Episode 163: From Hospital Executive to Real Estate Mogul: The Mason McDonald Transformation

Mason McDonald, once deeply entrenched in the healthcare industry, found liberation and financial success in an unexpected venture: real estate investment. His professional life took a dramatic turn when the pressures and dissatisfaction of his hospital executive job spurred him to explore real estate, an interest sparked by his family’s background in the industry. Mason’s story is not just about change; it’s about strategic and bold decision-making, taking a calculated risk with just $60 and a course on land flipping, leading to significant professional and personal growth as discussed in a gripping episode with Jay Conner on the “Raising Private Money” podcast.

Why Invest in Land?

Choosing land over other forms of real estate investment might seem unconventional to some. However, Mason outlined compelling reasons for his focus during the podcast. The barriers to entry are relatively lower, and the tax advantages are particularly appealing. Land is treated differently concerning taxes – something akin to handling inventory, allowing for particular benefits that traditional real estate doesn’t provide. Moreover, raw land offers diverse exit strategies – from simple sales to more complex developments, which can provide significant returns without the complications that buildings might entail.

The Mechanics of Land Deals and Marketing

One of the reasons Mason has been able to succeed where others hesitate is his innovative approach to handling and closing deals. During the episode, he explains the utilization of creative strategies to keep capital investment low, especially with thin-margin deals. This not only requires creativity but a deep understanding of the market and potential of the land involved. Additionally, his approach to selling through a realtor simplifies the process, allowing him to focus on acquiring more properties.

Direct mail marketing emerges as a crucial strategy in Mason’s toolkit. With a typical response rate of around 1%, the focus is on frequency and follow-up. Mason stresses the importance of quick, persistent communication to build trust and close deals – a tactic that facilitates higher success rates in the highly competitive real estate market.

Raising Capital and Community Building

Mason’s journey into land investments was initially self-funded, but as the scale of his operations grew, so did his methods for financing. Turning to private money, raised through friends, family, and network connections, offered a new lifeline. These funds not only fuelled his business but also allowed him to offer high returns to his investors, fostering a community of mutual benefits. This shift not only highlights the necessity of adaptable financing strategies in real estate but also showcases his commitment to communal growth, edifying potential investors through podcasts, social media, and personal interactions.

Educational Impact and Future Prospects

Besides being a successful investor, Mason dedicates part of his career to coaching upcoming real estate enthusiasts. His educational programs focus on joint ventures in land flipping, equipping new investors with the knowledge and tools required to navigate this niche market. Technologies like PropStream and Pebble CRM play a significant role in Mason’s operational strategy, illustrating the integration of modern tools into traditional investment avenues.

Conclusion: Taking Risks and Making Profits

As Mason McDonald’s narrative unfolds, it’s clear that his real estate venture is more than about making money; it’s about transformation, calculated risk-taking, and investing in oneself. The risks he took have not only paved the way for his financial freedom but have also inspired many to reconsider their professional paths. His emphasis on deserving the rewards from taking these risks resonates deeply, particularly for those standing at the crossroads of career change.

 

In essence, Mason’s story is a testament to the power of embracing change, the importance of financial literacy, and the potential of raw land investment as a pathway to achieving remarkable success and independence. Jay Conner’s insightful discussion with Mason not only shines a light on these aspects but also offers a blueprint for those looking to venture into this less-trodden yet evidently profitable realm of real estate.

 

Investing in Uncertain Markets: 

“You need to make sure that there’s enough margin in the deal so that if there’s any standard deviation or the market drops 10 or 20%, there are enough deals and profit that you want make, as well as pay back your investor in whatever anticipated timeline it is to sell.”

  • Mason McDonald

10 Questions Covered in this Episode:

  1. What motivated Mason McDonald to transition from a career in healthcare to becoming a full-time real estate investor focusing on raw land?
  2. Can you explain the specific tax advantages Mason mentioned about dealing with land investments and how they differ from other types of real estate properties?
  3. How does Mason McDonald’s approach of treating land investment as a “pawnshop for land” influence his business strategy and profit margins?
  4. Discuss the challenges Mason faced when he first started investing in real estate, and how his background in healthcare influenced his approach to real estate investing.
  5. What are the key strategies Mason uses for direct mail marketing, and how does he measure the success of these campaigns?
  6. Mason mentioned raising private money using unsecured promissory notes and joint ventures. What are the risks and benefits of these financial tools for both investors and Mason?
  7. How does Mason ensure financial stability and manage the risks associated with full-time real estate investment?
  8. In what ways does Mason’s strategy of minimal capital investment and creative deal-making serve him in land investments with thin margins?
  9. Mason pointed out the importance of getting potential sellers on the phone quickly and maintaining follow-up. What techniques does he use to build trust and close deals effectively?
  10. Discuss the role of technology and tools like PropStream, Pebble CRM, and Lead Mining Pros in Mason’s land flipping business. How do these tools enhance his efficiency and effectiveness in finding and closing deals?

 

Here are three fun facts that were revealed in the episode: 

  1. Mason McDonald started his real estate journey with just $60 and a land-flipping course, which enabled him to leave his healthcare career.
  2. He describes his approach to land investment as being a “pawnshop for land,” highlighting his unique strategy.
  3. Despite the low appeal of land flipping to traditional banks, Mason creatively raised between 1.6 to 1.7 million dollars through private funding from friends, family, and acquaintances.

 

Timestamps:

00:01 – Raising Private Money Without Asking For It

05:46 – Financial success in investing requires a stable income.

06:36 – Starting a new business is challenging.

10:31 – Avoids capital gains tax through the dealership loop.

12:54 – Discovering private money, is a blessing in disguise.

17:32 – Podcast conversations lead to successful investment opportunities.

20:11 – Coaching, consulting, land deals, and joint ventures are mentioned.

21:26 – Connect with Mason McDonald: https://www.MasonRMcDonald.com   

LinkedIn:  https://www.linkedin.com/in/mason-mcdonald-748110113/   

22:46 – Business targets growing US markets using data analysis.

27:48 – Land is less competitive than single-family houses.

30:32 – Calculate the cost of capital and assess profitability.

34:03 – Took risks, built a business, and offered quick sales.

35:44 – Jay Conner’s Free Money Guide: https://www.JayConner.com/MoneyGuide  

 

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Have you read Jay’s new book: Where to Get The Money Now?

It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book 

What is Private Money? Real Estate Investing with Jay Conner

http://www.JayConner.com/MoneyPodcast 

Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.

#RealEstate #RealEstateInvesting #RealEstateInvestingForBeginners #Foreclosures #FlippingHouses #PrivateMoney #RaisingPrivateMoney #JayConner

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From Hospital Executive to Real Estate Mogul: The Mason McDonald Transformation

 

Jay Conner [00:00:01]:

Welcome to another amazing episode of Raising Private Money. I’m your host, Jay Conner, The Private Money Authority, and this is the podcast where we talk about Raising Private Money without having to ask for money. Well, I have an amazing guest joining me here on the show today. He actually is a former hospital executive who actually retired from that, and went into full-time real estate investing. Can you imagine? Well, while he was in the hospital career, he actually held various executive positions, had all kinds of responsibilities, and, I mean, he was in charge of total financial, all the operational operational control, and listen to this, in that experience, he actually oversaw budgets exceeding $100,000,000 in annual revenue, and then he oversaw all the expenses and capital expenditure projects exceeding $30,000,000 Well, he took that experience being a hospital executive, and he now uses that experience to run a very, very super successful land acquisition and development company that, listen to this, in just a 2 year period, he’s completed nearly a 100 land transactions in multiple markets all across the United States. And in this interview, I’ve got a guess, that he doesn’t use any of his own money to do it, probably as well. We’ll find out. But during this period, he’s been able to implement very, very successful systems that actually automate his business and it has allowed his company to actually generate over $1,000,000 in revenue in the past year.

 

Jay Conner [00:01:40]:

Now he’s got an amazing podcast as well that’s called The Big Picture Blueprint. So in just a moment, you’re going to meet my special guest, mister Mason McDonald, right after this.

 

Narrator [00:01:53]:

If you’re a real estate investor and are wondering how to raise and leverage Private Money to make more profit on every deal, then you’re in the right place. On Raising Private Money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now here’s your host, Jay Conner. 

 

Jay Conner [00:02:19]:

Welcome to the show, Mason.

 

Mason McDonald [00:02:24]:

Jay, it’s great to be here.

 

Jay Conner [00:02:26]:

It’s great to hear your voice, Mason. That’s what I’m talking about. Right?

 

Mason McDonald [00:02:31]:

There we go. Inflate inflate my ego. And, as I joked before the show, my mom always said I had the face for radio, so here it is.

 

Jay Conner [00:02:39]:

I’m sure the audience caught that. Right? For goodness sake, Mason, how in the world do you go from being a hospital executive, which, by the way, I know the majority of our audience are listening to this podcast. They don’t get to see you. I mean, you’re, like, look way too young to even be a hospital executive if you still were 1. But how does that look? I mean, how does that happen? How do you go from hospital executive making, I’m sure, beaucoup’s money as a hospital executive, transitioning at your young age all the way over to a full-time real estate investor? How does that happen and why?

 

Mason McDonald [00:03:13]:

Yeah. You’re you’re right. It’s it’s terrifying that I was allowed to manage an entire healthcare facility. Became COO when I was 24 or 25 and CEO when I was 25 or 26. And from the outside view, you could see, oh, I’ve made it to the top of corporate America. I did it really quickly. I had the right undergrad degree. I had the right graduate school degree, but I was exhausted and did not enjoy my career in life.

 

Mason McDonald [00:03:40]:

I was 26, 27 years old, hypertensive stage 2, sleeping 2 2, 3 hours a night, stressed out all the time, and didn’t get to spend time with my wife. I always wanted to invest in real estate where my dad owned a commercial real estate portfolio that he inherited when he was really young, so I never really saw him work. My great-grandfather on my mom’s side developed, communities in Boca Raton, Florida back in the forties and fifties. And so it was kind of in my blood. I was listening to podcasts, always ready to invest, but just consumed education for years. I mean, 10000 hours of education easily over a decade. And I stumbled across the niche of land investing when I had saved up about $60 to invest, and I was going to invest in townhome syndication. And the person that was managing the syndication said, hey.

 

Mason McDonald [00:04:29]:

You know, this is what I do. I do land flipping. And he had a course, and I paid $5, took the course. To shorten the story, I followed the system and thought it was dumb. I was like, there’s no way this is going to work. And my first deal that I did, I bought 3 parcels in Southern Colorado for 43,000, and I sold them for 185,000. And it was

 

Jay Conner [00:04:52]:

pretty I like that ROI.

 

Mason McDonald [00:04:54]:

Oh, yeah. Yeah. And so I was able to quit my job, primarily because my wife was the stable software engineer that, managed the the finances of the household. So I was able to go off and be the entrepreneur. But, yeah, that’s kind of the short elevator pitch of how I became a CEO and then how I transitioned into real estate investing and land flipping full-time.

 

Jay Conner [00:05:14]:

We’re gonna dig into raising Private Money here in just a minute. But before we do, we have a lot of listeners here on the show who are in corporate America. They wanna be a real estate investor. They wanna get into real estate, But they have this fear of losing these, at least from their perspective, reliable, constant income. I get a paycheck every week. How does somebody transfer the mindset and make that jump?

 

Mason McDonald [00:05:46]:

I think, like, as a caveat to that, I could not have done it without my wife being able to make 6 figures in her job and support the house. So for the people who are not married or not very financially stable, this is not for you. It, takes money to be a successful investor, especially if you’re you’re doing it full-time. But the mindset shifts for me because I came from one of the most regulated industries, health care in the United States is extraordinarily regulated. There’s yellow and red tape everywhere. You have to operate within very strict parameters. And so I was really excited to be able to be in this entrepreneur entrepreneurial space where I felt like I could have unlimited freedom in how I operated. I was humbled very quickly whenever I went from having 20-some-odd direct reports and a few 100 employees under me to it being just me.

 

Mason McDonald [00:06:36]:

And so whenever I, you know, the first couple weeks, whenever something needed to be done in my new land flipping business that I had just started from the ground up, I’d look around and be like, man, someone needs to do that. And there was no one there to do it but myself. I was also humbled by the fact that it was a lot easier for me and my personality to come into an organization that’s been operating for a while, see where the deficits are, and implement the plans to effectively improve them versus building something from the ground up, which I thought was really surprising to me if I didn’t realize it was easier for me to fix something than it was for me to create something. So I think those were 2 mindset shifts that I had to kind of figure out. As the business became more successful, I got more access to capital through private investors and was able to effectively hire delegates, and implement new systems. It transitioned, but it definitely took a lot longer than I would have expected it to. And I really just wanna drive home the point of, don’t do what I didn’t. Quit your job after your first deal unless you’re in a good position.

 

Mason McDonald [00:07:38]:

But it’s it’s very different, moving from corporate America to this space.

 

Jay Conner [00:07:42]:

Right. Right. Well, that that’s certainly understandable. Mason, there are all kinds of types of real estate that people can invest in. I mean, there’s a single family. There’s multifamily. There are apartments. There’s self-storage, there’s commercial, there’s, you know, on and on and on.

 

Jay Conner [00:08:03]:

And then there’s land. Now, I know you just mentioned that someone you know, that’s what they were doing, but I’m sure you researched, I think, I’m not sure, I would think you researched other possibilities, other avenues. So why land as opposed to all these other options?

 

Mason McDonald [00:08:24]:

Oh, yeah. And I  thought about every single one, and having the entrepreneurial spirit typically means you have the shiny object syndrome as well. And I think for me, what I really liked about the land was the lower barrier of entry to actually acquire the asset. And then 2, I’m essentially on a lot of these deals, I’m just flipping it. Buying it for cheap, selling it for more. I’m essentially a pawnshop for land. And with that, you’re not exposed to capital gains taxes. You’re taxed.

 

Mason McDonald [00:08:55]:

It’s inventory. It’s like you’re a wholesaler or a dealer. So the the tax advantage or lack of disadvantage compared to single-family homes or, you know, flipping flipping some other, asset class where there’s a physical asset was appealing to me. And then, beyond that, it was the multiple exit strategies of in coming up with business plans in general, you always have to look at the exit. And with land, if you’re purchasing it at what you assume is a discount, you can either turn around and sell it in cash or conventional. You can sell it seller for night seller financing. You can potentially do a subdivide or assemblage of lots if it’s a bigger parcel or a bunch of smaller parcels. You can put in some level of horizontal improvement or just clear it, or you can go vertical and build on it.

 

Mason McDonald [00:09:43]:

So having all these different exit strategies for every piece of land was really, really appealing to me in the worst-case scenario. And typically, a lot of the land, you’re not paying that much in property taxes. It made it a really, really attractive active business to create as versus a passive business where I’m losing out on the tax benefits of owning real estate where it’s you know, I’ve got a commercial building that we’re converting into housing, digging 2 story building in, I don’t know, it’ll be 14 units or so, where I’m gonna be able to write off a ton in depreciation whenever we’re finished with that and then just long term appreciation of other rentals and stuff. So active business, I thought land was just one of the best strategies.

 

Jay Conner [00:10:22]:

Now let’s go back a moment. Something you said a second ago, you said there were some tax advantages to doing land. What are those advantages?

 

Mason McDonald [00:10:31]:

Well, I guess it’s the lack of a disadvantage, I should say. So I’m not a CPA or attorney, so don’t don’t listen to to me, but this is how we’ve done it we’re considered a dealer because we’re buying and selling so much land. And since we’re keeping it as inventory on the purchase, it’s categorized on the p profit and loss statement as the cost of goods sold. And whenever we sell it, we have all these operating expenses associated with it, and we’re just turning and burning inventory just like any other wholesale operation like a pawnshop. So not getting exposed to that capital gains taxes and having the land sales just being taxed as ordinary income that, you know, goes through my entities and s corp and pass through taxation, all the stuff that I don’t understand I hire a CPA for makes it so where compared to say, if I made $50 on a single-family home, flip, I’m typically gonna have to pay some form of short term or long term capital gains taxes depending on how long it takes, And I don’t get exposed to that here.

 

Jay Conner [00:11:34]:

Okay. I understand. Well, let’s get into raising Private Money since this is a podcast that’s called Raising Private Money. Raising Private Money is actually what you’ve identified as one of your expertise, something that you’re really, really good at. So let’s start our conversation on Private Money like this. I’ve observed, after interviewing 100 and 100 investors that have raised Private Money, There’s a common thread. Maybe it applies to you, maybe it doesn’t apply to you. But one common thread that I have observed after interviewing so many people is that they were in their business.

 

Jay Conner [00:12:13]:

They were going along in their business for whatever length of time, and then something, quote-unquote, something happened. Or should I say, something didn’t happen. And they were actually, quote-unquote, forced into finding a better and quicker way to fund their real estate deals. And therefore, they learned about Private Money and they started raising Private Money. That’s exactly what happened to me. I was investing in and still am single-family houses, here in Eastern North Carolina. From 2003 to 2009, the 1st 6 years, I used a local bank to fund my real estate deals. Quite frankly, that’s all I knew to do.

 

Jay Conner [00:12:54]:

I didn’t know anything about Private Money, hard money, creative financing, subject to the existing note, on and on and on, wraps, wrap-around, whatever. I didn’t know I didn’t know any of that stuff. All I knew was to go to the local bank, get on my hands and knees, put my hands underneath my chin, and beg and raise my skirt up for the bank to see your personal financial statement and all this and that. And, in January 2009, I was cut off from the banks, and lost my line of credit, everything, because of the global financial crisis. And I had a great relationship with my banker, but then it’s gone. So actually, that was the biggest blessing in disguise of anything that’s happened in my business was actually having to find a better and quicker way to fund my deals. Hence, Private Money. I’ve got 47 private lenders today, $8,500,000 that would go from project to project to project to project.

 

Jay Conner [00:13:50]:

What happened with you, if anything, that caused you? How did you start? Why? Why? And how did you start raising Private Money?

 

Mason McDonald [00:13:58]:

Yeah. I think, similar to you and so many other people what ended up happening to me is I made all that money on my first deal, which was great. Gave me a bunch of cash, and I felt really great and really liquid. And then I went bought a bunch of deals with all that money, and then I was out of cash again. So I had to wait for properties to turn around, and I couldn’t have any capital allocated to operating expenses. And so and then I would get a ton of cash in whenever I would sell these properties, and then I would go buy a bunch more, and I kept trading up and up. And I realized that access to capital was my barrier to scale. And the challenge with going to banks for the type of, business model that I have with land flipping is banks don’t wanna lend on that.

 

Mason McDonald [00:14:45]:

Land is not an attractive asset class to banks to lend on for this particular purpose because you’re in the standard flip where you’re not really adding value. How banks who don’t really understand land are incapable of calculating that LTV or loan to value. Even if you’re saying, look at all this data. This land is at 40% of what the market price is, and you could lend on it at 100%. And, I mean, it’s it’s secured against the asset, but they they don’t care. And so I had to go out to the the three f’s, the friends, families, and fools, and show them what I was doing and show them, my business models.

 

Jay Conner [00:15:23]:

Did you say friends, family, and fools?

 

Mason McDonald [00:15:25]:

Oh, yeah. The three F’s in Private Money is what we what we’ve come to call them. 

 

Jay Conner [00:15:32]:

But, I thought I had heard it all in Private Money. You just gave me a new one, but go ahead.

 

Mason McDonald [00:15:37]:

There we go. So, was able to approach family members and friends and say, look. This is what I’m doing. And for certain people that really knew me well, they were willing to give me unsecured promissory notes that I’m able to keep in the business and just pay them interest on it. And they’re happy. It helps them get passive income at 10 plus percent annualized, and they love getting those monthly checks. And it started out as 1-year note sometimes, and then they’re like, can we just keep this going forever, basically? And that’s great for me. And then, for joint venture partnerships on deals, I was giving up anywhere from 30 to 60% of deals of saying for the people that didn’t know me as well and didn’t know my track record as well, where they would fund a deal and I’d give them a percentage of the profit.

 

Mason McDonald [00:16:26]:

So, I’ve changed my model a little bit, and I’m better at raising money and doing it more affordably to myself and still making it great for my investors who are involved. But, yeah, to answer your question, it was I ran out of money, and I needed a way to get it, and the bank wouldn’t give it to me. But, people who knew me and knew that I was good at business, and I think my corporate career and my success in corporate America made them trust me a little bit more too. So, yeah, that that’s kinda how it got started. And I think to date, I’ve raised through myself through my own company is about 1.6 or 1,700,000 so far, that we’ve deployed and, not returned all back yet. They’re still live in deals, but in two and a half years now.

 

Jay Conner [00:17:11]:

Right. What’s your favorite way to get the word out that you’ve got a way for people to get some really, really nice returns on their investing with you? How do you get the word out? How do you spread the word? What’s your favorite way or method to raise Private Money?

 

Mason McDonald [00:17:32]:

I think my favorite way is I mean, through conversations like this, Jay, where we’re just having podcasts, and I’ve got my own podcast that my business partner, Dan Haberkost, and I talk about various deals we’re doing and then just sharing sharing what I’m doing in the business. And whenever you share what you’re doing on social media or LinkedIn is the main platform that I use, people come to me and say, how can I get involved? As versus me going out begging for money, people want to get involved and they wanna, you know, get in on your success and especially whenever they’re recognizing that, and this is kind of a shift in mindset that I’ve had to have of at the beginning of this, I felt like people that were giving me money, whether it was through promissory notes or joint venture agreements, I felt like they were doing me a huge favor. And then I look at, you know, my market portfolio and watch what I’m making every year just in the stock market and index funds and other funds and stuff like that, and I’m like, I’m doing everyone a favor. I’m giving everyone huge freaking returns of, like, I’ve joked with some of my investors on really quick deals of, hey. You made 64% cash on cash on this deal, in 15 days, which amounts to, like, 150,000 percent annualized return. So I think just chatting about what I’m doing and explaining that there are opportunities, to invest with me now and invest with me in the future. It makes it fun whenever you see how much people wanna get involved.

 

Jay Conner [00:19:03]:

Right. Well, and you just said something important. It sounds like you and I do it exactly like there’s no begging, there’s no chasing, there’s no selling, there’s no persuading. We’re actually offering something for those people, first of all, most of them haven’t even heard of, and that’s what a private lender is. And secondly, quite frankly, there’s more money than there are deals out there, at least in my world. I have a problem right now. I have over $1,000,000 and a half dollars sitting on the shelf that I’m not using in deals because I have more money than I can use. But you know what? I’d rather have that problem than have deals and no money.

 

Mason McDonald [00:19:43]:

Mhmm. Absolutely.

 

Jay Conner [00:19:45]:

So it really does this world of Private Money really, really does put you in the driver’s seat. So let’s dig into your land-flipping expertise. So we know why. You told us why you focus on land. So let’s get into the nuts and bolts a little bit. By the way, I believe that you also consult and coach real estate investors who want to get into land flipping and learn how to do it. Right?

 

Mason McDonald [00:20:11]:

Yeah. I do a little bit of coaching and consulting on the side. That’s not something that I do too much of, and it’s mostly because I’m too busy in my business to do it. But, for the right people, I do have various offerings that I can come in and consult or help coach and get people’s business off the ground. I do that mostly because I’ve got a small team now, but I miss the hustle and bustle of being in a large organization. And I love coaching and seeing people succeed. And then beyond that, I own a company where I now joint venture, with land investors or land flippers where we come in, bring in bring in all the capital, and, we partner with you guys. And my business partner has done, I guess, between us, probably 4 or 500 land deals in the past couple of years.

 

Mason McDonald [00:20:56]:

And, being able to coach and teach people how to do it and then have them come back and have you, have us fund the deals, it just creates another integrated model within the business. So, that’s kind of a fun side hustle that I do, not too often, though, on the coaching consulting side. Right.

 

Jay Conner [00:21:14]:

Well, that’s that’s that’s that’s, that’s interesting. Just in case, anyone that’s listening has to jump, I don’t want them to miss out on how they can connect with you. So, tell Mason, our audience, how can they connect with you? And then we’ll pick up with my next question on details of land flipping.

 

Mason McDonald [00:21:31]:

Yeah. Yeah. Mason R McDonald, is a personal website. It should have, I think, even my personal cell phone, email, and LinkedIn link on there. So if you find, yep, www.MasonRMcDonald.com,  you can find my links there. But in terms of what I’ll respond to most quickly in terms of social media, my LinkedIn, that’s where I’m most active, and there’s the link right there. Reach out to me on LinkedIn so you heard me on Jay’s show and wanna chat about anything from health care to land to Private Money to whiskey or watches or just have a conversation. Whatever it might be, I’m open to it.

 

Jay Conner [00:22:11]:

Alright. So, Mason’s connection is https://www.linkedin.com/in/mason-mcdonald-748110113/. His website again is www.MasonRMcDonald.com. So on the land flipping, Mason, where do you get your list what are the best lists and how do you contact them?

 

Mason McDonald [00:22:46]:

Yeah. So my my entire business, if you listen to the next 60 seconds, we target markets in the United States where there is growth and actual transaction volume. We start at the highest level of where are people moving and find that data on the census website. And then we go to third-party MLS sites like Zillow or Redfin and look at where there are markets where over the last 90 to 90 days to 6 months, there’s equal to or greater sales than properties coming on the market. And then from that, we use PropStream, and we pull landowner lists typically targeting people that have owned the property for anywhere from 5 or 10 or more years. Individuals and trusts live out of state, and out of county, and then, we upload them into our CRM, which is called Pebble. And from Pebble, we send direct mail campaigns. And for those listening on YouTube, I’ve got an example of what one of those looks like.

 

Mason McDonald [00:23:44]:

We send postcards, you know, something like this where it’s, are you planning on building on your land? If not, we’ll buy it so you can put your money to work elsewhere. And in addition to that, we use a company called Lead Mining Pros where they skip trace, the data that we send them, and they do cold calling and texting for us. And we get leads, and from there, we negotiate and close deals at whatever our desired rate of return is based on that property, but that’s my business.

 

Jay Conner [00:24:13]:

Well, you did it in 60 seconds. That’s amazing. You did it in 60 seconds, but now what’s the level of understanding and implementation? It’s a whole other world for sure.

 

Jay Conner [00:24:24]:

So do you direct mail them that postcard more than once or just one postcard?

 

Mason McDonald [00:24:29]:

It depends on the level of production within the market. There are certain markets that we’ll test out. And if we don’t really like what we’re seeing, or we don’t get too great of a response rate, we might not remail them, or we’ll wait 6 to 12 months before remailing. And then in the markets that are producing, we try to hit them several times in several different touches because you never know which marketing medium is going to appeal to people. Where today, we’ve got an offer we sent out in Northern Colorado. We mailed them maybe a month and a half ago, but they responded to us I think was either a cold calling or a texting campaign. So we’d touched them at least twice, and we’re offering 245. It’s worth probably 5 or 600 on that one piece of land.

 

Mason McDonald [00:25:14]:

And then we’ve had other ones where we’ve mailed them 15 or 20 times, and they finally get to the point where they say, stop mailing us unless you’re serious. And we’ll say, we are serious, and, we’ll get deals that way. So it really depends. The cost for marketing is so low in general, for what the margins of these deals are that we don’t mind, a certain amount of duplication of effort. But in general, in marketing, the more times you can touch your potential seller, the more likely you are to get the deal.

 

Jay Conner [00:25:46]:

Yeah. I had a very, very brilliant mentor one time tell me, Jay, if you’re gonna do direct mail if you’re gonna mail them one time, don’t waste your money.

 

Mason McDonald [00:25:58]:

Oh, yeah.

 

Jay Conner [00:25:58]:

What’s a good what’s a good rate of return? Not rate of return, response rate. What’s a good response rate? You mail out, you know, 1,000 postcards. What’s a good response?

 

Mason McDonald [00:26:08]:

God. A good response is probably 1%, I would say.

 

Jay Conner [00:26:12]:

Okay.

 

Mason McDonald [00:26:13]:

And it really depends on we try to keep it open-ended with our marketing. That’s why we’re doing neutral letters or neutral postcards rather than blind offers, I know a lot of people in the land space do blind offers, which essentially means you’re saying, I wanna buy your land at 123 Main Street. I’ll pay $85100 for it. We’ll close in 30 days. I feel like we get a greater response rate, but potentially an equal close rate, using the neutral letters. With a neutral letter, you’re able to go in, especially if you have decently professional marketing and it doesn’t come across as super scammy like cash. We buy land cash now fast, the pawnshop type marketing. Say that a piece of land is worth $100 and you sent them a blind offer and your math was wrong whenever you calculated your initial offer and you offered them 29,000, say they would have accepted 49,000, but they see 29,000.

 

Mason McDonald [00:27:13]:

They get emotional. They rip it up, and they throw it away as versus something along the lines of, we’re interested in purchasing your land, and then you are able to have that more open-ended conversation with them and just get them on the phone. Getting them on the phone is the most important thing because then you can use your soft skills to attempt to close deals.

 

Jay Conner [00:27:31]:

Well, it’s been my experience in real estate investing with single-family houses. The more time that goes by between them responding and you getting them actually on the phone for a conversation, the less likely you’re ever gonna do a deal because time kills the deal. Do you agree?

 

Mason McDonald [00:27:48]:

Oh, absolutely. And the land is less competitive in general, I feel like than single-family houses. However, I mean, I own a bunch of land. I’ve got probably, I don’t know, 40 listings alive right now, give or take, maybe a little less, and I get purchase agreements and postcards in the mail all the time for my land. And every so often, I’ll actually call these people, and I’ve never actually had anyone answer the phone live, and I’ve never had anyone call me back before, even whenever they send me an offer that I’m potentially open to accepting. So when I see that, I view that, okay, that’s my competition, then I’m really not worried about my competition in this space if people can’t even answer the phones or call people back. So, the quicker we can get back, the better. However, it’s that it factor factor or the the really good salesperson that’s going to absolutely get the deals over the finish line.

 

Mason McDonald [00:28:40]:

But if you say, hey, Nancy. I’m gonna call you back on, Tuesday, 30th at 3 PM, to discuss what we’ve discovered during our due diligence period, and you never call them back, why are they going to trust you? They’re already scared of scams. So I think following appropriate follow-up, and just doing what you’re gonna say, you’re going to do is one of the most important things of getting those deals over the finish line.

 

Jay Conner [00:29:06]:

100%, Mason. I tell I tell people all the time, that if you just haul your leads back, you leave your competition in the dust. Like, you know, I’m here in a small area, Morehead City, North Carolina. Population, 8,000 people. Our total target market is only 40,000 people. And once in a while, somebody will show up to play in my sandbox.

 

Mason McDonald [00:29:31]:

Uh-oh.

 

Jay Conner [00:29:31]:

And I’ll see a yellow bandit signed by the side of the highway. You know, we buy houses and a phone number. Well, I don’t believe in competition. I believe in collaboration. I wanna call them people up and say, hey, I got money burning a hole in my pocket. When you get I know they’re a wholesaler. I know they’re a wholesaler. They’re not staying in the deal.

 

Jay Conner [00:29:50]:

And, I’ve never wholesaled a deal in my life. I ain’t got nobody to wholesale it to. But anyway, I called them up and said, look, I got a money burning a hole in my pocket. When you get a deal on the contract, I want to pay you an assignment fee. I’ll leave him a message. And Mason, they don’t call me back.

 

Mason McDonald [00:30:07]:

I know they wouldn’t. I don’t believe it.

 

Jay Conner [00:30:10]:

Like, why, why are you spending your money on bandit signs and your labor and you’re putting that stuff out for goodness’ sake? So, Mason, I’ve got 2 questions before we wrap up. Next question. What is your magic formula that you’re willing to reveal as to how you calculate your maximum offer on a piece of land?

 

Mason McDonald [00:30:32]:

Oh, that’s an interesting one, because it varies from deal to deal so much. But the easiest way that I would do it or give advice to people who do it who are in the space and have enough experience to raise Private Money is you look at what your cost of capital is you annualize it, and you look at, and then from there, you look at the deal, and you need to make sure that there’s enough margin in the deal to make sure that if there’s any standard deviation or the market drops 10 or 20%, that there’s enough deal for you to make whatever desired profit that you wanna make, as well as pay back your investor in whatever anticipated timeline it is to sell. So say that your cost of capital is, 20% annualized and that you expect the property to sell within 6 months. And, gosh, you asked me to do math, and I’m, like, needing to write it down or something like that. But it’s essentially

 

Jay Conner [00:31:33]:

So you guys so you don’t take tax value and offer 25% of tax value?

 

Mason McDonald [00:31:38]:

Oh, that doesn’t make any sense. That’s just

 

Jay Conner [00:31:40]:

You’ve got a more you’ve got a more involved formula as to how you come up with your offer.

 

Mason McDonald [00:31:46]:

Oh, yeah. Well and because not everything is a deal, and and you can have more than deals, I’d actually never wholesale a property until this coming month. I think I have 10 contract assignments that we’re doing because the margins were thin on them I didn’t wanna deploy my capital, on these deals that had more thin margins, but I made the initial contract assignable and marketable, and I have realtors and title companies willing to work with me on it. So I’ve got, I don’t know, 10 deals closing next month that will net me about do some math here. Call it $40 maybe on those assignment ones, in particular, not my other deals that are closing

 

Jay Conner [00:32:26]:

Right.

 

Mason McDonald [00:32:27]:

My basis on that investment would have been close to, like, 290,000, which I typically wouldn’t do a deal with that thin of margins of 290k in cash and only 40k in profit on it. So with those ones, I was able to get creative and not have that much capital in the deal besides my earnest money. But in general, yeah, I try to I try to make anything work that it’s a good quality piece of land. And if the margins are thin, do an assignment, and if the margins are potentially heftier or it’s something that I would definitely wanna purchase myself, I just do that math of cost capital minus desired profit, and that that right there gives me that number.

 

Jay Conner [00:33:07]:

Okay. Very good. Last question. What’s your favorite, method of disposition? Your favorite method of selling and cashing out these pieces of land. Do you list it with your realtor?

 

Mason McDonald [00:33:17]:

That’s exactly it. Where I don’t have to think about it. When my acquisition manager brings it to me, I can take 10 seconds and say, this looks like a good deal. I sign all the contracts. The title company sends a mobile notary to my house. My realtor’s already got it listed with good pictures up, and we get an offer 3 days later for 2 or 3 times what we paid for it, and we close in 30 days those ones are great. They don’t happen as often as I would like, but, I had a few this year that were, like, 60k profit, just easy, didn’t have to think about anything. Those ones where my realtor does all the work, and my acquisition manager too.

 

Jay Conner [00:33:57]:

Mason, don’t you feel a little unworthy to make all that kind of money for the little bit of work you do?

 

Mason McDonald [00:34:03]:

No. I, I’m I’m the one that, you know, learned learned in my career what it takes to be an effective business, operator, and I’m the one that took the gamble and the risk and put my myself in personally guaranteeing notes sometimes, which I don’t do anymore, and took on the risk and created the systems and business and opportunity and raised the money. And to me, with everyone that we do business with, we always tell them if for the sellers of if you want the highest and best dollar, go to a realtor. We can refer you. If you want quick and convenient, come to us. And a lot of times, these people, they’re they’re not desperate. They’re just busy. And so we’re able to give them the cash they want.

 

Mason McDonald [00:34:49]:

We’re able to make our realtor money. My acquisition manager’s making money, the title companies, and I’m making money too. And I’m taking that money and putting it right back into the business or assets that I’d like to own for the rest of my life. And, yeah, if you start a business and you’re willing to take it on, you deserve to make money. That’s that’s America.

 

Jay Conner [00:35:09]:

Amen, brother. Amen, brother. So with that, Mason, thank you so much for joining me here on the show. Connect with Mason at www.mason rmcdonald.com, and you can find him on LinkedIn as well. God bless you, Mason. Thank you so much.

 

Mason McDonald [00:35:28]:

Thanks, Jay.

 

Jay Conner [00:35:29]:

There you have it another amazing episode of Raising Private Money with Jay Conner. Thank you for joining me here on the show, and we look forward to seeing you right here on the next episode of Raising Private Money.

 

Narrator [00:35:44]:

Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide.  That’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why Private Money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide. to get your free guide. We’ll see you next time on raising Private Money with Jay Conner.