel advice ever. So I'm in Mexico City and I have ox Tate, and he's like, look, this is what you want to do. Don't get sick when you're in Mexico City or anywhere where you're traveling, get Cipro and take a half tablet of Cipro in the morning, half at night. You'll be good as gold. So this is day two in Mexico, and I'm there for Roberto's wedding. And I'm in a small town in Xochitepec, Morelos, Cuernavaca. And I walk and I go to the pharmacy and I say to the pharmacist using Google Translate, cipro, por favor. And he then begins to speak Spanish to me, which I don't understand. But he starts speaking long sentences. I'm like, I don't understand. So he puts into the phone, you have to have a prescription for Cipro. So, okay, not a problem. I'll tell you what, if I had that Cipro, my trip would have been very different. Very, very different. Yeah, I don't want to go too much in detail, but you can imagine Montezuma getting his revenge, and it could have all been avoided if I just asked that question a week earlier and gotten my prescription. So now next time I travel, I'll be getting Sipro.

Tate. Call me. Just.

Yeah, I'll set you up.

Right.

I'll get your. Your first aid kit ready to go.

Yeah. Is there. Is there anything. Is there any other travel tips besides that one?

Yeah, there's a lot.

There's a lot.

There's a lot.

I think a lot of it depends on where you're going to. Right. What you're going to have access to.

But.

Trying to think what comes to mind. Nothing comes to mind immediately.

What's your favorite travel tip?

My favorite travel tip?

Yeah.

Download some good YouTube videos before you go on the plane.

Okay. Landon, favorite travel tip.

Oh.

So we just upgraded our luggage. I'm just. I don't care about luggage, but Terry is like, we need some good luggage, so we got this monos Luggage. That stuff is tough. I mean, O S M O N O s. And it comes with these little compartmental. It kind of downsizes it, so compresses everything in your luggage. I gotta say, like, six. It's not cheap, but as far as, like, traveling goes, that stuff is great. I mean, they just beat the crap out of your luggage.

I'll have to check that out.

Oh, yeah.

Oh, it's.

It's. It's another level of luggage. I had no idea. But it's. It's. It's pretty good.

I'm in the market for it. Eric, best travel tip.

I'm with Mike.

I like to make sure I've got plenty of content to enjoy while traveling.

So just be prepared, Scott.

Be comfortable. Get the highest class of service that you can afford.

Oh, gosh.

I was also going to say dress for where you're going, but always assume it's going to be cold on the airplane, right? Yes, it's gonna be cold. You're at 35, 000ft above sea level. It's gonna be freezing. Even if you're going to Hawaii, travel in a long sleeve, there's nothing worse.

Than being on a plane. Cold.

That's a great tip. And also the compression socks, I think those help a lot as well.

It's necessary.

Yeah, absolutely. I would say every time you go to a new city, do a food tour, it's a great way to get to know the city and experience the culture and the history without going to say, oh, I don't know, a boring museum. And, well, you meet other, other tourists and travelers and the food's outstanding. The Mexico City food culture, outstanding. Couldn't. Couldn't recommend it enough.

So, Mark, when we were in Portugal, we, we used a website called Tours by locals.

Okay.

And found this guy that was just top notch, right? Like, what wasn't through a touring company or whatever. And it was a private tour, so it was just like my wife and I, and if we would have had our family, it just would have been us. So it was not that. In fact, it was pretty probably on par with what I would have paid through a touring company, honestly, for a larger group. And it was just more private, intimate. And it was. We. We booked the whole day tour and I'm not saying this is the way it always is, but like, we booked a whole day tour with this guy and it required a car. And so here, here we are, man. Like, it's my wife and I, we're. We're at the hotel. The guy is going to meet us in the lobby with a car, you know, transportation for the day. Because, you know, we're not going to drive a car. He's going to drive the car. So we walk outside and, and you know, here's this black Mercedes sedan with a driver in a suit and he greets us and we get in the car like, like royalty almost. You know, every. Everywhere we went, this tour guide would get out with us, but the car would stay or go park somewhere. And when it was time to go to the next spot, here comes the driver, we get in the car. That's like next level stuff there. And I'm telling you, it was not that expensive either.

That's awesome. Tours by local. That's a good tip. Tours by locals.

Yeah, Great website. Tours by. I think it's tours by locals.

I'll tell you what, I. I'd like to do tours here for. For Take people out to eat. I could show people, like, around Scottsdale, like, the best places.

Yeah, man, make some money. You can make some money that way.

I don't want to do it for the money. I just want to meet, like, cool, interesting tourists.

Well, you gotta put. You gotta charge them something.

Yeah, yeah, I'll charge them something.

I don't know. Yeah, yeah, you know, maybe. Yeah, you could brand yourself like Scottsdale's Larry David.

Thank you. Pretty good. All right, well, if you're still listening to this, that's amazing, but thank you. All right, thanks, everybody. See you guys.

See ya.

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 forward slash training. Let freedom ring.