Adam Southey lost it all in the 2008 market crash and in this episode, he explains how he was able to come back strong from a big setback that took him from full-time investor to W2 employee back to full-time real estate investor all with a sole focus on his new niche, raw land.
Adam Southey Real Estate Background:
- Raw land investor
- Invests in raw land and consults with clients to help them do the same
- Host of the podcast Casual Fridays REI
- Based in Fort Worth, TX
- Say hi to him at http://www.casualfridaysrei.com/
Best Ever Tweet:
“Trust but verify.” – Adam Southey
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Adam Southey. How are you doing, Adam?
Adam Southey: Hey! I’m doing so good, thank you so much for having me.
Joe Fairless: Well, I’m glad to hear it, and it’s my pleasure. A little bit more about Adam – he’s a raw land investor; he invests in raw land and consults with clients to help them do the same. Host of the podcast Casual Fridays REI. I love that podcast name; it just makes me want to enjoy myself and listen to the podcast, just really relaxing, versus something like Best Real Estate Investing Advice Ever… Right? Casual Fridays just welcomes me into it.
Adam Southey: Yeah… You know, every day is a casual Friday when you’re an investor.
Joe Fairless: There you go… That’s true. Based in Fort Worth, Texas. With that being said, Adam, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Adam Southey: Yeah, no problem. I’ve been in real estate for probably 15 years now, and I’ve done just about everything. I got started as a new home builder, and became a realtor, and a wholesaler, a rehabber, a landlord, I’ve done mobile homes – you name it, I’ve done it. Then the market slowed down back in 2008-2009, and essentially because I was so leveraged, I went broke. Just like a lot of people, I ended up having to go get a job, and I ended up on the railroad, I was a conductor.
The whole time, all I was trying to do is rebuild everything I had and get back into real estate. I was listening to a podcast, the Side Hustle Podcast, and some guy was coming on, talking about buying and selling land, and how he was doing it for a couple hundred bucks an acre… And that hooked me, because that’s essentially all the money I had right then.
So I got involved, and my very first marketing blitz I bought three 2,5-acre parcels for $250/piece, and I sold them for $1,000/piece, and that was it. I was hooked. I went all-in at that point. That was 3,5 years ago, and we’ve scaled up the number of properties, the price range of properties, and like you said, we built a podcast where we just kind of talked about our journey as land investors… And through all that, other people reached out, and we started helping others. That’s where we’re at today.
I have a partner on the podcast, Justin Silvia. We have our land businesses, and we have the podcast, where we like to help others out.
Joe Fairless: Will you elaborate on how you went broke?
Adam Southey: Yeah… A bunch of bad decisions, really. I was a realtor, a house flipper. As a realtor, basically I was living dollar-to-dollar. If I went out and made 10k, 15k, I spent it. And then I’ve had rehabbed properties that I had just over-leveraged, and couldn’t sell them for what I initially thought I could… So when it came time to sell, I didn’t make what I needed to, and that put me on the job as a railroader.
Joe Fairless: Okay… And why in the world would you wanna get back into real estate after al that?
Adam Southey: That is a good question… I don’t know, but I wanted to do real estate all through college. I think I came up and gone through college around that time when those HDTV shows became really popular and made it seem really cool… I thought “That could be me. I could be out there flipping houses…” So I gave it a shot, and it went well at first, until it didn’t… And then luckily, through it all, I found land, and it’s just been the best thing I’ve done since.
Joe Fairless: Okay. Well, let’s talk about land now… Prior to us recording this, I rarely talked to investors on this show about raw land, because there’s just not a whole lot of people out there – maybe there are, but my team hasn’t found them – who do raw land. YOu mentioned that you saw I’ve interviewed a couple people and you said “There’s a similar approach to what we do, but we all do it in slightly different ways.” Can you first talk about your overall approach for how you buy it, and then mention your differentiators for how you’re unique?
Adam Southey: Yeah. So really at the core of what we’re looking for is more of an opportunity than per se some people wanna look just for back-tax properties, or they’ve got websites built where people come to them… What we do is focus on a county where there’s plenty of raw land, and then instead of just picking out certain people, we will send blind offers to everyone in the entire county who owns land. And it’s an actual offer, it tells them exactly how much money we’ll spend for it on their land, and they can sign it, mail it back, they can call us and talk to us about it… But regardless, that’s what we do.
So as we’ve done this over the years, the price range has also increased. Like I said earlier, my first properties were 2,5-acre parcels, for $250/acre. They were way out in the desert, I didn’t know why anyone would ever wanna buy them, but they were so cheap I bought them anyway, and just trusted the process. And as we’ve gone over the years, we’ve scaled up to what we now kind of refer to as a bass boat property, which is that price range that a bass boat or a Harley or something recreational would be. Our typical deal now would be somewhere in that 7k to 12k, and selling in the 25k to 35k range.
Joe Fairless: Okay. You live in Fort Worth, Texas. I’m from Fort Worth, and I don’t remember a dessert being in Fort Worth… So where was the first raw land that you bought?
Adam Southey: Yeah, so that’s the great thing about this industry – you can do it anywhere; you don’t have to buy near your home. I’m in Fort Worth, my first properties were in North-West Arizona. I currently own land in about seven different states, and never been to any of it, don’t plan on it.
Joe Fairless: You’d never bought land before… How did you end up looking at properties there?
Adam Southey: Everything’s online. Everything you need to buy land is online. You have to have a GIS mapping software, and those are readily available. You’ve got like ParcelFact, and MapQuest… You’ve got Google Earth, Google Maps, the counties sometimes have really good websites where you can get on their GIS, and do research on taxes, make sure everything’s current, make sure the right owners are there… You have everything you need to make your decisions based on that without physically going to see it.
Now, if we’re gonna spend a lot of money, 15k, 20k, 30k or above, we would send someone out there, but for the most part we’re not in that price range, so we just go with what we have.
Joe Fairless: Yeah, but Arizona – how did you pick Arizona as an area to take a look at?
Adam Southey: Yeah, that’s a good question. One of the things that I look for when I’m doing it is I just look for other investors. I knew there was activity going on in Arizona just from my research, and I just narrowed in on a property there. At the time, I didn’t really know what I was doing. I just saw other investors were in that North-West part of Arizona, so I figured if it’s working for them, maybe I should give it a try too, and that’s what I did. I ended up mailing out there.
Since then, I’ve put a little bit more thought into it, and we kind of know what we’re doing… But basically, every time I do a mailer now, for me personally, the first thing I always do is go “Man, where do I wanna own some land right now?” The last marketing I did was in Oregon. I just thought “Oregon is gonna be a cool spot to go.” So we get online, we go to Lands of America, or LandWatch.com…
Joe Fairless: That was the last one?
Adam Southey: Yeah, the last one was in Oregon.
Joe Fairless: I thought you said you’d put more thought into it. [laughs]
Adam Southey: Yeah, so it gets better.
Joe Fairless: Is the thought “Hey, where do I wanna own land?” [laughs]
Adam Southey: Yeah, so once we pick the state, then the thought comes in… We start looking for “Are there other investors there? Is it affordable?” So for me, I like to look for that market value of being right around $1,000. You can go on these land-specific websites like Lands of America and you can put Oregon in, as an example, and you can see everything that’s for sale in that state.
Then you start looking for the market value, where 20 acres is selling for $20,000. You’ll find certain counties where that happens, and then you’ll start doing a little bit more research. Are there other investors there? Is the pricing the same throughout the entire county? Because some of these counties will have big cities in it, so the price per acre will be one price in one part of the county, and cheaper in the other… And the way that we do it is we mail the whole county. So we wanna make sure the pricing is similar throughout.
And we wanna make sure there’s good attributes… Like, is it a good county? Are there mountains there? Are there lakes there? Is there hunting there? Are the things that would draw a buyer there? And you can really tell a lot of that from these land websites. That’s kind of where once we see all that stuff in one area, that’s where we’ll mail to.
Joe Fairless: Well, I’ve never done this, so I don’t claim to know much at all about buying raw land… One thing I’ve heard from conversations with other raw land investors is your best buyer is the neighbor of the property… Because they’ll want to buy the land right next to where they currently live. But when you said one of the first questions you ask is “Are other investors there?”, why is that relevant if other investors aren’t the number one buyer? …assuming that is a true statement.
Adam Southey: Yeah, for me it’s relevant that other investors are there, because you wanna know if the county works. Is there people actively buying and selling land there? What a new investor does is they get this idea into their head that they’re gonna go find the golden nugget. They’re gonna go to a county where no one’s working, and they’re gonna be the only investor there that makes all the money. Well, the problem with that is there’s a reason why it’s not working. And while you might find some good deals, you can go to counties where you know it’s being worked, and you can up your chances of success.
For example, Costilla County, Colorado is probably one of the most worked counties in America. It seems like every new investor goes to Costilla County, but they’re all buying land, and that’s because there’s so much of it. I’ve heard there’s 26,000 5-acre properties in Costilla County, Colorado. That’s more than enough to go around for anyone if they just put in the time to market out there.
Joe Fairless: Okay. What’s been an interesting deal that you can tell us a story about?
Adam Southey: Yeah, so I’ve got a good one and I’ve got a bad one I can touch on…
Joe Fairless: Let’s talk about the bad one first.
Adam Southey: Sure. I got this killer deal in South-East Oklahoma. It was 20 acres. It was a beautiful property. I got it under contract for $16,500, and it was gonna easily sell for 60k. I probably could have put it up on the market for 100k and sat on it for 2-3 months and gotten it… But I was buying it from an only child, whose parents had passed away. She was an older lady, she had been paying the taxes for 10-15 years… Only child, but there was no will, so the property wasn’t in her name. She said if I could help her get it into her name, she’d sell it to me for what I offered her.
So we got through this whole process of getting a quiet title done, hiring attorneys, going in front of the judge… It takes about six months. She goes in front of the judge, says that she’s an only child, she does all this, and at the end of it the order goes through, it gets transferred in her name, she goes to the attorney’s office, I transfer the money, they close the deal, and two days later a guy walks into the attorney’s office and says “You sold my 20 acres to some guy, from my sister, who had no right to sell it.”
So the attorney initially calls me back, he’s freakin’ out, and I’m like “She swears she’s an only child.” So we call her, she takes a friend of hers to the attorney, the friend swears up and down she’s an only child, so we kind of think that this guy is just full of it, basically… But he [unintelligible [00:11:58].17]
Joe Fairless: [laughs]
Adam Southey: So not only was she not an only child, but there was 14 brothers and sisters.
Joe Fairless: [laughs] Oh, man…
Adam Southey: And because it was a quiet title action in Oklahoma, they had a certain timeframe that they could fight this, and just have it overturned. Obviously, she said (whether she did or not) she spent the money I gave her, so now I’m basically out of my money and out of a property… But luckily enough, the 14 brothers and sisters – they came back and… Let me go back real quick – one of the best things my attorney did when he heard this, when he found out there was more brothers and sisters, is he went to all of them and told the story and got them to deed over their ownership, their portion of it to me, so I became the controlling interest.
Joe Fairless: Why would they do that?
Adam Southey: Most of them lived out of state, they didn’t care for their sister, which I can’t really figure out why…
Joe Fairless: No kidding…
Adam Southey: And even though they didn’t really talk to her, they didn’t want her to get in trouble, because she had just committed fraud.
Joe Fairless: Wow… That’s the kicker.
Adam Southey: Yeah.
Joe Fairless: Okay…
Adam Southey: So they came back and they bought it back from me for 18k. So I bought it for 16,5k and got 18k out of it. Not what I would consider a great success. It was definitely a huge learning opportunity, but I definitely don’t want to do that again.
Joe Fairless: Well, besides not doing deals with that one woman, what are some lessons that you’ve taken from that and applied to your business?
Adam Southey: Trust by verify. The way that we knew that guy was true was that he — this is what I thought I had hired the attorney for, because I was brand new to this and I didn’t really know, but… We just started doing Google searches, and going deeper, and we found out that yeah, that was true; we found an obituary from way back, that told the whole story.
Also, instead of closing through the attorney, I would have gone through a title company, and gotten title insurance, but because I had hired the attorney to do the whole thing, I thought it was just above board; I thought it was legit… So now any property that we buy above a certain price range is always through title.
Joe Fairless: What’s that price range?
Adam Southey: 5k or higher.
Joe Fairless: Okay.
Adam Southey: That was a good one to learn from.
Joe Fairless: Yeah, it’s a fun one. What about the other one that you mentioned?
Adam Southey: That was a good one. That was in North-East Nevada… So like I said, we mail to an entire county when we do our mailing. I sent out a bunch of offers… I had previously had some people looking for land, around 80 acres in size, but didn’t have anything available… And I mailed to this entire county, and without knowing, two people both accepted my offer, and each person had a 40-acre and they were right next to each other.
Joe Fairless: Oh, my…
Adam Southey: So it was just pure luck that the two 40-acres right next to each other, with access, 100 feet off the highway… And now I’ve got an 80-acre where probably 45 acres or so is flat, and then the rest of it is just mountain. So the person that bought it, they can sit back on the side of this mountain and look into the flat part, or they can somehow hide in the flat part, or do whatever they need to do… But I bought each 40 for $4,500, and I turned around and sold it for 36k.
Joe Fairless: Alright, so you were in it for 9k plus costs, and sold it for 36k… Which – 80 acres for 36k… [laughs]
Adam Southey: That’s still a great deal, right?
Joe Fairless: I think it’s still a great deal, but I know that’s an ignorant statement, because it’s all based on location-location-location… But it’s still sticker shock to me, talking about these price points with this amount of acreage.
Adam Southey: I get it, too… Especially when you’re trying to see the lower-end range. We have people we work with that go buy land for $100 every day. We have one client who’s done 400 deals where he bought them for $100 and flipped them for $500.
Joe Fairless: Where’s the 80 acres, by the way?
Adam Southey: That was in North-East Nevada, Elko county.
Joe Fairless: Okay. And what would disqualify an area? So “Hey, I wanna buy in Oregon.” Okay… Now I look at the areas. What would disqualify them?
Adam Southey: Like I said, if there’s no activity going on, but also there’s nothing attractive there. A lot of the properties we look for have mountains, or they’re good hunting areas, or there’s lakes nearby… It’s affordable, people wanna get out there… Maybe there’s a tiny home community in the area, or it’s a place where people like to get outside and go hike…
There’s a big area in Colorado – Alamosa, Costilla counties, where there’s big 14,000-foot mountains, where it’s real popular to get out and hike during the day, and then go back to your tiny home at night… So you can buy five-acre parcels for cheap and sell them for $5,000-$6,000, and you’ve got people lining up to buy them, because a) it’s super-affordable for them, but then they can live that kind of free lifestyle.
Joe Fairless: That’s interesting. I love talking about this stuff, because I’m learning a whole new world, and it’s fun to do… Based on your experience as a real estate investor, what’s your best real estate investing advice ever?
Adam Southey: Don’t give up. Not just investing, but any industry can be difficult; times get tough, or it gets hard… And a lot of people wanna make their first million dollars, or flip their big deal in the first 2-3 months, and when it doesn’t happen, they give up. But the dream is to be an investor where you’ve got cashflow, or you’re doing big properties. If it takes you a year or two years, who cares? As long as you get there and you keep working and be persistent; eventually, it will happen, as long as you don’t quit.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Adam Southey: Yeah, let’s do it.
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Joe Fairless: Best ever resource you use right now to do what you do?
Adam Southey: MapQuest. It’s an online GIS. You can go on and put in a property APN and the county, and you can see everything you need to see about the piece of land. It will draw a line around it, you can make maps to send out for marketing… It will essentially tell you anything you need to know.
Joe Fairless: What’s a mistake you’ve made on a transaction that we haven’t talked about already?
Adam Southey: Hm… I think probably not fully checking everything. When you’re new, there’s so many due diligence points that you can forget. You may check ownership, but you’ll forget to check back-taxes. Or you’ll forget to send in a certain document when you register… That’s a pretty common one, because every state you just don’t need to send the deed in; some of them have excess paperwork, like an affidavit or property value or something. It’s easy to forget those as you learn and grow. Those aren’t huge deals; after you learn and grow, you’re good at them.
Joe Fairless: What’s the best ever way you like to give back to the community?
Adam Southey: I’m really involved with my CrossFit gym, and just like every crossfitter, we always think of a way to get together… So several times throughout the year we do big things for charity, like [unintelligible [00:19:02].02] We raise money for neverthirst. It’s a company where they go out and they build clean drinking water for people that don’t have it. Or we’ve done Barbells for Boobs – that supports breast cancer. Anything we can do to get together and help out.
Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?
Adam Southey: Casual Fridays REI is our podcast. Monday, Wednesday, Friday. Me and my partner, Justin Silvia, we talk about our journey, we talk about things that come up in our business, and try and help everyone out.
Joe Fairless: Adam, thanks so much for being on the show, talking about raw land, your approach to finding areas, your approach to buying, and then the two entertaining stories. Trust but verify, for sure, Google searches… But really, even with the Google search that’s a little flimsy still… But the title insurance – that’s where it’s pretty rock-solid.
Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.
Adam Southey: Alright, thanks so much.