Categories: Podcast

107 – How To Pre-Sell New Development Opportunities in the Bay Area with Dave Brady

Synopsis

Dave Brady is one of the partners of DB2 contractors, a general contracting team that specializes in large renovations and small development projects. In this episode, he’ll share how he takes projects through the entitlement process and pre-sells them before they even start building to maximize their profit while minimizing their risk!

Key points

On Carrying Over Skills To Real Estate

Though he came from a technology background, Dave acquired skills and experiences that later would prove to be valuable in his real estate career, specifically in new developments. He shared that he learned how to build organizations, work with organizations, and making stuff happen. Seeing how people work together, how to delegate responsibilities, and make people accountable and drive results are very important as he is handling a fairly large number of people in his team.

Development Project Case Study

Dave shared a recent development project as a case study to show what the process looks like in doing flips. He starts by going to a neighborhood and asking himself, “What would be the perfect and most marketable house in this kind of neighborhood? What would it look like?”. After that, he determines an exit strategy by analyzing a number of deals and through the help of his realtors as well. He then, again asks himself what does he need to do to bring the value of the house to his desired exit price. Part of his strategy as well as to build in a JV so he doesn’t have to “take down a million-dollar property” but just deal with the holding costs.

Pre-selling Custom Homes

“To do something with a lot, you have to get a buyer who has to be able to envision what’s going to be put on that lot”, Dave said. So the best thing to do is to go to your partner realtors in that particular deal and ask for insights on how the house that would be built on that lot would look like, the comps, etc. The pre-selling process, on the other hand, involves photo quality interior and exterior 3D renderings of the property to entice potential buyers, all the while zoning approval and building permits are already being ironed out.

Lessons In The Flipping Business

Delegation of tasks is one of the lessons that Dave learned in flipping houses. As he said, flipping houses is not an easy business. You can’t do everything yourself and be in every box of the organization chart. You need to divide and conquer based on skill sets. Having an acquisition team who knows how to acquire houses below market and a network of realtors to assess the deal is a good place to start. It will immensely help especially if the goal is to expand your business.

Learning From Mistakes

When asked about what he wishes he knew back then, Dave shared it’s the realization that you’ll never learn the things you need to without making mistakes or becoming aware of the adjustments that you need to make as you go. “You can’t go to schools for the business that we’re in”, he added. There are all these books from gurus on how to succeed but “you don’t learn through your successes, you learn through your failures.” Nevertheless, he advises being humble enough to learn and get as much information as you can so you minimize these mistakes.

The Power Of Going Into A JV

Dave also shared about how joint ventures help you expedite your growth in real estate investing. Joint ventures can catapult you a lot faster than trying to do everything yourself. In his case, his joint ventures with lot owners worked great and it also reduces risk. His advice is to find somebody with an asset and look for a gap, whether a skillset gap, money gap, or anything that they don’t have that you can bring to the table.

Advice For Those Starting Out

As with other investors, finding somebody who’s done it before and adding value to them is one of the best ways for beginners to learn. Invest a lot of time and work with them. Doing projects with these mentors will tremendously cut down the learning curve and the time just figuring things versus starting from ground zero.