The Real Estate Investing Club

How to do Long Term Investing in Raw Land with Jenn Flynn | The Real Estate Investing Club #23

Transcript for “How to do Long Term Investing in Raw Land with Jenn Flynn | The Real Estate Investing Club #23”

Gabriel Petersen 0:02
All right, we are live. Jen, thank you for joining us today. How are you doing?

Jen Flynn 0:07
I’m doing great, Gabe, thanks for having me.

Gabriel Petersen 0:10
Absolutely. Why don’t you get us started? Tell us you know who you are, where you’re from and how you got into real estate in the first place.

Jen Flynn 0:17
Great. Great. Well, I’m Jen Flynn and I live in San Diego, California. I’ve lived out here since 1991. And seen a dramatic transformation with building and cities and it just like an explosion of people here in California. I had a background as a graphic artist and operations manager in the past and a financial planner for a little while. But I always kind of noticed things, you know, like raw land then being developed. And I kind of thought, Gosh, if I had the information that I needed to have bought that land at the right time, I’d be sitting pretty right now. And Funny thing is, that’s now What I do for a living so I got started in land investing after the stock market crash of 2008. And I got hit pretty hard, I lost about 40% of what was in my IRA at that time. So as you can imagine, like a lot of people, I was kind of upset. And I was looking to do two things, recover my losses, and then figure out a way to invest for my future so that I could get ahead. And regardless of what happened with mortgage loans, or even global economy, I didn’t want it to have that much impact on my own personal finances. So in 2008, I learned about raw land investing, and I watched a presentation. The company that I saw the presentation from is a privately held company that I now work for, that’s headquartered in Southern California. And all they do is scope out raw land property. that’s highly Highly researched. It’s, they sell it to clients that it already has some equity upside in it. And we just as buyers, we sit on the land and hold it and wait for a developer to need it. At any time, it could be we tell people to plan on having the land for like as long as a market cycle, which could be 10 years. But I was able to sell one of my properties after having it for eight years, bought it at $4 a square foot, sold it for $15 a square foot eight years later. So you know I made 250% return on that. And now I still have 14 properties that are out in Antelope Valley, which is about an hour and a half northeast of Los Angeles. So those properties are out there. They’re marinating all I do is pay property tax once a year. I don’t have to manage permits. I don’t have tenants. There’s no structure on my property. It’s just raw data. You’re

Gabriel Petersen 3:00
interesting I love it we have that is definitely a unique, a unique strategy that not many people are very familiar with. A lot of people are familiar with, you know, developing land building on land, but just investing in the land itself. We never really think of just buying plots of land and holding it for an entire cycle. So I really like that I’d love to delve in. So you got started just to recap real quick, you got started it sounds 1981 you’re in graphic designing, you know, you did a few things, financial planning. And then you got introduced into raw land and around 2008 from a professional company who later joined and and now you’re, you’re in it to win it. You’re 100% in and you got 14 land tracks out there somewhere in in California. And and you’re doing great.

Jen Flynn 3:52
That’s right. Yep. And I have this is my full time job. I don’t do anything else but sell raw land. So I have a California real estate licence. And I go out to the valley from time to time and just check on what’s happening in the area. There’s new high schools being built new Home Depot’s coming in new target, new housing tracks to the hundreds and thousands of homes being built. So I kind of keep an eye on the properties that I have in the properties that my clients have. And when I get new clients, we I kind of work with them on what their budget is, and where I can place them strategically. Because I’ve been investing for now 11 years I have properties that vary in zoning, everything from ag zoning, agricultural, which will probably be used for the expansion of solar facilities. And I’ll talk more about that in a moment. And then I have more expensive properties price per square foot for zoning that’s like commercial or heavy industrial. Interesting.

Gabriel Petersen 4:55
Yeah. So I I love the strategy. You know, it’s not something I’m familiar With So, um, I want to unpack it just a little bit. Yeah, investing in I’ve, you know, we we market nationally for single family, multifamily and mobile home parks. And so we get a lot of people coming to us and it’s just land. And most of the time we pass those along, or we just tell them you know, we’re not the best people to go with, you might want to reach out to a real estate agent. Because we don’t know what to do with it. We don’t know how to disposition it. We just we just don’t know how to go forward with just raw land. So kind of take us take us through the process of investing in raw land. What is it you look for? Is there. Are you looking at economic trends in the area at developing zones? Like, how do you define what is a good piece of parcel of land to invest in?

Jen Flynn 5:48
Yeah, that’s a really good question. I’m in Southern California. So where I live in San Diego, there’s two major cities that people are very familiar with. One is called East Lake Others called Temecula. And about 10 to 20 years ago those cities were biking trails. There wasn’t much out there, you could actually get to the lake on your bicycle. And over time we started to saralyn see land being cleared. And then you’d see a Home Depot go in, and then houses would start to be built. And you know, for somebody like me that lived in downtown San Diego, I was like, gosh, who would want to live out here? Because it was like 20 to 30 miles away from where I was. But I saw that the cities were kind of coming up out of the ground and they’re called exurbs. It’s a city within a city if you will. Okay, so in those exurbs are aware of affordable homes were being built. So at the time in San Diego, the median home price was probably 500,000. Now it’s about 750,000. But if you look at places like East Lake and Temecula, you can get a home for 400 to 600,000 because it’s not sold Close to the city infrastructure. So the company that I work for took the same sort of model and they’ve been doing this for 40 years. They looked at other cities in California, in particular LA, where within 60 miles of downtown LA we have 50% of the state’s population. Wow. Wow. In California is almost 40 million now. So within 60 miles of downtown Los Angeles, there’s 20 million people that live there.

Gabriel Petersen 7:30
Wow, that is insane. I did not know that

Jen Flynn 7:32
crazy statistic. So you have to imagine there’s there’s a lack of housing. You know, even even for million dollar homes, there’s a lack of housing because there’s so many people. So what’s happening is a lot of folks from LA are looking for an exit verb so they can find a house, they can find an affordable house, and that they can work either in that city or quickly get to Los Angeles if they have the job there. So the cool thing about where we’re we sell in Antelope Valley. The two cities are called Lancaster and Palmdale. The interesting things about that that’s an advantage over the other two cities I mentioned is they have a massive freeway that connects LA to Antelope Valley. In some parts of that freeway, it’s 10 lanes in both directions. There’s an existing train service that can bring people into la so you don’t have to get on the road if you don’t want to. And up in Antelope Valley, there’s two airports. There’s actually three Airforce plant 42 which is home to Boeing, Lockheed Martin and Northrop Grumman. Then there’s a logistical airport called Fox field and then northeast of that is Edwards Air Force Base. So there’s so much infrastructure out there and development that it that it’s just a matter of time for this whole you know, city to be something like an LA all over again. So what we look for is infrastructure. We the roads, okay, so paved roads, sewer, masterplan communities. We look for airport freeway access rail. This city has all that plus affordable housing for the millennials who are starting to have kids now and need a place to you know, to park it and raise their kids.

Gabriel Petersen 9:25
Gotcha. Okay. So So when you’re looking for it sounds like you’re you’re also only looking in areas that are highly populated. I mean, you’re not buying tracts of land. You know, I don’t know California that well, but you know, east of Cal east of La in the the non populated areas or in Northern California or anything like that.

Jen Flynn 9:45
We’re not up in Northern California, but we are in some unpopulated areas, again, just north of where the populated areas of Antelope Valley are north of that about another 10 miles. There’s nobody living there, however, What’s been happening over the last seven or eight years with the popularity of solar power, the land up there is flat. It’s 2500 feet above sea level. And it’s protected by a mountain range between LA and the valley. So it’s got super clean air. So it’s a perfect recipe for solar farms and wind farms. Gotcha. Go. A lot of land has already been purchased by massive companies that have been backed by Warren Buffett, Bill Gates, the guys that own Google, for example. They’ve been buying plots of land out there, putting panels on it, and then plugging into the local power grid and sending power down to Los Angeles. Interesting. Okay. Yeah. So my most affordable properties for people right now. And I say affordable. I can go as low as about 1820 grand for a property and up to 200 300 $400,000 worth of property. And a lot of people want to be where green technology is burgeoning. So we can get them super close within three miles sometimes within a half a mile of an existing solar facility. They have the property there, they wait until that solar facility has become profitable. And now that solar facility wants to expand and that person land is going to get consumed in the expansion.

Gabriel Petersen 11:26
Interesting. Okay. So that makes a lot of sense. So with with raw land development or raw land investing, obviously there it is, just buy and hold. There is no obviously cashflow. You’re not renting this land out to anyone. It’s just you’re buying the land, you’re sitting on it, you’re waiting a long period of time and then you’re selling it in, you know, a decade down down the road. Right.

Jen Flynn 11:49
Yeah. And that’s that’s the basic way to explain it. Now. You have a knowledge anomalies, anomalies. We’ve had some clients be in escrow with us and get an offer. on their property. We’ve I have a property right now that I closed on in December of last year. And I just got a notice of public hearing that the, this company called big boat solar is looking at taking more land around a massive project that they already have about 2500 acres, and they want to expand. So I might be selling my property this year. Oh, okay, after having it, you know, just for a few months, so it ranges the duration of the hold ranges. You’re exactly right, though, that there’s normally no cash flow, like if you wanted to have a flip around property. However, some of the properties the solar facilities will offer you a lease option. And some of my clients have been considering a lease option for 20 to 30 years when they get paid by the solar company. And after that term, they can you know, renegotiate, but they still own the land and any equipment on the line. Land. Interesting. Yeah, so that’s pretty cool. I have some properties where I think I probably will get a lease offer on it because of the size. And the solar companies are spending, you know, small amounts of money while small in the billions. But they want to be able to save some capital in the beginning because they need to buy all the panels and get everything hooked up. So they’re more open to leasing some of the larger properties so they don’t have that much cash outlay. Interesting. Yeah. And the cool thing for them is the moment they’re up and running, they have a 25 year guaranteed contract with la pg&e to buy all their power. So they don’t have to mark it. I mean, it’s

Gabriel Petersen 13:42
they have their customer right there. It’s right there. Right?

Jen Flynn 13:46
knows 20 million people are doing nothing but using more power. Very interesting. You know, we’re home now working from home, everybody’s got a laptop. electric cars are big in California. So that’s a bigger power. Draw on the home use, you know, everything you buy, now you got to plug it in. So it’s, I love it, even with issues like COVID, you know, the demand for power is doing nothing but going up.

Gabriel Petersen 14:13
So that strategy right there is very unique. It sounds like it’s very situational to one and buyer be at power companies. So I mean, but you also invest in land pretty much anywhere based on the transportation, you know, high population, the infrastructure that’s already around in the area. So you’re not restricted. You’re doing the solar panel, because that opportunities here are the solar tracts of land that are that are attractive to solar companies, because that opportunity is here, you know, today, but you’re also buying land in areas that have other, you know, future development potential.

Jen Flynn 14:51
That’s right. Yeah. So in my personal portfolio, I have land that zoned for residential, and I’ve got homes. If I look at a Google Earth map I can see homes already existing around this residential property that I have. I also have land in my portfolio that’s zoned for light industrial, heavy industrial, commercial and business park. Interesting. And so it’s just a matter of time until any one of those pops with some development, and then we’ll start the negotiation process.

Gabriel Petersen 15:23
So when you when you look at properties, do you? Are you already are you looking only at properties that are already zoned to what you want them to be? Or do you? Do you look at properties with the intention of rezoning them, you know, down the one,

Jen Flynn 15:37
I particularly don’t look at them for the intent of rezoning. What I’ve done with my own portfolio, what I’ve done for some of my clients that have multiple properties is let’s say they have two properties already zoned for residential. They went in and bought them and they may be about, let’s say, $85,000 for an acre, acre and a quarter and now they have more money and they want To invest more, I’ll take a look at properties in other areas for them. So maybe a commercial already zoned commercial property, or a property that’s up and going to be used for solar. So that’s how they can diversify their portfolio. Similarly, if they had the money in the stock market, they’d want to have some large cap, mid cap, international funds cash, we can develop a portfolio for people in real estate. That’s also diverse.

Gabriel Petersen 16:30
Interesting, I like it. So, I mean, with any real estate that you do, there’s always you know, there’s a process that goes from you know, finding it, financing it, buying it, doing whatever you want, you know, for you, it’s just sitting on it until you sell it. So at the very beginning of this process, how do you actually go about you told us how you identify what you know what fits your criteria, but how do you go about actually finding those tracts of land.

Jen Flynn 16:57
Our company has an entire research department Research and acquisitions department that has been doing nothing but purchasing property for 40 years. So they’re experts in what they do. They know what to look for. That’s way beyond what you and I would know what to look for. And literally, they can look at a property side by side and choose one over the other. And the average person might go, Well, why didn’t you choose this one? Well, if they think that there’s any sort of barrier to development, like that property may not sell to the end buyer in the future, they won’t buy it. They have a very, very strict set of guidelines to put a parcel through to make sure that they check all the boxes, and that they’re getting a property that we’ll be able to turn over one more time. And that’s the property that they’ll purchase. And we’ve got actually 26 things that we look for when we screen properties. We look at between 25 and 30 properties and we’ll purchase one or two of those

Gabriel Petersen 17:59
interesting Okay, so, I mean, for people who are listening and watching, you know, if they wanted to get into investing in raw land, obviously, you know, they don’t have a an entire department for them to, you know, find these properties, right, what advice would you give them to, to both find a good property? And I mean, you said you had 26 different criteria or 25 different criteria that you use, like what what are the, you know, the top three criteria that you would suggest somebody who’s looking to invest in land? What would be the criteria you suggest they use?

Jen Flynn 18:33
Yeah, well, if if somebody is going to do that on their own, you know, it’s really, I tell them, you know, good luck, kind of, it’s really buyer beware, you can go online right now and Google LA county property and pick up a property for yourself. And, you know, I would definitely look at the infrastructure, population growth, how many home starts, they have what’s near that point. Property Now, is there a hospital nearby? Is there existing solar nearby? Is there any cloud on the title for example, you want to make sure you get clean title to the property. But the simplest thing is to pay the extra money and use a land banker like myself, and allow me to find the property for you that fits your budget. That way we take the first mover risk, if you will. We’ve never sold a property to a client that’s then gone into open space and hasn’t been able to be sold. So I tell people, you know, you can you can go ahead and do this on your own and pick up 10 acres for two grand if you want, but if it’s still listed on the internet, there’s a reason our company didn’t buy it.

Gabriel Petersen 19:46
That makes sense. Yeah, always. I mean, I know it. Sometimes it hurts to pay professionals, but in the end it definitely, it’s worth it. And so if there’s things that obviously you can see that that people who are don’t have an entire department behind them won’t be able to see. So that makes a lot of sense.

Jen Flynn 20:04
Yeah, there’s two things to to using a professional to purchase land not only do you get a quality property that’s been researched, but you know, it is a long term investment more, more or less. So during the time you hold your property, we do webinars, we do zoom conference calls with people, we let them know about what’s happening close to their property, at least within three miles of their property. Because whatever happens within three miles of raw land is impacting the value of that land. So I’m in constant contact with my clients through newsletters, doing webinars for them when they’re when they’re interested about what’s happening in the area. And our company also broadcasts live on Tuesday evenings, about a 30 minute update of what’s happening. So we tell people about notice of public hearing of a solar farm is expanding or a new company from a new manufacturing company is opening up or it’s banding. So we offer that to our clients. And then what’s super cool is when it’s time to sell your property, you’re going to get a letter or a phone call from a consolidator, or even the end user, like a solar company, for example. And you probably will have no idea what your land is worth. Because it’s not like you can go into Zillow and find like a true value of a home. So we encourage our clients, although they have title to the property, they own it 100% they can do whatever they want. We encourage clients when they do have an offer to come back to us so we can do a little research and find out like what other clients have sold for in that area and what information can we give that client so they could get the highest and best amount for their their land, and we don’t charge for that service. We only get paid on the front end, nothing on the back end.

Gabriel Petersen 21:53
I like it that makes a lot of sense. So I’m gonna I’m gonna change gears here just a little bit and we’ve talked a lot about the nuts and Have your business what it is you do raw land. And so now I kind of want to go into into your experiences your stories. We all know real estate is it’s a roller coaster, you got your ups, you’ve got your downs, both emotionally and financially. So kind of take us to a moment where we’re, you know, the trough of your experience in real estate and kind of tell us what was the lesson that you kind of pulled from that one?

Jen Flynn 22:23
Yeah, um, I bought and sold four homes in in Southern California since I’ve lived here since 91. And I think it was around 2004 2005 the home that I had appreciated something like $300,000 it was a home I paid about 500,000 for you know, in the the value was just super inflated. And at that moment, I thought this would be the perfect time to sell, rent an apartment for a while and see what happens with the market and I never took my own advice. I wish I had because it was about a year and a half later, I needed to sell that house and the price had come down to just like 100,000 more than what I bought it for. So you now I’m way more aware of not necessarily timing the market, but being aware that the market does cycle. And if you if you have that gut thought you should take action on it.

Gabriel Petersen 23:24
I like it. I like it. So definitely, and I mean, you’re 100% right. Usually the gut, you know, you should always, you know, add your brain to the gut, just to make sure that you are doing the right thing, but follow your gut. Usually it leads you in the right direction. That’s Yeah, that’s good advice. So that that’s the trade off. You had a property 500,000 it was almost double that you could have sold it You didn’t you miss the opportunity didn’t follow your gut. But the lesson was, follow your gut when you know that you’re in a good good opportunity there. So now take us to the top. What is you know, you’ve been a real estate For a long time, why do you keep coming back to it? What is it that you love about it?

Jen Flynn 24:03
Um, I’d say two things I love about it. One is the, the returns that I’m expecting on my properties are there double digit returns every year. So what I’m expecting, because you can’t make any money, I

Gabriel Petersen 24:17
can’t get that in the stock market,

Jen Flynn 24:18
right? You can’t get that in the stock market. And if you figure that land is finite, there’s only so much of it, of course, the price would go up because it’s becoming more and more scarce. So that’s one thing I like about it. The other thing that I really like that just puts my mind at ease is it doesn’t matter what’s happening. In California, in America or in the world. There’s a demand for land. Things may slow down a little bit, but it’s not like my raw land is going to dramatically lose 40% in value like my 401k did back in 2008. You know, it’s just, it’s empty unless we wiped out half the population of the planet. It’s just impossible that that’s going to happen.

Gabriel Petersen 25:02
They’re not making more land

Jen Flynn 25:03
that’s not making more land, we like to say today’s dirt is tomorrow’s gold. If you own your, you know, you can pad your retirement or you know, put money away for your kids college or a house. I have clients between the ages of 18 and 80 that all invest for a multitude of different reasons.

Gabriel Petersen 25:25
Wow. 18 I gotta meet that person to get started

Jen Flynn 25:30
property in California. So that’s a smart young person.

Gabriel Petersen 25:34
I love it. Yep. All right. So, you know, you’ve been in, you’ve been in real estate for quite some time. Since 2004 2008. You’ve been in raw land. So you’ve had, you know, a ton of experience. If you could go give yourself you know, the gen that started out 2008 go back to her and say, Hey, do this one thing going forward going forward in your career, and you’re going to see, you know, great success. What would that one be? Some advice B?

Jen Flynn 26:01
Oh, that’s a good question. Um, I think one thing would be I was very heavily dependent on plowing as much money as I could into my 401k. Because at the time, that’s what I knew I was getting the the tax benefit of putting away pre tax money. And I was invested very aggressively because at the time I was in my, you know, in the 2020s, and 30s, so I could afford to invest aggressively. I think what I would tell myself now is to still put away as much as I could tax free, but see if I could also put some of that money into a self directed fund that would allow me to hold real real estate. Because most 401k companies, you can only do stocks, bonds and mutual funds. But some self directed IRAs or 401 K’s allow you to purchase real estate, and if I’d had done that, then I’d probably be retired by now.

Gabriel Petersen 27:00
I love it. Awesome. Well, Jen, we are nearing the end of our show here. But I mean, thank you for for coming on and for giving us everything, all the wisdom that you’ve given us on buying raw land and using it as a tool for investment. I mean, everybody needs to receive things as well. So if what is it that you see if you somebody brought you something? What would they? What would you want them to bring you?

Jen Flynn 27:23
If they brought me something? Um, you know, I’d say there being a good person on the planet, that would make me super happy. All right, a little more of that in the world. I’m with you

Gabriel Petersen 27:35
on that. Yeah. So what is if somebody did want to get in contact with you, what would be the best way for them to do that?

Jen Flynn 27:42
They can get me through LinkedIn. I’m Jen Flynn on LinkedIn. And they can also use I have a Google line, which is 619-393-9325 they can always leave me a message there. And I’m more than happy to just answer questions for somebody because this this isn’t the best investment for all people. It’s an awesome investment for some people. And I just want to make sure that people understand the pros and cons of land banking. And then we’ll take it from there.

Gabriel Petersen 28:13
I love it. All right, Jen, I can speak. I know I can speak for everybody listening and watching. We appreciate you coming on here and sharing your wisdom. If anybody wants to get in contact with Jen, she just put her Google number there or you can reach out on LinkedIn. Other than that, I hope you guys have a good day and we’ll see you guys on the next episode.

Jen Flynn 28:34
Thanks a lot. Really appreciate the opportunity.

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The Real Estate Investing Club is a podcast and YouTube show where real estate investing professionals share their best advice, greatest stories, and favorite tips in real estate. Join us as we delve into every aspect of real estate investing – from self-storage, to mobile home parks, to single family rentals, to real estate syndication!

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Topics you’ll learn more about throughout our episodes:

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– How to do out of state investing without risking your shirt in the process

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– Investing in commercial real estate

– Stories about brand-new investors and the lesson’s they’re learning as they take on their very first flips and rentals

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