The Dallas Builders Club
Real Builders. Real Investors. Real Deals.
The Dallas Builders Club Hosted by Award Winning Real Estate Investor and Builder Carl Dean along with his partner Mathew Smith, helps clients, investors, and builders grow and learn from the mistakes many of the pro's have made before them. You will learn investing strategy, building strategy, operations and efficiency tips as a builder, how to target the right markets and select the right clients. We will have special quest builders sharing some of their hardest lessons learned as well as vendors talking about their expertise and ways to improve process and profitability for builders all across the US. This show is NOT just for Texas builders, we will have builders and guests from all different high end luxury custom home markets throughout the US. Our goal is to entertain, be REAL, and help others in the space be more efficient, more profitable, and make less mistakes.
The Dallas Builders Club
Dallas Builders Club Ep. 3 - Funny Stories, Getting Personal, and Evaluating Lots
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This is our 3rd episode and we are almost dialed in on our production. Few more tweaks made after this episodes with the camera settings etc. We will get there boys and girls! but we promised each other to just DO IT and get it out, perfect or not just GO and keep going. So here it is. Funny jobsite stories you wont believe, whats going on this week, getting personal on how we keep it together and balance work and life, how to evaluate lots to make money and more banter. Check it out, let us know your thoughts!
Yeah. All right guys. Welcome to the show. Uh this is the Dallas Builders Club where we talk about everything as far as home building, custom building, uh real estate investing. It could be apartments, it could be houses. I've done it all. So um my microphone is slouching on me, piece of shit. We also talk about life. We talk about life. We talk about fitness, we talk about being dads, we talk about what's important, we talk about what motivates us, how to get motivation, how to keep motivation. Uh we talk about a little bit of everything, you know. Uh we just try not to make it just a bunch of boring ass content about building houses. So which is not boring at all. But tell me about what's going on for you this week.
SPEAKER_00A little shop, a little shop talk.
SPEAKER_01A little shop talk. Uh, what's going on for me this week? So this week, uh I really got to finish kind of the back end coaching stuff. I've got a couple people I got to get back to on the coaching stuff. I've been really trying to focus on getting the podcast rolling, getting the landing page set up for the webinar. We've got to get the Zapier or whatever we're gonna use set up for the, you know, basically pulling in the leads and then selling the coaching. I need to I need a landing page that I'm still working on. So some of those things that kind of slowed me down as far as like getting back to some of the guys. We've got two or three people that are interested in coaching already.
SPEAKER_00Are you working on that uh feature where someone leaves a comment saying like they're interested in the coaching?
SPEAKER_01Yeah, also, yeah, also the social media stuff working on, you know, again, that that that that kind of like automated feature where someone DMs us and like we get like the you know, we can kind of automate some of the process. The biggest thing that I'm working on really is trying to get the coaching off the ground, trying to get some of this automation stuff off the ground, and then obviously being on site shooting content. We've got a bunch of projects going on that I'm trying to like get you to get content. I'm trying to get content in all different stages of projects. So, you know, on top of all the stuff we're doing for promoting and marketing, we're also building a bunch of houses, which is fun.
SPEAKER_00Speaking of content, um, I got some bad feedback about throwing out that microwave.
SPEAKER_01Yeah, you know, I I was confused because I'm like, are they pissed about us throwing the microwave away? Did they not know that it didn't work, obviously? Yeah, yeah. Or were they pissed up that you did like the little Spanish voice? Because I'm like, dude, these these guys are our homies. Like, are you kidding me? We we drink Cebasas and bullshit with these guys all day long.
SPEAKER_00They're not offended, believe me. I'm not racist. First of all. Duh. Uh second of all, yeah, that microwave, I believe I looked at that thing for almost two weeks. So my thought process says that it's been rained on. It's done. That's a neighborhood of four plus million dollar houses. I'm pretty sure that if I live there and I was pulling in my driveway every day, I wouldn't want to see a microwave sitting on top of the transformer. Yeah. So I gave someone enough time to come get it, whatever, you know. And obviously, I think that was just like a last man standing microwave. Yeah.
SPEAKER_01Speaking of microwave, let's do a funny story real quick, a little off topic, because I don't want to hear about your week. Just a funny ass story here. So uh when I worked with Atwood Custom Homes in South Lake, uh, me and a couple other builders always had some crazy ass stories that we'd share every week. Uh, my buddy Chase, who now works for Stuart Custom Homes, I think, uh, he was on this job site and they were finished. Like this house was done, buttoned up, the whole deal, right? They were doing a final walkthrough, and he opened up the closet next to well, it was in a hallway, a closet, and he noticed that there was like a vent in there. And he was like, That's kind of strange. Like, there's a vent in this closet. Maybe there's something going on here, and nobody kind of put two and two together. Come to find out, it was a damn microwave. Somebody had a microwave on site and sat it somewhere next to this fireplace. And when they were framing and doing the sheetrock and whatnot, they basically sheetrocked around this thing. And and then the sheetrockers, I don't know if they thought it was funny, it was a prank, or it was a complete oversight, but they thought that the vent, the back vent of this microwave was something to do with the fireplace. And so the sheetrock in the closet had the vent of the microwave cut out, and you see it and you're like, what the hell is this? You open up the wall and it's a damn microwave sitting in there, bro. I'm not kidding you. The most funny story ever. There's photos of it. I'll try to find them somewhere. Uh Chase, if you're watching, dude, I need those photos.
SPEAKER_00We gotta, I gotta share that. Um, you gotta be careful with those microwaves, right? You cook anything in them and they give off condensation out of that vent. Yeah, so they were setting the microwave underneath the knee space of the island. Well, when I went to the job site the next morning, I pulled the microwave away, and that that condensation, which also was filled with oil or whatever, yeah, um, was all over the island.
SPEAKER_01I remember that, dude. It was all white oak. They had to replace all that white oak because the microwave was like the back of it was like it almost looked like it was like spewing out oil because it like sucks the air out of the whole thing. Well, they were cooking something greasy, yeah. Yeah, so when you're cooking something greasy, that m vacuum or whatever is kind of like pushing it out the back. Well, it like sh put that grease all over the white oak. Yeah, there was a ruined. There was a spot. That's terrible. Unstained white. Every crew on earth, yeah, especially down here in the south, brings a microwave to site to heat up their lunches.
SPEAKER_00Which we appreciate because I mean that just means your trades aren't leaving the site to take an hour. 100% agree. So you kind of got to talk to it.
SPEAKER_01You can't use it in the house.
SPEAKER_00I know.
SPEAKER_01And the home garage at best and keep it away from the walls and the trim.
SPEAKER_00The homeowners get mad about it, which I can totally understand. I mean, that same house. Yeah, that same house we had an issue where you know they literally brought uh uh uh like a skillet upstairs. Oh, yeah.
SPEAKER_01I've heat up tortillas. I've seen them break out a whole fireplace, like a little mini fireplace, and put like a gr a grillet thing or whatever over it, and they're doing their thing, feeding the whole crew.
SPEAKER_00Just have to have a respectable conversation with them. Like, hey man, I get it. Appreciate you guys being here all the time. But like the homeowner, they walked in here for their evening walk, and the house smelled like cooked food.
SPEAKER_01Yeah. Now when we were on we were on um uh the Falcon Estates project where we had eight houses and there was like four or five of them going on at the same time, right? So there's contractors all over the place. There was actually one guy who worked on a crew, I think it was a framing crew. His entire job was due to do nothing but clean up and cook lunch. Yeah. So he cleaned up, he's an older guy, cleaned up all day long. Lunch came. He not only made lunch for his crew, he was selling it to all the other crews. So he's in there making little side dollars. Man, that's just so efficient how they work. Hard, hard ass workers. I aspire to be that guy. Yeah. So what what do you got going on this week? What is what's on your well?
SPEAKER_00We got a house that's in mechanicals right now, so a bunch of walks on that, right? Um, you want to make sure you're walking with the HVAC company for placements on that. Uh, you know, walking with the plumbers, coordinating things with the roofer because of course, the second you get those penetrations, yeah. We just came out of the rainy season down here, so we want to make sure the roofer hops out there, flashes them in.
SPEAKER_01Yeah.
SPEAKER_00Um, I want to get a uh roof selection made on that house too, because then we can run the flashing up the walls and get that thing really dried in. Yeah. Um, so that project's in mechanicals. Uh, you know, we have the other uh project that's in engineering. Um I have a project where the slab is curing right now. So just trying to figure out when they're gonna cut cables so we can put a nice rough grade on that and drop lumber. Um and then we have another project that they're working on their plumbing undergrounds. And apparently I'm a tree root expert now because I have to figure out uh, you know, pruning tree roots at a 90 degree angle, and you can only go 24 inches deep in the trench.
SPEAKER_01And these are all things I keep me posted on that because if that turns out to be more of a pain in the ass than just pain to get the tree cut down. I mean, I hate to say it, I'm a tree hugger, but yeah, you know, I'm also not somebody who likes to make my life more complicated and more expensive than it needs to be. So keep me posted on that as we get further.
SPEAKER_00That speaking of complicated, it's you know, these are things like my phone started ringing this morning, and it immediately was the plumber calling me about tree roots, the roofer calling me about penetrations, uh, you know, like just the you you truly never know the kind of daily problems you're gonna run into. I've never run into a problem with tree roots yet, you know. And and in certain cities you gotta be careful because they're very serious about these trees. And there's costs and penalties you're gonna incur if you do kill a tree.
SPEAKER_01Yeah, especially the protected trees. Yeah. Yeah. I mean, I was I was replying to replying to um uh clients last night at like eight o'clock. And again, it's just nine o'clock. One of those things, nine o'clock, no big deal. And I don't mind it. You know, there's days where I do mind it, where I'm with my kids or something's going on, and you know, it's I can't if I can't get back to you, I can't get back to you. But if I'm sitting on my ass, you know, watching a show and I'm on my phone anyways, and you're you know what I'm saying? I I you know clients need those wins sometimes, and I understand this particular client has a super busy schedule, so it's their time. Yeah, we're trying to accommodate. Um, I don't mind that, but we know I had a list of things to knock out first thing in the morning, which was obviously send that pool bid out for a couple more bids, a couple more looks. Um, you know, it's just there's there's always a million things. Not to mention I'm dealing with the development of the seven other lots and trophy club. That's been a constant pain in my ass. Um, and then underwriting some more deals, yeah. Looking at a deal with for a student. So, you know, that's kind of the the day in the life of you know what we're doing besides all this.
SPEAKER_00You know, how do you I mean I I know like you're the one of the lessons you've taught me is like the ability to compartmentalize, whether that's business stuff or personalized stuff. Um, you know, you hear like you know, someone about like you take like Elon Musk, right? They call it signaling, and and basically signaling just means like he is focused on the most important problem at that time and getting past that, and he and he basically blanks out all of their noise. And they say that the unfortunate side of that is the noise sometimes is your family, your personal relationships, the things your friends need you for, and you block all that out to get through on the business side. So, what what do you do? Or like what are some of the ways I don't know that you deal with all of the pressure and and stress that comes with this business because it energy does come with this business.
SPEAKER_01Yeah. Well, you said it compartmentalizing is like my superpower, right? Like uh when I leave work and I'm home with my kids, I'm home with my kids. I'm not answering the phone, I don't care what's going on. You know what I mean? Unless your house is burning down and there's something I could actually do to save it. I mean, I'm not answering the phone for lawyers. You know, it doesn't matter. I mean, when I'm with my kids, uh, that is what I do. Leave the phone on the table or wherever. Um, but also I'm also hyper focused on whatever it is that I'm doing. You know what I mean? Like I I know priority, prioritizing is important and knowing I gotta get this done before I can get that done. I don't want to be dabbling and doing a bunch of little things here and there. It's like I gotta grind this out, then I can move on to this thing. Uh, but as far as the stress, I mean, honestly, dude, if we didn't work out every day, I'd be like a ball of just bad energy, you know, grinding and working out and and getting to F-45 or going for a run really helps. Uh, don't drink, obviously. Don't do any drugs. So it's like really my biggest and best release and and and focus point aside from work that really just puts me in a good mood and makes me happy and kind of alleviates my stress is hanging out with my kids. Um, even though they can be a pain in the ass sometimes, I'm sure everybody who has kids knows, like kids can be, especially when they're two, three, four, five, six years old, they're tugging on you every second. Um, but it's a good distraction. You know what I mean? It's like I watched Mario Brothers with my kids uh or just do something that, you know, the other last night we watched uh Little Rascals, which is cool for me because it was like a movie that I watched as a kid. So it's just like you know, I find those things that kind of just completely turn my mind off. Um I do a little bit of journaling, especially if I'm having some crazy shit going on in my life. Your video journals? My video journals. So I've got a Dropbox file that in case I die. In case I die. In case I die. And it's the videos that I want you to take and make sure the world sees and make sure my world is. I'm gonna watch them first. My kids see, and it's just me turning on my camera and just talking like raw. And it's raw. And I mean, it is not filtered like it would be with a therapist. It is like I don't want anybody to find this ever until I'm dead. Yeah. Because I'm so real, I'm so 100% authentic, true to myself, because I'm not making those videos for anybody but just me. You know what I mean? And I say things that people wouldn't like to hear. I I'm just 100% true to myself. And you know, I've made them since my kids were born, you know, talking about the first day my kids were born, the first time I saw them, you know, through the divorce, through the business stuff, like all these different things. And I just make these five, six, seven long minute-long videos on my phone, upload them to my Dropbox folder. And, you know, I told you, if I die, this this hat, you have to take this and make sure people get it in the right hands. Cause I mean, that's how I deal with stuff. You know what I mean? I I I I go to therapists every now and then, more or less just because nobody wants to hear me bitch about a billion things, you know what I mean? So it's like, and I'm not somebody who bitches about a million things. So I go to the therapist really just to talk shit for an hour and just oh yeah, they don't get a word in it. Yeah, they're happy. They're just there, listen, and they're like, Yeah, I got a girlfriend, give me a pain in the ass. And I'll be like, I kind of want a girlfriend, but I don't want a girlfriend. I'm so busy working, blah, blah, blah, blah, blah. It's like, you know. They got their notepad and they're just like, client, client is crazy. Yeah. At the end of the time, they're like, Time's up. I'm like, was that too much? I'm writing a book. I'm starting, I have three businesses, I'm doing this, I'm the dad, blah, blah, blah, blah, blah.
SPEAKER_00You're like, you you gave me no advice. Seriously.
SPEAKER_01I just vented for you. I walk in the room and they're like, buckle up. You know, it's uh, so yeah, I mean, that's how I deal with it. I I know you have gotten better at some of the, you know, because you get calloused over time, and you had a cushy deal with the insurance business and you know, the family living by the lake, and that whole deal up in Michigan. You was cushy, but it wasn't enough to fulfill you. Right. And so you got outside your comfort zone and you've had some hard lessons.
SPEAKER_00I've watched you go through the the growing deal. It was cushy, and I was cushy. Yeah. So um, yeah, no, 100%. I uh I mean, I share some of the same things as you, the, the, the exhausting the body to fix the mind or whatever. I'm I'm with that. You know, I I love going on my runs. Uh I'm a seven-day-a-week guy, and you know, all the cliche stuff. I'm I'm not doing it for any other reason than the endorphins and how much better it helps me because again, I don't drink, I don't have any vices. I'm not trying to run away from things. We really got to face things heads on, head on. But uh, I mean, really, beside all that, yeah, I'm kind of like uh close the blinds and and and hide, you know, the room dark, a little bit of music, yeah, you know, put my phone away. Um, I feel like I need a little bit of time. I always tell people when I talk to them about this kind of stuff, it man, it just kind of feels like we're constantly at war. And I don't mean that necessarily in a bad way, but it whether that's just all the problems that we have to deal with with the work stuff or you know, some of the personal life, it's just I'm I don't there's not very many moments where I'm not fighting with somebody or or just there's just some moment of conflict. And I get so wore out from that, yeah, that I'm kind of just like, I need to, I need to vibe. Like you'll come over to my house with the kids and everything, and what am I doing? I'm like in the kitchen, there's music on, I'm cooking. Yeah, like it's a very and you'll walk in my door like the Kool-Aid man, and I hit you right away, and I'm like, dude, stop.
SPEAKER_01I chill. In your defense, because I don't I don't think a lot of people know this, but in your defense, you moved down here not even three years ago. Yeah, we started the I started this business three years ago, basically. You moved on here six months after we started it, sold your business, moved your whole family down here. We started the business. My wife got pregnant with our twins. Yep. We moved into a house that's in your neighborhood, so we could all be close. My wife and I got divorced. Yep. The child the raising kids, and it we just we just separated. Um, and then obviously you're going through a divorce right after, and an unfortunate circumstance that has nothing to do with you. Yeah, I'm not gonna put it out here like that, but that's a lot, dude. You know, that's that's a lot mentally on top of growing a new business. We don't have clients calling us, you know, constantly to build them a house. We do have some, but most of our jobs are finding an investor, finding a lot, making a deal happen because we have to to keep the lights on, to keep making money. We have to go out here and make business happen. And then on top of that, stress and pressure, we've got to do a podcast, we've got to do the social media thing, we've got to make it to the gym, we've got to be single dads. You have your kids full time, I have my kids half time. Like, there's a lot of stress. So when we talk about like, you know, how do you deal with it? It's not just work stress, it's a lot of different stress, and and we don't really put it out there like that because we're not bitchers and complainers, but like it's a lot of shit to deal with.
SPEAKER_00I I think the only thing that I have a hard time with, well, maybe I don't have a hard time with, but people around me have a hard time with is when you're dealing with that many problems and and and and you're doing such a good job of compartmentalizing things and and you know, uh it can it it makes you because I get accused of this and I know it's actually not my personality, but it makes you a little cold. You know, somebody somebody can call you up, you know, whether it be a family member or a friend, and and they start to dive into their problem and you it's hard for you to you you need to be compassionate towards those things, but you're fighting against it because like there's no compassion in my life, you know, because you're just like, all right, what's the exactly so that I'm a very callous person.
SPEAKER_01Yeah, like I've been through so much shit.
SPEAKER_00And I feel I feel bad. I'm situationally aware of my inability to not be compassionate. Thankfully, I have kids that helps me out. You know, they like stub their toe and you come over there and you give them a hug and a kiss and all that stuff. But the natural reaction is just like that, like someone tells me a problem and I'm like, that's it. Yeah, exactly. I'm like, that was like that was eight o'clock.
SPEAKER_01That's nothing, yeah.
SPEAKER_00You know, and I don't I don't say that as a badge of honor or anything like that. I more or less just say it as a learning lesson to me like, hey Matt, you need to realize not everybody is in this crazy life of yours, you know. So be compassionate to your your family members, your friends, and the things that they're going through.
SPEAKER_01Yeah, I feel you. I mean, it's a lot, it's a lot running a business. You know what I mean? People don't get it. And maybe your business is selling cupcakes and it's a lot easier and less stressful and whatever, but man, we're dealing with multimillionaires, multi-million dollar investments, signing our life away for to just keep ourselves in business a lot of times. And it's like, yeah, we make good money. Um, but going through two divorces, as soon as you open the business, sure as hell doesn't help. Yeah. Uh, and then also, you know, just we have a lot of overhead. We got a big office, we got staff, we got things going on, we got, you know, things that we got to be a part of, the wine club, the events, you know, the realtor thing. It's just, it's just a lot, you know.
SPEAKER_00And uh, and I don't know if for anybody out there listening who has school-aged kids, I don't like the the school calendar, dress them up like a cow today, green hair tomorrow. By the way, sign this waiver because they're walking through a butterfly garden. And do they want chicken tenders for lunch or hamburgers? Like, that's a whole thing. I could hire an admin just to manage my lot of people do.
SPEAKER_01I'm sure Joe has an admin.
SPEAKER_00And you don't you don't want to be the parent because listen, if the kids forget something, it's not their fault. Like you, and you don't want to be your kids come home and they're like, How'd you not know about neon pony day?
SPEAKER_01No, there was there was none of that. It was like once a year you brought in cupcakes or or did like a show and tell. Like, here's my pet mouse my brother's gonna kill in two days.
SPEAKER_00I was in Tom Thumb for an hour trying to find peanut-free dessert to bring to my kids because it's like, you know, every they're like, Oh, I I thought I found donuts out there. They're like, Well, the donuts we fry them in the same thing we do our pecan pie in. Oh, cool. I'm like, all right, uh, do I just bring asparagus to school? Like, I don't know what to do here.
SPEAKER_01That's funny, dude. Um enough about them. Yeah, so let's talk about some topics here today. Let's get down to the nitty-gritty. So, uh, one thing I wanted to talk about is uh lending. So I'm the person who I do not pay attention to things until they're real. Like you could send me loan terms, and I'm like, okay, cool, whatever. Like it just in my email, I flag it, I move on. And then when we get to the closing table, I'm like, I want to review everything. And that's that's a fault of mine. I hate contracts, I hate reading anything that's long and not bullet pointed. Like it's just not my thing, right? Um, so I want to help everybody out there who's getting into real estate investing, whether it's flipping a house or whatever. So you can get these loans where if you have enough value up front, whether it's you own the lot and you're using the lot as collateral, or you have uh, you know, four or five hundred thousand dollars down or whatever for your flip, they'll allow you to roll your interest payments into the loan. And so we had a project recently where we had to take it over because the buyer ended up backing out, actually. No big deal. We go and get the loan terms, everything's good. We get to the closing table, and they're like, okay, we're gonna fund an account with your $250,000 profit that you're gonna be taking along the pro the timeframe of the build. And also you're gonna draw your interest out of this. And at the time I was like, cool, works for me, doesn't matter. Well, these loans are interest-only, pay as you go, right? So as you borrow $100,000 for the slab, you're now paying interest on $100,000 for that slab, so on and so forth. So immediately we have a fund funded account in our name with $260,000 that is for funding both ourself and our interest payment. Well, we're paying interest on the $260 sitting in that account immediately, day one. So it's like we're paying interest on the money sitting in the account to pay the interest. And we can't take that money and put it in the market. We can't take that money and do anything with it to where it's gonna offset our interest payment for that money. It's just sitting there. We're paying interest on it. So that's something you got to catch. Uh uh banks are in it to make money. I get it. I have great banking relationships, both hard money, you know, bank loans, whatever. But you got to pay attention to that stuff because you don't want them to fund an account for your builder fee or your interest payments unless you know and you run those numbers and it makes sense. Now, a lot of times it probably still will make sense because you need to get a deal done. But that's something that caught me off guard this last week.
SPEAKER_00Yeah, I don't even and I don't even know if that's just a just a them thing. Because now moving forward, I'd be like, by the way, if we're gonna do this, yeah, I'm only taking my builder draw as needed, just like we would with any investor deal.
SPEAKER_01Like we've done several investor deals. We take our builder fee from the overall pot, and it's we're not, we're not paying interest on it sitting there, right? And I think banks are a lot more flexible with people who have a couple hundred thousand dollars with them than they are guys who are fucking trying to get deals done and like you know, rob Peter to pay Paul kind of thing. Like, I get it. There's instances where I've got a bunch of debt out here and I don't look great on paper, but I've got a bunch of stuff on the pipeline and they're gonna take a little bit more advantage of you. I don't know if every lender's like that. I I love our lender, and uh, you know, there's a lot of lenders out there that we've worked with in the past that I like to work with. Just something that I want guys to make sure that they're paying attention to because there's a learning lesson. Yeah, paying interest on money sitting in an account to pay interest doesn't maybe might not make sense. And I don't want things to choke out your deals unexpectedly. So that's something I wanted to address today. What else we got here? Read the fine print. Yeah, read the fine print.
SPEAKER_00Honestly, you know uh it's It's a little bit of a cheat code, but I I at least use it to give me a starting point. So I will, if I have like a 30-page contract, I will upload it into ChatGPT or Claude and have them break it down for me. Now, I won't rely solely on it, but what I'll do is I'll read the summary and it at least it'll direct my eyes towards paragraphs or sections where things seem really out of whack. Yeah, think I've been chat GPT. Yeah, honestly, because it's like it if you sit there with a 30-page contract and you start reading, you know, you're seven to eight pages in, and by the time you get, you know, to 15, I mean, you're like, you're fading out. You're like, oh, this is mumbo jumbo, mumbo, jumbo. So at least if you have a summary like Chat GPT does, you can say, okay, well, I definitely need to put eyes on section 15 because that seems really out of whack. And you're gonna go back and review everything, but that that is that has helped me a ton.
SPEAKER_01Another thing that I just thought about is you know, on this specific deal, we were partnered with somebody else. And what people will do a lot of times, this is business, they will wait till the ninth hour till you're getting ready to go to the bank to close your loan to try to get you the final contract. And it might have some stuff that they snuck in there and they know that your back's against the wall because you're planning on closing a day. So it's kind of like this is bullshit, you know, because I didn't charge you for this, but you guys are nickel and diming me for this at the last minute, and you don't feel like arguing because you're going to the closing table that day and you're like, damn it, dude, like that pissed me off because I wouldn't have if we if we weren't closing a day and I had time to push back and forth with lawyers on this deal, I wouldn't have been okay with that. Like it cost us 50 grand that we didn't intend on spending. So that that really can piss you off. So make sure if you're on if you're doing a joint venture or contract with somebody on a deal, make sure you got those contract terms outlined, fine print, signed before you go to closing because they will try to get it to you that day and it can it can piss you off. It can get you tight.
SPEAKER_00And it's one it's one of those things where it's always such a rush situation. So you're trying to balance getting this done as quickly as possible and and also being thorough. Yeah. Um, and and that's kind of where they get you. Um you know, whether it because I'm a rush, rush, rush, but it's a good thing. And and whether they, you know, at the last second, you know, raise an interest percent point five or or or or the whole thing with the interest on the on the on the profit fund, you're you're at that, you're at the finish line. What are you gonna do? Like you have no more bargaining left in your system.
SPEAKER_01Which sucks. So you gotta be careful with that. Make sure you guys are don't wait to the last minute, try to get those contracts signed, try to get that stuff taken care of, and you know where you're at on a deal and understand it before a week before the closing table.
SPEAKER_00So you can at least push things back and forth if you need to. But at the end of the day, it takes money to make money. Yeah. You know, so you have to take some risks, you have to take on some debt. Um, and those people that do that are the movers and shakers. Yeah. Um, if you're not willing to do that, you're not willing to take risks, it's gonna be really hard to be successful in this business.
SPEAKER_01Honestly, dude, I I've we've we've talked about this several times, and it's like if the risk depends on me betting on myself, I'll risk it all. I'll gamble it all, I'll sign my house away, I'll sign my business away, I'll personally guarantee it. As long as I'm in control, as long as the deal is on me to succeed and for me to perform, I'll risk it all. Now, risking it all to spend a half a million dollars on lot deposits and a development where I'm not in charge is a much bigger risk for me. And we learned a hard lesson with that this this year. Because things just don't happen as fast as you want them to happen. Nobody really works as fast as we do, is what we've come to find out. And when shit gets delayed and you have no power to change that, that's really frustrating. And that's hard to go back and talk to your investors, like, well, developers are dipshit and da-da-da-da-da or whatever fell apart. You know what I mean? It just is what it is, regardless of whose fault it is, it's a lot more risky when you're taking money from people or investing your money and you don't have full control over the deal. But if you do and it's on you, I'll bet, I'll bet the house, you know.
SPEAKER_00Yeah, and we, you know, just to touch on our earlier segment and bringing it back to the compartmentalizing and how do you deal with these kinds of things, it's like, you know, you've been quarterback in that whole deal, right? And to see you, whether it be an evening and you're with your kids or a Sunday morning, and you know, you send me a screenshot of 37 miss calls, literally 37 miss calls, some from block numbers, you know, when a when the text thread is, you know, this person sending you 25, you know, text messages, like that is hard to look at your phone and set aside and then go on with whatever it is. You're just like, talk about like the Grim Reaper hanging over your head at all times. I mean, I don't know many people that wouldn't fold.
SPEAKER_01Well, I mean, it's it you you can only do what you can do. That's the thing, is like I can only control what I can control. And when someone's bitching at you at four o'clock in the afternoon and wanting, let's call, let's get on a call, we gotta get on a call. And it's like the call is not gonna end with a resolution. So who gives a shit? I'm not gonna solve the world's problems today. It's four o'clock in the afternoon. I'm not gonna be able to get a wire, I'm not gonna be able to get this, I'm not gonna be able to get a document drafted. Like, what's the fucking point? I don't want to sit here and waste my night going back and forth and chatting back and forth. It's like, hit me in the morning when I'm fresh, hit me during business hours. Otherwise, you know, and come with a solution. Otherwise, we're talking about nothing and spinning our wheels, and I am not a fan of wasting time spinning wheels. It's just not my thing.
SPEAKER_00Yeah, yeah.
SPEAKER_01So you just got to put it away. Let's talk about making some money. Um, so I wanted to touch on kind of, you know, as far as like looking for lots, these guys are like I've got builders that are coming into the program, and they're like, well, how do I know what lots to buy and how do I run the numbers? And so obviously, the underwriting template is part of our our of our package, but like just to like make numbers easy, when you're looking at lots to purchase, you want first want to be looking at the cost per square foot for homes being sold in that market in that specific area. What's the cost per square foot being sold? Okay. And then you got to look at what type of fixtures and finishes, right? So let's just say you're in a two and a half million dollar market, homes are selling for 600 a square foot, which is a pretty good number. That's kind of what we're targeting, is is really 500 plus, because it takes us, you know, probably 275 to $300 a square foot to build our product. Yeah, depending on the dirt work. Depending on the dirt work, right? A whole different factor with the dirt work. Um, but like we know, okay, well, it's gonna cost us, let's just be conservative here. Let's just say it's gonna cost us $300 per square foot, plus the lots, $500 grand. We want to build a $5,500 square foot house, and you total those numbers up and you say, okay, that's gonna cost us $1.5. Okay, well, that's that totaled $450 per square foot, all in, and we can sell for $600. So then you know that that's your meat on the bone, right? But you want to be paying attention to days on market as well. You don't want to be in a market where, oh, well, they got comps up to $750. Yeah, well, those comps are sitting there for 90 days on the market, right? You want something that if comps are selling for $750, I'm trying to hit that $700 price point. Like get somewhere where you're not at the top, you're you're kind of somewhere in the middle because the days on market are way faster on those products. And nine out of 10 times, we're gonna sell it before we even finish with the house. Like we've never finished a spec ever and not had it sold.
SPEAKER_00So no, I mean, honestly, most of the time people are chomping at the bit and it just gets like, I want to get the project to a point before we list it. You know, I mean, I could list it when it's in framing. Yeah, but I don't, I don't, it's just it way too much overcomplicated.
SPEAKER_01Exactly. Exactly.
SPEAKER_00And we'll we'll touch on too. I'm not gonna get into it in here because it's just like free game, but I mean you also got to consider the closing costs and the carry costs. Yeah, all that's a good thing. There's additional little, well, I don't say little because it can be a sizable amount. Yeah. Um, but these are all things, and then there is a literally literal plus and minus formula where you plug all the data in that you gathered and be like, okay, this is and if you're doing it right, it should be it should be pretty accurate.
SPEAKER_01Yeah, and I mean, uh there's there's guys that'll lend you hard money. Um, you know, you could build a two million dollar house with 50 grand down, right? Right, because they can you know they'll hit you hard with points up front on the front end, like two and a half points and then 12% interest, which is which honestly could be fine. I mean, it sounds crazy, but as long as you're efficient and you build that house fast, you get it sold, and you you know, it's it's gonna be less money than paying an investor 50% to come in and back you, right? And you are your own boss, and you know, so there's a lot of different ways to skin that cap.
SPEAKER_00And when you're paying interest on that, time is money. And I think that's why what we're doing with the systems and processes and the ability to keep your project moving and be proactive about it, um, you know, to not have any days where something's not moving on the project, especially if you're building an investor deal for yourself where there's not a client involved, you can move so much faster. Um, you know, realistically, from the time that you buy that land to the completion of the house, I mean, you could be easily sub-18 months, sub-16 months. I mean, however much, you know, you should be less than, I mean, for a house that you're doing that's a spec with no client involved, I mean, you can be less than 10 months from slab. Now we're talking four, five, six thousand square foot houses. Yeah. Um, but yeah, you can, you can move, you can move pretty good on them. And we have that all laid out with the schedule.
SPEAKER_01Exactly. And we've we learned hard lessons, right? So, like, you know, we had one of our best friends come in and invest in a deal, uh, and he purchased a lot that we were gonna go and design a house on, and it was in a new city, and we used a new designer. Yeah, two different things that were that was a that was a little risky for us looking back, right? Because the designer took longer than we expected, cost longer than cost more than we wanted, and the city took way longer, and the inspection stuff was way more intricate than South Lake and Westlake, which is insane. Um, and so it took like a year to get this thing approved, and he had debt on the lot. So the whole time he's paying his debt on the lot, it added up $60,000, $80,000. That just crushed our profit, right? Yeah. Not to mention, this whole time we're trying to get things approved, the civil for the actual house is one of the last things that comes about. And you get that done and you're like, wow, I'm gonna need 400 grand in dirt work. And so then things get hairy. You're already 80 grand in the bank or in debt because you have debt on the lot. So again, when you're doing these deals, especially if you're in a new city and you don't know their permit process, maybe call another builder and ask them. But aside from that, don't put debt on that lot because that's gonna kill that deal.
SPEAKER_00Yeah, don't put debt on the lot and uh find yourself a good dirt guy.
SPEAKER_01Oh my god.
SPEAKER_00Because you need that dirt guy to come out to the site and you need him to put eyes on it. I can tell you right now, you hop out of your truck and you look at it, you have no idea. You can't tell the difference between. I mean, we we have an idea because Ren, I'm I'm talking to new builders. You you're gonna look at a lot and you're not gonna see anything. Your dirt guy's gonna go out there and look at a lot and he's gonna be like, that's $150,000.
SPEAKER_01And there's an app called Land Glide that I have on my phone where you can look up an address. It's like $99 a year, but you can look up an address and it'll tell you the amount of fall it has on most lots from front to back. Now it's not gonna be accurate, but you can tell if there's 10 foot of fall, which is a big deal. You got an acre lot with 15 foot of fall from front to back. That's a lot of dirt work, dude. It's a lot. And you're talking and then you realize.
SPEAKER_00And people don't realize it's not just bringing in dirt, it's retaining walls and it's the drainage through the retaining walls. And what kind of dirt are you bringing in? And exactly we have to compact the soil and we've got to test it every six inches. We need to get the soil test. And you know, all of them. There's a lot too.
SPEAKER_01All of those things that was really the biggest learning lesson for us the first couple years in business was we started off with lots that were ready to go, that were benched. We had added a little bit of dirt, you know what I mean? Like everything was it was easy. And then we go off buying lots in different neighborhoods, and we're wondering why they've been you know bought and sold three times, and we're like, damn. And the developer's not gonna tell you, hey, by the way, that's been sold three times because it's 400 grand in dirt. He's gonna be an asshole, and he's gonna tell you that it's cheaper, right? And it's no big deal.
SPEAKER_00Yeah, I got a sweet deal for it.
SPEAKER_01Yeah, yeah. So we'll get into that next time. So we're gonna talk about next week um kind of the differences between that, you know, 500 to 1.5 million dollar project, the difference between a 2 million to 4 million, and then the difference between 5 million and up, because there's a massive difference that I think a lot of people need to understand uh and realize before they put themselves in too much risk. So we'll talk about that next week. I hope you guys enjoyed the podcast this week. Uh look us up on Instagram, YouTube, TikTok, you know, the whole thing DFW Custom Home Builder, as well as the Dallas Builder Club. And check us out on Spotify, download the podcast, give us some tips, hints, whatever you guys want to do, whatever you want to learn, let us know. Let's make it happen.