SPEAKER_00 0:01

What is up? What is up? What is up? What is up, pro design builders? Uh, welcome to another live stream where I give you the best game that I got when it comes to uh design and building new development projects. Uh, I'm Sam, your host, and welcome to the Pro Design Builder uh Facebook group. And so this group is specific for real estate investors that are struggling with knowledge and experience to become real estate developers. Uh I went through the same experience, right? And I jumped through a lot of hoops, I kissed a lot of frogs, and I got out the other side to where I wanted to, right? So if you don't know um my story, I I gotta always tell you, you know, my story. But, anyways, I first got into real estate investing um when my wife was supposed to go to med school and she wrote me a letter one day saying that you know she didn't want to go, she didn't foresee us having the family life that she envisioned. Um if you know anything about me right now, I am an active foster dad, I am an active uh adoptive dad. I adopted twins, and fostering is is a big part of who I am and something that I'll be doing pretty much for the for the rest of my life. So, and and she's has always kind of known that. So when she wrote me this letter, I'm not gonna lie, I was very disappointed and kind of kind of distraught. We we actually had to go see our um our married married uh our pastor, which is a married, married uh couple's counselor, and he kind of laid it all out. She laid it all out for them, and and at the end of that meeting, he was kind of like I agree, I agree with her. I mean, the the fact that she would hold uh family at such a high regard, but what it did was it kind of left us in a place where I still didn't know what what what our future was gonna look like. And that's when you know she said to me, she's like, Why don't we look into uh investing? So when my investing journey began, she handed me a book called Ripsad Poor Dad, and after I read that book, it really spoke to me. It spoke to you know who I want to be, who I want to grow into. And after that, we went to this seminar, and it really kind of started bringing things uh to life for me, and then from there I went to another seminar and then started taking messy action as a wholesaler. And a lot of you guys probably could relate to wholesaling and flipping and stuff like that, and that's kind of how that was my entry point into real estate investing, right? And but I didn't stop there, right? How I got into contracting as a design builder and a contractor was on my first flip, I hired a contractor, I fired a contractor. I hired a second contractor, I fired a second contractor, I hired a third contractor, and on my third contractor, I realized that this business has contractor problems, and I probably was never gonna be happy uh with the contractor's execution and and stuff like that. Um so uh I I I saw the opportunity, I got really good at it, and then I was like, you know what, let me look into being uh a contractor. Right, but before that happened as an investor, I remember uh a property that we bought and uh a car had ran into it. So I approached this uh building engineer, and I approached him and I said, Hey, listen, I want to learn how to you know build houses. And he said to me, he was like, uh Sam, you know, you if you pay me 30 grand, I'll teach you everything you need to know. And I'm like, 30? And then he said, you know what, make that make that 40. If you you pay me 40 grand, I'll teach you everything you need to know about building and stuff like that. And uh I walked out of there and I was like, this guy's a real jerk because he he was. He wasn't impersonable, uh, he wasn't somebody that I actually really wanted to kind of truly learn from. And um I remember walking out of there and uh I was like, I I gotta I gotta figure this out, right? I remember I had a friend that was a developer and he was a big time developer in Manhattan. And I and I went and I flew up there to meet with him. Uh at the time he had about six hundred million dollars uh of projects on under his under his belt. He had a couple hundred million in in projects coming up, and I just sat there and I and I just pretty much uh asked him about how did he get started, what what did he do, what were things that he did, and stuff like that. But I remember after that meeting, I said to myself that for me to become a developer, I had to learn this business through construction. And you know, that shortly after that is when I started my construction company. Uh I was a design build general contractor for the last eight years. I still own my own construction company because it makes sense to be vertically integrated. So through through throughout all of that, uh a lot of lessons learned, a lot of um um bad moves done, and I I realized, and through having several mentors now, uh amazing mentors actually, uh I realize my road to development and design build could have been done a lot shorter with the right mentors involved. So I want to return the favor to um inspiring uh developers and without having to go through the 13, 14 years of jumping through hoops, figuring it out, uh, like I did. But um I I don't regret it. Going to the school of hard knocks wasn't a bad thing. I got a lot of lessons that I won't do again, and you don't have to take those. So, you know, today's um training is about how to identify uh profitable land opportunities. So I'm gonna really be breaking down what this looks like for um you when you're looking at um land opportunities. So let's let's uh let's let's dive in. All right, so it all starts with market research, all right. So understanding the local market conditions, um the first step is to understand that real estate demands, uh real estate demands in the area, look at the trends of population growth, economic development, job creation, infrastructure, um uh regions with increasing demand. You know, we like populated cities, all right, areas or just on the outskirts of of populations or urban areas and stuff like that. Reason being is the increased activity and the infrastructure and and the job opportunity uh provides for quicker sales, right? So when you're looking at market research, you don't necessarily want to be in rural rural areas because uh it takes longer to sell those type of properties. So the rule of thumb is anything under 5 million, someone has to live in. They need a roof over their head, all right. You have to remember we are 4.1 million units short, right? So this math works in your favor, it works in our our favor, and understanding that the biggest difference is there's a knowledge gap, and bridging that gap to get your first project off the ground is the challenge. So that's what I'm here to kind of help you do. So, some of the ways that we do market research is we use sites like LoopNet, um, Zillow, Redfin. All right, also uh review your local uh economic reports from the Chamber of Commerce uh or the economic uh development office in your city. So if you just type in the Google uh economic development office uh in your specific area, uh it will pop up and you could do some um market research there on what's going on as far as development. Um, also, you want to check construction and building permits. What types of permits are already planned and approved, right? That's gonna really start to tell you the story on what is happening in your particular area. So focus on emerging markets. Highest returns come from investing in areas that are currently undervalue, but expect to grow due to planned infrastructure or business development, right? So planned infrastructure, right? What are what is infrastructure? Roads, highways, uh solar panel uh plants, uh uh a number of different batteries, you know, which is big now because we're doing this big conversion from from gas to you know solar power, you know, those types of uh chips uh that when you hear the Congress and different um when you hear Congress talking about bringing certain types of infrastructure and then they pass a package uh of billions of dollars, that is infrastructure that will eventually come into your community. But the thing about it is people all need somewhere to lay their head, right? And like I said, five million and below, there's probably an executive that needs to lay his head and bring his family so you don't be uh afraid uh of that. So assess supply and competition. So uh identify whether the area is supplied with similar types of development. Too many available properties can uh suppress prices and rentals, while low competition in high demand areas is a strong indicator of profitable opportunity. So you get you got to think about it, you know, like this. If the competition is low, let's say you're you're deciding to carve your own path, right, in a particular neighborhood, which is something that I like, right? As a developer, your job is to create the highest and best value in that particular area, right? You have the ability with the um knowledge and the vision to go into a particular neighborhood and begin to transition that neighborhood into its highest and best value, right? Depending on how great the schools are, where whether it has great walkability, whether it has great transportation, how close is it to malls, etc. These all all these things are going to be important, but you have the ability to do this in a particular neighborhood, right? But you have to make sure that it's the it's the right neighborhood. All right, so let's let's examine land location, all right. So proximity to key amenities. A location close to essential amenities like schools, parks, shopping centers, and public transportation often enhance the land's value. Convenience is a significant driver for both residential and commercial development. Those are some of the things that I had already uh mentioned to you. Uh assess the infrastructure, ensure that the land has access to necessary infrastructure such as roads, water, sewer, and power. All right, so we want to stay from away from uh rural rural land, right? We want to rebuild or build on land that has already had a house uh on it. Reason being is they've already established uh the the utilities, they've already established the sewer, water, and sometimes gas. So doing the connection uh is going to be a lot easier. Also, too, you're gonna you're gonna face less impact fees, right? You're gonna find out what impact fees are once you decide to make this transition and you decide to start connecting to um to the infrastructure that's already there. So uh access to infrastructure, ensure that they have access. Okay, boom, I already said that. Growth areas. Look for land located in areas that areas expected to experience economic population growth, right? Uh other areas that you want to uh look at and take advantage of is opportunity zones, right? So the city is planning or have a city planner, right? And they're planning out the map and changing the zoning, and there's certain areas that are gonna provide additional opportunities, and those are the types of things that are areas of growth you want to be looking for, right? There's also some financial benefits in in doing the development, right? There's a lot of perks and incentives that they give to developers for taking on certain projects because they they literally won't build them. So analyze the zoning regulation and land use. So understanding zoning laws, understand the zoning, the zoning restrictions on land, such as whether it's it's zoned residential, commercial, or uh industrial, um, per permitting and entitlement. All right, investigate what kind of permits are needed to develop the land and whether the local government um opens is open to changing the zoning to higher um higher higher value use, or i.e. converting uh agricultural land to residential or commercial or mixed use. These are the types of things that you want to know and you want to ask questions about when you're talking about tying up certain properties. Uh, obviously, if you're building single family homes, they have been single family homes there prior, then you're you're you're likely in the right zoning for that. You just got to check the re the restrictions around um the parameters of of the home, right? What is the survey says? How how high can you go? How wide, and is there any variations that could be done to increase that to its highest and best use? Those are the types of things that you want to know, right? So um re rezoning opportunities, ensuring that local planning authorities to understand future zoning uh changes is crucial. Uh underutilized properties, uh properties that are underutilized or outdated, such as old factories or vacant retail spaces, often provide redevelopment opportunities. Developers can acquire and repurpose such properties and can create high value real estate, right? So these are the types of opportunities you you want to be looking for, right? So you got to think about this. If you're a developer, you're a visionary, right? Your job is to see things that don't exist and create highest and best value for the area, right? The community will thank you for it. Um, not all the time they the they'll uh they'll thank you for it because sometimes there's a little bit of displacement that happens for that to happen. But because we're only dealing with one to four units, you know, you're not gonna have this kind of a pushback, right? It's when you get into the hundreds of units, you have these types of challenges. All right, so conduct a feasibility study. Nothing will happen or get off the ground with without a feasibility study. So let's break down what a feasibility study is. All right, so financial feasibility study establish the costs associated with acquiring and developing the land, including purchase price, site preparation, infrastructure, legal fees, and construction. Compare these these costs to the projected income from selling or leasing the developed property. Alright. Then you also want to uh calculate and estimate the return on the investment, which is the projected ROI. Alright, so calculate the potential return on investment or ROI based on the different scenarios. For instance, if you're planning a residential project, estimate the sales price of the of the home, apartment, and compare with the developed develop development cost, all right. So literally what you do is you take the final cost, right, minus the development cost, minus the profit, and then that's gonna tell you what the maximum you're allowed to pay for the land, right? You're gonna take that cost and you're gonna compare it to uh comps that have already sold in regards to land, right? That's gonna tell you if your project is going to pencil, and your project needs to pencil or you won't get it approved with your construction loan. So uh if you have questions about anything that I'm mentioning now, drop it in the chat, right? What questions you have, so I can provide additional clarity for you. So, all right, so time on market, right? Very important. Consider how long it will take uh it will take to develop the land and bring the product to market. Uh, longer development timelines can increase cost and exposure to market risk, right? So the longer your project is gonna take. This is why having and hiring the right team is so important, right? So the longer that it takes, right, the more it's gonna cost. That's just kind of how uh this thing goes, right? So the the the faster it is, the better it is, and then you stop spending, you know, day in and day out, right, on your monthly expenses. What right? So evaluate the site condition, right? All right, so topography is gonna be important, right? So and and soil quality. So one of the first things that you do when you when you're thinking about taking on um a project, a new development project, is they do a soil test, right? And one of the things that they do with the soil test is they drill all the way down and see if they can hit bedrock, and then they pull all the way up and then they scan all of that information and they give you a report. It's gonna tell you exactly what's underneath there, right? What's the soil like, right? Is it clay? Is it sand? Is it uh do we need to put reinforcement? Do we need to drop piles, right? Does the house need to be connected to piles because it's it's shifting underneath there? All of those things are gonna be important in understanding your construction costs, right? From there, your architect is going to put together plans that represent the soil conditions, right? And if the topography is off, if it's too slope, that means they're gonna need to bring in more more more dirt to kind of level it off, right? How does the runoff happen from the particular um the particular piece of piece of land, right? All these things are gonna be important in understanding how to analyze the dirt, right? So environmental concerns, be aware of environmental issue, issues such as uh contaminated uh soil, flood zones, and endangered species habits, right? So depending on the area, that's why I like homes that are already built, right? Because you're not dealing with endangered species, right? If it was a vacant, vacant piece of land or rural rural land, then you might have different avian species that are endangered or protected, and then now you have a bigger challenge, right? So uh also understanding flood zones, right? Uh FEMA has certain type of requirements on where the land level needs to be according to the crown of the street. So, you know, don't be intimidated by a lot of the information that I'm sharing. If you have questions, just feel free to ask me and I'll plug in the gaps. Alright, so utility access. So confirm the availability of essential utilities like water, electricity, gas, sewer. Uh if utilities are not readily available, factor in the cost and timeline for connecting, um connecting them. Right. So like I said, you want to be in areas where these connections have already happened, or even if it didn't happen uh just yet, and that piece of uh land has been vacant for uh a long time, but it has properties around it, right? So that's a good that's a good indicator as well because they have already connected to the city water and brought in utilities and and etc. So uh you could connect to those um those connections pretty easy, which is important for you to to to know and understand, right? So in last comparable sales, right? So so comparable land sales, look for recent land sales in the area and determine the market value of the land. So comparing similar size parcels with with similar zoning infrastructure and land featuring uh features, right? So comparable property. Sales if the land is intended for residential or commercial. Analyze the sales that just sold, right? That's gonna be a good indicator for you, right? So one of the most challenging things that you could do is be the first developer to set a comp, right? But that's okay. Um, I like setting the comp because now you create your own lane as to um as you create your own comp, so to speak, when you are first, right? So now when you're first to the area to to build something that represents something of quality, now that comp is gonna always be your comp. And then now you could continue to build in that particular area. So also, too, you want to find one designated area and then kind of specialize yourself in that particular area. You don't want to bounce around in different towns and etc. You want to know and understand that that community, know and understand the officials in that community. That's gonna be very important, and continue to do business in that area because once people get to kind of know you and get to kind of know the type of work that you produce, then it's all gonna work out in your favor, right? So engage in local expert, right? So this is this is gonna be key, right? Uh real estate brokers work with a local real estate broker who specialize in land and development. They often have insights into off-market deals and and upcoming opportunities that aren't widely advertised, right? So uh also use land use attorneys, uh, engage in land use attorneys or urban planners who understand the local zoning laws, um, permitting process and potential for rezoning or entitlements, right? So the team that you hire, the team that you are working with is going to be very important in your success, right? So if you're hiring professionals, which you are managing professionals as a developer, that's the route you need to go, right? So you want to explore government incentives. That was something that I mentioned briefly, but let's kind of dive into some of the government incentive programs when we're looking at land, right? So tax incentives. Some areas offer tax incentives or uh subsidies to developers who build a specific zone or such as an opportunity zone, right? So low-income housing, um, the government will subsidize you, or enterprise enterprise zones. These incentives can significantly boost profitability, right? So, not a lot of people want to build uh affordable housing, and if you are building affordable housing, there is some government programs that want to support that and will cut you a check for taking on that sort of project. So grants and financing assistance, research grants or low-interest financing programs available for certain types of development projects, uh, especially affordable housing, green building initiatives, or urban renewal projects. Right. So, lastly, most important, right? When you're taking on this kind of project, right, have multiple exit strategies, right? And we're gonna kind of dive into right so consider uh short-term and long-term holds, right? Determine whether the land is better suited as a quick flip or a long hold, right? So one of the long holds may be kind of like the one I described where the uh investor bought this piece of land. Um, mixed use building started going on around him, and now it made it a little bit more valuable once he put some plans together in that particular parcel, but he it was a long-term hold. There's a long-term um exit strategy for him, right? That he that he purchased for three or four hundred thousand. Now he was trying to sell it with plans for seven and a half million dollars, right? These are the sort of opportunities that you can plan for if you understand uh where the city um planner is going with the plans in in your city, right? So uh flexible development options. Look for land that offers flexible development options, allowing you to adapt um your plans based on market conditions, land that can be used for multiple purposes, uh, i.e., residential, commercial, mixed use, increase your options and reduce your risk. Anytime you have flexibility on the direction that you're able to take the project, then that's good, right? So uh if you are buying dirt and sitting on it and waiting for opportunity and understand that the zoning uh will allow you to to put commercial there or put uh multi-family um there, you you you you want to know that stuff kind of walking in. So hopefully you guys got a lot of nuggets um in this particular training. Uh, I try to bring the best value that I can. I do have something special that I'm working on, and I've been working on it for a long time. I'm rolling out my program for investors who want to go through it. All right, so I'm gonna be uh working on a beta soon, all right, and so be on the lookout for that, or just message me and ask me about my program that I'm gonna be rolling out soon. Is I'm going to offer it for for a select number of people. Uh, I'm not sure what that number is yet, and I'm going to roll with the beta where I take you through my course and and help you kind of get some some of your projects off the ground. So uh outside of that, I'll catch you next week where I'll bring you another training. And uh outside of that, have a great day.