Why Smart Developers Never Buy Land

The Real Estate Investing Club

Join our community of RE investors on Skool here: https://linktr.ee/gabepetersen  TIMESTAMPS: 0:00 - Episode Introduction & Guest Welcome 5:33 - The Difference Between Being a Builder vs Developer 11:11 - Why Development Projects Take 7 Years to Complete 16:07 - Using AI Tools to Speed Up Permitting & Code Review 19:06 - Construction Costs Rising: Why They Won't Come Down 22:00 - Education Recommendations & Vistage Mastermind 24:01 - Best Advice for Younger Self: Master Fundraising 27:40 - The Foreclosure Deal That Almost Destroyed Everything 31:39 - $3M Property Bought for $1.25M Success Story  🏗️ DISCOVER THE LAND DEVELOPMENT SECRETS THAT CREATE MASSIVE WEALTH 🏗️ In this eye-opening episode of The Real Estate Investing Club podcast, host Gabe Petersen interviews Eugene Gershman from GIS Companies, who reveals the insider strategies for partnering with landowners to create million-dollar development projects without buying land! 💰 Eugene shares his journey from avoiding his father's construction business to becoming a successful real estate developer who helps landowners unlock hidden value through strategic joint ventures and complex development projects.  FROM CONSTRUCTION FAMILY TO DEVELOPMENT EXPERT 📈 Eugene takes us through his fascinating transformation from studying economics and getting an MBA to reluctantly joining his father's construction company and eventually transitioning into full-time real estate development. He explains the crucial difference between being a general contractor who builds projects versus being a developer who orchestrates the entire process, manages risk, and captures the majority of profits. His story demonstrates how proper education and strategic thinking can transform a reluctant participant into a development expert.  INNOVATIVE LAND PARTNERSHIP STRATEGIES REVEALED 🤝 Learn Eugene's groundbreaking approach to partnering with landowners who want to develop their property but lack the expertise, capital, or experience to navigate the complex development process. He explains how landowners can contribute their property as equity into joint ventures, becoming either passive limited partners or active co-developers depending on their preference. This strategy allows property owners to potentially multiply their land value several times over compared to simply selling at market price.  THE REALITY OF DEVELOPMENT TIMELINES AND COSTS ⏰ Discover why development is truly a long-term game, with projects typically taking seven years from initial contact to final sale. Eugene breaks down the extensive feasibility study process required before any development begins, including market analysis, utility connections, permitting costs, and construction estimates. He reveals why construction costs continue rising and won't come down, making smaller unit developments the key to profitability in today's market environment.  Join our community of RE investors on Skool here: https://linktr.ee/gabepetersen

Transcript

00:00all right we are back with another episode of the real estate investing club how are you guys i hope

00:08you're having a good good week good day good uh whatever whatever day it is for you or whenever

00:13day you're listening to this on it's always friday here on the podcast so uh we're bringing that

00:17friday energy to you and we got a unique guest on the show with us it's eugene gershman he is

00:23in the development space so any of you guys out there who are interested in starting ground up

00:29brand new development this is the episode to be listening to um eugene has a ton of experience

00:34with gis companies and i'm sure he's gonna give us some good advice um going forward so eugene i'm

00:40excited to have you on thanks for hopping on gabe thank you pleasure being here absolutely i told

00:46you before we got on here we always like to start with stories we'd like to hear how people got to

00:50where they are so why don't you take us to the beginning of your story in real estate and tell

00:54us how you got here absolutely yeah so i grew up in a construction company a construction family my

00:59father owned a construction company he was a gc and i never wanted to be a builder and so even though

01:07i've been around uh his projects around his office all the time growing up i just it always felt like

01:16he's always stressed out he's always angry and uh he was always dealing with problems and so i'm like

01:22whatever like you that's your thing i'm not gonna do it and so i graduated i got my degree in economics

01:28and i went to work for the small investment firm running retirement projections for old folks

01:33got bored within a couple years said all the hell with it i'm still young so i'm gonna go get my mba

01:38which was one of the bad decisions i wouldn't say worse but one of the bad decisions uh to do an

01:45mba that early in life i had zero experience of actually working and everybody like all of my

01:52peers were at least 10 years older than me and only now you know 20 some years later i understand why

01:57but i went back to school got my mba my last year of mba my dad calls me and he's like listen quit

02:04screwing around i need some good people in the company he was looking to expand and i'm giving you a

02:08short version of the story he was looking to expand he had an opportunity to partner with developers

02:13uh to invest part of his uh contractor's fee invests uh some cash and uh become a joint venture

02:22partner on a development project and so uh that was my first um introduction to the industry so i uh

02:29literally got thrown into the deep end uh thank god he didn't let me run the company but uh i um

02:38yeah i basically had to figure it out i knew all the business theory because i just finished my mba

02:44i uh was always good with uh numbers and excel and um that's how i got started in the industry

02:53eventually we shut down our construction company and went um full on you know 100 into real estate

03:01development uh but yeah that's how that's how it started for me nice so kind of a family business

03:07for you i like that i've always uh whenever people come on the show and they have you know

03:11their dad was a contractor or an investor or whatever it's always you know i'm a little jealous

03:16because you got that background um gives you a good leg up but um so i have to ask you know we were

03:22talking before the show you are one of the very few guests that was that's in the seattle area um so

03:27did you go to uw was that either your undergrad or your uh your grad degree both both yep nice

03:32yeah good dogs i went there too um so you didn't want to you you did building you got into that space

03:41for a little bit but you knew that that was not for you you wanted to do development um not a lot of

03:45people understand the separation between the two between you know going out there hiring a crew

03:51putting putting walls up and then actually just setting up the deal so kind of explain the difference

03:57between being a builder and being a developer right so there's a lot of confusion and especially

04:02in a residential single family space because a lot of people use the term builder and i always like to

04:09make a distinction there is a general contractor and there is a developer and a lot of times in

04:16single family market the developer and contractor the same person or the same company and so that's

04:22what's typically referred to as cumulatively as builder and you know some of the large

04:28developers like tall brothers they are both developers and contractors and so they're referred

04:35to as builders in a commercial space there's more of a distinction not a lot of commercial developers

04:40also perform their own construction work and so that's the distinction developer is the entity the

04:48company that runs the process that manages the development process that ultimately takes the

04:55biggest risk by guaranteeing the loan by you know posting bonds a lot of times bonds could be pushed

05:04onto a contractor but that is where the risk usually sits and that's where the profits usually sit

05:14and then the developer typically hires engineers architects uh contractor general contractor

05:21and manages the work of those uh entities so that that's the primary distinction yep yep makes sense so

05:29um developer from your your perspective you're finding the deal you're finding the land you're coming up

05:34with the concept of what's going to be going there you're going out there you're doing permitting

05:38you're getting um you're getting the loan to finance the deal you're finding the actual builder the

05:43contractor who's going to be actually putting the walls up um and then you are you're running the

05:49deal once it's completed correct great exactly nice uh so for people who are who like this concept

05:56they like the idea of it uh what are the big the first few steps that you take to actually get in

06:01and then what are the big hurdles that you run into once you you know get your feet in the door

06:05so this is exactly what i'm trying to educate most um landowners that i partner with so in my business

06:13we partner with landowners to help them develop properties and i see landowners kind of divided into

06:21two camps one camp thinks the development is super easy you just hire an architect you hire a contractor

06:25you get it done and then another camp that thinks it's so complicated that they would rather figure out

06:30how to launch a space shuttle than uh try to go through the development process because there's so

06:35much risk involved and so i'm trying to bring bridge that gap so the first thing you got to do is you have

06:41to do a very detailed feasibility study and we actually developed a feasibility study checklist uh which

06:47we posted on our website as a free download uh that goes through the steps but you have to analyze the

06:54market you have to figure out what product fits best you have to estimate the cost to design engineer

07:01and permit you have to estimate the cost of hooking up utilities you have to uh estimate the cost of

07:07construction and then you need to figure out how much you can sell it for or lease it up for uh and

07:13figure out what your exit strategy is so all of these things have to be done as to as much detail as

07:21possible before you get to actually do the deal yeah yeah and you were mentioning um like the new

07:28strategy that you guys are implementing as you are partnering with landowners um which i feel like

07:33that's something that are not not a lot of people understand is an option if you own land out there and

07:38you partner with a developer to you know add value to the land um go into a little bit about the

07:44strategy what how how it works for both parties yeah so uh the strategy is uh really simple if you

07:50have a piece of land and you would like to see developed then we could put together a joint

07:56venture and this deal could have multiple different shapes we had some owners who want to take as

08:03passive role as possible in fact one owner said we don't even want to be a general partner or co-developer

08:08we are happy to be a limited partner nlp like any of your other investors and you run the deal

08:14here's the land they contributed into the llc get converted to nlp position and just watch us work

08:21and then we had other owners who want to be active who want to sit in every meeting want to be

08:26involved in all the decisions and we welcome that as well but essentially that's that's how it works

08:33typically we'd like to get involved as early as possible before any plans are drawn up

08:39uh candidly we frequently get phone calls when owners already started going down the path of

08:45development they may already have their plans in uh submitted for permits and then they realize that

08:52it's more complicated than they thought or they cannot get the financing that they needed they can't

08:55attract additional equity they their lender wouldn't uh give them the loan because they don't

09:00have enough experience and so that's when they call us and we get involved at that stage

09:05yeah yeah and i feel like uh yeah like i said not a lot of people understand that that is an option

09:11um if people have land or like myself i market for land i buy land usually people think that the only

09:18option is to sell it sell it at market price on the market but you can actually make more money from

09:24that land by partnering with somebody like yourself you know you put five hundred thousand dollars of

09:29equity of land value into the deal but that is just the that's the amount that you're putting in

09:34and then once it's actually completed that's going to be a greater multiple because it's

09:38you know you've you've seen the project through so um yeah that that makes a lot of sense to me and

09:43you guys are strictly residential correct you guys don't um you don't do commercial or anything like

09:50that you guys like to build multi-family apartments single family that kind of stuff pretty much yeah

09:54the way i describe it is if people live there then i would do it uh we've gone uh down the early

09:59development uh stages for hospitality projects uh that also had residential components i don't claim

10:05to be an expert in hospitality development uh but um you know i've never done offices i've never done

10:12industrial um projects i like to say i know enough to be dangerous but yeah our expertise is mostly with

10:20residential multi-family single family yeah makes sense um and so what is the timeline usually on

10:27development i mean that's the one thing that i've i've peeked my head into the idea of developing but

10:32i just i feel like it's uh well it's a lot you need to know a lot more than i know and it's just i'm

10:37gonna stick to what i know and get good at that um but also the the turnaround time to get one of

10:42these projects done is extremely long so generally from you know first contact with the owner to

10:49selling the project on the back end what is the timeline usually seven years seven years oh wow i

10:57mean i'm okay i'm being extra conservative here but uh development is a long game for us to make a

11:05deal with an owner i wouldn't want to sign anything i don't know for at least six to nine months of our

11:12first introduction and the reason being if we are going to be partners for several years we have to

11:18be sure that we like each other that we have similar values that we want to go into this process that i

11:28want to make sure that the owner understands the risks involved before they sign on the dotted line

11:35that takes time that relationship building takes time so i would not want to even if somebody came to

11:40me super hot ready to do the deal tomorrow i would try to slow them down and make sure that they

11:47understand what they're doing make sure they understand what the implications are now having

11:52said that once the deal is signed if it's dependent on the size of the project if it's a single family

12:00infill that could be done in a couple years we could start with a stock set of plans we could

12:07get the permit probably depend on the municipality three to six months and we could get a build in

12:14a year so that takes about two years if we're talking about a commercial project

12:20anywhere in the west coast in a large metropolitan area that's going to take at least two years to get

12:27it permitted it's so crazy it's just it is i've heard people say you know two to three years especially

12:34here in washington and like in seattle and it just blows my mind that you know developers are even

12:40even able to plan for it because in two to three years a lot can happen oh yeah and so if you're if

12:45it takes that long just to get a permit you're not even breaking ground that uh i don't know that's

12:50crazy that is a problem that needs to be fixed right well and that's why i'm saying it's a long game

12:55and you know it's not always a bad thing because it does allow you to go into many details of your

13:05project that you otherwise wouldn't have thought i mean there's so many i've seen so many plans

13:09permit plans being submitted to municipalities that are not even half baked they are enough

13:17they're enough to get the permit but a lot of the details of those plans are not worked out and it

13:23takes time for the design and engineering team to work out all of the little details of that plan

13:28and so you know a lot of times the cities push back and they make you redo a bunch of things and a lot

13:35of times unfortunately architects and engineers don't read the code very carefully and they make

13:43wrong assumptions and then the city catches them and they push back because they've made some wrong

13:47assumptions uh based on uh the code and a lot of times frankly the cities just interpret the code to

13:53uh their advantage because there's a lot of gray areas in the code and unfortunately a lot of uh

14:00city reviewers plan reviewers are so uh busy with uh workload and they are so understaffed

14:09that their natural reaction is if they see anything out of ordinary in your set of plans they just push

14:15it back instead of trying to work with you to uh you know solve the problem they're like nope this is

14:22wrong send it back and then you fix that one problem you resubmit it and then they start going

14:27down and they see something else yeah so yeah that makes sense i mean i feel for them i get it and

14:33many municipalities are now outsourcing their review to private engineering firms which helps sometimes

14:40because engineers between themselves they can work out a lot of issues but it is what it is it takes

14:45time uh it also helps us to get that time to work out all the details to work with a contractor to

14:52uh make sure that all the uh eyes are dotted and t's are crossed uh but yeah it it takes time

14:58um i feel like anything that is so heavy on analysis and review um is kind of right for ai do you guys have

15:08a huge have you guys used a lot of ai tools to help in the process or um yeah tell me a little bit about

15:14that i personally yes uh i use ai a lot and in our company we use ai a lot to analyze the code to

15:21analyze uh feasibility i haven't seen it used too much on the municipality side i have read in the

15:28paper recently that i think city of seattle is now introducing some uh form of ai review of plans i

15:35haven't yet experienced that so um we're working on one project right now it's in early stages so

15:41hopefully in the next couple months i'd be able to uh comment on that but uh definitely i'm i'm

15:47excited about uh all the things that i could do because there's so much repetitive work

15:51yeah in plan contract review i mean ai at least for me just uh to get a general understanding of a

15:59contract if there's anything i should be aware of um ai has just it's cut the time down in

16:04probably a tenth of of what i used to do and so i i there's a lot of opportunity especially for

16:09stuff like this a timeline that takes two to three years i'm sure that can be cut down

16:14if you put a little automation into it and so hopefully uh hopefully that is the case later on

16:18for sure yeah well just the other day we were trying to argue a point with the city and uh that's

16:23what i had to do i uh fed in the the entire land use code uh into i use two uh tools i use chat gpt

16:30and grok to uh compare the results and i said here's what i want here's the code uh give me

16:36your interpretation it gave me uh interpretation and they were different by the way between the

16:41two tools and then i said okay well here's what i want so now uh use the same information same

16:46background information but make an argument for what i want and then it uh wrote out this entire

16:52argument arguing my case which we then um i mean you have to edit it you know it's never

16:58correct uh right it's no it's not perfect not yet anyway but uh yeah then we use that to send it to

17:04the city uh here's our argument uh using the code references and we'll see what they say nice yeah a

17:12lot of opportunity there so we'll see where it goes um when it comes to the land itself you've

17:17mentioned you do you do infill so individual houses that you're building you also do multifamily

17:21is there anything specific that you guys generally look for in the land do you want it a certain

17:26distance from the city center um do you want a certain size that kind of thing well because our

17:31model is to partner with landowners uh it works a little bit backwards we're not searching out the

17:39perfect sites we are waiting for the owners to come to us with their deals and it just so happens that

17:47people come to to us with properties that are difficult in many cases they try to sell them

17:55to builders developers they couldn't sell them or they couldn't get the price that they wanted

17:59and then they came to us they said hey we can't you know this doesn't sell uh what can we do there

18:04and we start looking at it and we find wetlands we find steep slopes we find all sorts of complications

18:09and i understand why a lot of builders don't want to buy them so that's what uh comes to our

18:19table to our attention most frequently and then we start analyzing and see what can be done

18:23but as far as the specific niche type but recently we have been focused a lot on smaller unit sizes

18:32construction costs are rising rapidly real estate prices are not catching up to construction costs yet

18:40in just the balanced market right now construction cost is higher than

18:45the cost of the price of real estate whether it's rental or for sale

18:49and so our focus has been on building small where cost per square foot is still high but at least the

18:57total value of the finished product is going to be more or less attainable

19:00yeah yeah construction costs um we actually bought a self-storage facility um it is basically like it was

19:08a pretty large uh plot it was downtown indianapolis but only half of it was built it already had the

19:13uh the designs and everything and we were we were going to buy it and then build it um and luckily

19:18it cash flow you know cash flowed on purchase so it's still a good deal but construction costs

19:23went so high that it got to the point where it's like it doesn't even make sense to build at this

19:28point so we're hoping construction costs come down i don't know when that's going to happen i'm sure

19:33tariffs have had an impact on that at some point as well so yeah i have no idea what's going to happen

19:39there yeah i've got a surprise for you construction costs are not going to come down

19:42dang it's kind of expected no i i think the best the best bet is uh for the real estate values to

19:50catch up but i don't see construction costs coming down uh tariffs aside it's just inflation is still

19:57there and uh labor costs isn't coming down you know our minimum wages are only climbing with uh

20:04uh immigration crackdown there's going to be less and less uh you know illegal uh workforce out there

20:13and uh so labor force isn't going to come down uh it's it's going to go up in price materials

20:19maybe a little bit but i honestly don't see that happening even if we had no tariffs inflation isn't

20:25going anywhere your cost of appliances your cost of uh you know basic raw materials are still going to

20:32go uh continue climbing or if nothing else just stay stagnant the only thing that we see uh contracting

20:39in the last couple years is subcontracted profits because those guys because there is not a lot of

20:46work you know three years ago to uh get a sub they would budget something like 25 or more profit margin

20:54to date they might be willing to work for five percent just to keep their uh to keep their uh

21:01crews lights off because yeah because there's not a lot of work right now so that's where we see the

21:05contraction but uh you know that that's super temporary yeah hmm interesting all right well hey i just

21:12took a peek at the clock it looks like we have run it down so it's time to jump into the quick

21:16question round you ready so good let's go let's do it um starts with education it could be any form

21:22could be a conference you've gone to a mentorship program you've been a part of book you've read

21:26movie you've seen could be anything just two recommendations one for general life wisdom

21:29and then one for real estate uh you know i've been a member of uh vistage which is like a um

21:37mentorship program for executives and it's been super helpful it's a small uh cohort group but where

21:43you get to share your issues your problems with your peers and uh help each other out help uh solve

21:51problems uh super helpful i would highly recommend it nice and what was that again it's called

21:56vistage vistage okay yeah i always uh like good call outs for um mentorship programs because i do

22:03feel like that is the biggest thing biggest single thing you can do to uh you know accelerate your

22:09career is get into some kind of peer group where people are at your level or one step ahead of you

22:14um it is you know it's crazy how much of an impact that has so good recommendation especially when

22:19you're an executive it's always difficult to find somebody to talk to because you know you're sort

22:25of at the top of this uh hill and everybody else in the company and around you is below you so this

22:31helps you uh talk to your peers and uh help solve problems nice i like it all right next question is

22:39for your younger self let's go back to the eugene who was uh just watching his dad swing that hammer and

22:44getting angry at it go back to him look him in the eye give him one piece of advice moving forward

22:48uh the biggest piece of advice that i would give my younger self is figure out how to uh fundraise

23:01how learn how to market and remember that there is a ton of cash out there but you cannot expect that

23:12it'll come to you you have to go and look for it that is uh that was probably the biggest challenge

23:18that uh i've had because i grew up in a family that already earned some money and the projects that

23:24we did early on were the ones that we invested ourselves and so i never really had to worry about

23:29it and uh the reality is you need to work with investors you need to figure out how to fundraise

23:35so that you could do deals in the future so that you could grow otherwise you're just

23:39staying stagnant and that that was one thing that i only learned very recently and i wish i

23:47was uh told that you know 20 years ago so that i could start focusing on that and start building

23:53that pipeline interesting uh you are your episode 500 and i don't know 80 82 or something like that

24:00and you're the first person to say fundraising for that question so uh unique and i feel like it's

24:05very important especially in real estate because you will run out of your own capital very quickly and

24:11at that point it's difficult to do deals without any money i'll tell you that much people always say

24:16you can get people you know you can negotiate properties uh zero money down i have had

24:20exactly zero percent success uh getting getting deals with no money down i was never able to do

24:26that yeah so yeah fundraising is definitely a skill that is super important and um and it is a skill

24:34it's not something you think is something you just go out there you ask people and money comes to

24:38you but it's it's something that you you need to build a pipeline you need to build the

24:41credibility and it's it's more difficult than it seems so good recommendation um with that said

24:47i'm going to move us on to the next question this is about the u.s it is a big place there is a lot

24:52of opportunity out there give me the single metro you're most excited about investing in today

24:57single metro i'm most excited about i have to say it's the uh boise idaho area we recently started

25:08working on that uh on a new project out there uh it's in that major area major metropolitan area

25:13we're not actually in the city uh but uh i see huge growth out there uh real estate values are

25:20uh fairly affordable and uh the area is experiencing a ton of growth so i'm very excited about that

25:27market hinders you are all you are also the only person to say boise so that's cool i boise is

25:33gorgeous i i love boise so and i know they have had great growth out there so interesting to say

25:39um all right next question is about finding deals it all starts with getting in contact with the

25:44uh seller and pending that purchase agreement so what's your favorite way to generate leads and find

25:49new deals my favorite lead generation tool has been linkedin recently that's where we produce the most

25:59uh content and where we are being discovered the most i like that because i get to talk to

26:08more or less

26:10professional group of uh audience out there compared to other social media uh that's very much

26:19you know diverse from like little kids to uh grandparents and there's just two concentration

26:25linkedin is more of a professional environment so i like that so that's been our favorite tool

26:30and you know my message is that we're trying to convince sellers to not sell my motto is do not

26:37sell your land develop it and so that's that's what i've been telling people look if you've got a piece

26:42of land and you want to sell it my first question is what are you going to do with the money

26:45and if your answer is you're going to reinvest it in real estate well then just double down

26:50and reinvest it into your own property and grow the value there

26:54makes a lot of sense uh you are also the first person to say linkedin so

27:00that's three for three right there i'm impressed hey what do i get

27:04i'll have to think about that one uh yeah linkedin is a it's one of it's my favorite uh social media

27:12platform i'm really not big on social media even though it's you know it's a big part of um

27:16running a podcast and shooting it all out there but i don't use it myself but linkedin is definitely

27:21the one that i do use um just because i feel like the content i mean if you're into if business is

27:26your thing it's more business oriented um and you get a lot of a lot of good ideas there and so that's

27:32uh makes a lot of sense for sure all right next question is about lessons learned not every deal

27:38that we get into goes the way we expect it in fact many times if not every time something goes

27:43wrong and that's when we get to learn a lesson so what was a deal that went a little sideways for

27:47you and then what was the lesson you pulled from it the worst experience that i had by far

27:58was uh losing a deal to foreclosure so that was something that looked great on paper uh something

28:07that we came up with this pretty unique way to uh finance it and everything looked great on paper

28:16until it didn't uh the market changed we signed that deal in uh 2021 well the the original the first

28:23iteration of the deal the partnership introduction was 2019 2020 we started construction february uh of

28:292020 right before covet hit we refinanced that deal in 2021 uh we created in 2021 we created this super

28:37complex structure where we merged two projects together two buildings together into one project

28:42we set up ground lease financing and then everything collapsed from there we were not able to recover so

28:50that was painful that took us some time to recover the dust hasn't settled yet on the the challenges that

28:58we experienced there but uh yeah that was probably the worst thing and the biggest lesson that i learned

29:03is if you have to complicate it so much to get the deal done then it's better to just take a step back

29:11yeah yeah yeah and that is that's a hard lesson to learn too especially when you put a lot of time

29:17into the deal um you know you've done underwriting you've gone out there you've put you know your

29:22feet on the ground you've been talking with this seller for however long you've been talking with them

29:26sometimes it's years that you've been talking to these people so this deal is like ingrained in your

29:31mind and you just want to get it done and getting to that you know having gone through that getting

29:36into that emotional space and then realizing shit this is actually not a good deal it's i mean it's

29:41not a slam dunk like i need um and and realizing that you need to back away from it that is such a

29:47difficult difficult thing to do uh and it's something that everybody struggles with so i totally understand

29:52that um but not every deal is like that some deals are slam dunks and they they just go the way you

29:58expect it so take us to one of those deals uh what was the deal that just went right and uh everything

30:03the stars aligned and uh you kind of brought off into the sunset so a few years ago we developed this

30:09townhome community um over in bellevue here and we almost didn't take that deal it was uh complicated

30:17it um had uh it was right next to the creek so it had wetland issue uh setbacks it had uh

30:26poor soils it was just a difficult site the seller wanted that was the deal that we actually ended up

30:33buying uh the seller wanted too much money nothing could pencil there we ended up negotiating with

30:40the city on uh buffer mitigation we were able to reduce the buffer from the creek to increase the

30:47buildable space we built 12 beautiful townhomes uh they were the most expensive townhomes at the time

30:53on bell red road in bellevue we uh you know all the realtors kept telling us lower the price lower

30:59the price and we're like no this is like this is it so uh it was we ended up pre-selling all of them

31:06within two or three months uh we had a uh pretty unique creative financing structure there as well

31:14and it just worked out uh we got them delivered um and uh construction did take a little bit longer

31:21uh due to the soils issue and uh various other variables but that was definitely one of the

31:31most rewarding projects at the time nice i love it was there anything in particular during that deal

31:37that you feel like um you did differently that really you know and led to the the good result or

31:44was it you know you really just you got into a good piece of land um that worked out well okay so

31:50we weren't ever planning on buying anything i got a call from a broker friend and said hey i've got this

31:58deal another client of mine is looking to buy this piece of land but uh they have some challenges

32:05right now can you do me a favor can you just tie it up and uh you'll have four month feasibility

32:11and um if you don't you know want it or whatever if they don't uh want to uh take over then you'll

32:18just you know cancel it and i'm like listen i don't really do that he's like please just do me a favor

32:23like no pressure you don't have to look at it don't worry about it i'm like okay fine so we tied it up

32:29we um signed the person sale agreement without really honestly having any intent of buying it

32:36and i hate admitting that but you know truth is truth i haven't done it since i hate tying up

32:41properties just for the sake of tying them up uh three months go by and i put it on my calendar

32:45so that i don't forget to wave contingency or to um you know not wave contingency i guess decline

32:51the purchase i call up my broker friend i said hey well a three month is uh coming to an end

32:56is your other buyer going through with this or not like do we need to sign it he's like no

33:01uh they just told me that uh they're not in a position to acquire it so just you know don't

33:06worry about it and then we said okay fine i think he calls me back he's like wait but do you want to

33:11even take a look at it he's like it's still a great piece of property i'm like look i'm not really

33:16looking to buy anything right now but uh fine let me do some digging around i looked at the

33:21property it was a beautiful piece of property uh nothing like the area was growing i don't know

33:27how much you know about bellevue but that's before they opened the light rail like there was a lot of

33:32like that bell red corridor was exploding with spring district and everything uh medicines moved

33:37into spring district offices so huge growth there i looked at it i'm like the price is just not right

33:43like i can't pencil anything so i came uh called my broker back and i said can your seller reduce the

33:50price because i can't get it to pencil he's like yeah just counter we counted extended feasibility by

33:55two more months um i think they wanted originally something around three million dollars i said i

33:59can't get anything to pencil for more than 125 and they agreed and i'm like i can't believe i just got

34:08it for less than half but they agreed we we met with the city we said look there's very little that we

34:14can do here because of that creek because of the buffers but the city worked with us and we were

34:19able to mitigate the buffer we were able to build a little private park there and uh just the way

34:26that worked out that we were able to negotiate that acquisition the way we were able to work with the

34:31city to increase the density there and uh deliver you know this good looking product we're super proud

34:38of that yeah yeah and the lesson there is always offer you know doesn't matter what the listing price

34:45is just put the offer out there that works for for you that works for both parties we actually just had

34:50a similar thing it was uh there was an rv park listed for 1.5 we offered 750 we got 750 but that's

34:57just because it made sense at 750 but and 1.5 nobody was going to buy it it wasn't that that was a

35:02completely ridiculous price right and so yeah if if a property is off or listed at a certain price that

35:08does not mean that is the value of the property it just means that's the number that they put out

35:12there um and so yeah i i love that that worked out for you guys uh which leads us to our last

35:17question and this is for the listeners you've given us a lot to think about and i'm sure people want to

35:22reach out get in contact with you uh this is a two-parter where can they find you and then what

35:26can they expect when they reach out so i'm on most social media uh primarily linkedin look me up

35:32eugene gershman i think i'm the only one there uh but uh please connect i uh respond to everybody

35:38i um talk to everybody you can schedule a time to uh talk to me from linkedin or look me up on our

35:45website giscompanies.co no m there we have lots of tools there we have a free feasibility study

35:53checklist that you can download and if you want to do a feasibility study of your own property

35:57go ahead and download the checklist just follow the prompts and get it done and if you need my help i'm

36:03happy to help perfect i will put that link in the show notes so if you guys want to reach out to

36:08eugene just click the little more the description it'll pull down that full description in there

36:12you can find his link all right man that wraps it up thank you very much for having on the show

36:17thank you gabe it's been a pleasure absolutely for everybody who's with us today thank you guys for

36:23showing up you are the reason we do this so if you guys have any questions reach out to me gabe

36:27at the realestateinvestingclub.com if you guys want to support the show just leave us a review

36:31other than that i hope you guys have a great week keep rocking real estate and i look forward to

36:35seeing you on the next episode

36:37you

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