Ep #169 – Jordan Madewell – Becoming a Multifamily Real Estate Developer

Here’s Some of What You Will Learn: 

  • Opportunities in building to rent or building to flip
  • How to structure a real estate development deal.
  • How structuring a deal with the seller of the land can benefit construction financing.
  • How to minimize out of pocket equity when dealing with real estate development.
  • If you do not have any experience on contracting, partner up with a general contractor when getting into real estate development.
  • How to find good general contractors.
  • Going from a commercial zoning to a residential zoning is typically easier that the alternative.
  • Development is a longer process, typically 6-12 month depending on rezoning and planning.
  • It is best to find land that is free and clear.
  • If it’s just a purchased land, cash on cash return will be minimal for the first few years.
  • 2-3% per month is typically the standard on leasing up per month after development of a property.
  • You should always try to use a local architect because it will benefit you even though you have to pay more.
  • Local architects know everybody in the city and they know the nuances of that specific city you want to build in.
  • If you have a blueprint from somewhere else, and there are no restrictions on use of that blueprint, then a local architect can look over those blueprints and make the needed changes.
  • How to find land to develop on.
  • When doing your first build, do something simple first.
  • Connect with me on Facebook at Rod Khleif.
  • Text Rod to 41411 or visit RodKhleif.com for a FREE copy of my book, “How to Create Lifetime Cash Flow Through Multifamily Properties.”

Our Guest

You can learn more about Jordan Madewell at:

http://www.madewellinvestments.com/

http://www.madewell-construction.com/

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Full Transcript Below:

 

Ep 169 – Jordan Madewell – Becoming a Multifamily Real Estate Developer

 

Rod Khleif: Welcome to another edition of How to Build Lifetime CashFlow Through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here.

 

We’re gonna have an interesting conversation with the gentleman we have on the show today. It’s a little different than our normal real estate investors that go out and buy properties to rent or flip. This gentleman builds them. His name is Jordan Madewell, and I’m really looking for this conversation. Jordan thanks for being on the show buddy.

 

Jordan Madewell: Hey, thank you Rod, I appreciate you having me today.

 

Rod Khleif: Absolutely. Give us a little background on you. I know you have a construction business, and you’re in Lubbock, Texas. But tell us a little bit about how you got started, and how you got to where you are right now?

 

Jordan Madewell: You bet. I’m still kind of fairly new. I’ve only been real estate investing for about three years. We kind of started with the single-family route, and one day I looked up and told my wife, “Hey, we’re not gonna reach our goals if we don’t start looking a little bit larger scale.”

 

So that kind of started my education, and research, and reading, and listening to podcasts like your self. Learning how to get into the multifamily game. We started doing that. Last year, we took down our first small multi-family complex.

 

Rod Khleif: Okay, so you bought one.

 

Jordan Madewell: Yes. We didn’t build this…

 

Rod Khleif: Okay. Is that the 23-unit you told me about?

 

Jordan Madewell: That’s correct.

 

Rod Khleif: Okay. Fantastic. But I know that now… and I’d love to get into your building. This is so funny, because literally, I was just talking to my acquisitions team; I was speaking at a friend of mine’s boot camp, Kevin Bupp’s boot camp out in Orlando.

 

On the way back, we were talking about the opportunities in building to rent, and building to flip, and that’s what you’re starting to do now, so I do I’d love to hear about that.

 

Jordan Madewell: We’re on the planning stages but were gonna build, kind of a Phase 1; it’ll be eight to 10 units. We’re waiting to hear back how much we can put on this one specific parcel…

 

Rod Khleif: What density you can put down. Right?

 

Jordan Madewell: Right. And then the Phase 2 will be basically in adjacent parcel of land. We’ll be able to put like a remaining six or eight. So this is fairly small in nature. That’s about what we’ll be doing at during the first quarter.

 

And yeah, that one we’re gonna specifically hold, once we do get it stabilized, and rented, and everything performing like we need to, but on the other side; well in 2018 we’ll end up looking at doing that 20 to 30 unit complex and basically we’ll get that built, seasoned, and we’ll essentially flip it. We’ll sell it.

 

Rod Khleif: You’re gonna flip it. Okay. I wanna get right down to the nitty gritty, because it’s something I’m very interested in. And I think it’s something my listeners could benefit from. Because, as hot as this market is right now, and this is what I was talking to my team about; there are pockets of land that are zoned properly for this use, that are zone for multi-family, some of higher density than others; meaning you can build more units on some more than others.

 

Tell me how you plan to structure these deals. Because I have some ideas myself but I’d like to hear how you’re doing it then I’ll share my mine after you’re done.

 

Jordan Madewell: For me personally, between me and a couple of our partners, we’re gonna have to end up guaranteeing and get in coming up with the construction financing, the interim financing.

 

Rod Khleif: Okay.

 

Jordan Madewell: We’ll do that ourselves. We will end up raising equity to come up with whatever else skin in the game that we’re required to by the lender.

 

Rod Khleif: Okay.

 

Jordan Madewell: But obviously our investors will not have to guarantee that. So that’s how we’ll do the first part of it. It’s just getting into construction, getting into the building. We’ll have to do that.

 

And more than likely, especially on the ones that we’re not going to keep, we’re gonna have to just do… Probably something similar to like a funded flip type of project where we’re gonna give them a little bit of interest in the interim. But really their big game is gonna come at the back side.

 

Rod Khleif: You’re investors, okay. You’re gonna syndicate, and you’re gonna bring investors in, and structure it where you can offer good internal rate of return; the cash-up until the point of the liquidation event may not be spectacular, but the numbers the numbers look good for great IIR at the end.

 

Jordan Madewell: Yes.

 

Rod Khleif: And that’s a great model. A lot of syndicators do it that way, even in buy in and stabilized versus built.

 

Let me ask you this, did you buy the land or how did you structure that piece. Did you already own the land, or do you have it under contract, what’s the situation there?

 

Jordan Madewell: That’s exactly right. We are… I’ll come back to density in a moment but…

 

Rod Khleif: Okay.

 

Jordan Madewell: Yeah, we are under contract on the land and we’re gonna take that down individually.

 

Rod Khleif: Okay.

 

Jordan Madewell: That also helped towards our interim financing as well.

 

Rod Khleif: Okay. Okay. Is the seller going to remain in the deal? Are they involved in your ultimate construction, and sale, or liquidation?

 

Jordan Madewell: In this specific one, no.

 

Rod Khleif: Okay.

 

Jordan Madewell: It’s a very common way and that’s something that we’ll be looking to engage in the future. Because that makes a big difference on where you’re having to come from an equity raise standpoint, and it can go a long way on just having an easier time getting the project off the ground.

 

Because typically, most of the time, when you’re buying raw land, a seller is not going to let you re-plot, or re-zone, or do anything to help your case until it’s completely out of your hands. In that case, you’d lost time and money goals.

 

So to have a seller that’s willing to stay in the deal… A) Usually, that can be five, 10, 15, 20% of what you need to secure your construction financings, so that’s huge. And B) Usually they’ll help you in that re-zoning process from early on; if you have to re-zone. If it’s already re-zoned, good, that’s, your off to the races. So it can be a very big tool on your belt if you can get that seller to play ball with you.

 

Rod Khleif: Well, that’s the reason I brought it up, because you say five, 10, 20% of the equity raise. I would think, if they’re throwing the land into the deal then it can be more than that, am I missing something?

 

Jordan Madewell: If the land’s free and clear, yes. If they have some debt on it…

 

Rod Khleif: Okay.

 

Jordan Madewell: They obviously can only…

 

Rod Khleif: If the land’s free and clear.

 

Jordan Madewell: Yeah. If it’s free and clear, oh yeah…

 

Rod Khleif: It can be the lion’s share of the equity if it’s a big enough parcel.

 

Jordan Madewell: Absolutely.

 

Rod Khleif: I mean, unless I’m…

 

Jordan Madewell: Yeah.

 

Rod Khleif: Okay. I wanna make sure I’m not off on the left field here.

 

Jordan Madewell: Yes. [chuckles] No, you’re right.

 

Rod Khleif: That is what I discussed with my team. Guys, this here’s the strategies. So those of you who are listening, here’s the strategy, if you wanna target pieces of land with owners that have owned 20 plus years. So chances are it’s free and clear, that zoned properly. You reach out to those people that mainly may not be thinking about selling.

 

I mean I’m not talking about necessarily properties that are on the market where you’ve got a broker involved. I’m saying unilaterally go out and approach people that own pieces of land in decent areas that you know you’re gonna be able to rent units if you build, and approach them with the idea of, “We’ll put everything together.” You put the land into this and equitably split it out so they participate in the deal.

 

If they’re sitting on something that they’re just paying taxes on, it can be a great opportunity for you to structure a deal and minimize the amount of out-of-pocket equity, and maybe even eliminate the amount of out-of-pocket equity you need to put a deal together. Is that completely off on left field or is it possible?

 

Jordan Madewell: No, you’re spot on.

 

Rod Khleif: Okay.

 

Jordan Madewell: Another thing I would add is, from the income stream standpoint, I’ve got some peers that I know that do this. They’ll give the seller even some interest in the interim, before the asset starts performing. And then I’ve seen a lot of guys, they’ll just do a buy out clause where they say, “Yeah, you get to participate, and then after three or four or five years, once we refinance, we’ll pay you out with a premium.”

 

 

Rod Khleif: Little or no money into the deal…

 

Jordan Madewell: Right.

 

Rod Khleif: And then you’re offering them more than they’d get if they just sold it because they’re participating in future profit. And that’s why I kinda got excited about this. I’m really thrilled that I got you on the show because it just hammers home this thought process. It’s so tough to find deals right now.

 

Let me ask you this, I assume you’re a GC. You’re a general contractor, correct?

 

Jordan Madewell: Yes.

 

Rod Khleif: Okay.

 

Jordan Madewell: Yes.

 

Rod Khleif: I know, you know how to do this but let’s just say there’s somebody on the sidelines that hasn’t a got a GC license, maybe they’re in Florida here, or somewhere else that’s a decently hot market, how would you suggest to them to go about considering this is an option? Would you have them align with a general contractor? Maybe bring one in as a partner so that they can participate in?

 

When you structure construction I know there’s always… You could have profit built into the construction, obviously, for the general contractor. Is there a way to structure so that that becomes more advantageous? I guess, that’s my point. You got any thoughts on that?

 

Jordan Madewell: That’s a great strategy. I would say, that would be probably be my first, and then I would just really verify that general’s references, ‘cause the last thing you wanna do is you want to say, “Hey, I wanna do something”, and you find a guy that doesn’t know what he’s doing.

 

Rod Khleif: Right.

 

Jordan Madewell: I would look for a track record on that. But yeah, that’s a great resource. A lot of the larger… And you probably know this, Rod. But a lot of the larger property management firms have started steering into what was called construction management. That’s literally exactly what this is.

 

[00:10:01]

 

Jordan Madewell: You partner with something like that where a lot of the larger property management firms also own, themselves in addition to doing third party management. And so they’re gonna have a great idea of who is a great contractor to partner with, or they might be able to come in and help you with that deal.

 

I’ve seen guys that kinda take that on, and I don’t know if that’s available in all markets but certainly the mid to larger markets, that’s a real opportunity.

 

Rod Khleif: As a resource to find a reputable contractor; one that you can really make this happen, that’s a great tip. That’s a great tip. And no, you’re absolutely right, if you’re going to align yourself with anybody in this business you’ve got to check them out.

 

Jordan Madewell: Yeah.

 

Rod Khleif: You’ve got to check references. You’ve got to look at previous work performance, what have they done? But that is a strategy guys, aligning yourself with the GC, seeking land, seeking multi-family zoned land. This different… What’s the word I’m looking for? The zoning classification is different based on whatever state you’re in; it can be R4, it can be R whatever.

 

Jordan Madewell: Right.

 

Rod Khleif: There’s all sorts of different classifications but identify what those are. Even if it’s just five to 10 units to get started. Start with something small, involve the seller or the owner as it were, who will become the seller in the deal to hugely minimize equity needed for the deal, a cash out-of-pocket needed because again, the owner can contribute the land if it’s free and clear. And the bank will consider that is part of the equity.

 

Jordan Madewell: Exactly.

 

Rod Khleif: And you can structure a deal. I’m not gonna say this is easy, I mean you’ve got to draw plans. You’ve got to determine the caliber of property you gonna build. How you’re gonna lay it out so that you minimize costs, have your plumbing walls as close together as possible.

 

Jordan Madewell: Exactly.

 

Rod Khleif: The type of construction you’re going to build and on and on and on. If you gonna hold it, in on my opinion, you battle proof it, and you this much tile floors you can. Of course, that impacts price.

 

Jordan Madewell: [chuckles]

 

Rod Khleif: So there are other considerations here if you’re gonna buy it, or flip it. I’m really glad I got you on the show Jordan, because this is something that I’ve been thinking about, and I want my listeners to think about, because right now, it’s tough to find deals.

 

Jordan Madewell: Yes.

 

Rod Khleif: You really have to develop relationships, or you have to start a direct seller campaign doing mailers, and or really getting good with brokers. But this is something you can do without all that. Especially, if you’re in a hot market where vacancy’s low. And I promise you, in every market there is multi-family land just sitting there, that’s been sitting there for a long time. You just have to find it and find the zone park.

 

Sometimes you have to the re-zone. Sometime’s you’ll have to communicate with the seller and change the zoning. If it’s in the city or county’s path of progress and they see the value. It’s not impossible to do. Have you had to re-zone yet, Jordan?

 

Jordan Madewell: Some of the duplexes on a smaller scale. I’ve just got through doing that, the guy that we bought them from was convinced that this was a great spot for like a garden style office, just a small office. And it’s literally backed up to single-family, and duplex, and small multi-family, the entire way around it. In our eyes, it was a no brainer.

 

Rod Khleif: Really glad you brought that example up. Because, going from a commercial zoning to residential zoning is typically easier than the alternative.  So you’re in a situa-… Especially if you’re surrounded by residential anyway. So the city sees residential and they’re thinking it aligns with what’s already there, so yeah.

 

Jordan Madewell: Yeah, you make a great point there, Rod. Not everywhere in the country is this common or typical. But the reason zoning happens is, you’re trying to protect and stabilize neighborhoods, and business communities, as it were shopping centers or whatever.

 

You typically see commercial right up against the larger thoroughfares, and then you’ll see multi-family right behind that. And then you’ll see residential private homes right behind that.

 

Rod Khleif: That’s right.

 

Jordan Madewell: We just thought, “Man, this is a great place for these…” The land was vacant. He hadn’t done anything with it for years but he was convinced. And we just said, “Look, we’d buy some of your land,” and he finally said yes. We took him to the city and said, “Look. Look at everywhere around this place it’s Zone 4, what we wanna do, yet this is a commercial.” And they said, “Yeah, that’s a no brainer.”

 

He made a couple of great points I’ll go back to, you know, versus a normal buy, and acquisition of a multi-family, you could be looking at three to four months. This is a long process…

 

Rod Khleif: Sure.

 

Jordan Madewell: I would expect six to12 depending on, if you have to re-zone, and just planning, and stage. You have to do a few city ordinances or city hearings, and abide by those. It’s a little bit more drawn out.

 

And I love your idea on, you buy the land from the seller, that has that free and clear because if you were just to purchase land, build it, your cash on cash is gonna be very minimal for the first few years.

 

Really for a couple reasons: One, it takes two to 3%, is kind of what I’ve heard, is the standard on leasing up per month. You build 100 units, you’re gonna get two or three, maybe five leased up the first few months, per month. And then it climbs, but your cash on cash is fairly low.

 

So if you can come in with 30, 40, 50% equity in the deal because you have the land free and clear or whatever it is, that starts to get just as attractive as a normal acquisition. It becomes a very powerful tool to make your investors money and make yourself money.

 

Rod Khleif: And to put these things together. I came close to doing this a lifetime ago, and I didn’t but I know it’s a viable strategy. Now, I have not done it so, and I don’t know how the banks will embrace it and how much skin they want in the game, actually, out of pocket, if somebody contributes. But still it’s gonna be greatly reduced if you can get an owner to participate. Make it attractive enough to the owner that… You know, of course, this is a negotiation they’re gonna have to play ball as well.

 

Let me ask you this, I wanna dig in to the ones that you plan to build. I’d like to know how; what the construction is, how you found the floor plans? Did you design them? Did you find them? Are you maximizing efficiencies to lower costs? Speak to all that, if you wouldn’t mind, please.

 

Jordan Madewell: The first project, in a way, is gonna limit us, just by the use of the land and where it’s sitting…

 

Rod Khleif: Because of? Logistically size wise?

 

Jordan Madewell: [nods]

 

Rod Khleif: Okay. Okay, got it.

 

Jordan Madewell: We’re gonna build a townhome style. Those will be a two-storey; you’re common areas on the first floor, your bedrooms are on the second. So that’s the style and construction we’ll do on that. More likely, we’ll do the majority of it as a brick exterior, maybe some siding a little bit. These will have two-car garages.

 

Rod Khleif: Oh, wow. Nice.

 

Jordan Madewell: Yeah. This is gonna be more of a residential model. But the way the land sits, we can make it into a small community.

 

Rod Khleif: Garage is on the back or in the front?

 

Jordan Madewell: These will be on the front.

 

Rod Khleif: In the front. Okay, so you walk along the side of the garage to get into the unit, and then you got a big… So you have a big garage doors next to each other, with little entryways in between them.

 

Jordan Madewell: Yes.

 

Rod Khleif: It’s a very common style.

 

Jordan Madewell: Yes. Yes.

 

Rod Khleif: Okay. Good. Alright.

 

Jordan Madewell: The second, one will be…

 

Rod Khleif: I’m sorry. One more question, three twos?

 

Jordan Madewell: Yes. Yes.

 

Rod Khleif: Okay. Good. That’s the… I mean, three two two, that’s the ultimate rental property. Period.

 

Jordan Madewell: Exactly.

 

Rod Khleif: Okay. Awesome.

 

Jordan Madewell: The second project will be later in the year that’s a little larger. We’ll do probably a handful of single stories. We’ll just kind of stack them deep, four or five or six units long. We’ll put that along the street and then behind it we’ll go up, and do a one storey and two storey and behind it.

 

That does a couple of things one, it minimizes any zoning changes because you’re staying probably consistent with the area. If the residential area kinda is right across the street that’s gonna at least tend to comply more and they won’t give you as much grief.

 

And then we’ll go up inside the land itself. Then we’ll just have parking and driving surrounding that, splitting the two buildings.

 

Rod Khleif: Have you got this property? The one your describing, have you already got that selected or purchased, or under contract? Or is it just an idea as you find property.

 

Jordan Madewell: We don’t have the land for it yet, but we kinda already started mapping, concept, design and costs. Then once we find the land, we can basically just tweak it to fit the land and we can tweak it on our budgets to fit the land cost. Then we’ll pretty well know, pretty quick if it makes sense or not on that particular piece of land.

 

We do have a certain amount of communities that we’re looking where this make sense. Whether it be Lubbock, we’re also looking at Dallas-Fort Worth, were trying to just create kind of a plug and play, I guess you’d call it.

 

Rod Khleif: Yeah. No. So what you’re doing is… Are you personally creating these floor plans? Or did you buy, you find some online, or… How did you get that that piece?

 

Jordan Madewell: Well, of course, the business I do for a living, it makes it a little easier for myself, between me working with architects on a regular basis. But anyone can kind of go and… Some of the companies are like ePlans, Designplan.com, just some of those simple ones.

 

Rod Khleif: You can buy blueprints, the whole thing.

 

Jordan Madewell: You can. You can.

 

Rod Khleif: So you can go on there and you buy the plans off-the-shelf.

 

Jordan Madewell: Yes.

 

Rod Khleif: That’s what I was hoping you’d get to.

 

Jordan Madewell: One thing I would say, not a caveat but, anytime you can use a local architect…

 

[00:20:00]

 

Jordan Madewell: It’s going to benefit you even if you pay more for two reasons. One…

 

Rod Khleif: They know everybody. [chuckles]

 

Jordan Madewell: They know everybody and they know the nuances of that specific city you’re wanting to build in. So that’ll just… You may spend a little more money with him but you’re gonna save time and headaches.

 

Rod Khleif: Can you take somebody else’s plans and have the local architect bless them?

 

Jordan Madewell: As long as you don’t have restrictions on the plans you purchased. Sometimes, if you bought… If you had an architect draw you a set of plans, he may own the rights to that. You just wanna make sure that you are buy… With whatever you’re purchasing, you own the rights to take them and do whatever you please.

 

Rod Khleif: Okay.

 

Jordan Madewell: So yes, you can.

 

Rod Khleif: Okay.

 

Jordan Madewell: A lot of times, they’ll just make little tweaks and then they’ll stamp it, otherwise.

 

Rod Khleif: Okay. That’s a great tip on hiring somebody locally. I’m really glad you brought that up because it makes all the difference in the world. If they’re dealing with the city every single day, they’ve got relationships, and they know what the city’s ultimate plan is. They can help you even in this rezoning piece of it, ‘cause they’re familiar with what’s going on.

 

Jordan Madewell: I’ve had an architect, locally, he’s worked with the city a lot, so honestly, it’s like they see his name on the plan and they immediately have a level of comfort. And he’s gone to my zoning meetings on my behalf.

 

Rod Khleif: There you go.

 

Jordan Madewell: It just makes it very smooth.

 

Rod Khleif: Yeah.

 

Jordan Madewell: A lot of times, they’re gonna know what the city is gonna be looking for, on the negative side. If they’re looking to make sure you’re doing A, B, and C, they’re gonna make sure those are covered and keep you away from the other things that are… Nothing big but time is money and so in each time you have delays or you have to re-cement, or have review on your plan, or even once you’re in the building in your inspections, the less delays you have the better for everybody.

 

Rod Khleif: Yeah, no that’s great. Let me ask you this, just one really last big thought here. When you’re approaching an owner that’s got some land, is it not customary to actually get some of the pre-zoning type things done before you even pull the trigger? Like let’s say you’re just buying a piece of land. I’ve heard that it’s very common for, as part of the contract, to have a pretty extended escrow period.

 

You may put it under contract but as part of that contract you make it contingent upon achieving this level of zoning, or this density, or these particulars, nuances. Have you encountered that? Have you had to do that?

 

Jordan Madewell: My answer to that would be, absolutely. If you’re offering and you’re not gonna keep that seller in the deal put as many contingencies upon you getting the A, “Put it in there. I wanna rezone this land. If I can’t get this rezoned, I’m not closing.”

 

Rod Khleif: Right. Right.

 

Jordan Madewell: And B, “It’s contingent upon me getting it approved.” Kinda put all those in. A lot of them will push back on you, to be quite honest. If I was a seller, I probably would but I would put as many… Just like you’re gonna put your inspection and your financing contingencies in there on a multi-family. I would put in some rezone and just so you can fill out your plan.

 

Those are some things you wanna communicate to your seller. Show them your blueprint. Show them your business model. Show them, “Hey, this is what I want to do.” So you know that they know that you’re serious…

 

Rod Khleif: They know you’re for real. Right.

 

Jordan Madewell: And they’re not gonna try and beat you up on it. They’re gonna say, “Look, this is gonna be a great thing for everybody”, and a lot of times they’ll be more willing to work with you on it.

 

Rod Khleif: Yeah. I know that the low hanging fruit is to find land that’s already for sale, but I’m gonna challenge you guys, that if you’re serious about this go do what other people aren’t willing to do and actually reach out to owners that already have the land that’s not for sale. Because if you’re approaching them, and they hadn’t even thought about it, I think it be an easier negotiation to ask for time to do you know what it is you plan to do.

 

I mean, I could be wrong but it just would make sense to me that if they don’t have any expectation of needing the money in a certain period of time, it’s gonna be easier to negotiate and cut a deal that really is a true win-win.

 

Jordan Madewell: One other thing that I would say is look for, if you don’t have a low hanging fruit, look for the not so obvious. Perfect example, there might be a parcel of land that’s just overgrown and has an old trailer house on it. Or something that you’d go, “Man, that’s a terrible piece of land. It’s gonna cost me $10,000 to clear that land, but it’s better than going half a mile down the road and paying  $150,000, $250,000 more for the land.

 

You save that money, you still can clear it, and rezone it, the same way but otherwise, it’s just an eyesore. That might be a real avenue because the chances are, that’s an inherited piece of land or it’s not a state owner. They just get the property tax billed. They haven’t been there in years.

 

Those are some things I think would be, for some of your listeners, look for that in your community where you go, “Man, I could see a 20 or 30 or 40-unit…”

 

Rod Khleif: Let me even throw another wrinkle. Let me even throw another wrinkle. What if, you’re even in an inner city? If you find a beat up piece of property that’s an eyesore and you proposed to the city that you’re gonna put 10, 20, 30 units on that spot. Again, if the land is free and clear, and you can cut a deal with that owner to do the heavy lifting, I mean, that could be an opportunity is well.

 

Especially, I mean, I have friends I’m in a high-end mastermind of friends doing this in Philly right now.

 

Jordan Madewell: Yeah. That’s great.

 

Rod Khleif: They’re doing it. They’re about two blocks in into the hood but the gentrification is heading their directions. They’re two blocks in, in the tough area but it’s moving their direction. And they’re building units. That is absolutely a buy. It doesn’t have to be vacant land there can be… And thank you for bringing that up.

 

It could be a mobile home park like you say. It may be rural, or it could be even an inner city.

 

Jordan Madewell: Absolutely.

 

Rod Khleif: Yeah. What haven’t I asked you that you wish I had? Because this is a topic that I have not talked about before so I don’t have a whole menu of questions.

 

Jordan Madewell: No, I think it’s great. I think it’s something to explore especially as the premiums on existing multi-family continue to go up. We’re trying to look at multiple deals every month. The cap rates, it seems like they go lower every month.

 

So you’re force to do one of two things. You’re forced to wait for a correction and see if you can get some things a little bit more on sale. Or you have to look into building or buying another asset class and that’s kinda what we’ve done as we’re trying to look at both approaches in doing that.

 

Of course, it helps that I’m in this profession but you don’t have to be.

 

Rod Khleif: Right.

 

Jordan Madewell: What I would encourage your listeners to do, don’t reinvent the wheel. Don’t reinvent the wheel. Your podcast and your resources are invaluable for people that need to learn. You can find and learn those things. Then like you talked about, find some people in your community, if are already looking at real estate, they’re already doing some projects maybe there is a synergy there where you could align with them.

 

That’s what I would say. Just don’t try to do it on your own because you don’t know what you don’t know…

 

Rod Khleif: It’s a team sport, guys. This business is a team sport. Thank you for that, for re-affirming what I say regularly, that is this isn’t a solo gig. This is a find the best people you can find. Find people that shore up or supplement your weaknesses so you can focus on your strengths.

 

In my case, because of my experience level, if I go to do this building thing I may just start my own construction company and hire a GC or bring someone in to qualify the company, and just find a great project manager. Somebody that’s built these before underneath somebody, that’s typically a GC will have a project manager that handles a complex.

 

Depending on your level of experience, that’s a possibility. There’s a lot of ways to skin this cat, and a lot of opportunities. Look for those opportunities.

 

This has been good. I really, really appreciate you being on the show Jordan. I know your website is madewell-construction.com is that correct?

 

Jordan Madewell: That’s that my construction one. If people wanna see a little bit of what we’re doing on the investing side, just go to madewellinvestments.com.

 

Rod Khleif: Madewellinvestments. Is there a hyphen in there or is it just all…?

 

Jordan Madewell: No, just all together.

 

Rod Khleif: Okay.

 

Jordan Madewell: Yeah.

 

Rod Khleif: Awesome.

 

Jordan Madewell: Yeah. They can see that. One other thing I would say, if somebody in your audience is really looking at building, don’t go crazy.

 

Rod Khleif: Right.

 

Jordan Madewell: Don’t try to do a mix use, where there’s shopping underneath and…

 

Rod Khleif: Oh, yeah.

 

Jordan Madewell: Don’t try to get excited. Just do a good job, and build something that that’s gonna work. Don’t be too big for your breeches.

 

Rod Khleif: Oh, love that. That is very sound advice. In fact, start with a duplex, for Christ sake. Just start with something to get your feet wet…

 

Jordan Madewell: Exactly.

 

Rod Khleif: And get comfortable with it. Make sure you like it. And the risk there is practically nil.

 

Jordan Madewell: Exactly.

 

Rod Khleif: Instead of even doing a 20-unit, start with something small. A duplex or a quad, and you’ve got so many exit strategies if you do that. Again, your risk is practically zero.

 

Jordan Madewell: Yeah.

 

Rod Khleif: Because the bank’s not gonna finance it if you really don’t know what you’re doing. So that’s very sound advice, Jordan. Thank you. Yeah. Don’t try mixed use. Don’t try and do a different asset class, unless you’re familiar with it.  

 

Jordan Madewell: Yeah.

 

Rod Khleif: Alright. Well, thanks for being on the show, my friend. You’ve added a ton of value and I know you… we’ve got people’s heads spinning right now.

 

Jordan Madewell: [chuckles]

 

Rod Khleif: With possibility but I appreciate it buddy. Thank you.

 

Jordan Madewell: Same. Appreciate your time.

 

Rod Khleif: Absolutely.

 

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Thank you for listening to the Lifetime CashFlow Through Real Estate Investing Podcast.

 

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