About Brad Warren
Brad Warren is a national and international speaker, author, seminar leader, and business coach. He's traveled to 19 foreign countries and 27 of the 50 United States, teaching a range of business courses, including time management, communication skills, lead generation, and negotiation skills. He's coached over 500 business owners on goal setting and accomplishment, business planning and implementation, and how to be more effective and productive. Brad is the author of Just Sold! The Real Estate Professionals Guide to Selling More in Less Time. After 40+ years as a business coach, speaker, and trainer, Brad transitioned to a new career as a land banking consultant, helping patient investors build generational wealth by investing in land.
In this episode Jason and Brad discuss:
- The difference between appreciation and gratefulness
- What is land banking?
- Focusing on a niche
- Educating before selling
- Being appreciative and being grateful are two different things. To appreciate is to acknowledge the value of something or someone, but to be grateful is more about how you feel about a person or thing.
- Land banking is all about buying vacant land that’s strategically placed on the path of growth in order to sell to a developer in the future. It’s an investment for patient investors.
- It’s better to be a master in a small area and have a huge breadth of knowledge in that one thing than to try to achieve mastery over everything. Work with and build upon what you know. Focus and be good at one thing rather than being mediocre at a thousand things.
- Always educate before selling. Make sure that your customers or clients fully understand what they are buying or what they are getting into.
“Take the ordinary, be consistent about it, and you will produce extraordinary results.” - Brad Warren
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Brad Warren - Consistency for Extraordinary Results
I've got a special guest with me that I am intrigued about. I always say excited and I am excited about this particular guest, but I'm intrigued. Brad Warren, welcome to the show.
Thank you for having me.
You and I met at an event. I was there virtually doing a presentation. You were in the group and we've connected since then. I've learned about some of your backgrounds and what you're doing right now, which is incredibly interesting. I've got an initial question for you that we ask all of our guests over the last few years, so this is not going to be any different. As we enter the day, you and I are talking in the beginning of 2023, what strikes you that you're grateful for?
When I'm being flippant, I would say dark chocolate. That's the first thing that comes to mind. Ice cream is a close second. It’s Ben & Jerry's and Häagen-Dazs. Mostly I'm grateful for my wife, especially. She kicks me in the butt and keeps me on track. My friends and my business partner. In fact, my birthday is coming up. I'll be 72. I am extremely grateful for my health, the fact that I'm in good shape, strong and healthy. I'm able to do a bunch of stuff. I'm able to travel. I live in what I consider the greatest country on the planet. Even with all the stuff that's wrong about America, there is so much that's right about it.
I'm grateful to live in a country where I get to speak my mind, say what I want and do what I want. The list could go on and on. I do a gratefulness exercise every evening before I go to bed. I write down ten things that I'm either grateful for or appreciate. There's a difference between the two. There’s a little bit of a difference or distinction, but it's either something I appreciate about somebody or something that happened during my day or something I'm grateful for. I've been doing that for years. That's something I'm grateful for. I’m grateful in this list.
We're going to get to what you do professionally and everything, but I'm curious about you made a distinction there about being grateful and being appreciative. What is the difference?
Grateful is more of just thankful and appreciate is, “I like that.” When I appreciate what my wife did for me, I like that she washed the dishes that day and I didn't have to clean up the kitchen. I'm grateful for having her in my life. I hope that helps a little bit.
Thank you for that. We could have a whole episode on that.
What I normally do when I talk about words is I go to the dictionary and look up the definition. If we had time, maybe when you're asking a question, I'll multitask, which I don't recommend to people. I could literally go find the two definitions and read them and we would see that they are different.
You've enlightened me. You've given me an insight already. Our audience has already benefited from your answer so far. I know when I'm listening to a podcast and there's a guest on, the very first thing that goes through my head is, “Why am I listening to this person? How can they add value to me? Who is this person?” I read your background and some of the stuff that you've done professionally is super impressive. Would you mind giving us a minute or two on your background, who you are, and some of your experiences?
I’ve already mentioned I’ll be 72 on January 9th, 2023 so I had a very long carreer. I graduated from MIT in 1973. I went to Europe for one year and hitchhiked around for an entire year. I came back, hitched across the US, stopping in New Orleans from Mardi Gras, the Grand Canyon to hike down to the bottom and back up with a good college buddy. Eventually, I made it to San Francisco. I worked for the Social Security Administration for a couple of years. I went to graduate school. I got a Master's in Education and started my career as a consultant because I couldn't find a job as a guidance counselor.
I had gotten a Master's of Education at UC Berkeley and a California Pupil Personnel Services Credential because I wanted to be a guidance counselor and work with high school students. I couldn't find one so I became a consultant and started to do some training. I got a job at an elementary school. For ten years, I was a PE teacher. I had no PE background. I wrote the job description, which they then hired me to fill. That's a whole other story.
I did that for a while. I started my training career. I started coaching people. I worked for Keller Williams for about six years as one of their coaches. I worked for the Fred Pryor Seminar company, traveling nationally and internationally, and teaching seminars all over the world. I’ve subcontracted for several other companies doing the same thing.
I left that 40-year career as a business coach, seminar leader, and trainer to do what I'm currently doing. Even though I call myself semi-retired, I'm still doing stuff to make money. I got my real estate license and got into what's called Land Banking. First, as an investor, then as a finder, which was somebody who referred business to my land banking friend Marcella. Eventually, she said, “Stop sending me business. Go get your real estate license. Join my team.” I said, “I'm 67 years old. Do you want me to switch careers?” She said, “Yes.” Fortunately, I listened to her and to my wife who I appreciate and am grateful for. She kicked my butt. I started doing land banking. I have been doing it for a couple of years, and I love it.
I would love to ask questions about the PE teacher stint, hitchhiking through Europe, and then across this country. I got all kinds of questions for you, but I will focus on when I first heard the term land banking, which by the way, I first heard from you, so thank you for that, I was intrigued. I started doing some googling. I ran across you when I was doing some googling. You've got some stuff out there on YouTube which explains it. For our readers, let's start with the definition of land baking. What is land banking?
What I do is sell dirt. That's usually when I'm joking around with people. I sell vacant land that is strategically placed in the path of growth in one very specific area of Southern California. It's a 60-mile radius around Downtown LA. Our investors hold. This is not a get-rich-quick, a flip or cashflow. If that's what you're interested in, you can not read anything else I have to say about it. This is for patient investors who buy and hold. We're very conservative. We tell people, “7 to 10 years could be your whole period before you exit.”
Land banking is selling vacant land that is strategically placed in the path of growth.i
The exit strategy is you sell to a developer who needs your 1 acre because it's in the middle of 100 acres that they're building their shopping center on or their housing development or their solar farm, whatever type of land you happen to own. There are five different kinds of zonings. Land is dirt. You sell and we do provide some encouragement. We call it free negotiation coaching to help you negotiate with that developer to get the maximum price on exit.
There are a couple of questions that come to mind there. One is there's a buy-and-hold strategy there and the land banking piece though almost sounds like instead of me putting my assets in a bank or over here, I am putting it in the land. It's appreciating for me in a way of not like, “I bought my house and a year later, I can sell it for more because the house is appreciated.” It's different where you're putting it there, you're banking it, and then when and if developers come along, that's when you reap the benefits of that banking. Is that right?
That is 100% correct. Some people said to land banking, “Do you lend money to people to buy land?” The title is a little misleading, but that's what the company has been doing for many years. That's what they call it so that’s what we call it. It is this concept of take it to the bank and put it in the bank. Banking it usually means holding something for a while and not doing anything with it. That's what people do. You alluded to something, which is that most of my clients, I would say 60% or 70% maybe, use retirement funds, IRA, and the dormant 401(k) of some kind. They have to turn it into what's called a Self-Directed IRA but we won't get into the weeds on that now.
Land Banking: Land banking is this concept of taking it to the bank and putting it in the bank. Banking it usually means holding something for a while and not doing anything with it.
Because that money sits for most people for 20 or 30 years, if they're starting in their 30s, they got 30 years until they can pretty much start using that money or even want to use that money. Why has it all in crypto, bonds or stocks, which is very volatile as we've seen over the last year? My little stock portfolio is down 50% and some of my friends said, “That's better than mine.” We joke about most people's 401(k) is now 201(k) and in some cases 101(k). A lot of my clients will use retirement funds because that money sits there. They diversify. I don't want all people's money. I want a little piece to do a little diversification.
There are a couple of different directions that I'd like to go in. If it’s okay with you, I’d like to go macro for a minute because you are making me think of some things around the philosophy and the idea of it, but then I want to go micro and ask you some specific questions. For macro, I know all of our clients at Rewire. At some point in time, the question comes up because most of our clients are in mortgage and real estate. We serve other industries as well, but it does come up as, “Who's my ideal client? Where am I focusing?”
I see a map behind you and you even mentioned, “It's not like we do this all over the country and it's not even like we do this just in California or even this part of California.” No. You are in a 60-mile radius. It is very concentrated. I'd like to talk about that for a minute because that's got to be a very deliberate decision. If you want to talk about niching, that sounds like super niching because I'm sure there are opportunities outside of that 60-mile radius. Why is it that you're only focusing on that particular piece of the geographic area?
It's a great question and it's a macro-micro answer. A little background. The owner of the company who happens to be the son of the founder is a PhD Economist. He looks at both macro and micro trends. On the macro level, you have to look at things that people say, “Why California? Why just that one area of Southern California?” I'll play interviewer now. Where do you think we rank in terms of Gross Domestic Product, GDP, worldwide as a state? What number do you think we are?
It's high. 5 or 10 in the world?
You’re right. You might have heard me say that or looked up some research. We rank California as a state the fifth largest economy in the world. It's the China, Japan, Germany and California. We're about to pass Germany to become number four. That's the macro. This is even more nuts. Just the county of Los Angeles, which is within that 60-mile radius of where we invest, is the 20th largest economy in the world.
Slap me upside the head, “You got to be kidding.” I'm repeating stuff that I've read in research that our company has done. That's ridiculous. The county of Los Angeles is a larger economy than hundreds of countries in the world. That's a big and small view of why California and why that area. In our bigger presentation, my business partner Marcella Silva does a one-hour presentation called Land Banking 101.
One of the slides that she shows in that presentation is what's called The Ten Growth Factors. There's a tsunami of economic factors at the macro level that are all occurring in that circle around LA all at the same time. Population growth, industry growth, infrastructure growth, proximity to a port, job growth, and it goes on and on. When you've got all of those things occurring at once, it makes this area very right for exactly what we do.
You said there are other areas in the US. There probably are. A lot of people have mentioned Texas to me, but it doesn't have all ten. Some of the places in Texas that are experiencing some growth aren't close to a port so there's not a lot of warehouse construction like Amazon is doing, like detailing and this whole thing with people on Zoom. The amount of people that buy stuff online has exploded and is going to continue to explode in my opinion. Amazon goes out and builds these giant warehouses. Where do the warehouses sit? Land. Guess who's got the land that they need? My clients. That's an answer to that question.
The amount of people that buy stuff online has exploded and is going to continue to explode.
It makes me think not only about the factual macro reasons economically that you're doing that, but I also have to believe you probably know that 60-mile radius pretty well. That's better than having to know the entire country or the entire state of California and the West Coast. I'm assuming you know what's for sale and what's going to be coming for sale. You're concentrating on that area so your breadth of knowledge in that area has to be pretty deep.
It is. I’m 43 years in the same area focusing on city councils. We get the minutes from the city councils, the county reports and the general plan updates. The CEO lives right where a lot of the land is. He drives through it on his way from his ranch to the office, which is in Woodland Hills. He drives through some of the areas where we invest. When I go on vacation the last two years in a row, I've gone down to Palm Springs with my wife for a little one-week vacation.
We drive over to Desert Hot Springs to look at some of my client's land. We take pictures and send them to them. I've got little bags of dirt from 3 of my 11 properties. My wife and I own eleven properties. People always want to know, “You have some skin in the game. Are you a salesperson hawking this thing and you don't own any land?” No, thank you, folks. We bought land many years ago. We pretty much bought one property per year until we hit eleven then my wife said, “Eleven is enough.” We don't buy any more land right now, but we put our money where our mouth is and we invested quite a bit into land ourselves. We walk the walk and talk the talk.
I'm going to go micro because I'm intrigued and I'm going to imagine our audience is intrigued because this is an alternative to mainstream investments. Give me some down-and-dirty details. What kind of dollars are you talking about? You already talked about potential hold periods. What type of ROI? Let’s say one of our readers is going, “Land banking? This guy sounds like he knows what he is talking about. This is an interesting idea.” What are the high-level types of things that an investor might want to know before they go, “I'll do that?”
First of all, before you can even become an investor, you must watch Marcella's one-hour presentation, Land Banking 101, to learn all of this stuff that we're alluding and touching on. We won't even take you as an investor until you get educated. To answer some more specific questions, the minimum investment is $25,000 up to $2 million. That's our range. The whole period is 7 to 10 years. It is average.
Some people exit sooner and some later, but that's the average over time that we've noticed. Regarding the return on investment, we want you to exit somewhere between 3X and 7X return, which on a 10-year timeframe is about 25% to 30% a year, the way people have told me. That's like 300% so that would be three times I think because it's not compound. I don't know how to use the financial calculator. Roughly, you're looking at about 25% per annum over 10 years and a minimum is three times. We've had many people exit well over seven times, but we try to stay conservative and we say, “3X to 7X should be your return.”
Early in my career, I was in a real estate workshop and we took our Texas instruments calculators out. We were calculating returns. One of the examples that the presenter had done was with a real-life investment and we all calculated the return. It was something like a 150% return. Everybody was like, “What?” When you start getting up to those numbers, which are the numbers that you're talking about, the answer is it's enough. I don't even know how to calculate that. At those numbers that you're talking about, it doesn't matter. It's enough, but I hear you. If somebody was reading and they go, “Land banking. That's an interesting thing to think about. Interesting concept,” anything else that you would want them to know?
A couple of things. First, people always want to know, “What are my holding costs if I'm holding it for ten years?” California passed Proposition 13 in 1978, retroactive to 1976, which limits the amount that the counties can charge when a property changes hands. Most people know that those are pretty expensive. If you own a house now and you sell it, the new buyer is paying tax at that higher rate. In California, it's capped at 1.3% of the purchase price. Because it's raw land with nothing on it, the counties never do the full 1.3%.
You're starting out with your taxes fairly low and they can only go up 2% per year. Let's say you have a $100,000 purchase and your taxes are $500. In the second year, your taxes are $510. You're carrying costs over those ten years are minimal because all you've got is property tax. In addition, there's an escrow fee, like any real estate transaction. Our company pays for the title insurance so you don't have that cost. We also pay for the natural hazard disclosure report.
We offer free negotiation coaching to help you when you exit, negotiate with whoever it is that's buying that land from you. We might have other velour clients or investors that are right near your land who have already been offered more than you got offered. We can tell you that's legal insider information that we can help you with. That's a little bit about the carrying costs and the ongoing fees.
People also want to know, “Is it cash only? Do I finance it through retirement?” I've already said retirement and vehicle cash. We don't want people taking out a HELOC. I had one guy ask me and I said, “No. I may not even sell the land to you if you do that because now you're borrowing money and paying interest on that borrowed money. What if it takes ten years? Now you're increasing your cost quite a bit.” We don't like that. Cash, 1031 exchange, and retirement fund are the three biggest sources of income that people use to purchase the land.
Land Banking: Cash, 1031 exchange, and retirement fund are the three biggest sources of income that people use to purchase the land.
There are enough details there for somebody. I know for me, it's a very intriguing idea and you've answered the initial questions that somebody like me could go, “Potentially, tell me more about that.” Thank you for that. Before we end, I do need to ask you, you mentioned your age. You're still in the game. You're very excited. You mentioned all the things that you do. You look like $1 million. I need to know some things. What's the secret? Talk to me about some of the secrets. We're going to go away from land banking for a minute. What are some of your tips because many that are your age are not as vibrant as you are?
It started when I was young. I started working out in a gym when I was eighteen when I went to college. COVID forced me to stay home. I had this little workout gym in the basement, which I used. I was going to 24-Hour Fitness every 2 or 3 times a week. I work out every day for 45 minutes. I walk. Unfortunately, our dog passed away. That was our second one. We had Pepper for 10 years and Lucky for 12 years. I still go walk a minimum of a mile almost every day, rain or shine. I eat well. My wife is on keto. She eats totally differently than I do, but she got me into intermittent fasting and I dropped about 15 pounds.
I eat chia seeds 2 or 3 times a week. I eat a lot of salads. I do eat meat, chicken, and lots of salmon, those omega fatty acids. I do take some supplements and a little bit of iron. I'm a regular blood donor. I've already done I think 105 donations over the course of my lifetime. One time, I went and I was anemic and it explained why I was a little bit tired. My doctor did a blood panel and said, “Your iron level is low.” I take iron pills, Monday, Wednesday, and Friday. I take one a day only. I don't do them every day because then it gets too high.
I'm right in smack in the middle of the perfect range. I try to get to bed by midnight. I get up at 8:00 or 8:30 in the morning. I try to get a good eight hours of sleep. Not always. Usually, seven is. It is good for me, but eight is a little better. I will take a nap in the middle of the power nap for twenty minutes in the middle of the day. I meditate every day for 30 minutes. I do my gratitude. There are many things. If I knew what it was and I could bottle it, I'd be a multi-billionaire.
I think it's a combination of all of those things.
Here's one of my favorite quotes, “Ordinary things consistently done produce extraordinary results.”
That's a great way to end this thing. Thank you for that.
That's it for me. It's very ordinary to work out or to walk, but if you're not doing it consistently, you're not going to get extraordinary results. That's what I would love to leave your readers with. Whatever it is you're doing, even if it's not fun, do it anyway. Take the ordinary. Be consistent about it and you will produce extraordinary results.
Whatever it is you're doing, even if it's not fun, do it anyway. Take the ordinary. Be consistent about it, and you will produce extraordinary results.
We are going to end there. I have a feeling there are going to be some people that want to reach out to you. How do they do that? How do people find you?
The best thing to do is to email me because I do respond within 24 hours to emails even when I'm traveling. I have my laptop with me. Shoot me an email and make sure you mention your show because I always like to reward people that send me referrals. I do have a referral program. If people want to find out more about that, maybe you can't invest right now because you don't have $25,000 sitting around, but your uncle does or your next-door neighbor does. You refer them and I pay you a very handsome referral fee. If you want to find out more about being an investor, we're becoming what we call a finder, make sure you email Brad@BradWarren.com and mention that you read me on this show.
I'm intrigued not only with the land banking piece of it, but also the manner in which you're niched and you concentrate. You're staying in your lane. You've got the referral. Find your fee system set up. Kudos to you and your crew. You're doing some neat work there. I'm glad we now know one another. I appreciate you being on the show.
Land Banking: Do something you love and express that gratitude and appreciation.
Thank you. I'm grateful and I appreciate you in return for having me on. You can see how excited I get talking about this. We could do a two-hour show with no problem.
That I can tell and maybe do part two one day.
I’ll come back again. I’ll be happy to. Everybody that's reading, go out there. Make a difference in the world. Do something you love and express that gratitude and that appreciation. Don't keep it to yourself. It's no good if you keep it to yourself. Make sure you're telling other people, “I love you. I appreciate you. I'm grateful for what you did.”
Thank you so much. I appreciate you.
Thanks very much for having me. Take care, everybody.