How to Get Started With Real Estate Development – Jason Hsiao

It’s better for me to ask them questions now and figure it out than costing me millions of dollars later. It’s more important to ask the right questions than to have all the right answers.

Hey everyone, and welcome to another episode of the Everything Real Estate Investing Show with Sean Pan. Today, we have Jason Hsiao. Jason is a real estate developer and a meet up host in the Bay Area. He’ll be telling us how he got into the development space as well as some major tips on what to do if you want to get started. If you enjoy this episode, subscribe to the show and leave a review. We release episodes every Wednesday and Sunday and release the show notes on our site, everythingrei.com. Enjoy!

Sean: [00:00:57] Hi Jason, thanks for being on the show today. Go ahead and introduce yourself and let us know who you are and how you got into real estate investing.

Jason: [00:01:03] Hey Sean, thanks for having me. Super excited to be on the show. Been listening to your podcast as well. So, my name is Jason Hsiao. I’m a developer. I have a small team that helped us with our construction projects and also have a small team that helps folks buy sell and invest in real estate or acquire and dispose our assets as well. I got into real estate, I joke with people that I read Rich Dad Poor Dad too early. I read it in high school I think. So I started how talking before house hacking was a term in college. I got a two-bedroom condo my sister and I lived in it for one year and then after she moved out I rented it out to my friends and cover all my expenses with some beer money left over basically. And you know, we dabbled here and there, we picked up a few units in the foreclosed units in the downturn and then what we’re mostly known for now is in development and I kind of got into that by mistake or by accident. My father bought a duplex that could be redeveloped into three units, sort of detached condo kind of style. And it was not going well and I basically told myself, “Well, I’ll be damned if we were going to lose money on this deal.” So I stepped in and really just learned the hard way by going to the planning department and building and safety department super early in the morning at 7:00-7:30 in the morning kind of thing; asking a lot of other contractors or friends there at least somewhat familiar with this space; read as much as I could online. There’s some stuff on BiggerPockets, but it’s not a focus for them. I would say OpenOne has been pretty helpful as well as their publications or some other stuff that, some of the webinars and programs that they have. But really, you know, it would just sort of piecemeal together and we managed to exit out of that okay. And after we finish with that I had some time to sort of reflect and debrief a little bit and really felt like what I’ve learned is hard to come by. It’s not something everybody knows and it was challenging but it’s still fun as well. And we decided to do more and more of these kind of projects. You know, usually building 3,4,5,6 homes at a time. Our biggest project right now is actually 16 home detached condo with a food hall next to it. And then we also have a six units small lot subdivision in Silver Lake, which is a really cool, hip trendy neighborhood in Los Angeles. And then we’re also working on a 55-unit apartment in qualified opportunities zone down in San Pedro as well.

Sean: [00:03:48] San Pedro Square in San Jose?

Jason: [00:03:49] No. No, this is down in San Pedro in SoCal next to…

Sean: [00:03:54] Yeah, so like near Hawthorne? Got it.

Jason: [00:03:59] Yeah.

Sean: [00:03:59] So yeah. How long have you been doing development for?

Jason: [00:04:02] It’s been about seven or eight years I think. It’s when we first acquired the property that my dad was struggling with.

Sean: [00:04:09] What were some of the mistakes that he was doing that was causing him to be scared or potentially lose money?

Jason: [00:04:14] you know, everybody sort of stumbles the first time around, like anything new and first was probably just the lack of knowledge. And then the second part was really I would say more about not vetting and hiring the right person. He had a friend that was helping him. He has some good background, but he really at the end of the day he’s a surveyor. He is not a developer. He doesn’t do entitlement kind of thing. So, you know, he was getting architects that doesn’t have the best experience especially when we’re dealing with cities or bureaucracies or different agencies, there’s definitely some value for people that are familiar with the certain Locale. Like for example, our property was in the County of Los Angeles, which is even much bigger, complicated and messy kind of thing. So sometimes people that have been through it or they work in those kind of offices before, they can help you navigate that a lot better. So that was ultimately the core of what we’re struggling with like trusting the right people. And the Asian culture too where a lot of times you want to save face or you want, you know, you don’t want to fire somebody because you were worried about the relationship, which is you know, it has its place when there’s a lot of money on the line though you kind of have to do what you got to do sometimes.

Sean: [00:05:37] It’s true. Did you ever flip houses before or was it like this development project your first attempt into this like remodeling and reconstruction business?

Jason: [00:05:45] Yeah, in terms of active investment, I suppose I’m very comfortable of jumping in the deep end of the pool with both feet. I never flip homes or anything like that. It wasn’t necessarily by choice like I was saying, but again, I think in other things I’ve done in my life that gives me the confidence and ability to just in essence figure it out and solve and identify the problem and figure out the solution to then go from there, and really learn to have a way to compress the learning curve.

Sean: [00:06:17] So what are some of those things that you did to compress your learning curve?

Jason: [00:06:20] A lot of things you do is you have to do it on your own. And for me my learning style is a mix of I try to read as much as I can and learn as much as I can and then I find the subject matter experts to almost have like an office hours like you would in college right and just have very pointed and targeted questions for them and go, “Hey, I’m struggling with this. What should I do with this?” And if I can I try to get multiple opinions as well because sometimes you talk to one person and they might know what they’re talking about or it only applies to their state or their market, but that’s you know… For example, I know a builder in Texas, but some of the stuff that what she does, doesn’t really apply to California. That’s just not how the game’s played here. That’s my learning style and that works for me and I was able to compress the learning that way to really quickly figure out what I need to do.

Sean: [00:07:15] So basically you just do your project, when you’re kind of have problems, you find out, I guess you figure out a list of questions you want to ask the subject matter experts; you find those people and you ask them straight up, “Hey, I have this exact problem which I do?”

Jason: [00:07:27] Yeah, exactly. I think I gave the advice to some people that haven’t got done an MBA. I think a lot of times people are worried about asking the dumb questions or they feel like they need to have all the answers and yeah in certain capacities that’s definitely the case, but for me, I was fine and comfortable asking the dumb questions. I was new to it and I fully admit that I don’t know anything that I would just looked at it as it’s better for me to ask them questions now and figure it out than you know costing me millions of dollars later kind of thing. So I think it’s more important to ask the right questions than to have all the right answers because the quality of your questions will lead to the quality answers that you’re looking for.

Sean: [00:08:13] Now I know you said you haven’t done flipping yourself, but I’m sure you know a lot of flippers. What are some of the differences between being a developer versus being just a flipper?

Jason: [00:08:21] Yeah, so I mean the difference between developer and flipper. I’ve never flipped before but I think there are just a lot more complexities, a lot more moving parts to manage and there’s usually probably an extra zero at the end kind of thing. So for flipper, you probably just need a GC and maybe occasionally check with a structural engineer if you can take down a wall or open up a wall and for us there’s a lot more parts about geotags and you want to see if the soil, if there’s any problems with the soil, you want to see where the fault line is, if you can actually build what you want to build there, civil engineering on the water filtration and all these other matters like survey maps and then obviously working with architects and MEPs, where you’re going to lay your water, your plumbing, and your HVAC and all that kind of stuff. And from a public agency or you know community outreach aspect as well you can probably get a regular home. You can probably get it done in a year or two if everything’s to the quo, you don’t need to have any kind of variance. Versus flipping you’re probably out three, four, five six months. Hopefully, you know, no more than six months kind of timeline. And you know in flipping you might need to get a permit but for us depending on the scope of the size of the project or complexity, you know, often we have to go to public hearings with the Planning Commission or neighborhood councils or city councils, and that could easily, you know become a year or two just to get the entitlement and then another year or two to build it out kind of timeline.

Sean: [00:10:04] Is it worth it to go through all this trouble to develop? Like what if you take all that energy and just flipped a bunch of home?

Jason: [00:10:09] So I actually got into an argument with… well not an argument but it was you know, it was a pointed debate with another flipper where he came up to me, I share with him my numbers and he goes, “I don’t like your numbers”. I go, “What’s wrong with my numbers?” I wasn’t lying or anything and I thought that’s what he meant. He says “No because I can go flip houses and you know, I can flip six houses and make a lot more money than you do.” Which my counterpoint to that is “yeah, that’s true. But you spend way more energy on trying to find the deals. I just have to do one versus you might have to do 20 deals to make the same amount of money” And it’s not just about the money either. I think for what we do, you know, you are really thinking much long term and how you can make an impact in the community and transform the community instead of sort of just in and out and get up and leave kind of thing. It is a lot of work, but I think overall it’s a personal thing. From my conversation with other flipper friends or other developers, it’s not a fair comparison in my opinion, but it’s pretty different.

Sean: [00:11:19] Yeah, I mean it’s a scale thing. And I think Warren Buffett was saying that he would buy… he’ll probably buy single-family homes if there was a way to buy a huge amount like a huge portfolio at once. But there’s no real way to buy it and get a huge portfolio at once. And if you have like a billion dollars, you’re not going to buy a bunch of single family homes if they’re like, you know a hundred grand each, right?

Jason: [00:11:40] Yeah, I think it’s just that the scale is definitely different, right? And with flipping you’re sort of just chasing deals and looking at things all the time constantly at different places and you know, you might be underwriting 10 deals to get one and I’m underwriting the same amount to do one deal. And I mean, it’s hard to say the precise amount of time that’s invested, but I would like to say that the ROI on my time as a lot higher as a developer than a flipper.

Sean: [00:12:12] And so what is your goal? Like are you trying to become the next like, you know, Donald Trump with a political agenda. Are you trying to do like big skyscraper high-rises or like what’s your what’s your plan for the future?

Jason: [00:12:23] Yeah my goal, I’ve had to reflect a little bit after we just had our baby. I think for my goal, you know, at the qualitative side of it is to continue to find good and interesting deals and help and transform communities. We want to be doing interesting projects and providing returns to our investors. My personal goal on a quantitative side before my time is done on this Earth, I would like to build a thousand units and then I want to hit a million dollars in passive income.

Sean: [00:13:00] A million as passive income a year, right?

Jason: [00:13:02] Yeah.

Sean: [00:13:03] Awesome. Awesome. Now, what is your buying criteria when you’re looking at a development project? Like if I’m new and I am given a deal by a broker, how do I know if this is a good deal or a bad deal?

Jason: [00:13:14] Yeah, it’s it’s different depending on sort of what asset class we’re looking at. So if we just talking about single family homes, or you know one or couple of homes, the criteria is kind of shifted as the market got more competitive and even though not lately we kind of see things are plateauing a little bit. I used to say that usually at the back of the bar napkin level, I used to say I want to make 30% on on a house, on a development project on a simple one. With things being more competitive, you know, I was actually okay with say like 25 percent sometimes. Essentially about 30% of my cost will go to the land, about 30 percent will go to the construction hard and soft costs in terms of the Architects, permit fees, labor, material, and all that. And then you know, I got about ten percent I’m budgeting for my closing, my commissions, and any kind of contingencies, you know things that might go wrong and then that thirty percent that’s leftover that’s ideally what would be my profit. For bigger projects as we’re growing expanding and looking to multi families or other more commercial level class, my criteria essentially is that if I’m building it and I’m investing all this time and money into it, at the end of the day I want my cap rate, which is basically your net operating income divided by your cost, I want to be one percent over the prevailing market cap rate. So for example if I can build a 50 unit apartment and the market is a 5 cap, I want to calculate to where all my cost comes in. After I factor in all my cost, I’m performing at a 6 cap or higher. If I can’t hit a 6 cap, it’s really not worth the risk or the time and money in my opinion.

Sean: [00:15:14] When you talk about 30%, is that 30% of the final sales price, that you want three percent of that as your profit? or is it three percent of the money you put in?

Jason: [00:15:22] Thirty percent of the ARV.

Sean: [00:15:26] Wow, so for say a five million dollar project, you want 1.5 of that to be profit?

Jason: [00:15:32] Yeah, I mean and that’s not realistic in this market right now, you know, I think definitely should bought right and your land value was a lot lower, say you should have bought at the 2010-2011 time frame or maybe even up to 2013, you probably were still able to hit those kinds of numbers, but I know a lot of other developers they had to relax their criteria recently.

Sean: [00:16:00] I mean if you’re flipping homes, people are usually trying to just get like ten percent of ARVs profit. So hey 30% is amazing if you’re able to get that.

Jason: [00:16:08] Yeah, that’s what I’m saying. I mean, you know flipping definitely, because of the time and the money involved right, I think the risk is lower. But if I’m going to be much more involved, I definitely need to have enough meat on the bones in case the market shares or something goes sideways or just really to account for the risk that I’m taking on.

Sean: [00:16:32] So you want to talk about your project? The one that you have was like 14 different units of residential but you also have that food hall nearby?

Jason: [00:16:39] That’s an exciting project for us. You know, we came across this property that… a developer used to own it. It was almost a 19,000 square foot brick warehouse that Wonder Bread used to own and their plan was to just tear it down and put more condos on a kind of thing. But in order to do that, it requires a specific plan that the city was working on putting in place and they kind of just ran out of patience on it. So we were looking at this where you know, I travel quite a bit and I’ve always liked the concept of Chelsea Market or Poncey City Market or the San Pedro Square Market in San Jose kind of thing. And we were tinkering or playing around with the idea of putting a food hall here. But you know, even for me as I was coming from a marketing background, I always like to test and validate the idea. And so we went out, we got a broker and we had a package together to test different tenants. And you know throughout the process we were also getting feedback from the local steering committee that was sort of guiding or as a public feedback mechanism for this specific plan for the city and everybody’s been telling us, “Yeah, we would love to have a place to hang out or more food and dining options or place to grab a drink.” And in fact the words that they used in these steering committee was they would like to see a brew pub. And what I asked them was “Well, okay. Well what if I can get you the beer and the food but they come from a different vendor, you know, it’s not going to be like something that happens to be like two three miles down the road already anyway.” And they say “Yeah, no, we don’t care. Like we just want a place to hang out. We’re tired of going to Pasadena to other places kind of thing like that.” And we went out, we had a broker that was pitching these deals for us, and then it got to a place where I would just wanted to try something different as well. I started cold calling and cold emailing tenants as well. And we were able to land one of the biggest independent craft brewers in Los Angeles, and their owners just really fell in love and believed in our vision as well in turning this really just beautiful brick warehouse with these wood trellis in a roof,our barrel truss roof as well. And they signed on. And from there on… what usually happens with commercial deals like this, once you have an anchor, the conversation becomes a lot easier too, so we were able to sign the remaining 10 tenants and you know, they range from burgers to seafood to kebab or taco, and a coffee guy, those kind of things. And we have an ice cream vendor as well, To become a really what we are hoping to be a… well I’m not hoping, we know it would be that very vibrant food hall with a lot of different dining options and hang out spaces for people to sit. And next to it we’re planning to put in 16 homes that to support the food hall and also just you know, I think that’s what’s appropriate and a variety of housing options for the neighborhood. They’re ranging about about 1400 or 1600 square feet depending on which plan types were talking about and it will be affordable or kind of the average price point for that market as well.

Sean: [00:20:13] So you’re basically creating a food Hall, kind of like San Pedro Square and with Anaheim Packing District. I mean those things are amazing.

Jason: [00:20:21] Yeah, people of all ages love going to those kinds of places. I mean will be a little bit smaller though, and Anaheim Packing House, it’s a much bigger project. It’s I think there are 40,000 square foot plus and they benefit from a grand vision that the city of Anaheim has to transform the area with the housing density to support it kind of thing. And we’re a little bit more smaller, the food hall space there will be more regional food hall coming up and in general I think people are trying to keep it to below 20,000 because otherwise if you have too many vendors and you don’t have to population density or the traffic to support it, the tenants in there could end up suffering or not getting the same kind of benefits of returns that they’re looking for.

Sean: [00:21:08] Yep, totally got it. Now. Let’s talk about the deal itself. So remind me again you found this deal through an agent?

Jason: [00:21:15] We found this on Loopnet. So for everybody that says Loopnet is where good deals go to die, that is not true. Granted we had to think a little bit creatively on this one to reposition the building and the asset. And you know, we were also using private money so we could afford to be a little bit more patient and working with the city to get this finalized to allow our vision to come to life.

Sean: [00:21:48] And when you’re doing your analysis in the first place, I’m sure you have a lot of questions in your mind about unknown factors. Like how did you even decide to create, “Oh, I’m going to put some houses on this side. I’m going to create a food court on this side. And these are the numbers that are going to work out.” Like how are you doing this and all of your analysis if you have never done a food court before?

Jason: [00:22:05] Yeah, that’s a good question. And you know for the food hall our numbers definitely our pro forma went through a couple of iterations. So, you know, I think the first thing I look at actually, it’s not about just about the numbers. It’s about the market and what what the neighborhood needs, you know, what do customers or in this case the local residents, what are they looking for? So once we felt comfortable about the food hall concept, we started digging into the numbers. Okay, how much would it cost to fix up a space versus the side works and all the other utilities and you know infrastructures that we have to put in. And what had happened though was our numbers actually, I mean, we have enough information or we know we’re familiar enough with how to build a restaurant and we’re based off in the numbers on that. And then some of the other numbers came back a lot higher but what happened too was the rent we were able to get was also a lot higher. I think in the area the market rate for retail is maybe like 125 or 135 per square foot. We were initially underwriting it at 250 but we were actually able to double that. So we almost quadruple initially the market retail rental, rental comps for it.

Sean: [00:23:37] Say that one more time because I heard two dollars in 125 and I got confused there.

Jason: [00:23:41] Yeah, so the market rental comp for retail is about 125 or 135. And when we were looking at this, so that number usually in court includes tenant Improvement or other benefits or you know, they might be including a triple net on top of that. So basically we were looking at this, we’re “Okay If a tenant comes in, what’s the rent they will be most comfortable paying? And for anybody that might be interested, so for food guy, for general retail, generally people are trying to keep it or you know, you’ll come out on average about six to eight percent of your overall gross revenue. So we kind of looked at how much people might be comfortable paying and then sort of backing into the dollar per square foot figure and we were underwriting it about 250. And what had happened actually was we actually, when we pitched it, we were actually pitching even double that just in the initial stages and some people look at the number as high but once they wrap it around their number they go… Actually, we’re shifting the capex to opex for people with similar to say cloud computing and AWS,right. Like instead of having to buy all these computers or building spending a hundred to hundred fifty thousand dollars to build out your space, we’re shifting that into an opex, your ongoing monthly rent. So we’re actually able to double even what we were underwriting to about five dollars a square foot or more.

Sean: [00:25:21] I see so now they’re not paying the triple net. They’re not improving the property cause you guys improved it for them. So they’re just paying rent to you guys.

Jason: [00:25:28] Yeah, so they don’t get a TI allowance and they don’t have to pay for it to build out the space or anything like that. The tenants are still responsible toward their equipment and furniture and all that and on top of that there is a small portion of what’s called CAM charges or common area maintenance charge. So that’s for you know, the landscaping or somebody to come in to clean the toilets or bus the tables and you know, some kind of insurance and property tax for the properties, those kind of things. We essentially prorate that depending on how big of a space that tenant has. And that comes out to be about… we’re budgeting about $1.25 a square foot for the tenants. So we’re making it very turnkey that people just have to order their equipment , ship them to the site, and you know a contractor will help them connect it and there are definitely some newer tenants or newer businesses. I can tell from our conversation with them, they just struggle to wrap their head around this higher number there. You know to them they’re going “You’re charging me four times as much as what everybody else is charging. WTF?” And the tenants that we end up signing they all have two, three, four, or many many more locations and we pitched this to them or share this with them and they go, “Oh, I don’t have to deal with the build-out and the permits and the building department and Health Department. That’s awesome. Thank you so much!” Yeah, like as it comes out to be about three to four thousand dollars a month for these tenants and the value that we’re bringing in and adding to to them is that a lot of these guys, they get into the food business because you’re passionate about food. They want to be in the kitchen. They don’t want to be dealing with the contractors and architects. They don’t care about any of that.

Sean: [00:27:26] Yeah. It’s very true. So when you guys are getting outside vendor help, like contractors and designers, how do you even choose somebody to do that?

Jason: [00:27:35] We go by referrals most of the time, you know, so this is one of the things where once you get in a business whether its development or anything, I think you will learn quickly who’s good at doing what and if you need something usually try to go to people for referrals first. And then if we really need to, maybe you’ll go on, I don’t know, go on the internet. Or sometimes if I really need and if I’m really in a crunch too I’ll go through the permit records. A lot of times people submit plans and they have the architect information or civil engineer’s information on there who drafted this and submitted it. And if I see somebody’s firm’s name in the in the permit records like two three four times. Hey, you know good chance they probably know what they’re doing or they’re at least familiar with the city, versus some schmuck out there that’s never dealt with the city or anything. So we go by referrals first and foremost, you know that kind of thing and that’s usually worked out really well for us.

Sean: [00:28:45] That’s the same with contractors right? You just use all referrals?

Jason: [00:28:48] Yeah, so you know our broker that we end up using, essentially I end up pitching a lot of these deals and she helps me with the paperwork and kind of bringing them through the finish line. She works with much bigger developers like Vernon Ward, and he she used to work for the Irvine Company and Ford Rick Carusso who built the Grove in LA kind of thing. So she knows a lot of the other contractors that worked on other projects. So she gave me maybe four or five names and I reached out to these contractors and then plus one or two other ones I knew. And we were able to get back three or four proposals and just able to compare and compare both the numbers and sort of who we think has the right experience and background in the team to help us execute this on time and on budget.

Sean: [00:29:43] So you’re saying you’re going to permit to look up architects. Are you able to all that online or do you actually go into the city to pull up permits?

Jason: [00:29:50] It depends most cities. I think, you know, there’s some kind of online system. They’re not very user-friendly because cities don’t care about UI-UX kind of things. But once you’re able to find it, like a lot of this is, you know, it’s public information.

Sean: [00:30:06] And also I remember seeing the drawings for your proposed plans and noticed there’s a very few parking in the food hall. So I was wondering how are you expecting people to get there?

Jason: [00:30:16] I mean parking is always a hot topic for both the public officials and the residents. So for the parking for our project essentially in the beginning phases, you know, the planning department are trying to decide what kind of guidance to get us. Restaurants it’s supposed to be 10 to a thousand, and then traditional retail is 4 to a thousand. And for us, let’s say it’s eighteen to nineteen thousand square foot building but not all this is kitchen like because there’s a lot of overlap. It’s not a traditional product that can just be fit into somebody’s zoning code kind of thing. But you know, we had to use logic and use common sense throughout it because our common seating area, there’s so much overlap. So we were looking at really more the overall capacity or how many butts in seats kind of thing. And also because the tenants they kind of occupy a different time of day, a different audience for example in the morning people are not going to be going to the brewery , although some people might be, they need professional help. But you know, in the morning mostly the coffee guy or we have a bagel guy, you know for people going for breakfast. And then there’s going to be a lunch crowd. And then in the afternoon our bagel and our coffee guy, they’re not going to get the traffic anymore because I mean sure somebody can use a coffee pick-me-up, but they’re most likely not going to be drinking coffee at eight o’clock at night kind of thing. So yeah, we had some pretty serious discussions with the city on this. The initial guidance they gave us was four to a thousand and that’s what we were working off of. There was a case, like somebody wanted to make a case that we need more parking. So I basically just did my own analysis. I went out to all the different… I mean if I can physically visit comparable food halls I did. If not, I pull up the satellite pictures for other food halls across the country, the more neighborhood style kind of food hall and I count it how much square foot their building is and I’d literally just count one by one how many parking spaces that they provided and on average they actually came out to be about 2.5. So the city that come to us and go, few months ago we had a new city planner and he said, “You guys need to provide us 40 more parking spaces” and I was not happy, I did my analysis and I came back and I go, “Actually by this calculation you owe us 40 parking spaces.” So that’s kind of how we analyze and plan for the appropriate amount of parking.

Sean: [00:33:01] Okay, so wait he comes back and says you need 40 more spaces. I’m confused. You said four to a thousand. Does it mean four parking spaces to a thousand?

Jason: [00:33:08] Yeah. Sorry. I’m kind of using… I’m shorthanding of using some shortcut of the terms kind of thing. So essentially, most, I mean every city is a little bit different but for the most part, cities require traditional retail four parking spaces per a thousand square feet if that makes sense. That’s what I meant by four to a thousand. But restaurants, it’s like a production rank, like you have to plan for the max capacity. So for restaurants a good restaurant, you know, what if it gets so busy say, I don’t know what would be a good one. Like a Din Tai Fung or you know ramen kind of thing. They’re looking at this peak capacity. So most of the codes are saying ten parking spaces per thousand square feet of retail or restaurant space. The thing is, you know food hall is kind of a new. I mean, it’s not so new anymore, but still very relatively new concept. It doesn’t fit in the traditional building or zoning code that’s been around a hundred years because it’s a new thing right? So even though we have all these space, there’s not the capacity for people and the cars that come with the people are not the same traditional ratio. So, you know, we were just working through the city with the proper thought logic and precedents and other examples that we can utilize to to come up with the appropriate space or the appropriate number of the parking. And I think I’m actually just looking at it too; the drawing that you probably seen is truncated because it didn’t fit on a PowerPoint. I think yeah, like I’m looking at drawing now where it probably only show like 15-20 parking spaces. We actually planned for 70.

Sean: [00:35:04] Yeah. I’m like how you gonna fill these people in there?

Jason: [00:35:06] Yeah. I said it’s just parking and parking is not visually that interesting in the presentation. So I truncated that too so I can enlarge the actual food hall space.

Sean: [00:35:16] Okay, cuz I was like, okay, maybe there’s no parking because it’s a brewery, right? You don’t want people to drive drunk and stuff. So maybe everyone can Uber there.

Jason: [00:35:23] Yeah. I got you. And you know, it is a very important variable for when you’re planning a project whether it’s a food hall or mixed use or apartment right? Like there’s always going to be discussions. And even if you think it’s enough when you go to these neighborhood hearings or council hearings, they always say, “No you need more parking, you need more parking” It’s definitely the much-discussed part of the process.

Sean: [00:35:49] And what was the final resolution again? You got to 2.5 for a thousand?

Jason: [00:35:52] No. I said, “Hey, you know, I’m looking at these other examples. The average is actually 2.5. So like you should actually lower your parking requirement and obviously they’re not going to budge. So we stick with four to a thousand because ultimately too, sure, if we could put in more parking we would but you know, we were planning all these residential development and literally I pulled the new city planner, “Hey, I mean, I don’t see the justification for it. Just because you want something doesn’t mean it makes sense. And you guys gave us the direction four per thousand all along. If you now come in and tell me I need to plan for 10 per thousand, it will kill the project. I’m not kidding with you. And you know, the cake’s already baked. I can’t scrape off the frostings and the fillings anymore.” Like I wasn’t trying to macho with you or force it through. Like it was thought with evidence, with analysis, with data to support it’s not political. Like I just showed them the examples.

Sean: [00:36:59] So when is your project going to finish? When can we start visiting it and hanging out?

Jason: [00:37:04] We’re planning to get it done by the early or mid November. There’s still a lot of variables obviously with development. A lot of times there are things that come up but we clear the city’s hurdle right now. We have the contractor getting ready to mobilize. So it’s just a matter of how quickly they can get it done. But you know, we’re hearing a four-month build-out. Will probably get it for 5. If there’s a couple things that go our way we might be able to get it done quicker than that actually.

Sean: [00:37:39] So it hasn’t been constructed yet?

Jason: [00:37:41] So for the construction our plan because of the permit approval process, we actually started the outside and structural upgrades and some of the site work. And our plan was to, while we’re working on that we would go get the interior tenant improvement permitted. And you know, we kind of just hit some roadblocks there. We were going to get our permits sort of in pieces or in terms of our project timeline, but the city was feeling very uncomfortable because it is a beloved building and it’s a new concept that they, I think, ultimately they wanted to see the entire project information before they’re comfortable permitting even parts of it. So that really kind of blew up our plans that we had to add like 30-40 pages into it. And then now they have to look at everything brand new fresh again because there’s so much new information. And that really delayed the approval process. So now we’re finally at a place where everything’s approved, everything’s signed off, they’re kind of checking a couple other things because a lot of times you have to coordinate between city jurisdiction and county jurisdiction, so they just wanted to make sure the fire department plans are the fire department signed off and sewer plan, the county’s okay with the sewer plan. And then once they said they have the signatures then we can crank.

Sean: [00:39:20] Yeah, super exciting and I can’t wait to actually go there to hang out with you at your new development project.

Jason: [00:39:26] Yeah, it’s gonna be awesome. You know, I’ve joked, but I think I’m actually pretty serious to do my meet up there.

Sean: [00:39:33] I’ll be down if you have them. You’re gonna move to LA right? That’s the plan.

Jason: [00:39:36] Yeah, we’re planning to move to LA, you know with all the projects that we got going on. And for a personal reason too I think we just makes sense both personally and professionally so that we can keep growing down in LA.

Sean: [00:39:51] Yeah, I’ll come to the hangout. So if you can go back in time and tell yourself some advice say 10 years ago, what would you tell yourself?

Jason: [00:40:00] Don’t do it. No, I think you know to be honest, there’s not much I would do differently and I’m not trying to get into one of these like Bran Stark Game of Thrones moment. Like you are where you are supposed to be kind of thing. I think looking back I did a lot of things right and then things that don’t go right that’s sort of part of the course of nature of the beast sort of thing. The only thing I would do differently is probably about that… well I don’t have any control over it. It’s I think similar to advise startups get here in the Bay Area, in the Silicon Valley, is to fire quickly. You know, you always go in with the best intentions and you try to verify everything people are saying to you, but you know people sometimes buff a little bit or some people talk a good game, but they can’t execute. So in those cases, you know, you need to prepare to move on to plan B and plan C. Like I’ve shared with you and other folks, like sometimes it’s normal you will kiss a few frogs, but you gotta move on and keep progressing. So really spending the time to the consultants or the teams that you’re putting in place. Ask for referrals and you know, ask them about not just how great they are. But, you know tell me about a time when things didn’t go well and what did you do with it?

Sean: [00:41:32] I mean it’s like you said before with the whole Asian thing. How like it’s hard to, I guess… you want to save face to save your relationship, right? I totally understand what you’re saying man. It’s pretty nuts.

Jason: [00:41:44] Business is relational and so is especially real estate. And I can’t say this about everybody. I know there are times where, I mean, ultimately regardless it’s in development or whatever. There’s a quote by Zig Ziglar right? I might not say verbatim, but it’s about you’ll get everything you want in life. If you help enough people to get what they want. And that’s ultimately what I’m looking to do is to help other individuals, help the community, help the investors. And sometimes I come up short too and you know, it’s not from lack of trying or lack of effort and in those cases… or sometimes somebody asked for my help and I’m not the best person for it. But I’ll give it a try. I’ve told them like “I’ll give it a shot. But if it doesn’t work out, I hope you won’t take it personally and you can definitely fire me. I won’t take it personally.” I can’t say that everybody else is like that, I don’t know. I mean some people are just a little bit too sensitive in my opinion or you know, they turn very passive-aggressive. But ultimately it’s about getting the job done. And you know, if you ask Bill Belichick, he’ll probably say the same like “Do your job. If you can’t do your job, sorry, you’re cut from the team.”

Sean: [00:43:01] Yes, very well said. So how can people get in contact with you?

Jason: [00:43:04] Yeah, they can reach me. I’ll give you my phone number. Area code 512-680-9184 or they can reach me by email as well. My personal email is jason.c.hsiao@gmail.com.

Sean: [00:43:29] Awesome. Well, thank you so much for your advice today. Thanks a lot! Take care.

Jason: [00:43:33] Yeah. Thanks Sean. Keep crushing it.

Sean: [00:43:34] Bye!

Here are some of the key takeaways from this episode. It’s better to ask the dumb questions now. Find resources. Go to the city planning department and learn. In this business, you may kiss a few frogs, so don’t be afraid, be a little tough, and focus on getting the job done. You can find the show notes on our site everythingREI.com. I hope you all learned a lot. Thanks and have a great day.