How to Invest in California Land Banking Deals Near Solar Farms | Jen Flynn

Jen Flynn (00:00)
just as

As quick example, if you wanted to buy a $20,000 property, you’d pay about $8,000 per acre. Some solar projects are now paying between $30,000 and $50,000 per acre.

But the whole gamble on the land baking is the timing. I don’t know if you’ll get an offer in six months or six years, but we think it’ll be within a 10-year time frame because California has mandates and is just really exploding on going with green energy for the next 10 to 15 years.

Cody Crabb (02:03)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel and joining me today is Jen Flynn of Velur Real Estate Services out of Southern California. She has a really unique niche. We’re going to talk about that today. How investors can ⁓ diversify beyond traditional rentals and why some of the best opportunities don’t involve tenants at all. ⁓ So thanks so much for joining us today, Jen.

Jen Flynn (02:26)
It’s my pleasure, Cody. Thanks for having me on.

Cody Crabb (02:28)
Of course, yeah. So I’d love to hear the origin story. Like I always say, you it’s not typically one that you see on ⁓ the kids’ wall when they’re growing up. I want to get into real estate. So I’m curious, how did you originally get into real estate?

Jen Flynn (02:42)
Well, that’s a really good question. It was not ⁓ in my plan. I was a financial planner for MetLife for a while, and then I left that position in 2006 and actually was traveling through Vietnam and decided to stay in Vietnam and work for a nonprofit. And worked with a bunch of ⁓ orphans and disabled kids for two years. And during that time is when the stock market crashed in 2008.

Cody Crabb (02:54)
Hmm

Jen Flynn (03:10)
And I got hit pretty significantly with investments that were in my IRA. So I was on the hunt to try to find something that would ⁓ help me recover my losses and then get out in front of earnings and, ⁓ you know, something that would mature and help my retirement plan. And I knew I didn’t want to purchase property in California and try to do rentals, which a lot of friends were doing, because I was still living in Vietnam and didn’t want to try to manage something out of the

Cody Crabb (03:39)
Well, yeah,

Jen Flynn (03:39)
country.

Cody Crabb (03:39)
bit of a bit of a distance there. Yeah.

Jen Flynn (03:42)
Yeah, yeah, it would just be too complicated for me and I like to keep my life kind of simple. But a friend of mine introduced me to land banking and so I dug into it a little bit more and watched a presentation and thought this is a great way for me to dip my toe into real estate which is how most of the wealthiest people in America have made their money and I don’t have to worry about tenants and toilets and all the headaches that come with it. So I bought my first three properties in 2009.

sight unseen, I was still living in Vietnam and then about a year later when I came back to live in ⁓ San Diego I drove out and saw these properties and thought that the business model was just perfect. So I got my real estate license in 2010 and I’ve been purchasing properties from my own portfolio since then I now have 18 properties sprinkled out in Southern California and that’s what I do for full-time living is I sell properties to other folks

like you and me, that can get 20 grand or 200,000 together and invest and really have some California real estate without

headaches.

Cody Crabb (05:38)
Yeah, I mean that alone really catches my attention because California real estate is famously not the easiest to get into in the first place, but then saying it’s without headaches, mean even that, as you describe it, it’s pretty much a dream scenario. So just as people are kind of hearing about this as an option, what does a deal like this actually look like in practice? Like this doesn’t sound like your traditional

Jen Flynn (05:53)
Right.

Sure.

Cody Crabb (06:03)
find a deal, close on the deal. It sounds a little more interesting than that.

Jen Flynn (06:08)
It is pretty interesting. So I usually talk to people briefly and see if they’d be okay with an investment that doesn’t currently provide cash flow. That’s what a lot of people are looking for. But this is gonna be, like I said earlier, short to midterm investment. And by that I mean it could turn in one to maybe seven years time. ⁓ So if people are open to that, I’ll give them a presentation that’s about 45, 50 minutes so they really understand where we invest.

asked how we research these properties that Velur purchases, that we do a disclosure report and environmental report for the buyer. And then if somebody’s still interested, they’ll give me a budget and maybe they only have $20,000. They can get two and a half acres for that. Maybe they’ve done a 1031 exchange and they’ve got $500,000, but they don’t want to pay capital gains on that yet. So they can do a 1031 into raw land. ⁓ Or some people have

Cody Crabb (06:55)
Really?

Hmm.

Jen Flynn (07:06)
have money in a self-directed IRA or 401k and you probably know you can hold real estate in those entities now. So it’s a good option for people to diversify some of what they already have in the market and get into real estate at whatever level works for them. And then the process.

Cody Crabb (07:24)
Yeah, and I’m kind of shocked to hear the I’m I’m shocked to hear is how low

that num those numbers were for California real estate literally we’re talking about California real estate

Jen Flynn (07:31)
I know,

right. Well, you know, I live in North Park, San Diego and

900 square foot homes here are selling for 1.2 million. But if you invest where we’re investing, which is about three hours northeast of Los Angeles in Kern County in California City, it’s high desert, it’s flat, developable land. ⁓ There are cities up there, but we don’t usually get land right close to where there’s residential any longer. We’re buying land near solar farms, transmission lines and substations. So it’s further out.

which makes it less expensive and Velur is really good at researching properties of people that maybe haven’t paid their property tax in a while or they’ve got a lien on the property or they had inherited something they’re like I have no idea what this is I just want to sell it so Velur can pick up properties for below market value and then give it to myself to sell to a client after a markup and the client still ⁓ got built in equity so

Cody Crabb (08:07)
Hmm.

Hmm.

Jen Flynn (08:34)
just as

As quick example, if you wanted to buy a $20,000 property, you’d pay about $8,000 per acre. Some solar projects are now paying between $30,000 and $50,000 per acre.

But the whole gamble on the land baking is the timing. I don’t know if you’ll get an offer in six months or six years, but we think it’ll be within a 10-year time frame because California has mandates and is just really exploding on going with green energy for the next 10 to 15 years.

Cody Crabb (09:06)
Yeah, so out of curiosity, is there something that makes a piece of land particularly attractive to a solar developer? Is it just proximity to other things or is there other factors as well?

Jen Flynn (09:16)
Definitely other factors. So they like to be close to existing transmission lines and or a substation if they can. ⁓ But some of these projects are seven and eight thousand acres in size, so they will build their own substation if they need to.

There’s multiple billions of dollars of projects that are planned between the California city substation that’s going in on the east side of Kern County and then on the west side there’s more substations going in and more transmission lines and the county is paying for all of that. So we as investors that have land sprinkled out around these developments, our land is just increasing in value while the county is paying for this infrastructure.

action.

Cody Crabb (10:04)
Gotcha. Well, I mean, this does sound a little bit too good to be true. It’s like ⁓ getting into this and it’s a way to dip your toes in without going too far into it. It’s California real estate ⁓ at a bargain. My question is, where’s the risk, right? So what would happen in a case where, well, ⁓ what does it look like when this fails? Like where you don’t see the return or you don’t.

It doesn’t sell. I’d just be curious to know, like, what does it look like on the other side?

Jen Flynn (11:08)
Sure, that’s a very common question that I get. Some of the properties that I purchased in 2009 haven’t sold yet.

but they happen to be zoned as industrial and residential, which take longer to develop. The properties that we’re selling clients now are almost exclusively for solar projects. And the risk is that, you know, if you’re 65 and you’re investing, you know, maybe the parcel that you purchase won’t develop for another 15 years and you won’t see it come to fruition, but…

You know, your heirs will inherit that property and they’ll definitely see it come to fruition. The strategic kind of plan for this particular area, Kern County in California City, is that pretty much everything will be filled in with solar before the mandates expire in 2045, where we’re supposed to be as a state, 100 % on green energy.

Cody Crabb (12:06)
Hmm, so you’re there’s gonna not there’s gonna need to be more and you’re just banking on that Yeah, yeah, you’re banking on that cool. Well, so, okay Some investors would look at this and just be like we’re not I’m not even looking at this It’s not a very it’s not like sexy as people say like it’s not a very like exciting, you know What would you say to someone who says something like that?

Jen Flynn (12:10)
There’s going to need to be more. That’s right.

Well, I say ⁓ it’s not sexy, but there is a trade-off. So sexy might be buying a house below market value that you can fix and flip, and that looks really cool. And then you make your 50 grand and you go on to the next house and you do the same thing and now you have 150. If that’s the thing that excites you, land is probably not for you. Unless maybe you peel off 20 grand with each of your fix and flips and just tuck it away into something that’s very,

very safe that will more than likely, you know, there’s no guarantees with anything, but more than likely outperform the stock market and more than likely be better than your fix and flip returns because you’ve got expenses and fix and flips. You’ve got risk. What happens if we have COVID again? You know, the whole housing market just is stagnant. Solar farms were still putting panels in the ground, you know, because we, everybody was using power and we were using even more power.

Cody Crabb (13:20)
Good point, yeah.

Jen Flynn (13:30)
You know, the kids are at home instead of in school. They’re on their iPad instead of, you in a classroom. So that actually worked. I hate to say that there was a positive out of it, but solar was still ⁓ increasing in demand.

Cody Crabb (13:30)
Yeah.

Yeah.

Yeah, well, I mean that’s that right there is a really good point It’s not traditional real estate in the sense that like it goes up and down with the market the same way So like even that might be a little you know, that might reassure some people but it’s not exactly it doesn’t follow the real estate market exactly ⁓ so What is a so as people hearing are hearing this? I’m sure people are wondering like What does a deal actually look like you kind of walked us through? ⁓

Jen Flynn (13:52)
Right.

Right.

Cody Crabb (14:10)
the initial, like the process. But I’d be curious about like the practicality, like how long does it usually take to, from finding one of these to completely finishing it, and I mean like the process of purchasing it, how long does that typically take?

Jen Flynn (14:25)
Sure.

Well, we can, you know, once you say, okay, this is my budget, if ⁓ I will then go to Velur and say I’ve got a new client, let’s say they have a budget of 50,000, they wanna get a parcel as big as possible with that budget, you’d be in the neighborhood of maybe five acres to 10 acres.

Velur will tell me what they have in inventory that’s ready to go. And then I’ll show you that parcel. ⁓ I’ll do highlights for you with a PowerPoint. I’ll show you strategically what’s within three miles already of that parcel. And you’ll usually be close to transmission lines or an existing solar facility.

And we’re just waiting for those solar projects to expand. So if you like that parcel and you want to go forward, we write a two-page contract.

there’s no loan, there’s no pre-qualifications, you don’t have to do any of that business like a traditional real estate deal. ⁓ The two-page contract goes to Valor and we’ll hold the property for you for seven days. If you want me to drive you out to the area and tour the property, I’m happy to do that. And after the seven-day point, we request a 3 % deposit for the property and then we open escrow.

And during escrow, you’ll get documents to sign. Obviously, you’ll also get a disclosure report and an environmental report. And then we can close in 21 days, about four to six weeks after that, you will get title from the county for the property. And I tell people, just stick your title in the safe, know, pay your property taxes once a year and don’t worry about anything until you get an offer from a legitimate solar developer. And at that point,

Cody Crabb (16:28)
Wow.

Jen Flynn (16:46)
you’ll call me and say, I got this letter, what do I do? And Valor actually has some specific steps to help the buyer walk through the process of a sale. And because we have so many clients in Southern California and so many deals are happening, we know that solar companies are now paying, like I said, 30,000 to 50,000 per acre, depending on location. And we don’t negotiate on your behalf, but we’ll tell you what questions to ask.

Cody Crabb (16:57)
Mm-hmm.

Jen Flynn (17:15)
you can sell for the highest amount per acre that you can get.

Cody Crabb (17:20)
Wow, so okay. ⁓ People that are hearing this and salivating a little bit and thinking this sounds like an amazing option, ⁓ what do you have to have and be? mean, it sounds like it’s pretty hands off. I mean, you said you ⁓ in Vietnam looking at some of these things. So I’m just curious, where do you have to live? What do you have to have ⁓ in order to get in on something like this?

Jen Flynn (17:35)
Great.

So you can pretty much live anywhere in the world. Most countries can send money to the U.S. and invest. You don’t have to be a citizen to invest in land in America. ⁓ So that makes it pretty easy. What you have to have is access to the cash, whether it’s cash in the bank or money that you have in a self-directed IRA or 1031, like I said, that’s really it. ⁓ We do most of our

Cody Crabb (18:01)
That’s it.

Jen Flynn (18:12)
escrow process through DocuSign. There’s only two pages that we need wedding signature and you can mail those in and for my out of country clients they just use FedEx or DHL or whatever. Mail the docs in and like I said we can close in three weeks.

Cody Crabb (18:14)
Wow.

That’s pretty wild. This definitely grabbed my attention because it is not your typical situation we hear in real estate. Thank you so much for sharing all this. We’re sort winding down ⁓ here towards the end here. ⁓ I’d be curious if someone wants to kind of dig in and learn more about this and see if this is an option for them, where can they go online to learn more?

Jen Flynn (18:48)
They can go to my LinkedIn page. I’ve got other videos on there. I’ve got a couple PowerPoints on there. And they’re more than welcome to reach out to me via LinkedIn, send me a message, and I’m happy to answer their questions and get a conversation started.

Cody Crabb (19:03)
Fantastic, yeah, I encourage anyone to look at these things. It’s never a bad thing to keep your options open and learn what else is out there, so definitely worth a look here. Jen, it’s been a pleasure, I really appreciate it. ⁓ And for ⁓ our listeners, if you got something out of this episode, which I know you did, please go ahead and hit subscribe so you can get all the episodes and you get notified with future ones. So thanks so much, and we’ll see you next time.