How To Win In Real Estate Through Empty Lots With Michael Poggi
We pass by tons of empty lots every single day. Their dull and undeveloped state make them quite uninteresting, but with the right research and resources, one can turn them into powerful assets that yield a lot of profits. Mitch Russo chats with Michael Poggi who explains how he mostly deals with these vacant lots, invests on them, and transforms them into powerful real estate assets. He shares his unique methodology on finding the best empty lots to do business on and how his partnership with a research company makes the job way easier. Michael also talks about his private animal sanctuary, as well as how his real estate profits keep the place alive and vibrant.
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How To Win In Real Estate Through Empty Lots With Michael Poggi
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Now, on to my amazing guest and his incredible story. Starting as a stockbroker and working for Chicago Brokerage for nine years, he realized that while he had a successful business, the majority of his client’s money was all in real estate. He sold his book of business and started investing. After being in the real estate business for a short time, he figured out how to purchase vacant lots.
He found it ingenious way to leverage a small amount of cash into a real estate empire. When he started out over 20 years ago with $500, he quickly realized he could parlay that modest some into controlling properties worth far more by focusing on inexpensive quarter-acre buildable vacant lots in fast-growing resort communities. Once he realized the power of 25% to 50% profits yearly, he decided to focus on helping others do the same. He’s here with me to show you how you can get started very easily on your own. Welcome, Michael Poggi, to the show.
Thank you, sir. How are you doing?
I’m doing great, Michael. I’m so glad you’re here. Tell me how all this got started. I gave the readers some detail but fill in the blanks here. Tell us a little bit more about your origin.
As a young man, I was a stockbroker in downtown Chicago. I met many wealthy clients who would send me money to trade their stocks for them and buy their mutual funds, but they would only send me 5% of their net worth. I would end up having lunch with them or dinner with them and I would ask them, “Where is the rest of your money? I don’t understand. What do you do with it?”
Sure enough, they would have $10 million or $20 million in real estate. I would want to know, “Where is it at? Is it on land? Is it in apartment buildings?” They would only have a little bit in the stock market and the rest of it was all in serious great appreciating assets like vacant lots, apartment buildings, rental properties, etc.
I got to learn from multi-millionaires who taught me as their stockbroker how to invest in real estate and become better off. I ended up selling my brokerage firm. I ended up using the proceeds from that to start fixing and flipping houses. I’m not a builder or a construction guy so I had to hire people to handle the fix and flips but I put up all the money. I split it with the builders.
You did this for a while. You made some money and then you started expanding your vacant lot business. As you were figuring all this stuff out, what are some of the nuances about it? It seems pretty easy. You look in the newspaper and see if there are any vacant lots. Nowadays, you go online and search. You’re looking for vacant lots for sale inside resort communities. What are the nuances here? What are we missing? There has got to be something more to it than that.
My first experience when I first started many years ago was I would start to invest in vacant lots that were not in a resort community because didn’t have the same demand. For example, if I were to buy lots in Florida like Fort Myers, Punta Gorda, or Cape Coral, I would buy lots in there. They were cheap, but when it was time to sell them, they didn’t have as much demand because they didn’t have any amenities. Although they would sell eventually, the people who were buying those lots were only buying them to build their houses.
When I finally figured out that if I buy vacant locks cheaply in resort communities like quarter-acre buildable lots. When you go to sell a lot, you have a much better chance of selling a vacant lot that has lakes, golf courses, tennis courts, swimming pools, good schools, and churches. That was the pinnacle that launched my portfolio. I did all this in a self-directed Roth IRA. That goes back to my beginning story of how I built a multi-million-dollar IRA from only $500.
When I first started buying vacant lots, I only had $500 in the IRA. It’s pretty tough to become a millionaire in real estate with $500 so I had to figure it out. I started making offers to people who owned vacant lots in resort communities. I would call up sellers. At the time, they were $5,000. I would say to them, “I’d like to buy your lot for $5,000 but I only have $500. Would you please let me make you payments over five years?”
Some of them would say, “No. I got to have my cash now.” Others would say, “I don’t need it right now. I’m successful. I would rather defer the capital gains tax anyway.” They would loan me $4,500. I would give them the $500 down from my Roth IRA. My IRA would make payments to them for five years. At the end of five years, I realized that my lots had doubled. The one lot that I bought, the very first one went from $5,000 to $10,000 in that time frame of 5 years, which equals 20% a year.
I went ahead. I went and put it for sale for $10,000 and I realized that I could do the same thing for others. I could put my lot for sale at $10,000 at zero down, 100% financing, and no credit check. Everyone approved. I did advertise it like that everywhere. Back in the day, it was newspapers and eBay in the old days. Now, it’s Craigslist, signs on the property, and realtors.
I had so many phone calls from people that had no down payment and bad credit that wanted to own real estate so I was able to sell it easier for that reason and because it had amenities. Those two reasons alone got me my first lesson. I could buy and sell something on terms and exponentially grow my wealth using only $500 and then it got better.
In real estate, it is always better if you can buy something on terms and sell something on terms while exponentially growing your wealth using the smallest amount of money you can. Click To TweetWhat is interesting is the fact that it’s a matter of knowing where to look. You decided that these lots inside of vacation communities would be perfect. You were right. Before you started helping others do this, how many have you bought yourself personally over the years?
2,400.
2,400 vacant lots?
I have every single file folder here. The reason is that I was buying them for myself to hold but then also, I had orders from family, friends, and builders. What happened was when builders found out that I was buying in there all the time and making offers, some builders that only wanted 2 or 5 lots would hire me to find them a lot. They would buy it from me. They’d pay me $1,000 commission and then they would go ahead and build a few houses and then they would hire me again. That business grew very big long before COVID to where I was helping builders and then also investors.
However, you had to develop a methodology for finding them. Otherwise, you’re going to be spending a whole lot of time scanning newspapers, Craigslist, and all this other stuff. Tell us a little about that. How did you figure out how to find them? Do you have a system that you could disclose or share with us? Tell us about it.
From the beginning, I wasn’t sure which resort communities in the United States would be the best for me that would meet my criteria. My criteria were under $20,000 and must be a quarter-acre. Not too small, like 1/8 of an acre. It must be buildable. It must have at least 5% of the subdivision built out already. It means there must be at least 5% of the homes already in place including roads, electricity on the corners, stop signs, and street signs. Plus, it has to have good schools, restaurants, hospitals, and good churches. Those are the key things that I had to find.
What I did was I hired a research company. It cost me $6,800 at that time. I said to them, “Here’s what I’m looking for. Somewhere in the United States. It must be in a resort community. It must be all of my criteria.” They presented me with 5 choices and out of the 5, the first one that he picked was Lago Vista, Texas, which I’m wrung out of now, but at the time, I was buying Lots in there for $9,000. Five years later, I sold hundreds of them in my Roth IRA for $18,000.
I doubled my money in 5 years, which I probably averaged around 20% a year. I finally stopped buying lots in that subdivision because they went higher. Now, they are $65,000 in there. I had to find the second subdivision that was from my research. The research department gave me the tools that I needed to find the right subdivisions in the United States and then I also had to do more research and find out from the planning and zoning department.
I had to find out, “Are there roads getting widened? Are there permits getting pulled for houses being built? Are there churches going up? Are there new schools and shopping centers?” If the answer is yes, then that means that people are moving there. Also, the chances of my lot appreciating in my lifetime are much better than if I picked the lot in a subdivision that had nothing going on and maybe had no internet, no roads, or no houses yet. I don’t focus on cheap lots for $500 in the middle of the desert. I don’t focus on lots that are too far along. I don’t want to go into a subdivision that is 90% built out because then we’d be paying $80,000 for a lot.
That makes a lot of sense. There’s a piece here that we call the research division that is part of what you might say is the secret sauce. The idea of buying vacant lots and Resorts is great but if you can’t find them and then qualify them, then it’s a bit of a crapshoot. Do you still have the same research division or has it evolved? Is it now a software platform? Tell us a little bit about this process.
Once you identify a subdivision, there’s no more research to do other than things going on like, “What’s Walmart doing? What is Tyson Foods doing?” The only research that I need now is, “What’s going on in the subdivision?” As far as finding lots go, I don’t need to go into any other subdivision until this subdivision that I’m in which is called Bella Vista, Arkansas goes above $20,000 for my cost or my purchase price. I will stay in there and accumulate locks for maybe the next few years or whatever it takes. Once I get over a certain price where I can’t buy them below $20,000 anymore, then I’m done as a buyer and I would go again to a brand-new subdivision that only has 5% of the houses in there.
One of the criteria is that they can’t have more than say 5% of the lot sold or number around 5%.
It’s houses built and not lots sold.
Let’s assume that you’re you find yourself subdivision and full disclosure readers, Michael has bought me a lot too. I purchased a lot through Michael’s company. My lot is where again? I don’t remember where it is.
It’s Bella Vista, Arkansas, which is right near the headquarters of Walmart in Bentonville. It’s a very popular place for people tourists because they have some of the best biking trails and hiking trails in the United States. Walmart headquarters is there. It’s the same thing with Tyson Foods and other giant retailers and they buy there for the same reasons I do. In other words, their research department found the same reasons that I did which are more cost for the land right, low taxes, and low cost of living. Everything is cheaper there. When they buy there, they’re doing the same research that I was doing. Why would they buy there and put their main manufacturing plant next to Bella Vista?
You also said before that these are facilities that have amenities. There are things like trails for horseback riding or biking, forest areas, lakes, streams, mountains, and all the fun stuff that people like to be around. Do you go visit these Lots before you make an investment? How does that work?
There are several steps that I have to take before I buy a lot whether it’s for me, you, or anyone else. Number one, I have to have someone sending out offers. What we do is send out offers to people who are not listed on the MLS because we want to find people who are not being solicited by other people all the time. We want to find people who are not thinking about selling because those are the ones who might have something come up where they need to sell their lot to pay for something and they would consider selling their lot.
When looking for empty lots for real estate purposes, find people who are not being solicited by other people all the time. Look for those who are not thinking about selling. Click To TweetWe sent out thousands of offers a month to be able to get only a handful of choices from those. If I send out 5,000 offers, I might get 30 lots back where someone said, “Yes, I’ll sell you my lot.” I’ve had mistakes before where I sent out offers too low and I got no yeses back. I would waste $5,000 or $6,000 and get no results. I would have to raise my bite price by $1,000 and then send out another mailer and try it.
Once that happens, if the lot comes back with the contract saying, “Yes, I want to sell it,” then we have a team of people that handle all of the rest. We have to negotiate with the seller. We have to have another person check for liens to make sure there are no liens on the property. We don’t want to have something where there’s money owed on the property and then I have to be stuck with it. We have to make sure the property is buildable because what if there’s a big giant boulder blocking the entrance or maybe a big ravine in the center where it becomes not buildable or maybe the lot is too small where it’s an eighth of an acre.
We have to check for all that. We check the photography maps and then from there, we have someone who lives in a subdivision that I have to pay to go physically walk the lot. Remember, if I’m buying 30 to 60 or 100 lots in a month, that person’s going around from lot to lot looking at it to make sure it meets my specifications and passes my criteria. I then have to close on it. I have to pay closing costs. I have to transfer it into the investor’s account and I pay their closing costs again. I’m paying closing costs twice. This process is expensive, but it beats me having to fly out there myself and spend money on an airplane ticket. Land in the subdivision, stay in a hotel, drive around, look for lots, and negotiate. It’s not practical to do it that way.
I completely understand but again, we’re talking typically to people who have never done this before. We’re sharing the process with them. Let’s take this back to where people live. We live in Florida. We live near major metro areas here, but there are people reading who don’t live in Florida and may live in very rural areas. Is this viable for somebody without all your research capability and all of the stuff that you have in place to do this? What would the approach be for the average person? Where would they start looking for lots that they potentially could buy? Would they have to go to the town hall?
It’s tough because without them knowing the subdivision and knowing everything about what’s going on, it’d be difficult. That’s why we turned our program into a done-for-you program where we do it all for them. However, if someone wanted to learn all that, in the past, I’ve taught courses on how to do it yourself but sure enough, if I taught that to 100 people, 99 would say, “Mike, I don’t want to do all that. Just go find me a lot and I’ll pay you to do it. I got to go back to work.”
They would end up not wanting to do all of it themselves. There’s a lot to know about that. That’s why it’s tough to do on your own but the other thing is that a lot of people ask me why don’t I buy farmland like 50 acres, 100 acres, or 1,000 acres. The reason why is that it costs me more money to buy the lot so when I go to sell it, it’s harder to sell because it would be a much higher price. Buying quarter-acre lots are cheap and when you sell them at a double, they’re still cheap.
Buying quarter-acre lots is cheap. When you sell them at a double, they are still cheap. Click To TweetThat’s true and particularly for somebody who’s going to be building a multi-hundred-thousand-dollar home for them to pay $10,000, $15,000, or $20,000 for the land makes perfect sense particularly if their neighbors are already in place anyway. That makes a lot of sense. Let’s shift gears here, Michael. It turns out that we’re dealing with a very interesting individual Mr. Michael Poggi. The reason he’s so interesting is that while he loves helping people buy and sell lots, he also happens to run a zoo. Michael, tell us about this zoo that you run.
It’s a private animal sanctuary that my wife and I own in Davie, Florida near Fort Lauderdale. We have taken in exotic animals from people that were not supposed to have them or maybe someone passed away. Right now, we have received rehomed animals like monkeys. We have 60 monkeys on our property. We have three lemurs. We have every kind of exotic animal you can imagine like giant tortoises, snakes, turkeys, peacocks, sheep, goats, mini pigs, bunnies, and all kinds of exotic animals.
It’s quite expensive to pay for their food, their medical care, and the zookeepers to come here every day to take care of all their cleaning and everything else. My wife has a business where it’s called Exotic Animal Parties where we go to schools and summer camps. We take the baby animals that are born here like baby monkeys, baby mini pigs, baby sheep, and baby goats. We educate kids on the value of animals.
We spend every day during the week going to schools and summer camps. On the weekends, we go to house parties and corporate events. Our animals are being played with and loved on by thousands of people a week and it’s quite popular. For example, we might do 6 or 7 house parties on Saturday and 5 or 6 on Sunday with a mobile exotic animal petting zoo.
It’s not open to the public where people come on my property. We want our privacy and to be able to keep our insurance policy from getting rid of us. We go out to other locations and we educate. That helps pay for the food because it’s about $5,000 a month just in animal food plus you’ve got medical bills, antibiotics, deworming, and stuff like that.
How did you get started with that?
When I was in college, I got to work for a veterinarian and the veterinarian was at Valparaiso University where I went to college in Indiana. I took my business degree there. The veterinarian handled all of the Michigan City Zoo animals. It wasn’t a cat and dog veterinarian like you would think. I was helping out doing surgeries on tigers, deer, and alligators. An alligator would come in with a missing foot and we had to sew it up because another alligator bit it off.
Maybe it was a tiger that had a toothache. We would extract the tooth or maybe a declaw. It’s everything you could imagine. I was involved in hundreds of surgeries on zoo animals like deer, owls, and hawks. I had licenses to rehabilitate them and they would either go back to the zoo or the wild if they were from the wild. That’s how it got started.
You said to your wife one day, “Let’s keep this one,” and that’s how the collection started. It was the first monkey.
A lot of animals can never go back to the wild. A lot of animals can never be released. If a hawk has a permanently broken wing, it can never fly again. Rather than euthanize it, I felt so bad. I have such a big heart for animals and people that I said, “Let’s keep it alive, and let’s feed it.” I ended up accumulating many owls, hawks, and even baby deer that were hit by a car. We helped out with thousands of animals, rescuing them.
Do the animals know that you’re taking care of them and appreciate your help and care? Do they show love back to you or does it feel like they’re in jail to them?
They sure do.
Tell me more about it.
They’re all very affectionate. As a matter of fact, do you remember how when you go to a petting zoo how sweet and tame they are? Animals love to be hugged, scratched, and petted. When these animals are being loved, it’s so much enrichment for them that it makes your life a pleasure. They are in big giant enclosures but every day they’re going out to be played with kids, moms, and dads so it becomes something that’s good for the animals. Plus, it helps us afford a good diet for them so we can afford organic food.
Do you have a veterinarian on site or do you need one on site? Is it more on-call? How does that work?
We do. We have a USDA veterinarian who has to come here to give shots to the alpacas, goats, sheep, and everything. They check their vitals. We have an actual mobile vet who comes here to make sure that all the medicines that are supposed to be administered on a quarterly basis are all done. We also get inspected by the USDA and the Fish and Wildlife. We have to have documents showing that the USDA veterinarian visited here. We have to prove that they come here and give them the shots.
What a fascinating operation. It sounds like it’s also very rewarding as well particularly when you go to schools and all those other places. Is there any crossover or interaction between the two businesses between the real estate side and the animal side?
Yeah. The only crossover is that the profit from real estate helps pay for the rescuing of animals. Other than that, there is not one bit.
It sounds to me that it’s far more of a passion project than anything else.
It is. My goal one day is to be able to have a big giant facility like a 100-acre animal park but those are millions and millions of dollars to carry something like that.
It’s fascinating because we all have passions and interests outside of our work. You’ve been able to find one that’s a bit unusual compared to the rest of us and it sounds like a lot of fun. I wanted to transition to the second part of our interview, Michael. It’s where we get to know you a little bit better.
I’m going to ask you a couple of questions that are about you. Feel free to take your time and answer or you could pontificate all you like. I just want to ask you these questions. Here’s the one. Who in all of space and time would you like to have one hour to enjoy a walk in the park, a quick lunch, or an intense conversation with?
I am a fond person of Elon Musk. I find him fascinating that he can handle 10,000 tasks a day when I feel like I’m overwhelmed from handling maybe 50. I want to be around people like him who are such visionaries that never think anything is too big. I am inspired by him.
The funny thing about him is that I remember listening to him speak once. He made it clear that his lifestyle is his entrepreneurial work. Sleeping more than four hours a night is a waste and working less than seven days a week is a waste. The guy is totally on all the time. I don’t know how he does it. I certainly couldn’t do it now, but he found a way and he’s amazing. If you could ask him questions, what might you question that you’d ask Elon Musk?
It would be about time management. I’m learning a lot about time management from you, Mitch. I’ve watched you take notes on everything you do. It’s very inspiring to see how you are so organized. I would ask him some of the same questions that I would even ask you for your advice on which is, “How do you keep track of everything you’re doing because you’re involved in hundreds of different things with people? How do you manage all of that to not let things slip through the cracks whether it’s sending something to someone that they asked for? How do you keep track of all that?” I’m fairly good at it, but I know that I’ve got ways to go to be able to handle ten times more than I’m handling now without pulling my hair out.
Elon would answer the question better than me. However, I’ll tell you what I do, which is relatively straightforward and simple. I have an assistant who doesn’t need education other than being smart, available, and aware of what I do in my business. Whenever a request comes through, all have to do is read it and forward it and I know it will be done. That’s the thing but there are things I got to do myself.
I use a very simple platform. A lot of people do too. I use Notion. I don’t know if you’ve ever heard of Notion before. It’s a great tool. It lets you create lists of all kinds that you like. You can put lots of content in it. I believe there’s a free version. I like the paid version because it has some extra stuff. Truthfully, Notion is where I can tag things so that if I’m talking to somebody and they might be a good candidate for a program I’m running or a group that I’m building, I tag them and then later I can search by tag.
Evernote has that same capability as well. It’s an older version of a notetaker whereas Notion is more modern and a little bit more advanced in the way it works. Those are my basic tools. I also have a calendar, email, and everything else. For my client work, and you heard me talk about it at the beginning of the show, I use my own software ClientFol.io to manage all of my coaching sessions and keep track of all my interactions with clients and potential clients so I have their information at the tip of my fingers. For me, software has been awesome at helping new organize things. Let me ask you the second question. This is the grand finale or the change-the-world question. What is it that you were doing or would like to do that truly has the potential to change the world?
I love educating people. I think that educating more people makes a big difference. If I could educate people on a larger scale where I’m showing everyone my secrets, it would make me feel good because so many people are stuck learning about investing from their parents, stockbrokers, and financial planners, and they’re not learning about real estate. That’s the biggest problem I see in our society. Young kids growing up through high school and college are only learning about stocks and mutual funds. They are rarely learning about business and investing in real estate.
Real estate investing should be a primary topic. We’re not getting the right advice. A lot of our parents don’t know about real estate investing. A lot of our stockbrokers and financial planners don’t discuss it at all because they don’t make a profit from it when they recommend it. We should have courses available in college and school. I would like to be the person who can handle it which would help everybody on the planet to learn more about safer and better Investments instead of stocks and mutual funds.
Young kids growing up through high school and college are only learning about stocks and mutual funds. This should be changed, and real estate investing must be a primary topic. Click To TweetThat sure is a great mission and I agree with you. It would be fantastic if more people knew about the power of non-linear investing because once you put money in a mutual fund, you’ve lost control of that money to somebody else. That’s a good cause. Michael, if people are interested in learning more about how to purchase small lots or quarter-acre lots inside vacation communities, how can they get ahold of you?
They can probably hop on my calendar. I have a calendar available where they can hop on there for a consultation at no charge as a gift. It is www.MeetWithMichaelPoggi.com. I’ll be glad to spend time to go over what you invest in or what questions you might have on vacant lots to help you with our done-for-you program or anything else about real estate investing that I could give my opinion on.
That’s very generous. Are you saying that anybody who is reading this can pick up the phone or the scheduler, book a call, and talk to you directly?
Absolutely.
Thank you, Michael. Readers, I would take advantage of this. Michael, we’ll talk again soon.
Thank you, my dear friend. I appreciate this opportunity. I look forward to seeing you again soon.
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