Posted on: June 25, 2021

Daniel Watson is a US Army captain, an athlete, and a father of two who started his real estate business as a sideline. And now, just five months in the business, he earns $6,000-$12,000 deals a month!   

In this episode, Daniel talks about his interest in real estate investing and why land selling is the best market. He also tackles the strategies he used to gain better profit margins.

Key Takeaways

  • Why Daniel chose to focus on land selling
  • How he manages work and his business
  • Some uncertainties when buying land properties
  • On sourcing and selecting areas to invest in
  • Take part in a real estate community as a way to form partnerships

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Episode Transcription

Brent Bowers:
Hello, rhino nation. You have your land expert, Brent Bowers, here today and I’ve got an amazing guest, a friend of mine from the Army, from my old Army days. My friend’s name is Daniel Watson, he’s a captain in the United States Army. This guy’s an incredible stud. He’s an athlete. He’s a father of two, amazing husband and he actually just got back from an extremely long deployment in Korea and I’ve got him here today to talk about land, so I’m really excited. Daniel, what’s happening, my friend?

Daniel Watson:
Hey man, how’s it going? Definitely excited to be here. Thanks for having me on.

Brent Bowers:
Yeah, great to have you. I’m going to ask you a ton of questions today, about what you’re doing in land, how you do it as a father, as a husband and a guy, you’re always at the military’s beck and call, how in the world are you doing it? So, I’m intrigued by this. I know we talk a couple of times a month and you always inspire me with what you’re doing, so I’m always pushing my team and like, “Hey, you hear what Daniel’s doing over here? Let’s go, let’s go, let’s go.” So, why the heck land? Why land? You’re an Army officer, you don’t need the extra pay, what are you doing this for?

Daniel Watson:
Yeah. Well, thanks for all that, appreciate it. Honestly, this started out as kind of a hobby. Like you said, I was deployed in South Korea for all of 2018 and I took that time and I saw what you were doing, Brent, you inspired me, and I saw what you were doing with your house flipping and wholesaling and then you got into land and he told me about that. And I just spent that whole time I was away from my family, just studying, researching. I kept coming back to land for a few reasons. Everybody sees HGTV and they want to flip houses, they want to wholesale, they want to do some buying holds rentals and all of those things.
And those are all great and I do those things, but there’s just a few things about land that really intrigued me. And one is something that you talk about, I’ve heard you talk about before, the P houses, the P smell houses that you always have to deal with, with these reno’s that are always done. Contractor issues, repairs on buying holds, they can eat up your entire profit margin for an entire year on one repair. And then competition was certainly one, so all of those things, for instance, myself, I have a house that I just had to replace the AC unit on, and it was $3,600. I’m only making $250 a month profit on that house, so my profit for the whole year would’ve been 3000 and I just lost all of that on one repair on a house that I had to do two months after buying it, so that’s why land really, for me.

Brent Bowers:
Sorry for my delay. I just had to pull out the calculator, because I’ve been there with these houses. I had one that I bought in 2007 and I was actually getting $150 a month, passive income with that, net income after all expenses. That’s if nothing broke. And I feel like every six months something major would break, whether it be the water heater, the septic system, the roof, the well pump. So, I just did some math, you were getting $200 a month net income after all expenses and you had a $3,600 air conditioner, so for about 18 months, you’re not going to break even on that house, or actually get any net profit on it, so that’s pretty wild.

Daniel Watson:
Yeah, if you dig into that even further a little bit, I went a conventional route on this mortgage, so I have $18,000, tied up in that house also. So, if you think about dollars invested for your return, you know what I mean, for your cashflow? Think about it. Okay, it took me $18,000 to get into an asset that’s going to bring me $250 a month. With land, I can invest $1000. I can buy a property for a thousand bucks and then I can turn around and sell it for $6,000. And if I do it on terms, I can get $250 a month just from that. So, on one hand, I’m risking $18,000, keeping that tied up, and then with the land, I only have $1000 tied up and I’m making the same amount of money each month.

Brent Bowers:
So less risk, you get your money out faster, how is it finding these buyers for the $6,000, being able to pay payments, how hard is it to find that buyer? Because I get a lot of questions, “Where do you find the buyers for these type things? How do you find them? How hard is it, how long does it take to sell?” Those are some of the questions I get asked all the time.

Daniel Watson:
Well, I can tell you that one of the counties that I do on my smaller dollar amount properties are on the desert squares, if you will, you know what I mean, that everybody talks about and maybe Arizona and Nevada, places like that. If I’m doing terms… Well, actually, honestly, lately I’ve been doing a lot more just cash sales and I’ve been buying properties for $1,500. I’ve kind of figured out this area after four or five months, I know that I can get a property for $1,500 or less, and I can sell it for $4,500 to $5,000. And right now, for the last four months, I’ve been selling between three and four of those cash every month. So, I’m making between four and $10,000 a month, cash profit, every month, just steadily. And I know that I can do that for the foreseeable future.

Brent Bowers:
So, $10,000 a month. It sounds like you’re barely getting by.

Daniel Watson:
That’s the thing, Brent, I mean, this whole thing for me, like I said, it’s a hobby. I have my other job and everything that I do, but this is just something that I enjoy doing and it just so happens that for most people, including myself in a lot of ways, making six to $12,000 a month, every month? I mean, that’s a success story. That’s perfect for so many people out there, so that’s very powerful and life changing for a lot of people out there. And that would be enough for, I would say, the majority of folks out there wanting to do this. They would call that success, I think.

Brent Bowers:
Yeah, I absolutely think that’s a success. For some people an extra $300 a month will absolutely be life changing and you’re talking six to 12,000 a month. Well, let’s talk about how long, how long did it take you to get there? You must’ve been doing this for years, you got a crazy business built up, you’ve got all this cash, how long did it take you to get to six to $12,000 a month consistently? This is what I’m excited to hear, because I feel like a lot of people are probably wondering, “Okay, this had to have taken this guy, Daniel, years to do this.”

Daniel Watson:
Right, so I’ve consistently done that for the last five months total. Okay, so for the last five months, I’ve made between six and $12,000 a month on those desert square properties. I sent out my first mailer ever for land in May 2020, so it took me two months to build that consistency, honestly.

Brent Bowers:
So, roughly what are we looking at, seven months now you’ve been doing land?

Daniel Watson:
Yeah, seven months now I’ve been doing land and every month it’s been getting just better and better and easier and easier. And we’ll kind of talk about how I’ve kind of changed my whole game plan with all this, actually, since it’s been going so well, so quickly.

Brent Bowers:
What do your offers look like? How many offers are you having to send out each month to get deal flow like you’re doing? And mind you, a lot of people don’t realize the actual demand of being a military officer. I mean, first off, what do your work days look like in the military? And I know you just got back from Korea and all that, what does your average work day look like?

Daniel Watson:
Yeah, so I wake up at 5:00 AM every morning. I go to PT, which goes from 6:30 in the morning until 8:00. Go home, hang out with the kids for a while, make them breakfast to eat, go back to work. I have to be there 9:00, 9:30. And then I typically work until about 6:00 every evening. So really, I’m doing this at night for maybe an hour a night and a couple hours on the weekend. And now, more or less, I’m still answering the phones and things like that. I don’t have PATLive, I don’t have Airtable and all of these things that folks use. I just keep track of things on sometimes, my green notebook that the Army gives me, and an Excel spreadsheet, honestly, and that’s pretty much it.

Brent Bowers:
That is absolutely incredible. So, you basically are at work by 6:00 AM, leaving at 6:00 PM, so that’s only a half day, right? We’ve got 24 hours a day. You’re only working half day. [Crosstalk 00:09:42].
What’s that?

Daniel Watson:
You don’t need to sleep.

Brent Bowers:
Yeah.

Daniel Watson:
Oh, and by the way, I have two kids, I have a four-year-old at home, a two-year-old at home, my wife as well, I certainly make sure that I don’t neglect any of them, so.

Brent Bowers:
Yeah, and I’m sure your wife wants to see you from time to time. I know those kids will see you, because they want to see you, because I have three of them running around stomping above my head right now, waiting for me to get done with this podcast to play, because when the kids come home, my job is no longer buying and selling land, it’s playing, daddy’s play time. So no, that’s amazing, so I love that you are doing this one hour a day and a few hours on the weekend. It’s not like you’re putting in a 40 hour week.
Now, that’s crushing so many misconceptions that people think about business people. “Oh, to start a business, I’ve got to do tens of thousands of hours. I’ve got to bootstrap everything. I got to work nonstop. I’ve got to stop sleeping.” You still get time. You’re doing an hour a day, so it’s totally possible to do this and you’re just living proof of it. And how many offer letters a month or a week are you having to send out to do deal flow like this?

Daniel Watson:
So, this is funny too, actually, because I do send out a lot now, but the funny thing about it is the initial properties that I got, and really a lot of them that I sold throughout this whole last five months, were off of my first mailer, is what’s funny about it. And I sent out, I think, 2000 pieces and I just stumbled across one guy who, I sent him an offer on one property and he’s like, “Well, hey, Dan, I see you want to buy this property. I actually have 10 more, if you want to buy those too, I’d be happy to sell them to you.” I was like, “Well, yes, sir, I’d be happy to buy this from you.” And the funny thing is, I only bought five of them at first. And just because, for me, I had to prove to myself that it worked first, before I invested too much money into it. Well, for me, what was too much money into it.
So, I sold those first five in a month and a half. And I was just like, “Okay.” I called him back, I was like, “Hey, can I buy those other five?” So, I bought those other five from him, sold all of those. I mean, it’s one of those things that’s like, it happened so quick and even still, I’m still calling people that I didn’t buy land off of, that I had accepted offers for them, having to go back now and contact these people, because I saved their phone numbers and email addresses, and try and get them to sell to me again, because I know now that it’ll sell. And people ask me all the time, “How much money have you lost selling land, Daniel?”
And my answer is to them, “The only money that I’ve lost selling land are the properties that I’ve never bought.” You know what I mean?

Brent Bowers:
Wow.

Daniel Watson:
That’s essentially it. Any property that I just didn’t have the money at the time to purchase, that’s the only money that I’ve… It’s potential earnings that I’ve lost.

Brent Bowers:
The only money you’ve ever lost in lands are the deals you haven’t purchased. That’s incredible. That’s a quote from a board right there. So, out of, you said 2000 letters, and you did 10 deals.

Daniel Watson:
Oh yeah, definitely.

Brent Bowers:
That’s a half percent. That’s literally 0.5, half percent closing rate.

Daniel Watson:
And it goes against everything you hear too, because you’re like, “Well, if you get more than 2.5% or so response rate, maybe you priced too high.” But for whatever reason, I mean, they all accepted them at $1,500 or less and I sold all of them for $5,500 or $4,500, so.

Brent Bowers:
That’s incredible. That’s amazing. And yeah, it doesn’t matter response, right? It’s all about the conversion rate. I mean, I know you bought houses as well. How many house mailers did you have to send out just to buy one house?

Daniel Watson:
Brent, that’s why I stopped sending out house mailers, because you know this too, that’s why you’re asking this question. I spent all this money and I sent out like 4,000 mailers on houses, probably spent $2,500 probably on that mailing campaign and I got two responses back, nothing under contract. I have to say, I think it’s just the competition. There’s so many people, again, I think that when you talk and hear about real estate, that it’s, “I have to buy houses.” And you know as well as I do that people are trying to wholesale properties that are just junk and there’s no spread. There’s no way that the investor who’s buying off this wholesaler can make any money off of this. The profit margins on land are just exponentially better. It really is a game changer, honestly.

Brent Bowers:
Yeah, if you’re selling it in the month and a half of buying five parcels of land, selling all five of them in a month and a half, so you’re getting all your money plus profit in month and a half. I know why you didn’t buy any houses, you got to send out 4,000 letters a month and it’s a minimum of at least three months of doing that, so you’re at four, eight, 12,000 before you finally convert one of them, but it just takes a ton more mailers, so I love that, I appreciate answering that question. And yeah, I kind of did that a little tongue in cheek, so I know when you’re doing that and I’ve been there as well.
So, what are some of the learning lessons that you’ve come across with buying land? I know it hasn’t all been perfect roses type thing and easy transactions. What did the learning lessons look like?

Daniel Watson:
I wasted a lot of money, well, not a lot of money, but I wasted some money on trying to make sure everything was absolutely perfect, before I even sent out my first mailer, like website, paying people to create a website. I would say, don’t pay somebody a crazy amount of money to actually create a website for you. There’s places like Fiverr, you can go on and have a website created, a WordPress site created for you for very little. And really, to me, the website is mainly credibility for you.
I haven’t sold a whole lot of land off my personal website, but on my mailer that I send out, I have that website on there, the address, so they can go back and see that this is legit and I’m a real person that’s doing this, it’s not a scam. If you’re starting with desert square properties, like a lot of people do starting out with this, I would say, if you have $5,000, let’s say, don’t go out and buy a $5,000 property that you want to sell for $10,000, right? If you have $5,000 buy five $1,000 properties that you can sell for $4,000 or $5,000 a piece. You know what I mean? Have a little bit of an inventory rather than just having one property that you’re advertising. Be able to advertise multiple properties for yourself.
And then, once you get the properties, go ahead and pull the trigger on getting Lands of America. Go ahead and get, I know it’s like $250 a month or whatever, to list your properties on LandWatch. It’s LandWatch, Land and Farm and I believe something else, but that is what changed everything, honestly. Almost all my leads off of LandWatch, the whole Lands of America site. And then, let’s see, don’t send test mailers. Don’t send like 500 mailers at a time thinking, “Well, this place might work, blah, blah, blah.” But any successful mailing campaign is going to need at least 1500 mailers in it to really test that area. And then, don’t get hung up on pricing. That’s another great one, in my mind, don’t get hung up on pricing. One of the podcasts that I watch regularly, I believe, talks about paralysis by over analysis. Over analysis paralysis.
So, you’re analyzing it and you’re analyzing, you’re getting your pricing together, you’re testing it. You’re looking into this area and then you just never get an email out, so don’t get stuck in that boat either. So, I think those are a lot of really good lessons learned and ways to go into this and kind of being more successful right from the start.

Brent Bowers:
Great advice, great advice. Everything is never going to be perfect. Launch the mail. I love that you launched 2000 mailers at once and you’re so right, you got to get to around 1500. I always say it’s like priming that pump. You got to just prime that old pump, keep cranking that handle, and eventually water will start to come out and you got to keep going. Don’t stop.
Eventually, once you get a good flow of water or deal flow, land flow, whatever it is, you could slow down a little bit, but you got to keep pumping it. And I love the fact, I remember talking to you a while back about your website and everything you’re doing. And I totally agree, a website is a great thing to have, but don’t spend much time on it. I mean, you can get a carrot site by going to landsaleswebsite.com, landsaleswebsite.com is a good site to go to. You can get a free trial with that. I think it’s a 30-day free trial and you can literally start tomorrow. And it’s, I think, about $50 a month, so it’s a really good way to get started. Don’t spend time on your website, spend time getting that mail out.
And I love that you say you spend money on advertising, like Lands of America or land.com, LandWatch, great sites. You get your stuff out there in front of people that are actually looking to buy land and don’t get hung up on pricing. That’s a lot of fear for people. I don’t want to hold you too long, but that makes me think of one more thing, what made you pick your area? Because I have a lot of people come to me that’s like, “What’s a good area? How do I choose an area?” And you don’t have to give your special secret sauce, but I remember you picked an area very quick, Daniel, and that was what I was just so impressed with. And I did too, and we both do deals. But I know there’s people out there, they’re like, “Oh, I don’t know what area to pick.” And they’re not doing deals yet, but how did you just pull the trigger on that?

Daniel Watson:
So, it came from me wanting to get away from the desert squares, right? So, I feel like I spent so much money talking to people for… I talked to you about this yesterday, Brent, I talked to a guy for a half an hour on this property that I was going to try and sell to him where I would make $3,000. The next day, he never called me back, so I never sold that property and I spent all that time doing that. So I thought, “I’m going to get into infill lots.” You know what I mean? I’m going to get into infill lots, I’m going to try and just bump up this profit margin, spend a little more on each one of these properties and just really bump up that profit margin, scale up, so that’s what I did.
I started doing that and I sent out my first mailer for that in November. And the way I found my area was, I basically went to the state that I wanted to do business in. I went to Zillow, pulled up the map, filtered from houses, took all the houses off and everything and just put lots. And then I hit for sale and then I hit sale, right? And then I just started seeing all the dots pop up, all the yellow and red dots in the state that I was looking in. So then, I just started zooming into different areas on that map and seeing what is the reason people are buying land in that area? What’s the attribute of that area? Is it a hill? Is it water? In my case, it was water, so I started seeing all of these dots all around these bodies of water, where everybody was interested in living.
And these are high dollar neighborhoods. I mean, these are houses that, each neighborhood, the houses are $500,000 minimum, built in these neighborhoods. So, I started looking at the zip codes and I started mailing to those zip codes kind of based off of what houses go for in that area. I thought, “Okay, well, this is probably what a contractor would pay me to buy this lot in that area, so he could build a house on it, right?” Because as you and I both know, new builds are harder. Right now, houses are hard to come by, so new builds are very popular. So I just thought, “Well, maybe I’ll start trying to advertise to contractors, market to contractors.” And that’s what I did. It’s funny, I did exactly what I said not to do right here, I sent out a 500 piece mailer.
Sent out a 500 piece mailer, came back, priced it completely wrong, and this lady calls me back and she’s like, “Hey, I have this purchase agreement from you. I have this property. However, I have two of these and you offered me $5,000 for one, so I’m going to have to have $10,000 for each.” So I go back, I look at that neighborhood and I see these houses are million dollar houses in that area. And I was like, “Absolutely.” Got them under contract, paid all in, I was $24,000 all in on both of these properties and closed 48 hours later after I put them on Zillow myself, I had an offer that I accepted for $90,000.

Brent Bowers:
$90,000 in 48 hours. Let’s just do some quick math. You paid 24 for it so 90, 80, 70, 60, what is that? A $66,000 profit in 48 hours on 500 mailers?

Daniel Watson:
Yeah.

Brent Bowers:
That you priced wrong. I mean, this is amazing.

Daniel Watson:
And it goes even further than that, Brent, because there were other properties in there that I told you about over this week, that were from that same 500 piece mailer, that I have started calling back and getting new up to date purchase agreements on, and sent to title and I thought, “Okay, cool, I’ll make $10,000 on each one of these.” There’s three of them, I was like, “If I make $10,000 on each one of these, I’ll be happy. $30,000 profit on these three properties.”
Start calling realtors. I got a realtor that’s been in the area for 20 years and he starts running numbers for me, since I have him under contract, starts trying to numbers for me and he came back and he said, “Okay, so the first property, it looks like I’ll be able to get probably about 45,000 for it. The other one I’ll be able to get 55,000, and the other one I’ll be able to get 10.” So, I’m all in on these properties for $26,000 and it looks like I’ll be able to sell them for 110.

Brent Bowers:
Wow, so that’s all on a 500 piece mailer. You’re going to do five deals, that’s going to make you 66 on one and what’s the other one on the other one?

Daniel Watson:
They think it’s going to be 91,200, is what they think right now.

Brent Bowers:
So 91,000 plus the 66?

Daniel Watson:
Yeah, so $150,000.

Brent Bowers:
On 500 mailers.

Daniel Watson:
Yeah.

Brent Bowers:
You must be really good at picking an area. And think about it, it’s much easier, and I heard this quote the other day, I heard Joe McCall say this and he was on a podcast and I think he gave credit to Kent Clothier. But he said, “It’s much easier to sell people what they want, rather than what you have.”
So you found a demand, an area of demand, and you bought the land there and people want it and they’re buying it from you. So, man, that’s incredible, my hat’s off to you. Why the heck wouldn’t these sellers just take the easy route and put it on Zillow or list it with a realtor? I know you’re a good looking guy, [inaudible 00:25:53], but what is so good about you? Why would they sell it to you?

Daniel Watson:
That is the biggest question that people ask when I tell them about this type of stuff, in particular, my father-in-law. My father-in-law, he’s like… I’m telling you, you know big Lou?

Brent Bowers:
Big Lou.

Daniel Watson:
Big Lou. So, he asks me all the time. I tell him what I’m going to sell this property for, and I don’t think he ever believes me until I show him the HUD at the end, this is actually what I sold it for. But I kind of stopped asking this question, but this is what I think it is. Let’s say you own an old classic car and it’s in your garage. You know it’s worth something, it’s been sitting under a bunch of tools and old wood and stuff like that, it’s in your garage. You have every intention of selling that someday, but you just never get around to it. And then you have a guy like me that sends you a letter saying, “Hey, I’ll pay you this much money for that car in your garage.” I mean, what are the odds that you’ll just go ahead and take that offer? You know what I mean?

Brent Bowers:
Yeah.

Daniel Watson:
And it’s taken a step further. Let’s say that you have an old car in a garage in Texas and you live in Colorado and I found out that you have it. What are the odds that you’d sell me that car that you never get to enjoy, you never get to use, you never get to have fun with? It’s just sitting there collecting dust.

Brent Bowers:
Pretty darn good odds, especially if my wife’s been telling me to sell it.

Daniel Watson:
Yeah, exactly. And then, say you had to pay taxes on it every year.

Brent Bowers:
Oh my gosh.

Daniel Watson:
That’s exactly what it is, I think. I think people know, I think people inherit things sometimes. I think people know that it’s probably worth something. They just, with their busy day to day life, they don’t get around to selling it and an offer from somebody like you or I falls in their lap and they’re just like, “Great, this is awesome. I had to do no work for this whatsoever. I’m just collecting money.”

Brent Bowers:
And I get to get my garage space back.

Daniel Watson:
Exactly.

Brent Bowers:
Now I buy a motorcycle, because I’ve got room for three motorcycles in there.

Daniel Watson:
Exactly.

Brent Bowers:
That’s a perfect example. And I remember six months ago, you told me this example and I kind of forgot all about it, but now that you said it again, it’s so true. It is absolutely so true. And I find that most of these land sellers that’s selling this land, they’re not desperate for money.

Daniel Watson:
Right.

Brent Bowers:
They don’t really care. It’s just no emotional tie to it. There’s not a lot of back and forth. We’re not sitting on their stinky cat pee house negotiating for three and a half hours and I’m late for dinner and my kids are tired and they want to see dad. No, it’s a phone call and we’re not having to go through the land. It’s just so much easier. And everybody’s going after the ugly, nasty foundation problem roof caving in houses. I mean, geez, that one house we did together several, several years ago. Well, no, it was like two and a half years ago now, I think. I mean, we’ve had the fix the foundation, the house was splitting in half. I mean, that was just a nut job.

Daniel Watson:
Yeah, absolutely

Brent Bowers:
I’m excited, this has been a great, great call. Great podcast, I think it’s going to provide a lot of value for the listeners. Last thing I’ll ask is, if someone is thinking about getting started with land investing to create passive income, and we didn’t even talk about your passive income, I think we’re going so long, but for someone that kind of either get out of the job they hate or get started in this and start crushing it like you, what would you recommend, how to get started?

Daniel Watson:
Just education. I mean, educate yourself on everything as you’re doing it. I, myself, on my commute to and from work every single day, I’m listening to a podcast on land sales or whatever. I mean, I’ll say that there’s so much free information out there also, but there’s going to come a point where the free information is going to only take you so far, because all these folks on these podcasts, on the free ones, are giving you just enough to get by and then being part of a group and a team really makes all the difference.
So, once you learn everything you can from the podcasts and all of that stuff, become part of a community. That community is really powerful, they can give you a lot of tips and then they can even become partners for you too, that you can do joint ventures and different things like that and really scale up on what you’re doing, for sure.

Brent Bowers:
I love it, thanks so much, that’s such great advice and thanks so much for joining me, Daniel. And if you’re interested in getting started on your way to generating massive, passive income through land, head over to wholesalinginc.com/land. That’s wholesalinginc.com/land and schedule a call. My team will hop on a short call with you and discuss your investing goals and if it sounds like we’re a good fit together, I’d be honored to help you on your land investing journey. Daniel, thanks so much.

Daniel Watson:
Thanks for having me, Brent.

Brent Bowers:
Good night.

Daniel Watson:
Take care.

Brent Bowers:
I’ll see you next time, land sharks.

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