Mark Chats with Real Estate Strategy Lab Founder Jeff Coga

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In this episode of the Best Passive Income Model Podcast, Mark chats with Jeff Coga – founder of Real Estate Strategy Lab and host of the Real Estate Strategy Lab Podcast. Jeff is a lead-generation expert who started his career in 2004 with the first purchase of his home at the age of 19. He flipped this house for a profit of over $50k and knew this was his passion.

After many years of trial and error, much studying and reading, Jeff has refined his strategy and shares it with other real estate investors through his Real Estate Strategy Lab.  His goal is to help people like him eliminate the trial and error process by offering valuable insight into leads, closing, conversions, and more.

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If you’d like to help out the Land Geek Community, please rate, review, and subscribe to the podcast on iTunes.

Tip of The Week:

  • Jeff: Listen to the Real Estate Strategy Lab Podcast for lots of free tips.  Visit GetMyBrainfood.com for 2 FREE AUDIO BOOKS to feed your brain.

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Mark Chats with Mitch Stephen of 1000Houses.com

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In this episode, Mark chats with Mitch Stephen of 1000Houses.com.  Mitch is a self-taught real estate entrepreneur and has been self-employed since 1996.  In that time, he’s purchased over 1000 houses!  Mitch is the author of the highly successful book,My Life & 1,000 Houses: Failing Forward to Financial Freedom” and the soon to be released book, “My Life & 1,000 Houses – 200 + Ways to Find Bargain Properties”.  

Mitch specializes in owner financing to individuals left behind by traditional lending institutions and is passionate about giving new life to properties that scar the neighborhood.  His success is inspiring and he offers great tips you can use to get started.  According to Mitch, “It all starts with a deal” and he’s here to simplify the process of getting your real estate business off the ground.

Mitch generously offers his new book absolutely FREE to Best Passive Income Model listeners for a very limited time.  See the details in the Tips of the Week below.

Thank you for listening to The Best Passive Income Model podcast.  Your support helps me attract great guests who share knowledge that you can use to grow your business.

If you’d like to help out the Land Geek Community, please rate, review, and subscribe to the podcast on iTunes.

Tip of The Week:

  • Mitch: Get a FREE download of his new book, “My Life & 1,000 Houses – 200 + Ways to Find Bargain Properties“.  This is a MUST READ and Mitch is generously offering it to my listeners for FREE.  Simply go here to download the Kindle version of the book absolutely free.  But hurry, this offer expires May 25, 2015.  

    Bonus Tip: If it’s the only thing you do this year, find someone and learn how to solve the problem of private money.

  • Mark: Learn more about Mitch at 1000Houses.com and don’t forget to get the Kindle version of his book FREE here.

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Mark Chats with Leading Tax & Wealth Expert Tom Wheelwright

tom wheelwright podcast

In this episode, Mark chats with Tom Wheelwright – CPA, CEO of Pro Vision Wealth, leading tax & wealth expert, published author of the best-selling book Tax Free Wealth“, Rich Dad Advisor, speaker.  Tom was hand picked by Donald Trump to contribute to his Wealth Builders Program.

Tom is a tax expert with more than 35 years of experience and he’s passionate about helping entrepreneurs and investors understand how to put money back in their pockets.  Through his tax expertise, Tom realized that taxes aren’t in place to punish investors and entrepreneurs, they actually offer incentives.  It’s an understanding of those incentives that can dramatically reduce your taxes so you can keep more of your money.

Listen to the full episode to gain insight into Tom’s expansive knowledge.  This is an episiode you don’t want to miss.

Thank you for listening to The Best Passive Income Model podcast.  Your support helps me attract great guests who share knowledge that you can use to grow your business.

If you’d like to help out the Land Geek Community, please rate, review, and subscribe to the podcast on iTunes.

 

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Mark Chats with 8th Largest Mobile Home Park Owner Frank Rolfe


In this episode, Mark chats with Frank Rolfe – 8th largest mobile home park owner in the world and largest private owner of billboards in Dallas/Fort Worth.  Frank is the co-founder of Mobile Home University - the #1 source for mobile home park investment advice.

Frank shares insight into billboard investing and why ANYONE can do it.  He discusses the benefits of it being one of the few federally-regulated industries and how that guarantees profit.  Frank also talks about how Conrad Hilton inspired him to pursue his passion and become one of the world’s largest mobile home park owners.

Thank you for listening to The Best Passive Income Model podcast.  Your support helps me attract great guests who share knowledge that you can use to grow your business.

If you’d like to help out the Land Geek Community, please rate, review, and subscribe to the podcast on iTunes.

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Just follow these easy instructions to enter the drawing

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Mark: And back once again, one of my favorite podcast guests from OBUniversity.com. He is now the eighth largest mobile home park owner in the world, most likely creeping on seventh if this deal closes. You know him. I love him. Frank Rolfe, how are you?

Frank: Mark, how are you doing?

Mark: Good, good. It’s funny because in that little intro there, I forgot to mention that before you became the eighth largest mobile home park owner in the world, you were the largest private owner of billboards in Dallas-Fort Worth. So this podcast because there’s a lot of compelling attributes about billboard investing and I think there’s a nice synergy there with raw land. And I thought it would be great for the Best Passive Income Model listeners to learn more about billboard investing. What do you think?

Frank: Sure, absolutely. I hope I can live up to your intro.

Mark: I know you can.

Frank: I’ll try.

Mark: So Frank, why billboards?

Frank: Why billboards? Well Mark, several reasons. First, people may or may not be aware, billboards are one of the few industries in America that are regulated by the Federal government. And by regulating it, they virtually guarantee to make money with them unless you really screw it up.

The only things regulated by the government prior to that were trucking and the airlines and they both did phenomenally well while they were regulated. And then the government deregulated them because they wanted to foster competition and ruined their profitability. Billboards, they cannot figure out how to deregulate because they don’t want more of them to be built in a large macro scale. So it’s one of the few industries out there which is regulated by the government and they can’t seem to unregulate it to lower prices and lower profitability.

Another reason why billboards is, that billboards are something that anyone could do. Anyone on this call who can scrape together a few dollars to get in the billboard business, that’s where most people began, there are million different ways to participate in what is called out of home advertising, which is the macro species that billboard is just one tiny part of. You can build a wooden billboard for a few thousand bucks. They can have a hundred percent or more return on investment every year.

Mark: Did you say a hundred percent return on investment?

Frank: A hundred percent, yes. It has probably got the highest of all the things in real estate. Billboards probably have the highest rate of return of anything ever devised.

Mark: No, I think raw land beats it, Frank. We’ll argue about it.

Frank: OK, OK. I’m just saying from an income property perspective because raw land is not income property. It’s a different animal. But from an income property perspective, billboards always take first prize in return on investment.

And the third reason is it’s something you can do easily at night and on weekends. It will not interfere with your day job at all.

Mark: Right.

Frank: Fourth item is you can do as much or as little as you want. Some people only own a couple of billboards. Some people own empires.

Another great item about billboards right now is the internet has ruined the other media. It has ruined newspaper, radio, TV. It’s all destroyed. You can now – why do radio when you can go on your computer and listen to YouTube, get on your iPad and create your own song list. The same with newspaper, I don’t know about you Mark, I don’t subscribe to any newspaper today.

Mark: Yeah.

Frank: I just subscribe to the local paper, the Wall Street Journal. I look at MSN and I’m done. But billboards are the only thing out there that that does not have to pay any money to create content. You have no choice. You have to look at them while you drive. You don’t have to. You could fight it and look only straightforward. But some people don’t. They get bored and they read the billboards.

Mark: Right, right.

Frank: The internet has actually helped billboards because it ruined the other media. It made billboards more attractive. So that’s why there’s a much higher billboard rent. So I think those are probably the key items.

No, there’s actually one more Mark I’ll throw out which is, you only rent a billboard traditionally one time a year. So it’s kind of like an apartment on a one year lease. But in the ad world, that’s phenomenal. I mean newspaper contracts for a day, sometimes a month. So you can have a lot of billboards and you can spend very, very little time operating them, which again is great if you try to feather it into your regular day job or feather it into your retirement where you really don’t want to do that much stuff. It’s very adaptable. It’s a giant chameleon.

Mark: Yeah. But Frank, I mean I live in Scottsdale and I’m driving around and I see these billboards off the highway and it’s always like the same companies.

Frank: Yeah. Mark, that’s because the industry went through massive consolidation back in ‘90s. That’s when I sold out mine. I sold out ’96. Prior to the ‘90s, in Dallas for example, there were 60 different operators. Today there are only maybe six.

Mark: OK.

Frank: And what happened is, clear channel which were all kinds of guys that bought me out and Lamar and CBS which has now renamed themselves OUFRONT, they probably owned, I don’t know, 80 to 90% of all the billboards in America. And they did that through buying everybody up and that’s actually a plus more than a negative because what happens is big companies are not very aggressive, not very well-ran so you can actually do better today than you could back when I was doing it. I used to have to compete with 59 other guys that were really pretty good at what they did.

Mark: OK.

Frank: Right. And today, you are looking at a few giant dinosaur companies. They are not very good at anything that they do.

Mark: Right, right.

Frank: Yeah. So that has actually created an opportunity more than it’s heard.

Mark: What’s the biggest barrier to entry then? Because if it’s regulated and the government doesn’t want you to build a new billboard, how do we break in? How do we do this?

Frank: Well, let me go back two steps. The government does want you to build new billboards. In fact, if you if you read their stuff, they all say that billboards provide valuable content and information for drivers and they provide valuable information for merchants who rely on interstate and non-interstate highway traffic to make their towns and businesses prosper. So the government is not negative on it.

They want to have it very limited though and that goes back to its early origins as the Beautification Act back in the ‘60s under Lyndon Johnson. The intent was not to shut it down. That would have been easy. They could have just said no billboards could be built and that was the end of it. But they didn’t want to do that because they don’t want you driving around and you want to need to find a hotel. You do need that billboard saying Holiday Inn six exits up. So they had to make – they had to I guess kind of do a plea bargain with themselves. They wanted to have very few signs based on how many you could have but they wanted to have signs.

Mark: OK.

Frank: So they’re not negative on it.

Mark: OK. So I own 40 acres off the highway in Nevada. So that’s perfect billboard real estate, correct?

Frank: Yes and no. See, when they built the Beautification Act to regulate the signs, the signs are all now based on certain zonings and spacings. So you had to be at certain spacing from the next billboard down and you had to be in the right zoning.

Mark: OK.

Frank: So unless you know your zoning and your spacing, I can’t tell you whether your land works or not.

Mark: OK. Let’s say zoned agricultural.

Frank: That still would not help. See, every state has their own regulations on the zoning.

Mark: OK.

Frank: Some states allow you to build on ag ad and some do not.

Mark: What’s an ag?

Frank: Ag, agricultural zoning.

Mark: OK, yeah.

Frank: OK? So what you have to do to get the business is you have to research the laws in your area for zoning and spacing and that’s like the key starting spot.

Mark: So this is sort of the big barrier to entry because it doesn’t seem like it’s money because for a couple of thousand bucks, you can have a billboard built, correct?

Frank: Well, right. You’re looking it from a land owner perspective. From a guy building billboard perspective, it’s a whole different deal because there was like a half-read [0:09:52] [Phonetic] any number of pieces of land. So it’s limiting to you as a landowner. It’s not limiting to the sign builder owner.

Mark: OK. So how do I find these hot spots where I’ve got the right zoning and I’ve got the right distance?

Frank: OK. Well, here’s what you have to do, Mark. First thing and it may sound complicated but it really is not that complicated if you think about it. Most people, they start at where they live, which you take your house. And then most people will build a territory that represents about four to five hours from their house.

Mark: OK.

Frank: That’s a typical billboard territory. That was my billboard territory in the old days. So you just take your compass. If you’re an old school guy like me, you draw a circle around your house, four to five hours out, which means four to five hours to me is about 300 miles away from your house roughly.

Mark: OK.

Frank: And you draw that circle. And in some cases like where I live in Missouri, that circle encompasses now six states. So it can be a lot of terrain. It’s very rare that you’d be inside of one state if you go four hours out. The only state I could think of that you could pull it off would be Texas. But even then you start at little Texas.

Mark: Right, right.

Frank: So when you have that thing going there, then what you do is you will notice in your circle that 80% of your circle is not city. If you look at your typical piece of America anywhere you go, maybe not California but even in Western California is mostly rural. It’s not all city.

Mark: Right.

Frank: And so, the rural laws are very simple. The rural laws are governed by your state. They come in a little state handbook. It will tell you when you’re out of the country, how many feet between signs, and what creates what is known as an unzoned commercial area.

Mark: Unzoned commercial area, got it.

Frank: Yeah. This is the only real estate time in the world that such a definition exists. What an unzoned commercial area is, is based on your states. Some states defined it as single business along the highway as an unzoned commercial area and you can build billboards in unzoned commercial area. Some states require two businesses side by side to be a zoned commercial. But once you learned that law that that law will work throughout everything on your map, this is not at the city.

When you get to the city, the city has the right to amend their law tougher but not easier than the state. So your typical city will have a regular zoning map designation. Your typical city will allow signs in everything from retail to light industrial, sometimes agricultural, depends on where you are. The only zone they typically will not allow billboards in is residential.

Mark: OK.

Frank: OK? So, you figure that out in the spacing. And then what you do is you will ultimately, if you were to do that, you have a giant stack to your ceiling of ordinances from all those cities. The state handbook works for everything that’s rural. And then the cities, you have to get the individual ordinances, and that’s a lot of ordinances.

So what you typically do is you take your 300-mile circle from your house and you divide it in four quadrants. You draw a north, south and east, west line. And then you say to yourself, “OK, which of these quadrants has the best economics? Which of these is the strongest?”

What most people do is you take and you map, I know this sounds weird, Mark, but bear with me. You map out where the Walmart stores are.

Mark: The Walmart stores is the secret to…

Frank: Yeah, Walmart stores. They are the secret to life.

Mark: …to life, OK. I love it. Well, it used to be McDonalds.

Frank: Yeah. McDonalds is number two.

Mark: OK.

Frank: It’s number two. But Walmart does a phenomenal job of due diligence. McDonalds, they just constantly need more restaurants so they’ll build them in really weak locations and we find them around Missouri just the weirdest spots, a town of 200 and a McDonalds, right?

Mark: Right.

Frank: But Walmart, it’s much more serious enterprise. I mean a typical Walmart store sales are I think a hundred million a year, some crazy number. So they just don’t jack with that lightly. They’re very serious. When you lay the Walmarts on to your circle, you will see that one quadrant will completely dominate the other three. Typically, that one quadrant will have as many Walmarts in that quadrant as all other three combined.

Mark: Interesting. OK.

Frank: And that’s your strong quadrant. From the strong quadrant, what you do is you identify with a highlighter where your major roads are, the interstates, the non-interstate highways. These are the hot spots because the rates are high. The business is based on traffic count. So who has the highest traffic? Interstate highways do.

Mark: Sure.

Frank: Right? So, you follow those out. And as you follow those out, you will see what cities those highways passed through. You already know your state ordinance. And now, you’re gathering up city. When you’re out calling around the cities, you will notice cities that sound much more fertile than others because you’ll call and they’ll say, “Yeah, you can build a billboard here every 400 feet and there are 25 different zonings.” And so, when you figure out just based on your gut feel of where the hot spot, the hot opportunity is, that’s where you go.

Mark: OK.

Frank: And you work that little tiny niche market to completion. And then you go to the next.

Mark: OK. So now Frank, let’s talk about the fun stuff.

Frank: OK.

Mark: Let’s talk about the hundred percent return. So walk me through the economics of it.

Frank: Sure. Let’s start at the simple unit which is the wooden telephone pole and [0:16:12] [Indiscernible] traditionally. They can be 8 x 24 and 12 x 24. They come in many sizes. All you do is you drill holes and you put in anywhere from three to five telephone poles which are used telephone poles traditionally, sometimes free from your local utility company. And then you put out what are called stringers which are nothing more than 2 x 4s that run across and you typically put in five, six stringers and then you take plywood and you screw the plywood to the stringers.

And now, you have a sign. Now, you’re done. And then basically when you put the ad on, you print on vinyl and you do what’s called wrapping the sign face with the vinyl. You don’t do it. You let professional do it. And that’s all there is to it. And a sign like that depends on the market. A typical market in America with that sign will rent for $200 to $300 per month.

Mark: OK.

Frank: All right? And you have two sides. So let’s just take the middle, so you got 250 per side. So you get $500 a month for both, $6,000 a year of revenue. Out of that, you traditionally pay 15 5o 20% to the landowners. Let’s say in this case, you pay them a thousand a year.

Mark: OK.

Frank: Right. So now, you have the $5,000. And then you have to pay to install the vinyl. You have to pay repair and maintenance and tax and insurance. Let’s say all that comes out to another thousand. So now, you’ve netted $4,000. And the sign probably cost you $4,000 to build.

Mark: OK.

Frank: And that’s where the one hundred percent comes in. I have built wooden signs, not initially but within five years where the signs are running for a thousand a month per side that you can pull that off if you are a very good shopper and a good planner and you can see the path of progress way ahead of time. It’s very, very rare to find ever a billboard that rents for less $2,000 a year. That’s kind of unheard of.

Mark: Wow!

Frank: So basically, that’s what you do. And some people, what they do is they try and build – they stick with the wooden signs and they try and build – draw a little portfolio, five signs, ten signs, whatever. And some people go crazy and build like hundreds of them. So it just depends. But that’s as simple as sturdy spot for most people is wooden signs.

Mark: But the people that go crazy and build hundreds of them, they must have a team, correct? They’re not going out and driving themselves.

Frank: I had 300 billboards, OK?

Mark: OK?

Frank: That’s how I was the king of Dallas-Fort Worth. And my entire team was nothing more than myself and a bookkeeper.

Mark: It’s you and a bookkeeper.

Frank: Yeah, that was the team. The reason I was able to play my team so skinny was I made a choice early on that I wanted to have perfect customer retention. I wanted to have a hundred percent renewal rates. And I never got to it. But I was able to get about 80%. So at 80% renewal of my 300 signs, I only had to rent 20% of them a year. So I only had to rent 60 faces a year. Right?

Mark: Right.

Frank: And I could do 60 faces by myself. So that’s how I worked it.

Mark: Wow!

Frank: Yeah. The renewal rate is the key to happiness. To get a higher renewal rate, what you have to do is you have to provide a good investment for the advertiser where they get more out of the sign than they paid. So what you do is you try to make good choices on who you put on your signs.

So if I had a sign somewhere and I had ten different potential advertisers and I had Wendy’s who would pay me 300 a month and I had Jojo’s Bridal that would pay me 800 a month, I would go with Wendy’s.

Mark: Sure.

Frank: Because Wendy’s are going to be there forever. Jojo’s, you put them up. They might last four months. They put a bankruptcy and you’re doing it again.

Mark: Right.

Frank: And a lot of big advertisers, they don’t make that choice. They go strictly for money. Whoever pays the most, that’s who they go with. But you know what? If you go that route, your sign might go three months, vacant for three months, rented for four months, vacant for four months. When you really average it all together, 800 a month is great but a six month occupancy is no better than 400 a month.

Mark: Wow! But can you do this virtually now, Frank? Can I go on Google Earth, pick out my quadrants, and…

Frank: No.

Mark: I can’t do it virtually?

Frank: Well, you can do some of it virtually but no, you kind of have to get out of your car and do it.

Mark: OK.

Frank: Now typically, what I used to do, I would go out and drive to the market and I would record all of the legal locations in one drive based on spacing and zoning. I would then go back and I would contact the tax assessor and get all the owners’ names and then I would start contacting them. So it’s not like you’re out there all the time in your car.

I mean typically, you go out, gather the info, go back. You do all the rest of it virtually from your home until you get lease, you get a permit and then to build that again, you’re out in your car. And then to rent the ad space, I used to do that through direct mail and cold calling. So I would not – so basically, I go out to the sign early on about three or four times.

Mark: OK.

Frank: The one time to sign up the lease. One time to build it and then another time to rent the ad space to actually sign contracts and then you still have to go out there periodically and check on your lights, make sure your lights are burning if it’s a lighted sign. If it’s non-lighted, just make sure the thing is fine. No one has graffitied it, that it hasn’t fallen down or something like that.

Mark: Sure. Sure. Wow! I love this model. So what’s the dark side? There’s got to be some dark side to this otherwise…

Frank: Well, the dark side is again, you have to use your brain. I mean it’s like one of those video games where it requires some degree of setup. It’s not just plug and play. It’s not a tarry ping pong. It’s a more intense video game.

Mark: Right. So Frank, as long as we have to work.

Frank: Well yeah. You have to do something. You have to actually put a lot of effort out. And you have to be – you have to work smart. You don’t want to be looking for locations where there’s no humans. That’s stupid.

Mark: OK.

Frank: But if you work smart and you put out the effort out, there really is no dark side. The only dark side is probably is the scale because when you go to get in the billboard business, it’s just always one at a time. You can’t really go in and do much more. I mean I did over my 14 years of the industry. I did some larger acquisitions. But again, they were never really large. The largest I ever bought was 28 signs. And typically, when I was buying signs, a portfolio would be little like maybe five signs.

So that wears people down. Sometimes an apartment complex, you can buy one complex and have 300 units. In the billboards, you buy or build one billboard and you got two. Then you go get another two.

Mark: Right.

Frank: So probably the most depressing thing for some people is scale. But at the same time, that’s a plus for some people who don’t want a lot of scale.

Mark: Right. It’s a manageable niche and it’s slow growth, right?

Frank: That’s right.

Mark: And you can do it on the weekends.

Frank: Or at night or if you want to do it during the day, whatever – I mean there are retired people in it. There are people with day jobs in it. And then there are people who they do it full time.

Mark: Right.

Frank: It’s whatever you want to do. But to be in it full time, you have to have a giant amount of billboards. So it’s not just a business. It’s very time-intensive. It never has been. I mean if you look back at one of the early pioneers was a family out of Philadelphia called the – the last name was White and the company was called White Co.

And White Co started with a guy building wooden signs predominantly for Holiday Inns. And he was building it one at a time and they built up this giant company by hand, building here’s one, here’s one, here’s one, here’s one then his kids got in the business. Now, you have three people building it one at a time. But that’s where it all began. Again, it’s really hard to make it a get rich quick scheme.

Mark: Right.

Frank: But it’s a great get rich slow scheme.

Mark: Those are the best.

Frank: Yeah. And if you look at the industry actually and obviously all the real estate sectors, you have the top guys but you have some remarkably high folks on the Forbes list who are billboard guys.

Mark: One of the billionaires in – I think we have seven billionaires in Arizona and one of them is a billboard guy.

Frank: Yeah. You probably have Arte Moreno.

Mark: Arte Moreno, there you go.

Frank: Arte Moreno, who was the guy from Outdoor Systems. John Kluge, the richest man in America, one time long ago was a billboard guy.

Mark: Yeah.

Frank: Ted Turner was a billboard guy. That’s where he got his money to start Turner Broadcasting Network and all of his other weird things that he does. He was originally a billboard guy. So a lot of billboard guys who have gotten on to greatness. There’s a lot of American wealth that came from billboards.

Mark: Yeah. I mean look, the eighth largest mobile home park owner in the country. The world started out as a billboard guy, Frank.

Frank: There you go. There you go, Mark.

Mark: All right. I’m sold. I’m sold. All right. So this is the part of the podcast Frank, I think this is new for you because it’s on the Best Passive Income Model Podcast, I’m going to challenge you. I’m going to explain my business model and ask you, do I have the best passive income model?

Frank: OK, go ahead.

Mark: OK. So we go after somebody who owes back taxes on a piece of raw land and lives out of the state. So they’re not really emotionally attached to that parcel and they’re kind of advertising to the world that number one, they don’t value that property anymore and number two, they’re financially distressed or there’s something up because they owe back taxes. Right?

Frank: Right.

Mark: So we send them a lowball offer and we buy it, let’s say, 20, 30 cents on the dollar. OK? Now, instead of flipping it for cash which we can do and when we do that, we typically make a 300% return, we’ll put a note on it. We’ll owner finance it so it’s a one-time sale, right?

Frank: Yeah.

Mark: And then we have recurring revenue on an asset that requires no rental, just like billboards, no renters, no repairs, no renovations, no rodents.

Frank: Right.

Mark: We’re in a noncompetitive niche, right? You don’t go on television and see, “Flip this land.”

Frank: Sure.

Mark: And so, there’s no very little competition.

Frank: OK.

Mark: Frank Rolfe, do I have the best passive income model?

Frank: I see you have – that’s a great model. I’m not going to say the best because we’re kind of feel strongly on the ones we do. But the only drawback to that model I can think of is just finding quality land that was unpaid taxes. I got a lot of tax sales with my mobile home park operation as far as buying old model homes at tax sales, which is the most depressing bottom of the pyramid at any auction.

Mark: Right.

Frank: And there are these people who are buying little fidgety, triangular things of land that’s the size of my coffee table.

Mark: Right, right.

Frank: Right. So I always look at them thinking, “Now buddy, what are you doing there? What can you do with that?” I mean they actually will show the overall schematic. You might be able to house a miniature horse ride for children, maybe you’ll put in a 9-diameter rope with miniature horse on it, all that you can do with it.

Now, if you can find quality land, yes, I can’t have any problems with what you’re describing because I myself have been fascinated with people buying stuff. I’ll give you a weird billboard story Mark, which falls right to what you just described.

I get a call because I am the only guy in America that will talk about billboards. I don’t know what the problem is, everyone else either died or is grumpy and so I am like the last of Mohicans. There was a guy named Victor before me that I used to use as an appraiser who was very nice, who went to talk to people and answer their call. Then he died. So it was back to me alone.

So I got a call from somebody one day who said, “Hey, I got this billboard on this piece of land that I bought at a tax auction. And I said, “OK. Well, tell me about the site?” “Well, we haven’t contacted the company yet but it’s kind of like in the highway.” And then I said, “What company is it?” “Oh, it’s like Lamar.” And I said, “How big is it?” He said, “Well, I don’t know anything about billboards but I counted that underneath it and I came up with about 50 feet.” I said, “That’s probably 14 x 48. That’s the Cadillac of the industry. Is it a single meet-up hole?” Yes. Is it two-side? Yes. Where the heck are you? He gave me I think it was like Pittsburg. And I said, “Holy smokes!”

He said, “How much should I get for that?” I said, “Well, I don’t know Pittsburg’s rates but that sign probably rents for $2,000 to $4,000 per month per side.”

Mark: Wow!

Frank: So I’m guessing about – he’s probably got a 100, probably – I mean you probably going to get like I don’t know, 20 grand a year for it in ground rent. And I said, “What did you pay for this?” And he said, “Oh, we probably bought this land for like five grand.”

Mark: Yeah.

Frank: I’m like, “How the hell did you pull that off? How big is it?” He’s like, “Oh, it’s like an acre.” I’m like, “How is this possible? Are you kidding me? I mean is this serious.” And he’s like, “No, no. We just bought this at this tax sale.” I said, “Does the guy ever redeem it?” No, never redeemed it. That’s just fucking crazy. I mean so yeah, that stuff obviously, any red-blooded American hears stuff like that thinks like, “What the freak!”

Mark: Yeah, yeah.

Frank: That’s crazy. I mean that’s like going to car auction or something and someone bids a $100 for a Porsche 911 and it’s in fine condition. You’re kind of like, “What? How is this possible?” But no, I have heard stories. I have seen the evidence. I’ve put billboards on land that was bought at tax sales. So yes, I have nothing negative on tax sales at all.

Mark: All right, yeah. I mean that’s our model. All right. So Frank, one more time, I’m going to put you on the spot. For the Best Passive Income Model listeners, what is a website, a resource, a book, something actionable where they can go now and improve their businesses and improve their lives?

Frank: Gosh Mark, so many thoughts come to mind. One website that we use a lot and what we do which is helpful for anyone in real estate is BestPlaces.net.

Mark: No, Frank. We have already done BestPlaces.net.

Frank: Oh, I am sorry, Mark. Well, can I give you then a book?

Mark: Yes!

Frank: Did I ever give you the book called The Man Who Bought the Waldorf?

Mark: No. I love that. I’m buying that right now, The Man Who Bought the Waldorf.

Frank: This book changed my life, Mark. I’ll tell you real quick what happened.

Mark: OK.

Frank: Back when they had the Texas Depression in the late ‘80s, for the old-timers who are around in that era, what happened in Texas was oil pricing collapsed just like it is now.

Mark: OK.

Frank: And at the same time, real estate collapsed because they changed the passive loss laws in real estate. And all real estate overnight was hugely devalued so you had the double threat. Texas is nothing more than an oil producer back then with a lot of construction. So fast forward even a year, every high-rise in Dallas is in foreclosure, every one, every high-rise in downtown Dallas is in foreclosure.

Mark: Right.

Frank: It’s a bloodbath. My mother was an oil and gas CPA at Arkansas Oil and Gas. Remember that, Atlantic rich field?

Mark: Right.

Frank: They had a $100 million tower they had just built and it was sold at the courthouse for $50 million. That’s how bad things were.

Mark: Wow!

Frank: So things were so depressing Mark, it’s unbelievable. I can’t go through a day without somewhat unbelievably horrifying experience. I go to the dry cleaner to get my clothes. The dry cleaner has gone out of business. My clothes were gone. I go to a restaurant, take my wife to dinner and I find the door chained shut with the landlord lockout letter in the window. So I was just like, “What the heck?”

Well, I’m getting kind of depressed. I’m trying to rent billboards and all these businesses, they’re all going down the tubes. And I’m walking around in Fort Worth, Texas and I see an old used bookstore. So I go into the old used bookstore. I’m looking through all these books and the books were like a dollar. And I come across this book and it says, The Man Who Bought the Waldorf, the story of Conrad Hilton.

Mark: Right, right. By the way, I’m on Amazon right now and this book is like 60 bucks. It’s a collectible.

Frank: Is it a collectible? I paid a dollar for mine. OK. So I buy this book and if you read the book, I don’t know how much time I have, Mark, to tell you. I may only have 10 seconds or do I have a minute or what?

Mark: Come on, Frank. You can have as much time as you want.

Frank: All right. Well, if you read the book, what’s fascinating about the book is if you didn’t know the story, I did not know it.

Mark: I’ve never heard of Conrad Hilton, by the way.

Frank: OK. Well, you’ve heard of Hilton hotels, right?

Mark: Yeah. I think they’re a little chain. Yeah, they’re huge.

Frank: They’re huge, right. OK. Well, so Hilton is this guy and he works for his parents in a tiny hotel and I believe Cisco Texas and it’s a damp. I’ve seen it in person accidentally. I went to Cisco one time and there it was. And so, the hotels are damp and he wants more out of his life. His mother says, “Hey Conrad, you know what? If you want to launch big ships, you got to go where the water is deep. You got to get out of this small town Texas nonsense. You got to get work big time. You got to get to Dallas. You got to get to big cities.”

Mark: Sure.

Frank: So he goes to Dallas and he has really good BS skills and he convinces these banks to loan him millions of dollars in the 1920s and he builds this chain of super luxury high-rise hotels but he doesn’t know what he was doing. He was only like 28 years old or something.

Mark: Right, right.

Frank: And so, he builds all these hotels and during the 1920s he’s doing fine and he’s staying full and they have all these fancy clubs on the roofs and champagne flowing then the Great Depression hits. So he loses everything, everything!

Mark: Everything.

Frank: Totally! I mean he loses it all. He lost his house, car, everything. And so what do you do? Well anybody else will probably just go and jump off a bridge or just been so depressed and just grumbled the rest of their life while they worked at a waffle house or something.

Mark: Right.

Frank: But he wasn’t going to do that. So what he did was he went back to the banks who had just taken all of his assets away and said, “Hey guys, remember me? I’ve got great BS skills. Can I manage these?” And the banks were like, “You’re freaking crazy dude. Why would we let you do that? We just foreclosed on you.”

Mark: Right.

Frank: And he’s just like, “Well, because I need a job and I’m really good. You were impressed with my BS before to loan me millions of dollars to build these freaking things. I might as well run them.” Well, nobody want to run these hotels because during the Depression, no one used hotels, right? So there was no – nobody wanted the job. So they’re like, “OK, I guess you can manage it.”

So all these hotels he had lost to foreclosure, they made him the manager of. So now, he has got a job. So now, he’s managing these hotels that he used to own, kind of embarrassing, kind of weird. People say, “What? You’re Conrad. Aren’t you the guy that built this?” Yeah. “Now, you’re just manager?” Yeah.

So he’s managing away and as he’s managing the hotels, he had to scheme. His scheme is to buy them all back for next to nothing.

Mark: OK.

Frank: So he very closely studies the financials. He’s already writing his next pitch in his brain of raising money again. And as he sees the market bottomed in the late 1930s, he makes his move and he goes to investors and says, “I’m Conrad Hilton. Yeah, I’m the guy who lost everything. It’s true. But here’s the deal. I know hotels really well. I’m managing this chain of hotels that I used to own and here are the numbers. And you see, they bottomed in like 1936 and now, they’re going up every year.”

Mark: Right.

Frank: And he’s such a good BS. So people said, “Oh gee, OK, Conrad. Here, I’ll go ahead and threw in a million bucks.” And the next guy, “I’ll throw in a half a million.” So he builds his fortress. Now, he goes back to the banks and he says, “Hey banks, these hotels aren’t worth anything near what I’ve spent to build them. But you’re stuck with them forever. But I have an investor group that might buy them.” Well, the banks at this point were like, “These things are hopeless. They’re not going anywhere.” And they went, “Let’s just dump them.”

So, they sell the hotels back to Hilton, the very hotels that he had borrowed money from them before and then they like lost 90% of their money. Well, he buys them back again. And then he raised that. Here comes World War II and you have all these GIs on railroad cars stopping in cities. Well, the occupancy in hotels goes insane.

Mark: Right.

Frank: And he’s able to actually even rent out the chairs in the lobby. He can rent out a chair for five bucks a night.

Mark: Oh my God!

Frank: To a serviceman who will sleep in the chair because they have no rooms. He even actually makes closets in the lobby and the rooms because of so much demand, right? So he raised the thing freaking up. But he doesn’t go crazy the second time because he remembers what happened to him the first time. So his new theory is, “You only buy hotels for penny on the dollar.” Right?

Mark: Right.

Frank: He puts it in the book that the big lesson he learned in his life was never build anything from scratch. Wait for a depression and buy it for a penny on the dollar what it cost to build. And using that new philosophy, guarded with his income from World War II era, he ends up buying every major hotel in the United States from Waldorf Astoria to The Plaza, to the Palmer House. Every major hotel you can name in every major city…

Mark: Wait. Frank, I lost you. Well, you just went mute on me. That’s weird. All right. Well, we just lost Frank. But I am going to say that that story about Conrad Hilton is very interesting because we didn’t talk about but Frank has a very similar story except a much better story than Conrad Hilton because when he sold his billboard business, he started buying up mobile home parks pennies on the dollar and then he sold out when he couldn’t buy them anymore in 2006 at the top of the market, sold in the Depression in 2008 and start buying them back up again. So he was at one point I think 28th or 15th largest mobile home park owner in the world and then became the 10th largest and now the 8th largest by following the Conrad Hilton example.

So for all the Best Passive Income Model listeners, I want to thank you for your time and listen to podcast. I’m so sorry that we lost Frank’s audio there. But I do want to remind you, learn more. Go to www.TheLandGeek.com. Download for free the Passive Income Blueprint. Get the ebook, How to Avoid the Three Fatal Land Buying Mistakes. And of course, get this always informative and engaging podcast delivered each week to your email inbox.

Please learn more about Frank Rolfe. Go to OBUniversity.com. Learn how the heck to start building your own billboard empire, OBUniversity.com. I don’t know if Frank can hear me or not but Frank, thank you so much for being on the podcast. And again, thanks everybody. We’ll see everyone next time.