Interview with Vanessa Peters
Vanessa Peters on Investing in Land Entitlement and Making Big Returns
So many people end up going to school, choosing a career, working as hard as possible, and climbing the corporate ladder, hoping that they will one day achieve financial success. But far too often, that day never comes.
Today’s guest, Vanessa Peters, is an excellent example of someone who fell into that trap but ultimately decided to do something about it.
After 10 years of building a career as a Doctor, she realized she wouldn’t achieve her financial goals, even as a high-income earner. Not only was she swimming in debt from years of schooling, but her life revolved around work, leaving little time to enjoy anything else.
In 2008, Vanessa decided to start investing in real estate and began with a single-family home. Before long, she moved on to multifamily, mobile home parks, self-storage, short-term rentals, and even land entitlement, which is turning raw land into a “shovel-ready” state. This adds value and can lead to BIG returns for both syndicators AND passive investors!
In this episode, you’ll hear all about Vanessa’s unconventional path to succeeding as a real estate investor. We discuss syndication strategies for passive investing, why cash-flowing assets are so crucial to your success, and the massive opportunities that exist with land entitlements.
Featured on This Episode: Vanessa Peters
✅ What she does: Vanessa Peters is the founder of VMD Investing and has been investing in real estate for over 10 years. She is the Chief Physician Officer of Graybill Medical Group in Escondido California, and is also the author of the book “The Busy Professional’s Guide to Passive Real Estate Investing.”
💬 Words of wisdom: Even as a high-income earner, Vanessa knew she wouldn’t be able to retire when she wanted. By getting involved with real estate investing and learning everything she could, Vanessa worked toward financial freedom that gave her the quality of life she’d hoped for.
Key Takeaways with Vanessa Peters
- Realizing her career as a Doctor wouldn’t allow her to succeed financially.
- The story of her first deal and how she went from single family homes to investing in multifamily real estate.
- Why holding on to a cash flowing asset (like a single family home) is a smart move, regardless of market conditions.
- Why real estate syndications are such a passive way to invest your money.
- Vanessa describes her experience with multifamily, mobile home parks, self-storage, and land entitlement—and the problem she sees with investing in single-family homes.
- How to invest in “raw land” and make BIG returns by adding value through entitlements.
- How Vanessa’s investment company bought a $6.5M piece of land and sold it for $17M in less than a year!
- Hear about Vanessa’s book, The Busy Professionals Guide to Passive Real Estate Investing
Clips from the Show with Vanessa Peters
Planning ahead isn’t enough without smart investments
“We were working our butts off, making pretty good money: But I was really intent on not working until I was 65. The older generation of doctors stopped working when they couldn’t work anymore, and that’s not how I wanted to be. I wanted to have a quality of life, start a family. And even though I was being super frugal and saving a lot of my money … saving and investing in the stock market, and plotting out my income over five years, my net worth was a straight line. I was like, This is not going to work for me, I am not going to get where I need to without some kind of exponential growth. … I figured I had to start looking elsewhere for investing. … I knew that real estate was the way to do it, and so that’s what I focused on.” – Vanessa Peters
Find an investment that fits your style
“I’m like, I’ve got to find a way to invest in real estate that I can do. … So I started looking at multi-family and syndications. Once I found out what the returns were and how profitable I could be in a completely passive role, I was totally hooked. And so that segued into me wanting to get more involved, learning more, joining a coaching program, and learning how to be a syndicator.” – Vanessa Peters
Anything can be syndicated
“A syndication is usually, to keep it simple, purchasing a large asset and bringing in limited partners or investors to help with the equity portion of the investment. So you get debt service on it like a mortgage, and then the rest is provided by the limited partners. The operators — the general partners who sign the loan, run the business, take care of the database — provide returns to those investors. And those investors, once they write their check, it’s completely passive, which is the beauty of it. Getting a preferred return, which is your cash flow, is awesome, and then some equity on the backend when they sell or refinance. Syndications can be anything, though, not just real estate. You can syndicate startups, IPOs, Broadway plays: anything can be syndicated.” – Vanessa Peters
Find distinct niches to avoid saturated markets
“I started out with a lot of multi-family homes, and since then I have branched out into some mobile home parks, and also self storage is really a good place to be, especially if you can find the right operator. They’re all getting saturated now. The tailwind from 2012 and on might be slowing down a bit. There’s a lot more people out there that want to be syndicators and are hunting for deals. But there’s always a way, especially if you are very particular about who you work with.” – Vanessa Peters
Be 99% sure when dealing with land entitlements
“You’re dealing with the government, the county engineers, it’s a process that usually takes about nine to 18 months from start to finish. It’s very important to have a strong contract, so that when you’re doing your due diligence, you’re not buying land yet: You don’t buy it until you are 99% sure that this is going to be a saleable piece of land.” – Vanessa Peters
Increasing land value can be fast but not instant
“You’re forcing appreciation in the fastest way possible. … Basically, you’re taking the raw land and getting it ready, and during that process, the land acquisition managers are these specialists called LAMs, and they know what they’re doing. They used to work for the national home builders, but now they’re working for private companies, because the home builders either aren’t doing it, or when they do it, it’s so cumbersome and full of red tape that they just can’t grab that piece of land. So they take the land, and they put it through a whole process. A good rule of thumb is approximately double the value of the land in nine to 18 months.” – Vanessa Peters
Vanessa Peters Tweetables“It's not sexy, and it's not a DIY project. You don't go to a weekend seminar and come out able to entitle land.” – Vanessa Peters Click To Tweet “My goal isn’t to become a syndicator, my goal is to become financially free.” – Vanessa Peters Click To Tweet
- Vanessa Peters Website
- The Busy Professional’s Guide to Passive Real Estate Investing
- Rich Dad Poor Dad
- D.R. Horton
- GoBundance Women
- Hal Elrod
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Read the Full Transcript with Vanessa Peters
Justin Donald: Well, I’m so excited to have you on the show, Vanessa. This is so fun, it’s very rare where I get to take a Lifestyle Investor Mastermind member and highlight all the cool things that they are doing in this world. And I probably should do more of it, quite frankly, because our tribe, our community is just so incredible. And there are so many things I want to highlight about people, but your story is just a wonderful story that I think can inspire so many. And so, I’m excited to have you on the show. Welcome.
Vanessa Peters: Thank you so much. I’m super excited to be here in a second that we have an amazing tribe. So, definitely have more of them on the show.
Justin Donald: So, you are a doctor by trade. You’re in family medicine, you live out in San Diego, and which, by the way, is one of the most beautiful places. I love it when it came down to, it’s really funny when we are figuring out where we are going to move, at a certain period of time, I had an exit, and it was nothing substantial, but it gave me the freedom to move wherever I wanted to move. And so, my wife and I were talking, and I said, “Well, I’ve got two places on my list.” I said, “I love Austin and I love San Diego.” And my wife said, “I’ve got one place on my list, and it’s Austin.” So, Austin won. But I used to take…
Vanessa Peters: Smart move.
Justin Donald: Hanging out with all my friends out there in San Diego. So, I love it out there. But I want to talk about your story. Like what made you want to be a doctor? Like, how early on did you decide that? Because you love it and at the same time, you have been able to take what is normally a very busy schedule that the doctor has and you’ve been able to invest and diversify your assets in an incredible way. So, share with us how you got started, Vanessa.
Vanessa Peters: Yeah, sure. So, I felt that I wanted to be a doctor when I was in high school. And so, the reason was, it’s not very exciting, but it was practical because I didn’t have an entrepreneurial bone in my body. Nobody in my family was an entrepreneur and nobody really even went to college. So, it was kind of out there. But I had a science teacher say, “You would be a very good doctor,” and I was also good at other stuff. And so, I was like, well, I could either be a lawyer or a doctor, and I was like, well, I don’t really like lawyers, and I don’t think I would like that, that sounds boring. So, doctor, it is.
I wanted to help people. But honestly, what it was for me was the security of knowing that when I got out of college, I would have a job. I would have a title. I would be employable. The idea of going into college and paying a bunch of money, which I was paying myself, nobody was putting me through college and was like with a B.A. in liberal arts or an economics degree, even, I mean, I just had no idea what that meant. The possibilities are endless, I’m sure, but it scared the crap out of me. So, I was like, I’m definitely going to have a job. And I thought about, well, I could be a nurse or I could be a pharmacist. And I thought, doctor, that sounds like that’s pretty much at the top of the food chain. And so, I think I will do that.
Of course, I didn’t know at the time that being a doctor doesn’t mean that you’re at the top of the food chain, and it doesn’t mean that your own boss because even in Canada, where I’m from originally, doctors are independent, but their boss is the government. It’s like one giant HMO who pays them, and so. And of course, now I’m in the States and I love it here, and it’s amazing. I came straight out of residency, but you learn how that you’re not really that high in the pecking order.
Justin Donald: Well, it’s interesting because I talk about this a lot about the reality and the illusion of reality. And I’ve shared this analogy before, where a lot of people want to live in a gated community because it’s safe, the gate keeps the bad people out. But the reality is a gate can kind of keep bad people out, they want to get in. It’s an illusion of safety. But mentally, people feel more safe, and therefore, it is their reality. And I think the world of being a doctor for most people, it’s expectations not meeting reality because a lot of people think doctors make a tremendous amount of money, but doctors spend a lot of money to get to the point that they can make a lot of money. So, then when they’re making a lot of money, it’s going to debt service. And then there’s, in many regards, like handcuffs to the hospital or business or government or whoever you work for. So, there’s often not the autonomy that exists later on when maybe a doctor would start their own practice, which is also a big risk because a lot of doctors didn’t learn how to run a business so a lot of them fail because of that.
Vanessa Peters: Yeah, I remember distinctly in my last week of residency, we had like a half-day on how to start your own practice and like, literally, in Canada, that’s what everybody does. They go in and they hang up a shingle. And because you don’t have to worry about insurance contracts with payers and blah blah blah, there’s only one, right? And so, you literally go out and you start your own practice. And I mean, that is just terrifying that they’re sending all these doctors out there brand new to start their own enterprise. So, yeah.
Justin Donald: A lot of people go to college for a specialized degree to start a business. A lot of people will be an understudy, but with doctors, you spent all your years of college. You’ve got your additional years, your residency, and this is focused on your craft. This is focused on being a great doctor. And then, oh, let me give you one week on how to run your own business, and that’s just not sufficient. So, it’s interesting to see, I mean, it’s pretty obvious to see why a lot of doctors don’t go out on their own. But I think the doctors that really kind of get ahead of the game in a financial regard do so by going on their own and figuring it out. I mean, obviously, there are a lot of doctors that can make great money and after debt services paid, or maybe if they didn’t have debt service, it’s a different scenario.
But I’ve got a lot of friends that started their own practice, the doctors that are just in many different industries, whether it be dental, whether it be optometry, whether it be family practice. And it’s amazing what can happen as these entrepreneurial skills are honed and learning how to scale a business and open up multiple locations. It’s really cool. So, I’m curious of your thoughts around that and what you’ve seen in your community and with your friends.
Vanessa Peters: Right. I mean, when I started, which was 19 years ago, I moved down from my residency in Canada down here to San Diego. And I’ve been in the same job ever since. So, I’ve been here for 19 years and worked my way up so that now I’m the medical director of the group. And we have 12 locations and 80-plus providers. So, it’s grown a lot from when I first started, it was only like two locations. And so, I’ve seen the evolution of medicine during that time as well.
Back then, I was joining a small group and I was a W-2, but we became shareholders and we still are physician-owned. So, we are running our own business. It’s a little different because you’ve got the corporate structure of CEO and the CFO and all that that take care of things versus like what we call onesies and twosies, which you’re a solo doctor or the one that has a partner. And so, I wouldn’t have had the skills to do that at the beginning, and I messed it up. And I might have caused myself a lot more harm than good because we do come out with a lot of debt.
And the docs now coming out, especially those in primary care, they do want the security of a W-2 job with time off which is kind of a whole nother issue. But they want to have all of the 401(k) benefits and everything all baked in. And that’s just the way it is now for most primary care, especially in California, where we do need to have insurance contracts because if you have your own business and you’re taking insurance, you’re not going to do that by yourself. Those docs who are out there by themselves doing it, they probably don’t take a lot of insurance. And people are paying cash or they’re using their PPOs. But it’s a different world here in California. So, I’m grateful for the fact that they took me on from Canada. Getting a visa and all that was not easy, it’s not easy to come down. Super grateful.
The first six months I was here, I was just starstruck. Look at all the palm trees. This is amazing. The weather is so great. And I’m super happy with the move that I made, but I realized, I think it was about after 10 years of practice that there had to be a little bit more because I was working super hard. We used to do everything, go to a hospital, do admissions, rounding, skilled nursing, urgent care as we were working our butts off, making pretty good money. But I was really intent on not working until I was 65. The older generation of doctors, they stop working when they can’t work anymore. And that’s not how I want it to be.
I wanted to have a quality of life, start a family. And even though I was being super frugal and saving a lot of my money, like half and half, I was diligent for about five years, saving and investing, of course, in the stock market, and plotted out my income over five years and my net worth. And it was a straight line and I was like, okay, this is not going to work for me. I am not going to get to where I need to get to without some kind of exponential growth. And the compounding, like where’s the compounding? The compounding doesn’t happen in five years. I figure that out later. It takes decades for compounding. And when you’re a doc, you get started so late. You don’t get that head start. And so, I figured I had to start looking elsewhere for investing. And that’s what kind of got me into learning, that I knew that real estate was the way to do it. And so, that’s what I focused on.
Justin Donald: Vanessa, you made a comment that is so powerful, and it’s just so important that people hear this because you recognize, even as a high-income earner, even moving up the corporate ladder to where you are to a director of a hospital, of a medical practice, and even saving half of the money that you make, I mean, this is incredible that you’re still not going to get to where you want to be. And I think most people don’t even have the luxury of those opportunities that you’re talking about. And so, to figure out what’s next and to say, “Hey, I need to start investing in other things and real estate, in myself, and my own education outside of the medical field.” I think that’s incredible. And I wish more people did. And I hope that this podcast episode can inspire more people to do it because I know a lot of doctors, and a lot of them, especially the ones that live in expensive cities, they’re just making ends meet. It’s not like what many people think.
And conversely, I’ve got a friend here in town in Austin that is– I got to be careful not to say too much, but is selling all of his practices for just under nine figures, for barely under nine figures. And what an incredible opportunity. But I know so many more that are not even really getting ahead. It might seem on paper like they’re making a lot of money. And so, I love what you’ve done. So, walk us through like, how did you get started? Like this had to be a little scary, you’re a doctor, you’re figuring out how to carve out time to do something different, but you don’t have the expertise yet. You invest in your first real estate deal, I think, back in 2008. Walk us through that.
Vanessa Peters: Great. Well, the first deal that I did in 2008 was just a real realtor friend of mine said, You know what? This area is going to really do great after this downturn. And this was at the beginning of the downturn, and I had some extra money. Like 40 grand was a lot to me. And so, I made a down payment on this home, which was a short sale in Riverside County, just north of San Diego. And I bought, so early that it kept going down. And so, I freaked out a little bit like, oh, maybe his advice wasn’t so good.
So, instead of doing what I should have been doing, which was buying more of these houses in that area, I just kind of set it and forget it. I had good tenants, and I just kind of it’s like, okay, well, I did it, it’s fine. We’ll just sit there and watch it. Of course, that home that I bought for, I think, 225 is worth 600 now. So, it would have been great to get 10 or 20 of those, I’d be set right now, but I basically went on with my life. I got married. I had a child. I was just focused on other things. And that was when I kind of woke up after saving really hard for five years and I realized, it actually all came to a head when I was in Minnesota riding my bike or on a lake with my family for a vacation.
And it was so peaceful, and you could just hear the gravel on the bike wheels, and the kids were kind of laughing. And I was like, really calm inside and I was like, oh, just that feeling. And I was like, that’s called contentment. And I realized that that was a feeling I did not have enough of. We worked so hard. And as doctors, we’re treating our time for money. We don’t get paid when we’re not there, and so there’s this disincentive to take time off and do things that we enjoy. And so, I became passionate about, I need to get that feeling. And being the practical liberal person that I am, I thought, well, I need to buy a house by a lake. So, I’m going to look at Lake Tahoe and that didn’t work out. But it got me on the path.
And so, I just started devouring books on real estate, BiggerPockets, and listening to podcasts. And I picked up Rich Dad Poor Dad, which I had read when I was younger and just was kind of like, fired up about it. My husband thought I was kind of crazy, figured this one would pass my interest because that happens regularly. Sometimes, it’s weird things like fermenting vegetables. But this time, it was real estate and it stuck. So, that was like five years ago.
And once I got the taste for investing in real estate, which I realized I couldn’t do actively in San Diego anymore because I thought I would repeat what I did in ‘08. And of course, it was much too late by then and kept looking and looking. And I’m like, I’ve got to find a way to invest in real estate that I can do. Now, being an active real estate investor, like buying homes and flipping them, obviously, I don’t have time for that, and this isn’t the market. I didn’t want to buy a single-family home in Memphis that I don’t even know anything about and get fleeced by some property management company. I didn’t feel good either.
So, I started looking at multifamily and syndications, and once I found out what the returns were, first of all, and how profitable it could be in a completely passive role, I was totally hooked. And so, that segued into me wanting to get more involved, learning more, joining a coaching program, learning how to be a syndicator, basically, because I always like to learn about what I’m doing.
Justin Donald: I love it. So, I want to dive into that, but before we do, you made a comment here that I think is really important. You bought a single-family home. And even though it went down in value, this is why I love cash flowing assets, even though it went down in value, you didn’t have to sell it because it cash flowed so you could weather the storm of the highs and the lows. You could weather that downturn and not be forced to sell it. And so, one of the things that I really talk about is getting your passive income to equal or exceed your income to survive and eventually, your lifestyle income. And so, that’s a great story, a great way to say, “Hey, let me buy this home because it cash flows. I can wait and hold it. This could be a long-term play. It could be a short-term play. It can be whatever I want. I have flexibility because my renter is covering the cost of the mortgage payment. So, nice job. Totally brilliant. Let’s talk about syndications because you’ve done like 32 or 33 syndications, I believe. And I’d love to hear all the different paths that you’ve taken, and just so everyone knows, can you elaborate on what a syndication is?
Vanessa Peters: Yeah, absolutely. Syndication is usually, to keep it simple, purchasing a large asset and bringing in limited partners or investors to help with the equity portion of the investment. So, you get debt service on it like a mortgage, and then the rest is provided by the limited partners, and then the operators, the general partners who sign the loan, run the business, take care of the days, have the stuff, they provide returns to those investors. And those investors, once they write their check, it’s completely passive, which is the beauty of it, and getting a preferred return, which is your cash flow, which is awesome. And then some equity on the back end when they sell or refinance. So, syndications can be anything, though, they’re not just real estate. You can syndicate startups, IPOs, Broadway plays, anything can be syndicated.
Justin Donald: That’s awesome. So, the beauty here is for anyone that feels like you don’t have time like I’m already so busy in my job, there’s no way I have the time to invest. And for some people, they fall into that trap. For most people, they fall in the trap of either (A) not investing and consuming everything that they make; (B) investing everything they make back into their business; or (C) taking the path of least resistance and investing everything else into the stock market, into 401(k)s and the qualified plans.
And so, there are different ways, in my opinion, better ways, at least ways to diversify so not all of your assets are in your business and in your qualified plans and in the stock market. And I think if you look at the wealthiest people in the world and you analyze, and I’ve spent a lot of time researching the wealthiest people, like what does their portfolio look like? And of the people that are like literally the wealthiest in the world, 50% or more of their portfolio is in real estate and private equity.
And so, if you think about that, the majority of their net worth is not in the stock market. The majority is in private enterprises, private business, private real estate. And you’re saying, “Hey, I was able to invest in these syndications as a busy doctor with a vibrant practice when I’m moving up the corporate ladder, at the same time, adding more responsibilities because it doesn’t cost time when you find the right operators. Is that right?
Vanessa Peters: Absolutely.
Justin Donald: So interesting. So, what are some of the syndications that you’ve done?
Vanessa Peters: So, I started out in multifamily because I was part of a team. My mentor was basically helping us get large multifamily as we work with a large operator in Texas. And so, the deals were really beautiful and of course, one of my taglines for my business is I’m investing alongside my investors. So, my goal isn’t to become a syndicator. My goal is to become financially free, and I want that cash flow. I want to be able to exit medicine if I want to, not that I necessarily want to, but I might want to scale back. So, these are amazing deals.
So, I started out with a lot of multifamilies. And then, since I have branched out into some mobile home park, which I know you love, and also self-storage is really a good place to be, especially if you can find the right operator. They’re all getting saturated now. The tailwind from 2012 and on might be slowing down a bit. There are a lot more people out there that want to be syndicators and are hunting for deals, but there’s always a way, especially if you are very particular about who you work with, just having a couple of good, different, distinct niches.
And then, of course, land entitlement is my most recent foray. And I just love land entitlement because it really is helping because there’s a four million home shortage in the US right now. And there’s a variety of reasons why that is, not the least of which is that the homebuilders got burned in 2008 big-time during the downturn. They had purchased a whole bunch of raw land, and it was sitting on their books literally worthless. And so, they decided going forward, we’re not going to do that again. We are going to buy land, preferably when it’s all set, meaning entitled paper lots, shovel ready, land banking, whatever you want to call it.
So, they want to buy built premium for land when it’s all ready to go because it reduces their risk significantly and allows them to buy land, get it built and sold within a year, supply chain issues excluding that. But so, that’s a great way to help basically, profit from the major demand right now. I mean, if you’re in the business of buying single-family homes as your business, you’re kind of in trouble right now because it’s hard to find anything that cash flows. I am doing a few Airbnbs here and there. That’s what’s the only way I could buy anything that will cash flow is if you can bump up the rents significantly.
And those poor people, the millennials are now the biggest demographic for the next three years, and they want to buy homes. They’re done with the apartments. They want to buy a home. They want to start a family and they’re getting shut out. So, if you can partner with an operator that is doing the land entitlement, building homes that are affordable in the 300K or 325K range, the brand new, and these are things that young people can afford, regular people can afford this, and we’re desperately in need of it. So, that is why I’m really kind of passionate about that right now.
Justin Donald: Oh, it sounds just incredible. Just for clarity’s sake, I think it’s important to kind of dissect and break down what land entitlement is because I feel like that can be an intimidating word. But basically, you’re taking raw land and you’re getting it ready to be able to have a development built on it, whether it’s multifamily or whatever it ends up being. But can you break down the specifics of what entitlement is, land entitlement, land banking?
Vanessa Peters: Sure. Yeah, I mean, it’s really boring. It’s not sexy, and it’s not a DIY kind of a project. You don’t go to a weekend seminar and then come out and be able to entitle land. So, I always said I wasn’t going to invest in land because the only thing I knew about was buying raw land and selling raw land. And that’s a high-frequency business and that’s not passive. So, that wasn’t for me because you have to do a lot of volumes and you take a small amount off each sale.
So, the land entitlement, I gave a talk on it recently and I mean, I felt bad for the listeners because it was really so boring, but I wanted to show them the detail that goes into the process. So, the folks that are doing this, they have to go to the city. You’re dealing with permits, zoning, soil testing. There’s a big environmental survey that’s done where they literally have to go over the entire land, look for anything that might be off like, is there anything on the land? Is there something with liquid in it? What is that liquid? What’s underneath the land? Are there big rocks that are going to prevent them from putting in the pipes that they need to put in?
So, it’s basically a very, very detailed survey of the land, also requires dealing with the city and the county. You might even have to do one of those things where you ask for community input and go to events like that. So, you’re dealing with the government, the county engineers, and it’s a process that usually takes about 9 to 18 months to kind of go from start to finish. And it’s very important to have a strong contract so that when you’re doing your due diligence, you’re not buying the land yet. You don’t buy it until you are 99% sure that this is going to be a salable piece of land.
Justin Donald: That’s great. And so, I’m assuming that you have to do a phase 1 as you’re doing your entitlement. For everyone that is not in real estate that’s never had to do one of these, I do these on any of the properties that I buy, and you’re basically making sure that there was never a gas station, never a laundromat, never a place that would have contaminants that would get into the soil that could then be problematic for anyone who lived on it. And so, it’s not that expensive, but when there is a fail on the phase 1 to remediate that, it’s an incredible cost to go through it. Sometimes, it’s virtually impossible to overturn. But kind of rule of thumb as I’ve learned it for me, at least, is the moment, it’s a no, I just walk. I don’t even try to get a phase 2 and anything like that. I want to resolve it. It’s too expensive, too much can go wrong, and sometimes you can figure all this out if you go through the city records, you can figure out what has been on the land. Has it been raw land from the time of records until now? Well, you probably don’t have an issue then, but if there’s ever been something else on it, then it’s really important that you do that. So, very interesting.
Now, let’s talk about the returns here because, and so, with land entitlement, so before you were talking raw land flipping, raw land small margins, you need a large volume of transactions to really make a good return. With land entitlement, it’s different, and you’ve got a timeline with which you’ve got it under due diligence. You’re only going to buy it if you know that there’s a buyer lined up. You’re going to lock it in at one rate, you’re going to sell it at another rate. And it’s a short period of time really between when you buy it and when you sell it. So, I’d love to hear some of the specifics there.
Vanessa Peters: Yeah, I mean, you’re forcing appreciation in the fastest way possible, really. I mean, apart from building, because then you’re making it worth even more, but basically, you’re taking the wrong land and getting it ready. And during that process, the land acquisition managers are these specialists called LAMs, and they know what they’re doing. They used to work for the national homebuilders. But now they’re working for private companies because the homebuilders either aren’t doing it or when they do do it, it’s so cumbersome and full of red tape that they just can’t grab that piece of land.
So, they take the land and put it through the whole process and basically, usually, a good rule of thumb is approximately double the value of the land in 9 to 18 months. Like I said, they have a land assignment contract that they don’t complete the close until they’re sure. Another option is sometimes a simultaneous close where they have an LOI, which they frequently get ahead of time, almost, always. And they sometimes can actually do a close where they purchase and sell it in the same day, which takes less capital, which is great.
Justin Donald: That’s incredible. I’ve had some friends that have done that. So, first of all, I’ve got a bunch of friends that have done very well in land entitlements and I’ve got other friends that have definitely done the transaction day of where you basically close on both, you close on the buy side and the sell side and you make that margin and again, less out of pocket, less hold time. It’s just a brilliant way to do it when you can line that up. Now, you had a deal that was really fantastic, and I’d love to get some of the specifics because you had a killer return on a short timeframe.
Vanessa Peters: Yeah. We purchased 500 flat land near south of Charlotte, and that was in December of last year. The purchase of the land was $6.5 million, and due diligence costs, etc., were about $1 million. And so, we raised money for that. It was just a one-off land entitlement, not a big fund, just this one piece of property. And when we were bringing in investors, we had an LOI from Mattamy Homes, one of the big national homebuilders, for $14 million. Now, the land costs $6.5. They’re offering $14 million and they are basically telling this operator, “We want that land. Please get it ready for us, and then we’ll buy it from you.”
So, the operator decided not to actually sign the LOI. And so, they pushed it out. They pushed it out. They pushed it out. The land is ready to close this week, and the sale price with Mattamy, the final sale price is $16.75 million. I mean, I’m not that great at math, but that’s a pretty darn good return. And the next day, after they finalized that, D.R. Horton came in and said, we’ll pay you $17.5 million for that piece of land. So, there’s a lot of money to be made if you are efficient and good at this. And it’s not like you can just walk in the front door of D.R. Horton and be like, I’d like to entitle some land for you. You have to know the market, you have to know the people, and kind of have a back way in.
Justin Donald: So, how long of a time frame was it on that deal from the time you signed to the time that you’re closing?
Vanessa Peters: So, we’re going to close this week, so it’ll be 11 months, basically. But I should say that we paid our investors 18% annually, but we paid them out in August. So, it was an annualized return of 18% that they received. So, that was kind of nice.
Justin Donald: That’s awesome. So, they’re already out of the deal. Very cool. That is so fine. Now, you have a book that you wrote that I think is just super clever, has a great title, The Busy Professional’s Guide to Passive Real Estate Investing. And what I love about it is you have walked the talk. So, you have been the busy professional. You have invested in all these different things, 33, 32, 30 some odd syndications. You’ve got deeded property that you own. You’ve done all kinds of things, different asset classes. What made you want to write this book? And do you feel that this book is all that someone needs to be able to do the things that you’ve done?
Vanessa Peters: Yeah, great question. I mean, I wrote the book because, well, I joined a mastermind with some folks that you might know, Hal Elrod. And it seemed like everybody was writing a book, and I thought that was like, no way, I can’t possibly fit that into my schedule. But they were so inspiring, and I was like, okay. So, I did my mind map and I got it all out there. But the reason I wanted to write it was because I had started my business. We’re bringing in investors to deals and realized that so many people don’t know about this. It’s still even though once you’re in it, you can’t unlearn it and you think everybody knows. There are still so many people that don’t know. And I felt like this would be a good way to get the message out of ways to invest that isn’t buying a house, isn’t flipping a house, isn’t being a landlord, isn’t dealing with tenants, toilets, and termites. It’s totally passive.
And so, I was so passionate about it. I want to share that with people. It also gives them a really good foundation for what is this syndication? What are the ethics used? What are all these terms in the PPM? What is a PPM? How much money am I going to make? And then I did this cool thing where I wanted to know, okay, if I invest 100 grand per year and reinvest all the dividends, how much am I going to have in passive income? And I created a spreadsheet in Excel because I couldn’t find a calculator anywhere. And so, this roadmap, I call it roadmap to success, it basically shows after about eight years, you have $108,000 in passive income per year. And to me, that was phenomenal. That’s just the beginning.
Once you spread that out to 10, 11, 12, 13 years, I mean, it’s like in the millions. It’s like, okay, this can’t be right, double-check my math. No, it’s right. So, it’s pretty phenomenal. And I wanted to share that with people and also help people get a good idea of things before they come to me because the reason I say to write a book is, it’s like the phone conversations that you’re having over and over and over again. Put it in a book. People can read it, and then they can come talk to you, and then they’re more educated.
Justin Donald: I love it. That is so awesome. Congratulations. I’m taking something that you have had a lot of success with that can help liberate other people and give them time freedom. A lot of people, they think they want financial freedom, but the reason they want financial freedom is for time freedom. So, I just think that is incredible, and what a blessing you’ve been to our mastermind as well. I just feel so privileged to have so many smart doctors like you that have broken the chains of the norm of just being a doctor and have gotten out of their comfort zones and have done so many other things.
And I know you’re part of GoBundance Women, an incredible group of entrepreneurs. In fact, a bunch of women from your group is part of our mastermind, which is so cool. And it’s just neat to see all these different professionals kind of walking arm in arm, looking to make a difference in their life, and helping support other people to bring them alongside so they can do the same thing. And it doesn’t matter what you do, it doesn’t matter if you have a job, it doesn’t matter if you run your own business, but you have this opportunity if you just move towards it and spend time with people that are doing it. So, I want to just recognize you and give you major props here, Vanessa. I think it’s so cool what you have done. And I want to thank you for the time that you spent on the show today. Where can our audience find out more about you?
Justin Donald: Love it. Well, thank you for sharing today. And what a great segue, what a great episode to kind of wrap up as I love doing, which is what are you going to do today to take one step towards financial freedom, towards a life by design, not a life by default? And what a powerful message today is, because it lines up exactly that way with something to the tee that someone else can do where it doesn’t take time. You could be a busy professional, but you can invest in syndications, you can invest in deals with experienced operators. So, again, I leave you with this. What’s the one step you can take towards financial freedom today? Thanks. And we’ll catch you next week.