Developers Are Big Kids With Legos | Ryan Garland E45

In this episode of Paradyme Shift, Ryan Garland breaks down one of the most important principles in investing today: following data over hype.

With increasing market uncertainty and emotional decision-making at an all-time high, Ryan explains why relying on trends alone can lead to costly mistakes — and how data-driven strategies create more predictable outcomes. 

He shares how Paradyme Companies evaluates opportunities using:

• Population growth and migration trends
• Rent demand and affordability metrics
• Institutional capital movements (BlackRock, Blackstone, etc.)
• Local economic activity and job markets

Ryan also dives into how Paradyme approaches development differently by:

• Prioritizing in-house manufacturing and cost control
• Using third-party market studies and regional data
• Focusing on a small number of asset classes to improve execution and reduce risk

The episode also highlights key investor education topics, including:

• Why most developers chase trends — and why that can be dangerous
• How emotional investing leads to poor decision-making
• The biggest mistakes new investors make when evaluating deals
• Why understanding deal structure is more important than chasing high returns
• The importance of balancing cash flow and long-term equity gains

Ryan reinforces that successful investing isn’t about reacting to what’s “hot” — it’s about understanding why markets move, where capital is flowing, and how to position accordingly.

This episode is a foundational guide for investors looking to make smarter, more disciplined decisions in today’s evolving market.

Paradyme

Transcript

Follow Data Not Trends

How Trends Become Real Projects

Why Developers Build What’s Hot

The Data Behind Market Selection

New Investor Mistakes And Deal Structure

Risk Control Through Planning And Execution

Where To Learn More And DM Topics

SPEAKER_00 0:20

Hey everybody, welcome to the Paradigm Shift uh podcast. I'm gonna get right into it today. Um, Joe pulled up some of the latest um requests, but probably one of the most popular engagements um from people on all of our content. And I'm gonna kind of list some of these things out and answer these things to you. But one of them is uh why don't we chase trends? We follow the data. Data is massive. You'll hear me say it about it all the time. And I think right now the world's already burning enough, right? We we don't want to try to lean on our own understanding. There's things that we're gonna miss. I you know, to try to be more, you know, feeling driven right now, I think is just naive. I think what you need to do before you make any decisions is look at data, look at where the world's going, where spending habits are going, what baby boomers are doing, uh, healthcare, all of the things that the wealth is moving into, right? So if you look at BlackRock, Blackstone, which way are they gonna invest their money? Which assets are they investing into more heavy? You know, those are the things that are really important. So if you're not tracking the data, um, you're you're gonna make a big mistake in your investment um um endeavor or journey. Uh the other thing is the trends. The trends are part of that data, right? What's trendy? For example, barn dominums, steel building methods, everything that happened with fires uh in LA, you know, uh state farm leaving California. I mean, it is just unbelievable of all of the things that are going on that you have to consider and then going after those trends and understanding why they exist and then finding out how those things are being built. How is it actually being accomplished? Okay, great. I understand why, but like how is it actually being accomplished? You know, for us for us, we're actually manufacturing a lot of our own buildings right here in Lake Cavas, so or at least a lot of the components. And then we'll go to maybe another manufacturer, but we're bringing it all in-house so we can kind of control the narrative, control the cost, control our timeline to mitigate risk. Um, so there's a lot of those things that you have to understand the data, but then why? And then understand that everyone that's going to be a part of that trend actually has the ability to perform as well. So it's not just the data that will kind of give you a spark. It's how is it actually going and all of the things in between that also have supporting data too to accomplish what the goal is, right? So you have uh you know, you have us kind of looking at things from a different lens, I think most more than most, but also very institutionally driven. We're getting third-party market studies, we're using specific groups that all they do is focus on the southwest as an example, or they have a uh a very good understanding of this area, like an appraiser would, right? Those type of things. Um, let's see. Why most developers build based on what's hot? I would agree. So I think I tell people this all the time: builders and developers are just kind of like big kids that like Legos, okay? So they could drive by a property and go, you know what? It would be so cool to build a gas station there, or so cool to build apartments there, or so cool. But that doesn't mean that it's good for the city or it's good for the community, right? You so so, in essence, builders and developers are just gigantic children. So you got to know that. Um, but I think that's that is the case. Developers uh by nature like to build stuff they want to build, which is great. I do too. You know, people go, hey Ryan, why aren't you building more storage? I'm like, well, storage just isn't sexy. I mean, it's great numbers, great investments, but I just don't really want to do it. I'm at a point in my life where I want to build things that I genuinely like, but if I can keep the same investment strategy and structure as the as the storage, then that's what we'll do, right? So you you kind of have to, you you gotta have to know and understand why developers start a process and that most of them, 80% of them, are just big kids, but you really have to drill down into the trends in the data. So, okay, how paradigm uses population growth, rent demand, migration trends, um, how how we look at those. So rent demand uh is good when you're building apartments, right? Like how what's the migration out there? What's the affordability number look like? What are what's the job uh market look like? So when you're looking at rental profiles, if you're building, like for example, apartments, that's a different, that's a different data strategy, right? You're by by nature, rentals for apartments are more lower income overall. So when you look at the the average medium income in a city, it's a little bit 20, 25% lower than that, is where you want to land in regards to your rents for whatever building or project that you're developing. So kind of keep that's like kind of a metric to follow, right? So there's a lot of those kind of rule of thumbs that you can use to kind of vet projects, but that's one that's one big component as far as rent uh rent growth, rent understanding. Um, let's see, population growth, of course, goes the same way, right? We all know Texas is booming because people are migrating to Texas. We all know certain parts of Tennessee or Florida, right? People are leaving uh New York. For example, a lot of private equity now that's leaving New York and Chicago, they're all going to Fort Lauderdale. I think there was a publication out there floating around talking about there's more private equity firms in Fort Lauderdale than anywhere else in the country now, because everybody and in companies were getting out of New York and again, Chicago. So, you know, those are the things that just happen, and you want to follow that and understand why they made the decisions. And and so a lot of that pop growth is money is gonna follow as well. So and and mind you, when like I'll use Havisu as an example. When people are retiring and they're moving here, they're also moving their money here, right? They're buying their houses, they're buying their stuff, they're gonna go get a credit union, uh, you know, for example, account, they're gonna start banking at maybe a local uh bank. They start moving their money here. They open up and maybe another business or or they buy you know more real estate here. They just move their wealth here. So when pop growth goes on, more wealth is gonna go there, which means more job demand. The list kind of goes on. So you have a much better uh outlook on making an investment, and obviously depending on what you're trying to uh trying to create. So that's important. Let's see. Um, I keep scrolling here, so forgive me. Uh examples of what you do avoid. Oh, what we do to avoid um certain assets. I would say, you know, we're kind of we were a little bit more diversified um and spread out, you know, before the pandemic. Uh, you know, we were a lot more involved in more things. I think what you're gonna see is that we're kind of honing in our craft more and really starting to become more professionals at like one asset or two asset classes. Um, that's where we want to hover. I think, you know, the business is hard enough. Uh, every project is difficult enough that it really does take a lot of energy and a lot of polish and a lot of hand holding to get anything built and done in today's environment. It's just so different than it was, you know, 10, 15 years ago. So it's really, really important that we stay on that track and stay super focused on that type of development or asset class and kind of focused as a firm. So, one of the reasons why I want to share that with you guys is because most people invest based off of emotion, not necessarily the data. And and and that's good, right? You want to get the warm and fuzzies about the developer, the the development. If you're just a hands-off investor, more of a limited partner, you know, you want to get the warm and fuzzies to make sure that you're, you know, going getting the into the right uh getting into the right group. However, really take a look at our, you know, like our pitch decks as an example. We cite where we're getting the data from that is ultimately helping us make the decisions that we're making and why we're going so far into a specific asset. So, you know, again, because people are more emotional nowadays and because of the volatility, it is important that you really do consider the data as being a uh uh kind of your true north on your decision making for your uh for your wealth creation or uh preserving your wealth. Okay, guys, got another one for you. Uh the biggest mistakes new investors make. I think this is really important. Um, not trying to drive you into a direction. I think these are going to be massive bullet points for consideration as to why people make big mistakes. And to be candid, I get investors all the time that are current investors that have made investments into other uh syndications that are just having much larger issues than I could have ever expected. And it's because they didn't understand the structure. So chasing returns instead of understanding the structure, that is the most common. As an example, when I have the barn caves, the returns on the barn caves are much higher. So we get a lot more uh hits on that investment. So, regardless of the term, they see 30% plus and they're like, I want to know about that one rather than the 20% plus. They just people naturally go to where the money's at. So by nature, people are greedier and so they want to know where I'm gonna make the most money. So that is a problem. I think people need to identify and try to understand the structure first to then identify the risk and how real that 30% returns really is, right? Because I'd say other operators and developers, they use those numbers to try to get your attention and then get you in, but they really didn't weren't able to paint the picture and explain the structure. And investors really didn't know what they're getting themselves into from the beginning. So that's a big, that's a big thing. So you have uh you have that chasing returns over understanding the structure, not knowing the operator and and the misunderstanding. So again, not knowing what it is that you got yourself into. Timelines, liquidity, waterfalls. That's another thing. You know, people, a lot of people are looking for cash flow, but they don't think that equity investment opportunities have cash flow components to it, which one of ours does, the other one does not. Meaning you can invest into something where you have a big equity kicker like a 30% return on the back end, but you get cash flow throughout the process. So you're getting cash flow a, you know, each year. So you're getting some income while you wait for that big profit participation on the back end, right? So again, not knowing, okay, I know I need cash flow right now, but I also want to make a bunch of money on the back end uh because you need it both, you know, you may need both of it, but you're unable to identify which investments or operators have that. So, you know, that's a big thing too. People want cash flow and people want equity kickers on the back and they want to build their wealth on top of generating cash flow and putting their money to work. Um, let's see. Uh, most investors don't lose money because uh because of the market, they lose money because of the decisions. I would I would agree with that. I would say that most in most developers, it's not that they're making bad decisions. It's just that they're trying to navigate shifts in the game. And the most important thing you do as a developer is stay on track based on your structure and planning. Where you mitigate the majority of your risk is in planning, design planning, making sure you have the construction management, make sure you have the right numbers for you know your line items, what you're where you're gonna get your materials, what your lead times are, what your install times are, which you know, how many subs have how much labor, and when how long they it's gonna take for them to deliver, you know, logistics too, right? So it's all kind of comes around the management and planning, is where the majority of the risk is. And as long as you've planned it properly, you've you've got a track record on how to navigate uh landmines, and you have a good group of people, you typically would do really well. So um that is it for that concept. If any of this segment was of value to you, I encourage you to take a look at some of the other webinars and what it is that we're doing as a firm. I manage a hundred million dollar debt fund now, which is a distressed asset fund. I do a lot of things and private equity from equity opportunities and development and identifying materials all the way down to opening up gyms. We just opened up a gym in Lake Havasu. We'd encourage you to take a look at the Family Office Society website, see what type of product that we're bringing to the town, and look how fast we ramped up with memberships and showed proof of concept of the way the world is moving, but we use the data to support our decision making with that investment. We'd love to continue to encourage you to watch what it is we're doing and how we're mitigating risk through these unique times. I really appreciate the opportunity to earn your business. And if there's something that you guys want me to touch on or talk about or topics, feel free to DM right, you know, right on this post. Let me know what it is you'd like for me to touch on so I can go ahead and give you more value and continue to hit some of the things that matter most. So thank you very much for watching. We'll see you soon.