December 11, 2023 • 47 mins
Farmers and ranchers have a unique lifestyle that sets them apart from typical office workers who retire in their 60s and enjoy retirement benefits. For farmers and ranchers, retirement is not the norm; they persist in their way of life until their very last breath. But for other professionals like doctors, how do they manage their wealth?
In this captivating podcast episode, Colter engages in a thought-provoking conversation with David, a certified financial advisor with a diverse background in small business deals and land flipping. Together, they delve into the world of finance, specifically addressing the unique financial challenges faced by aging farmers, ranchers, and doctors who have amassed substantial wealth over the years. David candidly shares his own experiences, shedding light on the obstacles he encountered during the tumultuous 2008 financial crisis.
If you're seeking valuable insights into investment opportunities, including stocks, real estate, and bonds, you've landed on the right episode. Join us as we navigate the ever-changing landscape of interest rates on savings and jump into the potential hurdles within the commercial real estate market, such as floating-rate debt and geopolitical uncertainties. Colter also offers intriguing perspectives on how global instability might impact investments in rural real estate.
But that's not all; this episode is brimming with expert knowledge and engaging discussions. Don't miss out on the chance to expand your financial wisdom. Tune in now to explore these insightful topics and gain a deeper understanding of financial strategies.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
I'm Colter DeVries, owner of Ranch Investor Advisory
and Brokerage Services.
As a former commercial nagbanker, my main reason for doing
this podcast is to simply gaugethe market's appetite for
crowdsourcing investment in aranch real estate fund.
Speaker 2 (00:15):
The Ranch Investor podcast, curated by subject
matter experts to give youimmense benefit, because we
believe your time is valuable.
Speaker 3 (00:25):
Dave, welcome to the Ranch Investor podcast.
Thanks for coming on.
Thank you?
Speaker 4 (00:30):
Yeah, glad to be here , my friend.
Speaker 3 (00:32):
I hope you can take up the majority of time telling
me about what doctors do withtheir money, as we also get into
retirement, succession planning, estate planning.
That's a big issue in farm andranch right now and what you've
seen some of your clients do.
You're a certified financialadvisor.
(00:53):
You do some small businessdeals on your own outside of
your CFA services.
You do some land flipping.
You've got some experience allaround that I'm glad to have you
on.
You can share that with ouraudience.
We do need to get into taxreduction planning, retirement
(01:14):
income, some of the familywealth planning and estate
planning.
As the question comes up quiteoften, dave, is what do our
counterparts in the urban areasdo with all their money?
What do doctors do with theirmoney?
What do lawyers do with theirmoney?
And so that, as we have anaging population in farm and
(01:37):
ranch, the average farmer andrancher is over 65 years old and
they've got immense equity,immense wealth and assets.
But there is a big push toeducate and I hate using that
word because it sounds likepompous when it's like you need
(01:59):
to educate yourself, like I'mgoing to give you an education.
I hate using that word butbring information.
How about that?
There's a huge push to bringinformation to farmers and
ranchers when it comes tomanaging investments, financial
advising, estate planning,retirement planning.
Launch in, dave.
(02:20):
Give me your background andthen help me take over from here
so I can give this voice arrest.
Speaker 4 (02:26):
Yeah, you bet Colter.
Well, I think, as I think,about ranchers and farmers, and
we have some of those, thosekind of clientele.
In my financial planningbusiness we deal with them, and
in our land flipping businessthat we do there, I think about
that group and I mean, thesepeople are the salt of the earth
(02:49):
, regular folks.
They're to me, the ideal personbecause they have a lot of
wealth.
But you would never know it ifyou talk to them, right?
At least the majority of folksthat are in that position, many
farmers in particular.
Man, you think about goingthrough COVID and what happened.
(03:09):
I mean I was like gettingsmacked in the face right where
you were planning on selling allthese crops and you have to go
let it rot in the fields for awhile and you're often land rich
and cash poor, and doctors andmany of the small business
owners, people like that that Ioften deal with in the financial
(03:30):
planning.
They're kind of the opposite,right, they tend to be more cash
heavy and cash assets, maybe agood deal of real estate, but
certainly it's a smaller portionof their net worth than
ranchers and farmers and thosekinds of people which, what most
of us do that are ranchers andfarmers.
We go out and buy more land,right, because we know it.
(03:52):
We understand it, we can, to adegree right, work with it and
we know that if we plant corn,plant soybeans, plant wheat,
whatever, what that yield mightlook like, my cash flow might
look like not that we'reguaranteed it, but at least we
have an idea of it.
And for me, a little bit aboutmy background.
So I've been in the financialplanning space for 20 plus years
(04:18):
now at this particular point.
So I'm 42, to give everyonecontext in terms of who.
I am originally from SouthernCalifornia, although I have
roots in the farm world.
In Manchester, washington,which is across the water from
Seattle.
We have an old family farm thatwas there which has been, over
the years, gotten to smaller andsmaller and smaller chunks to
(04:41):
now it's left to the oldVictorian style farmhouse on the
water, with a couple acres ofland there still on the water,
which is awesome.
Speaker 2 (04:51):
So I come from that stuff.
Speaker 4 (04:53):
Yeah, it's on Deniston Lane.
My last name is Deniston, sothe family lane you know is
still there and probably pointto that and my heritage.
Because I look at my family andhow I was raised, you know work
ethic was incredibly importantand and treating people
(05:13):
honorably and fairly wasimportant, and the value of real
estate was something that I wasbrought up with.
That was incredibly important.
My folks are real estateinvestors.
My great aunt and uncle didwell in real estate and it's as
part of as I've evolved as aperson.
(05:34):
You know real estate, landfarming, those kinds of things
have appealed to me more andmore and more.
If someone was to look at thisvideo, I'm wearing a collared
shirt right now.
You know I don't look the part.
I look like a white collar guy,which of course, I have a big
chunk of that in me.
But I look at how I started out20 years ago, right, you think
(05:55):
about when I started in thisindustry.
You know the Internet wasdefinitely here.
We were just getting past dialup and all the good old AOL
stuff and cell phones evolvedand you know life has been
moving so quickly.
I know many farmers now.
Right, I mean, you can do somuch more with machines and
computers and GPS coordinatesand telling tractors and whatnot
(06:20):
where to go and how to do itwithout having to do all the
work, and it's so much of adifferent world out here today.
So for me, in my journey, Igrew up in California, went to
school in Seattle and I've beena small business owner basically
since I got out of college.
So originally I went in myfirst year in financial planning
(06:42):
and knocked on 2,000 doors totry and get clients in the snow,
in the wind, in the rain, inbeautiful sunshiney weather and
I thought I was a pretty smartguy.
But I'll tell you, man, thathumbled the heck out of me in
going through that process andthen-.
Speaker 3 (07:03):
That's hard work.
That's hard work like farmingand ranch and knocking on doors
and building your book right outof college.
Speaker 4 (07:10):
Oh yeah, no, it's you .
You definitely grow toappreciate an office and growing
up, you know, and earning mystripes in the industry, and so
ended up working for another guyand got to a point where had my
great aunt had passed away,received some money, we had no
(07:33):
debt on our house on anything,you know, we owned it all, which
is the way I always wanted tolive.
But then I got to a space in mycareer where I wanted to make
an acquisition and so, just likemany farmers and ranchers in
this case, I acquired financialplanning clients and so, rather
than trying to grow itorganically right, I grow it and
go out and make an acquisitionto try and speed up the process.
(07:57):
And unfortunately, the closingdate of that was August 1st 2008
, which was awesome, fantastictiming.
Speaker 3 (08:05):
Oh, that is my listeners.
They get tired of me saying it,but I have impeccable timing
like that as well, dave.
What happened with you, Colter?
I timed the cattle marketexactly wrong and, yeah,
immediately.
Much like the 08 financialmarkets, in real estate, they
(08:27):
dropped 40%.
So did the cattle market in2015, which I have a listener
who told me he's heard it enoughand so I won't go into it any
further.
Dave, love it man.
Speaker 4 (08:42):
Yeah, so we go through this process where I
literally had no debt, no,nothing else, and I had all this
debt after this acquisition andI'm sure many people listening
to this can relate to that asyou buy a new piece of land and
it didn't work out the way thatyou thought it would, and I'm
now just clawing and scraping toget my way back up and I feel
(09:09):
like I earned my inheritance inthat time period.
It was handed to me.
I didn't blow it, but Iinvested it and, man, it was
hell to get back through that,but we made it through that time
period and I swore at thatparticular time I was never,
ever going to be dependent againon one thing, which is what led
(09:31):
me to multiple streams ofincome and doing different
things, including thelandflipping that I'm doing
today, which kind of brought meback full circle to my family
and how the family grew up and Iwas raised and it's been a
beautiful but difficult journeyAlong the way.
By the way had two beautifulchildren.
(09:53):
My wife and I have been married20 plus years now.
My oldest is in college and myyoungest is our little miracle
girl.
She was less than a pound whenshe was born.
Speaker 3 (10:03):
Oh, wow 12.4 ounces.
Oh, my goodness.
Speaker 4 (10:07):
Wow.
And she was super early 23weeks justationally, so 17 weeks
earlier than she should havebeen and it's been a journey
getting through that and that'spart of the reason why I focus
on doctors.
I'm giving back.
So if you ever listen to mypodcast, the Freedom Formula for
Physicians, that's me justgiving back to the physician
(10:28):
community.
It's been a passion project forthe last seven, eight years or
so.
Speaker 3 (10:34):
Well, my wife is a, she's a PA and, as many ranchers
have joked with me, so I lostmy ass ranching once before.
The joke is I was a brokerancher.
Therefore I had to become aranch broker.
And now they all my friends saywell, your wife's a PA, Now you
(10:56):
can go back to ranching.
Because behind every goodrancher is a wife with a town
job, and she has anexceptionally good town job,
which means I could be a greatrancher with her off-arming come
.
Speaker 4 (11:10):
Man, because it's so variable, right, I mean it's?
You're investing all the timewith ranching, whether cows or
horses or whatever, and havingto decide what stock do you sell
?
What stock do you buy?
Speaker 3 (11:25):
all that kind of thing.
And what?
What Freedom?
What was the podcast?
Speaker 4 (11:29):
one more time the Freedom Formula for Physicians
is the title Freedom.
Speaker 3 (11:32):
Formula for Physicians.
Speaker 4 (11:34):
Yes.
Speaker 3 (11:36):
Well, thanks for coming on, because it is I do
want to get into.
That is one question I had, andI actually want to jump right
into a tangent, because you andI have this similar story about
not so impeccable timing.
Yeah, what are your thoughts onwhere we're at today?
(11:56):
Are we overvalued on realestate and equities?
Is there cause to be skepticalright now?
Speaker 4 (12:07):
Well, there's always cause to be skeptical, colter,
there's no doubt about it, right?
You know I get this questionall the time, every year,
multiple times of the year,doesn't matter the year.
But yes, there are concerns,right?
You know?
I think with a lot of differentthings, whether stocks or real
(12:28):
estate or bonds.
You know there's really, exceptthe money in the bank, you know
, now you can actually earnmoney in the bank for the first
time in a decade actually morelike 20 years.
You know, you could earn 5% onyour safe money, which is
incredible considering that wewere making zero to 1% for like
(12:50):
15 years out of that money.
So it's a much differentenvironment than a couple of
years ago in terms of paperassets like stocks, bonds,
mutual funds.
In terms of real estate, I,literally right before we got on
this call, I was having a gueston my podcast.
We were talking about realestate and, in particular,
multifamily and office andself-storage, and we're talking
(13:16):
about how so many operators hadgot floating rate debt in 2019,
2018, 2020, and that floatingrate debt might have been locked
in for five to seven years.
Well, here we are now, right,starting 2024, 2025, 2026, 2027,
(13:37):
we're gonna start to see.
You know who's naked underneaththeir coat, right?
You know it's gonna be reallyinteresting to see how the next
couple of years play out.
Of course, there's all the crazygeopolitical stuff that
something always seems to behappening.
But this feels a little scarier, right, you got Russia and
(13:58):
Putin with their finger on thenuclear devices.
That's the threat.
That's scary of it.
We've got stuff going on inIsrael and Palestine and they're
that feeling of gosh.
Is World War III across thenext year coming to us?
On the other hand, I wouldpoint out, with savings rates,
(14:20):
you know now getting nice yieldson investments like we're
seeing, rates, like I said, wehaven't been seeing it 15, 20
years, and there's a lot more ofan attraction now to the safer
stuff.
On the other hand, employmentyou look at the economy.
There's been talk of recessionever since COVID started, which
(14:41):
we had a little bit of arecession, but then bam, the
government throws downhelicopters worth the money and
things kept chugging along.
And here we are today.
Job market's still growing.
I'm not saying it's easy, butthere's still jobs being created
every month.
That got across all kinds ofindustries.
There's certainly no negativeGDP even in sight in terms of
(15:07):
gross domestic product theeconomy right.
We're not in a recession, we'renot close to a recession.
The Fed is now put the brakeson raising rates, or at least
pumping the brakes to not beraising by three quarters of a
percent, which means all of usfor you and me and everyone else
, that means our borrowing costs.
(15:28):
Okay, we can more know, hey, ifwe wanna take out some debt to
invest in our businesses, wehave a better idea of what
that's gonna be right.
So there's some of theseunknowns that have become knowns
in the economy.
So I'm cautiously optimistic ishow I would say it.
I think you look at this lastyear, for example, tech stocks
(15:52):
oh my God, they have beenscreaming.
If you look at the big techstocks, they're up like 40 to
50% for this year.
Now, if you look at everythingelse outside of tech like you
look at consumer goods companiesjust think of things you buy at
the grocery store laundry,detergent, soda, stuff like that
(16:15):
those are down this year.
Utilities big publicly tradedpower companies are down this
year.
There's a list of about energy,oil companies are down this
year by five or 6%.
So certain sectors are gettinghit harder.
Well, guess what I'll bet younext year, that whole flight's
(16:36):
gonna flip and tech probablywon't be doing as well and maybe
some of these other things willstart doing better.
So those are some of the thingsthat I'm looking at I'm talking
about.
I think a lot of the dividendstocks have gotten hit much
better.
For dividends, for example, nowyou have higher yields because
interest rates have gottenhigher.
So I think there's some reallyattractive stuff out there.
(16:59):
But, yes, there are risks.
There are things to beconcerned with, things to keep
an eye on, like commercial realestate, for example, how that
impacts banks.
You think of a lot of banksthat might loan farmers and
ranchers money.
Well, they might be pullingback and I'd be asking people to
put more cash into deals thanthey used to all that kind of
(17:20):
stuff.
What are you saying on your end?
Speaker 3 (17:22):
That's right and actually we like to say and I'm
gonna try, I'm gonna prefacethis by saying I'm not just
putting my sales pin.
Everything is spin cycled whenyou're a salesman, a broker.
But the World War III analogyin private conversations, I
(17:45):
guess I am gonna blast it andbroadcast it right now.
But that's good for my businessRural real estate and a stable
farmland producing United States, domestic food production,
global instability, supplychains, war overseas I don't
(18:06):
have the data to support this.
I'll flat out say I don't knowwhat the correlation is, but I
presume that it's good for mybusiness.
World War three is and that's.
You know, that's a veryMachiavellian thing to say.
I'm not, I'm not wantingrockets flying over Israel and
(18:30):
Palestine, that's.
I don't personally value thatand want that, and I don't want
that in the Ukraine either.
So I think the long term outlookyes, there is a lot of
uncertainty and skepticism.
It's even in these safe quote,unquote safe assets of farmland
(18:52):
which banks are.
Yes, now you're going to haveto come with more equity, more
down payment.
The debt service coverage ratiodoesn't look as good as it used
to, especially when commoditieswe're at a peak.
They were very high andvolatility High prices means
high volatility, means expensiveoptions, because the the
(19:17):
probability, the possibility ofOf your expected income dropping
by half, that probability isnow increasing.
That's more expensive In themarketplace.
All of that, all of that beingsaid, I think land is going to
do what it's always done, justslow and steady.
(19:39):
Yeah, we've had some bubbles,you know, in Minnesota, north
Dakota, you see some recordsetting farmland prices $19,000
an acre, which is about $10,000higher than the farmer next door
wants it to be if he's buying,but he's also sitting on that
same land.
That just went up that much.
(20:00):
Yeah, it's full of paradoxes.
What I am, what I'm curious,though, is economics, is the
movement of resources from areasof low yielding to high
yielding, and I had thelisteners can attest that.
(20:22):
There was a gentleman who wason my podcast a couple weeks ago
who beat me up pretty severelyover the annual yield on
farmland and ranch land, becauseapples for apples, farm and
ranch especially ranch is lowerthan farm.
Farm is like two and a half 3%gross annual yield, ranch is
(20:45):
half of that, and he's like boy.
That's.
That's horrible colter, that is.
He's like I can get commercialreal estate with 8%, eight cap
annual yield and then a threeyear IRR of 14% and your three
year IRR is 6%.
(21:08):
With a one cap, he's likethat's just horrible.
And why would anyone?
Why would anyone invest in farmand ranch?
And what I tried?
I didn't get a chance to saywell, it's risk, adjusted it's,
it would be considered core realestate.
It's not value add, it's notfixed and flip, it's not
(21:28):
distressed, it's core realestate and it's about as core as
it gets.
So that's that's my rebuttal toAdam, coming on here and
beating me up the other week.
What are your thoughts, though,on core versus value add class
C office space?
I keep hearing that this isgoing to, like you said, the
(21:49):
variable interest rate, loansand the flight of capital to
other areas.
We keep waiting for thiscommercial real estate crash.
I haven't seen it yet.
Speaker 4 (22:02):
No, but I believe it's probably still another year
or two out, if not three.
Because what's happening behindthe scenes?
Everything that I read andpeople I talk to is right now
banks are trying to work outthat stuff with the current
owners.
Right, you know they're,they're trying to make it work.
So, whether someone's gettingmezzanine loans or some sort of
(22:25):
fill in thing to to have it, butat the same time you're getting
dropping yields.
So your friend who was talkingabout, hey, buying something
with, with cash right, you'recoming in, you're doing
something with it is so muchdifferent than someone that
already holds the real estateand they're going to try and
hold on as long as possible,right, or they they finish with
(22:49):
it and even if they do forecloseor whatever, I mean that's a
long process.
That is not particularly multimillions of dollars buildings I
mean we're not talking about a$500,000 home here, you're
talking about millions ofdollars, you know, probably
let's just say a minimum of twoor three in a C type building,
(23:11):
you know, but it might be fiveor 10 or 15 or 20, you know,
depending upon the building.
But those aren't big buildingshere in Minnesota.
I mean you have some deals likethat, but that have happened.
I think, in terms of ranchersand farmers and those types, I
think the the main mistake, inmy opinion, that they make is
(23:33):
putting too many eggs in thatone basket, whether it's a
certain crop.
I think the best farmers right,they're diversified, they'll
have greenhouses, they'll havedifferent kinds of crops and
things that they have going onand they're testing new things
as opposed to someone thatthey're just in soybean and corn
(23:54):
, right, that's, that's notdiversified.
If corn craters are screwed,you know, so you might be
counting on a yield of one or 2%, but it may not be less than
that potentially.
Now we do know that there's beena lot of foreign buying.
You hear a lot of Bill Gatesand what's happening there.
So, just like in officebuildings, right, you got C
(24:16):
class, b class, a class, I mean,think of ranching and farming
the same way.
Right, there's differentqualities of it.
You have a place that has waterrunning by it.
That's what Bill Gates has beenbuying up.
From what I understand, youprobably know better than I do.
You know, because he wants thewater rights that stuff is
probably going to stay at apremium.
You have something that'sfarther away from water?
Well then, you know, your landprobably isn't worth as much.
(24:39):
It could be more volatilebecause it's not the class A
type, in that I think we can allagree.
I mean generally, farmland, ifyou look at the last 20 years,
has gone up a ton.
Right, I mean it's.
It has appreciatedsignificantly because of people
like Bill Gates, otherbillionaires buying ranches and
(24:59):
farms, the Chinese coming intrying to acquire different
things.
It is a volatile asset class,you know, at the end of the day
it can go up a lot, it can godown a lot because it depends
upon the crops that are beingyielded and what you can do with
it and all that kind of thing.
At least that's my take on itfrom what I see my off.
(25:19):
Base on that or no.
Speaker 3 (25:21):
Well, I want to get your thoughts on this.
I think the paradigm shift mymy parents generation believed
you have to own the land andyour goal was to just buy and
buy and buy, accumulate moreland.
You, you farm and ranch whatyou own and your goal is to own
(25:44):
more.
I think Gen X might be changinga little more, where where
they're going to say, all right,I will own 25%, lease 75% and
as land that cash on cash andyou'll yield for ranches
approaches zero.
Essentially, as that happens, Ithink more people are inclined
(26:06):
to say look, I'll separate offthe, the land investment entity
and I'll transfer that risk tosomeone else, someone else who
needs the portfolio benefits oflow risk, low return, like Bill
Gates.
I'm not going to defend BillGates, but the initial thesis
(26:26):
for him was what can I buy tooffset all this Microsoft stock,
what is the exact opposite ofMicrosoft stock?
And it was farmland.
That's the story.
The other people believe theremight be all terrier motives
there, but so, anyways, you theyounger generations I want to
(26:47):
say are going to be growingtheir operating entity at profit
margins of 30%.
They're going to have the landowning entity.
Someone else can can bear thatrisk and and someone else needs
that portfolio diversification.
So what we're seeing today,talking about your clients,
(27:08):
doctors and some of the moreurban investors, is because
these cap rates, these yields onrural land, farm ranch, are
getting so low.
Institutions are no longerplayers for direct ownership.
But yet, since financing rateshave gone up so high, we're
(27:30):
seeing a flip in that you don'twant to own land, you want to
own the debt on the land, andI'm with them.
I would.
I would much rather own a fiveyear Loan on a apartment
building at 9%, then own theapartment building for the next
(27:51):
five years.
Speaker 4 (27:53):
I think that's part of the diversification I was
referring to earlier.
Right Like, if you look at myland flipping business and what
I do there, we do a lot of ownerfinancing Different size
properties, different types ofproperties, and I have all these
streams of income that arediverse.
I'm not tied to one thing orone person and then on top of
(28:18):
that I run some masterminds andstuff for other land investors
that are like me.
It's another stream of incometo add to what I have.
The same is true, I think, withfarming and ranching, beyond
the kind of crops or the kind oflivestock that you may have.
I think playing the debt side toinvestor money and too, is
(28:38):
incredibly important.
There are many land investors,or a few land investors out
there Now, for example, thatteach a lot about subdividing.
Maybe you should look at landbanking, for example.
If you're a rancher or whatever, take some of that asset and
start dividing it out.
Maybe you could look at ownerfinancing some of it to create
(29:02):
streams of income for yourself.
There's so many ways but thenthat vertical to make money and
do different things with it.
You could still stay tied toland if you want to, but just
being a landholder, as you'resaying, I think isn't the wisest
financial idea.
It should be part of it.
No doubt that should be a partof what I think a lot of people
(29:25):
do Real estate farming, whatever.
That should be a part ofsomeone's overall portfolio of
having a long term real estateasset.
But you should have differentstreams of income coming in, so
if one thing isn't working, hey,you still have this other asset
that is working for you.
Speaker 3 (29:44):
And one thing that has affected.
You'll probably start seeingthis in the news clippings, the
headlines.
What we're seeing is, yeah,those 5.5% CDs.
Right now People would muchrather put their money into a CD
than a ranch that appreciatesthat 5.5% annually.
People are just saying look theappreciation rate, the
(30:09):
risk-free rate, they're equalright now.
So I would, given theopportunity for risk-free or
appreciation, I would rather gowith risk-free and it's more
liquid.
That's tough for me to competewith right now.
Speaker 4 (30:23):
That's tough, but I think how much would you say
ranchers have appreciated by,for example, in the last 15
years, 20 years.
Speaker 3 (30:34):
Oh, it's even so 20 years, even taking into account
the craziness of 2021, you'restill annualized.
Kager is going to be 6% to 9%,5% to 8%, 6% to 9% right around
there, depending on certainareas.
(30:55):
Yeah, certainly.
Speaker 4 (30:56):
Different assets, different locations, a lot of
kinds.
Speaker 3 (30:58):
Yeah.
Speaker 4 (31:00):
Well, I think there's no doubt that that's really
attractive.
Plus, it's liquid.
When you have money in the bankand you're able to make 5% to
6% and you have the backing ofthe US government, which some
people might argue isn't great,but most people, I think, would
think that that's a good thing.
However, at the same token,that ain't going to be
(31:23):
guaranteed that way forever,right, that's for right now,
this period of time.
If you look two years ago, youweren't getting that, you
weren't getting anywhere closeto that, right?
So you're not locked into thatrate for five years, 10 years,
15 years.
So if you want to get asustainable, nice rate of return
(31:44):
, I would suggest that's not theplace for that Short term.
Absolutely Next year or two, ifthere is a recession, guess
what?
Those rates will drop and thenit's not going to look so
attractive anymore.
Maybe they go up a little bitin between now and then, I don't
know.
But what I do know is that Iwouldn't want to put all my eggs
in that basket either, right?
(32:04):
I think I have some money there.
I have $150,000 sitting inmoney market right now.
Me as a financial advisor,landflipper.
Of course, I have my stockportfolio.
I have other things that aremore aggressive.
I have my landflipping.
It's just all part of thebigger picture.
So if someone has, let's say, anet worth of $10 million and
(32:26):
you have $500K in safe stuff, Ithink that's a great idea.
If you have $5 million in it,that's probably not such a good
idea Right meaning or might evenlose to inflation.
So you know, it's like beinginvested in gold Generally it
(32:48):
matches inflation, but you don'thave the liquidity that you do
in bank accounts.
So that's my take on it is yes,those rates look extremely
attractive, but things likefarms, ranches, land, you know,
if you're playing the asset inmultiple ways, like we're
talking about, that's the way todo it.
Do the debt side, do the equityside, do subdivides, do owner
(33:10):
financing on some lots togenerate income for yourself.
You know, all that stuff Ithink is good and strong to do.
Speaker 3 (33:17):
So that would be one.
It's kind of like you're beinggentle with your client.
Right now is what I hear,Rather than saying you need to
diversify, get into mini storageand triple net auto zone or a
Walgreens property, commercialreal estate class C, class A,
(33:43):
you know you need to diversify.
You're kind of saying well,your comfort zone is obviously
farm and ranch, you're highlyconcentrated.
Is there a way to diversifywithin that asset?
Speaker 4 (33:55):
Right, totally.
And the reason I feel stronglyabout that and I think you know
there's advantages in stocks,bonds, mutual funds, the kind of
stuff I do as a financialadvisor.
There's tax benefits that youcan get from those kinds of
things that you can't get fromraw land and farming and whatnot
.
But, on the other hand, I'm notgonna make a leopard be able to
(34:20):
change its spots, right.
So, and there's the reality isthere's a lot of wealth and
value in farming and ranchingand stuff like that.
So there are other advisorsthat would say, oh, you need to
have 50% of your money in stocks.
Well, I don't agree with that.
(34:40):
You know, if someone got thisfar and has a portfolio of five
to 10 million bucks, who am I toargue with them on where their
money should be?
They've done well with whatthey have, you know.
Particularly too, I know for meand the reason I got into land
flipping is I didn't wanna justhand over my hard earned money
(35:02):
to somebody else.
I wanted to dig in it, get init, get my hands dirty and run a
business that helped me be ableto have some measure of control
over where the money's beinginvested, how it's going, and
that's not for everybody.
There's plenty of people outthere that run syndications that
(35:24):
, for many busy doctors, they doget into, whether it's the
things that you mentioned,self-storage or multifamily or
whatever.
And here's the reality is manyof those things have an
incredibly high amount of feesbecause you're paying someone
else for your time right, and soif you can spend some of your
(35:47):
own time to do this stuff, thenyou're making that much more
money rather than paying it tosomeone else and I say this as a
financial advisor getting paidby other people to manage their
money.
And reality is those peoplethat I generally work with they
don't understand it.
They might read about it some,they might have some degree of
understanding, but they don'tcare about it, they don't.
(36:10):
I mean, they care about it, butthey don't like it, they don't
enjoy it, and so I step in tohelp people save the time and
not have to think about it asmuch, so that way they know, hey
, someone's on their side, theycan bounce ideas off of me.
We talk about taxes, we talkabout investments, we talk about
all that kind of stuff, but forsomeone, I think, that has an
(36:31):
established portfolio, yes, somediversification is good, but
you shouldn't be invested in 30things, because how are you
gonna keep your eye on 30different things and no one
person from another when you'vehanded your money off to 30
different people that arerunning syndications and
(36:51):
convincing you they're the bestthings since sliced bread, which
, in fact, I think you're gonnasee more and more of the emperor
walking around with no clotheson.
Right On some of these peoplethat were highly leveraged and
now they have these debts thatare coming up where they got to
pay a lot more in interest thanthe cash line gonna be there to
support the thing, so Well, youtook, you hit on something.
Speaker 3 (37:16):
I'm actually working on a syndication for ranch
investing.
But one thing that in myresearch you look, go to bigger
pockets forum.
Some of these real estateinvesting communities and, yeah,
(37:37):
a lot of those people.
They don't like syndications,they don't like crowdfunding
platforms.
They believe it's too high feed, they don't like investing with
someone they don't know.
And that's understandable,because actually a lot of these
people on these forums areprofessionals themselves.
(37:58):
So they have a differentopportunity costs.
They have a different skill set.
They don't need to pay someoneelse for someone else's time and
expertise and experience.
And I get that for the averageperson.
I'm happy to pay my financialadvisor $4,500 a year or
(38:18):
whatever it is, because I thinkhe balances me, I can be
impulsive and he's kind of likean insurance policy.
He's there to check me before Iwreck me.
So I think when it comes tosyndications, there is, if you
(38:41):
don't have the experience andthe expertise and the time, yeah
, those the high fees, therelationship would be one tough
one to get over.
But I do want to hear moreabout your mastermind group in
this land flipping.
Tell me about that.
Speaker 4 (38:59):
Yeah, so basically we have a.
The land flipping community issmall, I'm sure, in the same way
you know ranching.
I mean a lot of the people knoweach other, right?
You know the, particularly incertain states or whatever.
In this case, nationally andinternationally, there's a lot
(39:20):
of people that have gotten intobuying and selling raw vacant
land and I was the kind ofperson I never wanted to come up
with a course because it takesso much time to do it and then
you have to maintain it.
But there are people that havethem.
I didn't want to do like a highlevel coaching thing because I
know the time and effort thatgoes into that.
(39:43):
You have to usually do whatwe're doing right here of having
another podcast, you know,having funnels, doing ads, all
this stuff.
That took time, which I lovebeing a financial advisor and I
didn't want to give that up ontop of doing the land flipping.
But I loved meeting with people, so I basically, for free,
started getting groups of peopletogether seven to 10, we would
(40:05):
meet for two days and reallyjust spend deep time with one
another, of hanging out, sharing, breaking bread together,
sharing ideas, you know, justhaving an environment where
people know they're not gonnaget sold something that were
truly all there to help oneanother, and at the time I
(40:25):
wasn't charging for it, so I hadno financial incentive to do it
.
It was all about buildingrelationships.
And so finally, this last yearI started doing some paid events
, which I've been playing withsome of the price points and
whatnot.
But to give you an idea, we hada 50 person event here in May
the one for 2024 sold out withina week of that one closing.
(40:49):
So I guess we must have beendoing something.
Well, we have one going toPuerto Rico with a group of 10
of us all together in January.
Possibly we're doing Italy nextOctober.
So we're seeing some coolplaces and I get to have great
relationships, make a little bitof money, but it's nothing
compared to my usual businesses.
(41:09):
I just do it for therelationships and the passion
and really having theopportunity to get to know
people.
I love talking about businessand land and markets and all
that stuff, and so it just itfeeds my soul and it's been a
lot of fun.
It's really meant forexperienced people, not new
people.
This is not for someone justwanting to get into the business
(41:32):
.
There's plenty of other peoplethat have courses and coaching
programs.
That I certainly don't do that.
I'd highly recommend severalpeople out to folks that are
interested in getting going.
This is really meant for peoplethat are buying and selling
land regularly.
Speaker 3 (41:48):
Is there a website for that?
I want you to plug your CFA,your financial advising website,
as well If you have themastermind out there, or a
community or a group, socialmedia group.
Speaker 4 (42:03):
Yeah, actually, I don't have a social media group
specifically for it.
I do have a website that, to behonest with you, I can't
remember if we took it down ornot, because we had our last
event and it sold out.
Landunconferencecom is thewebsite.
(42:24):
I think it's downright thissecond actually, because we
don't have any events alreadysold out that we have, except
the Italy one that's coming upnext October.
But if people want to check itout, one of my partners in that
event space is Seth Williamsfrom RE-Tipster.
Seth is an amazing, awesome manof God, good guy and very
(42:49):
trustworthy dude.
He has courses.
He doesn't do coaching but hedoes courses and has a ton of
YouTube videos all on the space,including one of the event is
on Seth's YouTube channel.
Speaker 3 (43:03):
What is his again, Seth?
Speaker 4 (43:06):
RE-Tipstercom For real estate tipster.
Re-tipstercom.
Speaker 3 (43:10):
Okay, that's Seth.
Who again?
Seth Williams?
Seth Williams, okay, are youtwo at all personalities where
there's a LinkedIn or an Xthread that people can follow
you and get?
Your daily update.
Speaker 4 (43:25):
I don't do that stuff but certainly people could go
to my website.
I do have a Facebook accountfor Dave Deniston.
Cfa is where someone couldfollow on social media.
I don't post stuff daily.
I do a lot of family photos andthere's some good financial
things on there.
Certainly, my podcast is agreat way to keep up with me,
(43:49):
which you can go todrfreedompodcastcom.
I usually put out a new podcastevery week which I talk about
all these different things thatwe're talking about today, which
you can do search for Freedomfor more physicians, or
drfreedompodcastcom to go checkthat out.
Speaker 3 (44:06):
Dave, I'm going to be straightforward with you.
It's going to be very difficultto get my wife to change from
true crime podcasts to the DrFinancial Freedom podcast.
She does like those true crimeones.
Speaker 4 (44:25):
Those are better.
I'll be honest, my podcast isfun and educational, but it's
not as good as true crime.
Speaker 2 (44:31):
I can't compete.
Speaker 4 (44:32):
I can't compete.
My wife doesn't even listen tomy podcast.
I'm not offended, it's allright.
Speaker 3 (44:37):
Yeah no, she'll never hear mine.
That's why I can reference herand not take shit at home for it
.
Speaker 4 (44:44):
That's right.
Speaker 3 (44:44):
Well, you have a beautiful family in the
background and, for anyone who'sinterested, definitely reach
out to Dave on the websiteDaveDenistoncom the podcast if
you'd like to hear more.
And is this mastermind group?
Is this predominantly yournetwork within Minnesota or is
(45:06):
it national?
Speaker 4 (45:07):
No, it's national.
Speaker 3 (45:08):
Okay.
Speaker 4 (45:08):
Literally.
People from all over thecountry, even the world, are
kind of part of it mostly US, ofcourse, but there's some people
in the Philippines, some peoplein Italy that are doing land
flipping in the United States,that are part of my list, if you
will, of other land investors.
So, yeah, yeah.
Speaker 3 (45:28):
Well, dave, appreciate you coming on the
Ranch Investor podcast andbearing with me as I struggle
through losing my voice thisweek.
But this has been good man.
You've hit on some good thingsand I think people are going to
have questions and I encourageeveryone to Whatever platform
(45:48):
they're using social media goahead and shoot us your
questions and if they'restraight to Dave, I can try to
relay them, but we definitelylike to hear your feedback.
So please give us good, bad,otherwise feedback on any social
media or Discord channel wehave.
Speaker 4 (46:05):
Love it.
Thank you, Colter.
Speaker 1 (46:06):
Thank you for having me Listeners of the Ranch
Investor podcast who arereceiving this immense value for
free.
Thanks for tuning in.
I do have an ask in place ofadvertising.
I do not monetize this onSpotify, apple, anywhere.
I don't click the monetizebutton.
(46:26):
So I do have to get a plug inhere and I ask what I'd like
from you is to hear somefeedback.
So, on our social media, pleaseshare this episode.
All I ask in return for nothaving promotions and
advertising is that you sharethis, send a text, get it out
(46:49):
there so more people can enjoywhat we're producing.
Thanks for tuning in.
Speaker 2 (46:53):
We feature only the best accredited and established
rural real estate professionalswho analyze, transact and manage
billions of dollars annually.
No newbies here.
Click Subscribe on yourstreaming platform so you know
when the latest episode hasdropped.
I'm Colter DeVries, owner of Ranch Investor Advisory
and Brokerage Services.
As a former commercial nagbanker, my main reason for doing
this podcast is to simply gaugethe market's appetite for
crowdsourcing investment in aranch real estate fund.
Speaker 2 (00:15):
The Ranch Investor podcast, curated by subject
matter experts to give youimmense benefit, because we
believe your time is valuable.
Speaker 3 (00:25):
Dave, welcome to the Ranch Investor podcast.
Thanks for coming on.
Thank you?
Speaker 4 (00:30):
Yeah, glad to be here , my friend.
Speaker 3 (00:32):
I hope you can take up the majority of time telling
me about what doctors do withtheir money, as we also get into
retirement, succession planning, estate planning.
That's a big issue in farm andranch right now and what you've
seen some of your clients do.
You're a certified financialadvisor.
(00:53):
You do some small businessdeals on your own outside of
your CFA services.
You do some land flipping.
You've got some experience allaround that I'm glad to have you
on.
You can share that with ouraudience.
We do need to get into taxreduction planning, retirement
(01:14):
income, some of the familywealth planning and estate
planning.
As the question comes up quiteoften, dave, is what do our
counterparts in the urban areasdo with all their money?
What do doctors do with theirmoney?
What do lawyers do with theirmoney?
And so that, as we have anaging population in farm and
(01:37):
ranch, the average farmer andrancher is over 65 years old and
they've got immense equity,immense wealth and assets.
But there is a big push toeducate and I hate using that
word because it sounds likepompous when it's like you need
(01:59):
to educate yourself, like I'mgoing to give you an education.
I hate using that word butbring information.
How about that?
There's a huge push to bringinformation to farmers and
ranchers when it comes tomanaging investments, financial
advising, estate planning,retirement planning.
Launch in, dave.
(02:20):
Give me your background andthen help me take over from here
so I can give this voice arrest.
Speaker 4 (02:26):
Yeah, you bet Colter.
Well, I think, as I think,about ranchers and farmers, and
we have some of those, thosekind of clientele.
In my financial planningbusiness we deal with them, and
in our land flipping businessthat we do there, I think about
that group and I mean, thesepeople are the salt of the earth
(02:49):
, regular folks.
They're to me, the ideal personbecause they have a lot of
wealth.
But you would never know it ifyou talk to them, right?
At least the majority of folksthat are in that position, many
farmers in particular.
Man, you think about goingthrough COVID and what happened.
(03:09):
I mean I was like gettingsmacked in the face right where
you were planning on selling allthese crops and you have to go
let it rot in the fields for awhile and you're often land rich
and cash poor, and doctors andmany of the small business
owners, people like that that Ioften deal with in the financial
(03:30):
planning.
They're kind of the opposite,right, they tend to be more cash
heavy and cash assets, maybe agood deal of real estate, but
certainly it's a smaller portionof their net worth than
ranchers and farmers and thosekinds of people which, what most
of us do that are ranchers andfarmers.
We go out and buy more land,right, because we know it.
(03:52):
We understand it, we can, to adegree right, work with it and
we know that if we plant corn,plant soybeans, plant wheat,
whatever, what that yield mightlook like, my cash flow might
look like not that we'reguaranteed it, but at least we
have an idea of it.
And for me, a little bit aboutmy background.
So I've been in the financialplanning space for 20 plus years
(04:18):
now at this particular point.
So I'm 42, to give everyonecontext in terms of who.
I am originally from SouthernCalifornia, although I have
roots in the farm world.
In Manchester, washington,which is across the water from
Seattle.
We have an old family farm thatwas there which has been, over
the years, gotten to smaller andsmaller and smaller chunks to
(04:41):
now it's left to the oldVictorian style farmhouse on the
water, with a couple acres ofland there still on the water,
which is awesome.
Speaker 2 (04:51):
So I come from that stuff.
Speaker 4 (04:53):
Yeah, it's on Deniston Lane.
My last name is Deniston, sothe family lane you know is
still there and probably pointto that and my heritage.
Because I look at my family andhow I was raised, you know work
ethic was incredibly importantand and treating people
(05:13):
honorably and fairly wasimportant, and the value of real
estate was something that I wasbrought up with.
That was incredibly important.
My folks are real estateinvestors.
My great aunt and uncle didwell in real estate and it's as
part of as I've evolved as aperson.
(05:34):
You know real estate, landfarming, those kinds of things
have appealed to me more andmore and more.
If someone was to look at thisvideo, I'm wearing a collared
shirt right now.
You know I don't look the part.
I look like a white collar guy,which of course, I have a big
chunk of that in me.
But I look at how I started out20 years ago, right, you think
(05:55):
about when I started in thisindustry.
You know the Internet wasdefinitely here.
We were just getting past dialup and all the good old AOL
stuff and cell phones evolvedand you know life has been
moving so quickly.
I know many farmers now.
Right, I mean, you can do somuch more with machines and
computers and GPS coordinatesand telling tractors and whatnot
(06:20):
where to go and how to do itwithout having to do all the
work, and it's so much of adifferent world out here today.
So for me, in my journey, Igrew up in California, went to
school in Seattle and I've beena small business owner basically
since I got out of college.
So originally I went in myfirst year in financial planning
(06:42):
and knocked on 2,000 doors totry and get clients in the snow,
in the wind, in the rain, inbeautiful sunshiney weather and
I thought I was a pretty smartguy.
But I'll tell you, man, thathumbled the heck out of me in
going through that process andthen-.
Speaker 3 (07:03):
That's hard work.
That's hard work like farmingand ranch and knocking on doors
and building your book right outof college.
Speaker 4 (07:10):
Oh yeah, no, it's you .
You definitely grow toappreciate an office and growing
up, you know, and earning mystripes in the industry, and so
ended up working for another guyand got to a point where had my
great aunt had passed away,received some money, we had no
(07:33):
debt on our house on anything,you know, we owned it all, which
is the way I always wanted tolive.
But then I got to a space in mycareer where I wanted to make
an acquisition and so, just likemany farmers and ranchers in
this case, I acquired financialplanning clients and so, rather
than trying to grow itorganically right, I grow it and
go out and make an acquisitionto try and speed up the process.
(07:57):
And unfortunately, the closingdate of that was August 1st 2008
, which was awesome, fantastictiming.
Speaker 3 (08:05):
Oh, that is my listeners.
They get tired of me saying it,but I have impeccable timing
like that as well, dave.
What happened with you, Colter?
I timed the cattle marketexactly wrong and, yeah,
immediately.
Much like the 08 financialmarkets, in real estate, they
(08:27):
dropped 40%.
So did the cattle market in2015, which I have a listener
who told me he's heard it enoughand so I won't go into it any
further.
Dave, love it man.
Speaker 4 (08:42):
Yeah, so we go through this process where I
literally had no debt, no,nothing else, and I had all this
debt after this acquisition andI'm sure many people listening
to this can relate to that asyou buy a new piece of land and
it didn't work out the way thatyou thought it would, and I'm
now just clawing and scraping toget my way back up and I feel
(09:09):
like I earned my inheritance inthat time period.
It was handed to me.
I didn't blow it, but Iinvested it and, man, it was
hell to get back through that,but we made it through that time
period and I swore at thatparticular time I was never,
ever going to be dependent againon one thing, which is what led
(09:31):
me to multiple streams ofincome and doing different
things, including thelandflipping that I'm doing
today, which kind of brought meback full circle to my family
and how the family grew up and Iwas raised and it's been a
beautiful but difficult journeyAlong the way.
By the way had two beautifulchildren.
(09:53):
My wife and I have been married20 plus years now.
My oldest is in college and myyoungest is our little miracle
girl.
She was less than a pound whenshe was born.
Speaker 3 (10:03):
Oh, wow 12.4 ounces.
Oh, my goodness.
Speaker 4 (10:07):
Wow.
And she was super early 23weeks justationally, so 17 weeks
earlier than she should havebeen and it's been a journey
getting through that and that'spart of the reason why I focus
on doctors.
I'm giving back.
So if you ever listen to mypodcast, the Freedom Formula for
Physicians, that's me justgiving back to the physician
(10:28):
community.
It's been a passion project forthe last seven, eight years or
so.
Speaker 3 (10:34):
Well, my wife is a, she's a PA and, as many ranchers
have joked with me, so I lostmy ass ranching once before.
The joke is I was a brokerancher.
Therefore I had to become aranch broker.
And now they all my friends saywell, your wife's a PA, Now you
(10:56):
can go back to ranching.
Because behind every goodrancher is a wife with a town
job, and she has anexceptionally good town job,
which means I could be a greatrancher with her off-arming come
.
Speaker 4 (11:10):
Man, because it's so variable, right, I mean it's?
You're investing all the timewith ranching, whether cows or
horses or whatever, and havingto decide what stock do you sell
?
What stock do you buy?
Speaker 3 (11:25):
all that kind of thing.
And what?
What Freedom?
What was the podcast?
Speaker 4 (11:29):
one more time the Freedom Formula for Physicians
is the title Freedom.
Speaker 3 (11:32):
Formula for Physicians.
Speaker 4 (11:34):
Yes.
Speaker 3 (11:36):
Well, thanks for coming on, because it is I do
want to get into.
That is one question I had, andI actually want to jump right
into a tangent, because you andI have this similar story about
not so impeccable timing.
Yeah, what are your thoughts onwhere we're at today?
(11:56):
Are we overvalued on realestate and equities?
Is there cause to be skepticalright now?
Speaker 4 (12:07):
Well, there's always cause to be skeptical, colter,
there's no doubt about it, right?
You know I get this questionall the time, every year,
multiple times of the year,doesn't matter the year.
But yes, there are concerns,right?
You know?
I think with a lot of differentthings, whether stocks or real
(12:28):
estate or bonds.
You know there's really, exceptthe money in the bank, you know
, now you can actually earnmoney in the bank for the first
time in a decade actually morelike 20 years.
You know, you could earn 5% onyour safe money, which is
incredible considering that wewere making zero to 1% for like
(12:50):
15 years out of that money.
So it's a much differentenvironment than a couple of
years ago in terms of paperassets like stocks, bonds,
mutual funds.
In terms of real estate, I,literally right before we got on
this call, I was having a gueston my podcast.
We were talking about realestate and, in particular,
multifamily and office andself-storage, and we're talking
(13:16):
about how so many operators hadgot floating rate debt in 2019,
2018, 2020, and that floatingrate debt might have been locked
in for five to seven years.
Well, here we are now, right,starting 2024, 2025, 2026, 2027,
(13:37):
we're gonna start to see.
You know who's naked underneaththeir coat, right?
You know it's gonna be reallyinteresting to see how the next
couple of years play out.
Of course, there's all the crazygeopolitical stuff that
something always seems to behappening.
But this feels a little scarier, right, you got Russia and
(13:58):
Putin with their finger on thenuclear devices.
That's the threat.
That's scary of it.
We've got stuff going on inIsrael and Palestine and they're
that feeling of gosh.
Is World War III across thenext year coming to us?
On the other hand, I wouldpoint out, with savings rates,
(14:20):
you know now getting nice yieldson investments like we're
seeing, rates, like I said, wehaven't been seeing it 15, 20
years, and there's a lot more ofan attraction now to the safer
stuff.
On the other hand, employmentyou look at the economy.
There's been talk of recessionever since COVID started, which
(14:41):
we had a little bit of arecession, but then bam, the
government throws downhelicopters worth the money and
things kept chugging along.
And here we are today.
Job market's still growing.
I'm not saying it's easy, butthere's still jobs being created
every month.
That got across all kinds ofindustries.
There's certainly no negativeGDP even in sight in terms of
(15:07):
gross domestic product theeconomy right.
We're not in a recession, we'renot close to a recession.
The Fed is now put the brakeson raising rates, or at least
pumping the brakes to not beraising by three quarters of a
percent, which means all of usfor you and me and everyone else
, that means our borrowing costs.
(15:28):
Okay, we can more know, hey, ifwe wanna take out some debt to
invest in our businesses, wehave a better idea of what
that's gonna be right.
So there's some of theseunknowns that have become knowns
in the economy.
So I'm cautiously optimistic ishow I would say it.
I think you look at this lastyear, for example, tech stocks
(15:52):
oh my God, they have beenscreaming.
If you look at the big techstocks, they're up like 40 to
50% for this year.
Now, if you look at everythingelse outside of tech like you
look at consumer goods companiesjust think of things you buy at
the grocery store laundry,detergent, soda, stuff like that
(16:15):
those are down this year.
Utilities big publicly tradedpower companies are down this
year.
There's a list of about energy,oil companies are down this
year by five or 6%.
So certain sectors are gettinghit harder.
Well, guess what I'll bet younext year, that whole flight's
(16:36):
gonna flip and tech probablywon't be doing as well and maybe
some of these other things willstart doing better.
So those are some of the thingsthat I'm looking at I'm talking
about.
I think a lot of the dividendstocks have gotten hit much
better.
For dividends, for example, nowyou have higher yields because
interest rates have gottenhigher.
So I think there's some reallyattractive stuff out there.
(16:59):
But, yes, there are risks.
There are things to beconcerned with, things to keep
an eye on, like commercial realestate, for example, how that
impacts banks.
You think of a lot of banksthat might loan farmers and
ranchers money.
Well, they might be pullingback and I'd be asking people to
put more cash into deals thanthey used to all that kind of
(17:20):
stuff.
What are you saying on your end?
Speaker 3 (17:22):
That's right and actually we like to say and I'm
gonna try, I'm gonna prefacethis by saying I'm not just
putting my sales pin.
Everything is spin cycled whenyou're a salesman, a broker.
But the World War III analogyin private conversations, I
(17:45):
guess I am gonna blast it andbroadcast it right now.
But that's good for my businessRural real estate and a stable
farmland producing United States, domestic food production,
global instability, supplychains, war overseas I don't
(18:06):
have the data to support this.
I'll flat out say I don't knowwhat the correlation is, but I
presume that it's good for mybusiness.
World War three is and that's.
You know, that's a veryMachiavellian thing to say.
I'm not, I'm not wantingrockets flying over Israel and
(18:30):
Palestine, that's.
I don't personally value thatand want that, and I don't want
that in the Ukraine either.
So I think the long term outlookyes, there is a lot of
uncertainty and skepticism.
It's even in these safe quote,unquote safe assets of farmland
(18:52):
which banks are.
Yes, now you're going to haveto come with more equity, more
down payment.
The debt service coverage ratiodoesn't look as good as it used
to, especially when commoditieswe're at a peak.
They were very high andvolatility High prices means
high volatility, means expensiveoptions, because the the
(19:17):
probability, the possibility ofOf your expected income dropping
by half, that probability isnow increasing.
That's more expensive In themarketplace.
All of that, all of that beingsaid, I think land is going to
do what it's always done, justslow and steady.
(19:39):
Yeah, we've had some bubbles,you know, in Minnesota, north
Dakota, you see some recordsetting farmland prices $19,000
an acre, which is about $10,000higher than the farmer next door
wants it to be if he's buying,but he's also sitting on that
same land.
That just went up that much.
(20:00):
Yeah, it's full of paradoxes.
What I am, what I'm curious,though, is economics, is the
movement of resources from areasof low yielding to high
yielding, and I had thelisteners can attest that.
(20:22):
There was a gentleman who wason my podcast a couple weeks ago
who beat me up pretty severelyover the annual yield on
farmland and ranch land, becauseapples for apples, farm and
ranch especially ranch is lowerthan farm.
Farm is like two and a half 3%gross annual yield, ranch is
(20:45):
half of that, and he's like boy.
That's.
That's horrible colter, that is.
He's like I can get commercialreal estate with 8%, eight cap
annual yield and then a threeyear IRR of 14% and your three
year IRR is 6%.
(21:08):
With a one cap, he's likethat's just horrible.
And why would anyone?
Why would anyone invest in farmand ranch?
And what I tried?
I didn't get a chance to saywell, it's risk, adjusted it's,
it would be considered core realestate.
It's not value add, it's notfixed and flip, it's not
(21:28):
distressed, it's core realestate and it's about as core as
it gets.
So that's that's my rebuttal toAdam, coming on here and
beating me up the other week.
What are your thoughts, though,on core versus value add class
C office space?
I keep hearing that this isgoing to, like you said, the
(21:49):
variable interest rate, loansand the flight of capital to
other areas.
We keep waiting for thiscommercial real estate crash.
I haven't seen it yet.
Speaker 4 (22:02):
No, but I believe it's probably still another year
or two out, if not three.
Because what's happening behindthe scenes?
Everything that I read andpeople I talk to is right now
banks are trying to work outthat stuff with the current
owners.
Right, you know they're,they're trying to make it work.
So, whether someone's gettingmezzanine loans or some sort of
(22:25):
fill in thing to to have it, butat the same time you're getting
dropping yields.
So your friend who was talkingabout, hey, buying something
with, with cash right, you'recoming in, you're doing
something with it is so muchdifferent than someone that
already holds the real estateand they're going to try and
hold on as long as possible,right, or they they finish with
(22:49):
it and even if they do forecloseor whatever, I mean that's a
long process.
That is not particularly multimillions of dollars buildings I
mean we're not talking about a$500,000 home here, you're
talking about millions ofdollars, you know, probably
let's just say a minimum of twoor three in a C type building,
(23:11):
you know, but it might be fiveor 10 or 15 or 20, you know,
depending upon the building.
But those aren't big buildingshere in Minnesota.
I mean you have some deals likethat, but that have happened.
I think, in terms of ranchersand farmers and those types, I
think the the main mistake, inmy opinion, that they make is
(23:33):
putting too many eggs in thatone basket, whether it's a
certain crop.
I think the best farmers right,they're diversified, they'll
have greenhouses, they'll havedifferent kinds of crops and
things that they have going onand they're testing new things
as opposed to someone thatthey're just in soybean and corn
(23:54):
, right, that's, that's notdiversified.
If corn craters are screwed,you know, so you might be
counting on a yield of one or 2%, but it may not be less than
that potentially.
Now we do know that there's beena lot of foreign buying.
You hear a lot of Bill Gatesand what's happening there.
So, just like in officebuildings, right, you got C
(24:16):
class, b class, a class, I mean,think of ranching and farming
the same way.
Right, there's differentqualities of it.
You have a place that has waterrunning by it.
That's what Bill Gates has beenbuying up.
From what I understand, youprobably know better than I do.
You know, because he wants thewater rights that stuff is
probably going to stay at apremium.
You have something that'sfarther away from water?
Well then, you know, your landprobably isn't worth as much.
(24:39):
It could be more volatilebecause it's not the class A
type, in that I think we can allagree.
I mean generally, farmland, ifyou look at the last 20 years,
has gone up a ton.
Right, I mean it's.
It has appreciatedsignificantly because of people
like Bill Gates, otherbillionaires buying ranches and
(24:59):
farms, the Chinese coming intrying to acquire different
things.
It is a volatile asset class,you know, at the end of the day
it can go up a lot, it can godown a lot because it depends
upon the crops that are beingyielded and what you can do with
it and all that kind of thing.
At least that's my take on itfrom what I see my off.
(25:19):
Base on that or no.
Speaker 3 (25:21):
Well, I want to get your thoughts on this.
I think the paradigm shift mymy parents generation believed
you have to own the land andyour goal was to just buy and
buy and buy, accumulate moreland.
You, you farm and ranch whatyou own and your goal is to own
(25:44):
more.
I think Gen X might be changinga little more, where where
they're going to say, all right,I will own 25%, lease 75% and
as land that cash on cash andyou'll yield for ranches
approaches zero.
Essentially, as that happens, Ithink more people are inclined
(26:06):
to say look, I'll separate offthe, the land investment entity
and I'll transfer that risk tosomeone else, someone else who
needs the portfolio benefits oflow risk, low return, like Bill
Gates.
I'm not going to defend BillGates, but the initial thesis
(26:26):
for him was what can I buy tooffset all this Microsoft stock,
what is the exact opposite ofMicrosoft stock?
And it was farmland.
That's the story.
The other people believe theremight be all terrier motives
there, but so, anyways, you theyounger generations I want to
(26:47):
say are going to be growingtheir operating entity at profit
margins of 30%.
They're going to have the landowning entity.
Someone else can can bear thatrisk and and someone else needs
that portfolio diversification.
So what we're seeing today,talking about your clients,
(27:08):
doctors and some of the moreurban investors, is because
these cap rates, these yields onrural land, farm ranch, are
getting so low.
Institutions are no longerplayers for direct ownership.
But yet, since financing rateshave gone up so high, we're
(27:30):
seeing a flip in that you don'twant to own land, you want to
own the debt on the land, andI'm with them.
I would.
I would much rather own a fiveyear Loan on a apartment
building at 9%, then own theapartment building for the next
(27:51):
five years.
Speaker 4 (27:53):
I think that's part of the diversification I was
referring to earlier.
Right Like, if you look at myland flipping business and what
I do there, we do a lot of ownerfinancing Different size
properties, different types ofproperties, and I have all these
streams of income that arediverse.
I'm not tied to one thing orone person and then on top of
(28:18):
that I run some masterminds andstuff for other land investors
that are like me.
It's another stream of incometo add to what I have.
The same is true, I think, withfarming and ranching, beyond
the kind of crops or the kind oflivestock that you may have.
I think playing the debt side toinvestor money and too, is
(28:38):
incredibly important.
There are many land investors,or a few land investors out
there Now, for example, thatteach a lot about subdividing.
Maybe you should look at landbanking, for example.
If you're a rancher or whatever, take some of that asset and
start dividing it out.
Maybe you could look at ownerfinancing some of it to create
(29:02):
streams of income for yourself.
There's so many ways but thenthat vertical to make money and
do different things with it.
You could still stay tied toland if you want to, but just
being a landholder, as you'resaying, I think isn't the wisest
financial idea.
It should be part of it.
No doubt that should be a partof what I think a lot of people
(29:25):
do Real estate farming, whatever.
That should be a part ofsomeone's overall portfolio of
having a long term real estateasset.
But you should have differentstreams of income coming in, so
if one thing isn't working, hey,you still have this other asset
that is working for you.
Speaker 3 (29:44):
And one thing that has affected.
You'll probably start seeingthis in the news clippings, the
headlines.
What we're seeing is, yeah,those 5.5% CDs.
Right now People would muchrather put their money into a CD
than a ranch that appreciatesthat 5.5% annually.
People are just saying look theappreciation rate, the
(30:09):
risk-free rate, they're equalright now.
So I would, given theopportunity for risk-free or
appreciation, I would rather gowith risk-free and it's more
liquid.
That's tough for me to competewith right now.
Speaker 4 (30:23):
That's tough, but I think how much would you say
ranchers have appreciated by,for example, in the last 15
years, 20 years.
Speaker 3 (30:34):
Oh, it's even so 20 years, even taking into account
the craziness of 2021, you'restill annualized.
Kager is going to be 6% to 9%,5% to 8%, 6% to 9% right around
there, depending on certainareas.
(30:55):
Yeah, certainly.
Speaker 4 (30:56):
Different assets, different locations, a lot of
kinds.
Speaker 3 (30:58):
Yeah.
Speaker 4 (31:00):
Well, I think there's no doubt that that's really
attractive.
Plus, it's liquid.
When you have money in the bankand you're able to make 5% to
6% and you have the backing ofthe US government, which some
people might argue isn't great,but most people, I think, would
think that that's a good thing.
However, at the same token,that ain't going to be
(31:23):
guaranteed that way forever,right, that's for right now,
this period of time.
If you look two years ago, youweren't getting that, you
weren't getting anywhere closeto that, right?
So you're not locked into thatrate for five years, 10 years,
15 years.
So if you want to get asustainable, nice rate of return
(31:44):
, I would suggest that's not theplace for that Short term.
Absolutely Next year or two, ifthere is a recession, guess
what?
Those rates will drop and thenit's not going to look so
attractive anymore.
Maybe they go up a little bitin between now and then, I don't
know.
But what I do know is that Iwouldn't want to put all my eggs
in that basket either, right?
(32:04):
I think I have some money there.
I have $150,000 sitting inmoney market right now.
Me as a financial advisor,landflipper.
Of course, I have my stockportfolio.
I have other things that aremore aggressive.
I have my landflipping.
It's just all part of thebigger picture.
So if someone has, let's say, anet worth of $10 million and
(32:26):
you have $500K in safe stuff, Ithink that's a great idea.
If you have $5 million in it,that's probably not such a good
idea Right meaning or might evenlose to inflation.
So you know, it's like beinginvested in gold Generally it
(32:48):
matches inflation, but you don'thave the liquidity that you do
in bank accounts.
So that's my take on it is yes,those rates look extremely
attractive, but things likefarms, ranches, land, you know,
if you're playing the asset inmultiple ways, like we're
talking about, that's the way todo it.
Do the debt side, do the equityside, do subdivides, do owner
(33:10):
financing on some lots togenerate income for yourself.
You know, all that stuff Ithink is good and strong to do.
Speaker 3 (33:17):
So that would be one.
It's kind of like you're beinggentle with your client.
Right now is what I hear,Rather than saying you need to
diversify, get into mini storageand triple net auto zone or a
Walgreens property, commercialreal estate class C, class A,
(33:43):
you know you need to diversify.
You're kind of saying well,your comfort zone is obviously
farm and ranch, you're highlyconcentrated.
Is there a way to diversifywithin that asset?
Speaker 4 (33:55):
Right, totally.
And the reason I feel stronglyabout that and I think you know
there's advantages in stocks,bonds, mutual funds, the kind of
stuff I do as a financialadvisor.
There's tax benefits that youcan get from those kinds of
things that you can't get fromraw land and farming and whatnot
.
But, on the other hand, I'm notgonna make a leopard be able to
(34:20):
change its spots, right.
So, and there's the reality isthere's a lot of wealth and
value in farming and ranchingand stuff like that.
So there are other advisorsthat would say, oh, you need to
have 50% of your money in stocks.
Well, I don't agree with that.
(34:40):
You know, if someone got thisfar and has a portfolio of five
to 10 million bucks, who am I toargue with them on where their
money should be?
They've done well with whatthey have, you know.
Particularly too, I know for meand the reason I got into land
flipping is I didn't wanna justhand over my hard earned money
(35:02):
to somebody else.
I wanted to dig in it, get init, get my hands dirty and run a
business that helped me be ableto have some measure of control
over where the money's beinginvested, how it's going, and
that's not for everybody.
There's plenty of people outthere that run syndications that
(35:24):
, for many busy doctors, they doget into, whether it's the
things that you mentioned,self-storage or multifamily or
whatever.
And here's the reality is manyof those things have an
incredibly high amount of feesbecause you're paying someone
else for your time right, and soif you can spend some of your
(35:47):
own time to do this stuff, thenyou're making that much more
money rather than paying it tosomeone else and I say this as a
financial advisor getting paidby other people to manage their
money.
And reality is those peoplethat I generally work with they
don't understand it.
They might read about it some,they might have some degree of
understanding, but they don'tcare about it, they don't.
(36:10):
I mean, they care about it, butthey don't like it, they don't
enjoy it, and so I step in tohelp people save the time and
not have to think about it asmuch, so that way they know, hey
, someone's on their side, theycan bounce ideas off of me.
We talk about taxes, we talkabout investments, we talk about
all that kind of stuff, but forsomeone, I think, that has an
(36:31):
established portfolio, yes, somediversification is good, but
you shouldn't be invested in 30things, because how are you
gonna keep your eye on 30different things and no one
person from another when you'vehanded your money off to 30
different people that arerunning syndications and
(36:51):
convincing you they're the bestthings since sliced bread, which
, in fact, I think you're gonnasee more and more of the emperor
walking around with no clotheson.
Right On some of these peoplethat were highly leveraged and
now they have these debts thatare coming up where they got to
pay a lot more in interest thanthe cash line gonna be there to
support the thing, so Well, youtook, you hit on something.
Speaker 3 (37:16):
I'm actually working on a syndication for ranch
investing.
But one thing that in myresearch you look, go to bigger
pockets forum.
Some of these real estateinvesting communities and, yeah,
(37:37):
a lot of those people.
They don't like syndications,they don't like crowdfunding
platforms.
They believe it's too high feed, they don't like investing with
someone they don't know.
And that's understandable,because actually a lot of these
people on these forums areprofessionals themselves.
(37:58):
So they have a differentopportunity costs.
They have a different skill set.
They don't need to pay someoneelse for someone else's time and
expertise and experience.
And I get that for the averageperson.
I'm happy to pay my financialadvisor $4,500 a year or
(38:18):
whatever it is, because I thinkhe balances me, I can be
impulsive and he's kind of likean insurance policy.
He's there to check me before Iwreck me.
So I think when it comes tosyndications, there is, if you
(38:41):
don't have the experience andthe expertise and the time, yeah
, those the high fees, therelationship would be one tough
one to get over.
But I do want to hear moreabout your mastermind group in
this land flipping.
Tell me about that.
Speaker 4 (38:59):
Yeah, so basically we have a.
The land flipping community issmall, I'm sure, in the same way
you know ranching.
I mean a lot of the people knoweach other, right?
You know the, particularly incertain states or whatever.
In this case, nationally andinternationally, there's a lot
(39:20):
of people that have gotten intobuying and selling raw vacant
land and I was the kind ofperson I never wanted to come up
with a course because it takesso much time to do it and then
you have to maintain it.
But there are people that havethem.
I didn't want to do like a highlevel coaching thing because I
know the time and effort thatgoes into that.
(39:43):
You have to usually do whatwe're doing right here of having
another podcast, you know,having funnels, doing ads, all
this stuff.
That took time, which I lovebeing a financial advisor and I
didn't want to give that up ontop of doing the land flipping.
But I loved meeting with people, so I basically, for free,
started getting groups of peopletogether seven to 10, we would
(40:05):
meet for two days and reallyjust spend deep time with one
another, of hanging out, sharing, breaking bread together,
sharing ideas, you know, justhaving an environment where
people know they're not gonnaget sold something that were
truly all there to help oneanother, and at the time I
(40:25):
wasn't charging for it, so I hadno financial incentive to do it
.
It was all about buildingrelationships.
And so finally, this last yearI started doing some paid events
, which I've been playing withsome of the price points and
whatnot.
But to give you an idea, we hada 50 person event here in May
the one for 2024 sold out withina week of that one closing.
(40:49):
So I guess we must have beendoing something.
Well, we have one going toPuerto Rico with a group of 10
of us all together in January.
Possibly we're doing Italy nextOctober.
So we're seeing some coolplaces and I get to have great
relationships, make a little bitof money, but it's nothing
compared to my usual businesses.
(41:09):
I just do it for therelationships and the passion
and really having theopportunity to get to know
people.
I love talking about businessand land and markets and all
that stuff, and so it just itfeeds my soul and it's been a
lot of fun.
It's really meant forexperienced people, not new
people.
This is not for someone justwanting to get into the business
(41:32):
.
There's plenty of other peoplethat have courses and coaching
programs.
That I certainly don't do that.
I'd highly recommend severalpeople out to folks that are
interested in getting going.
This is really meant for peoplethat are buying and selling
land regularly.
Speaker 3 (41:48):
Is there a website for that?
I want you to plug your CFA,your financial advising website,
as well If you have themastermind out there, or a
community or a group, socialmedia group.
Speaker 4 (42:03):
Yeah, actually, I don't have a social media group
specifically for it.
I do have a website that, to behonest with you, I can't
remember if we took it down ornot, because we had our last
event and it sold out.
Landunconferencecom is thewebsite.
(42:24):
I think it's downright thissecond actually, because we
don't have any events alreadysold out that we have, except
the Italy one that's coming upnext October.
But if people want to check itout, one of my partners in that
event space is Seth Williamsfrom RE-Tipster.
Seth is an amazing, awesome manof God, good guy and very
(42:49):
trustworthy dude.
He has courses.
He doesn't do coaching but hedoes courses and has a ton of
YouTube videos all on the space,including one of the event is
on Seth's YouTube channel.
Speaker 3 (43:03):
What is his again, Seth?
Speaker 4 (43:06):
RE-Tipstercom For real estate tipster.
Re-tipstercom.
Speaker 3 (43:10):
Okay, that's Seth.
Who again?
Seth Williams?
Seth Williams, okay, are youtwo at all personalities where
there's a LinkedIn or an Xthread that people can follow
you and get?
Your daily update.
Speaker 4 (43:25):
I don't do that stuff but certainly people could go
to my website.
I do have a Facebook accountfor Dave Deniston.
Cfa is where someone couldfollow on social media.
I don't post stuff daily.
I do a lot of family photos andthere's some good financial
things on there.
Certainly, my podcast is agreat way to keep up with me,
(43:49):
which you can go todrfreedompodcastcom.
I usually put out a new podcastevery week which I talk about
all these different things thatwe're talking about today, which
you can do search for Freedomfor more physicians, or
drfreedompodcastcom to go checkthat out.
Speaker 3 (44:06):
Dave, I'm going to be straightforward with you.
It's going to be very difficultto get my wife to change from
true crime podcasts to the DrFinancial Freedom podcast.
She does like those true crimeones.
Speaker 4 (44:25):
Those are better.
I'll be honest, my podcast isfun and educational, but it's
not as good as true crime.
Speaker 2 (44:31):
I can't compete.
Speaker 4 (44:32):
I can't compete.
My wife doesn't even listen tomy podcast.
I'm not offended, it's allright.
Speaker 3 (44:37):
Yeah no, she'll never hear mine.
That's why I can reference herand not take shit at home for it
.
Speaker 4 (44:44):
That's right.
Speaker 3 (44:44):
Well, you have a beautiful family in the
background and, for anyone who'sinterested, definitely reach
out to Dave on the websiteDaveDenistoncom the podcast if
you'd like to hear more.
And is this mastermind group?
Is this predominantly yournetwork within Minnesota or is
(45:06):
it national?
Speaker 4 (45:07):
No, it's national.
Speaker 3 (45:08):
Okay.
Speaker 4 (45:08):
Literally.
People from all over thecountry, even the world, are
kind of part of it mostly US, ofcourse, but there's some people
in the Philippines, some peoplein Italy that are doing land
flipping in the United States,that are part of my list, if you
will, of other land investors.
So, yeah, yeah.
Speaker 3 (45:28):
Well, dave, appreciate you coming on the
Ranch Investor podcast andbearing with me as I struggle
through losing my voice thisweek.
But this has been good man.
You've hit on some good thingsand I think people are going to
have questions and I encourageeveryone to Whatever platform
(45:48):
they're using social media goahead and shoot us your
questions and if they'restraight to Dave, I can try to
relay them, but we definitelylike to hear your feedback.
So please give us good, bad,otherwise feedback on any social
media or Discord channel wehave.
Speaker 4 (46:05):
Love it.
Thank you, Colter.
Speaker 1 (46:06):
Thank you for having me Listeners of the Ranch
Investor podcast who arereceiving this immense value for
free.
Thanks for tuning in.
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