riverside_katie_& gabe magic episode _ oct 16, 2025_gabe_petersens stu 2

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen  TIMESTAMPS: 0:00 Introduction to Development Investing 3:45 Creative Deal Structuring Without Money Down 7:20 Developer for Fee Business Model Explained 10:05 Seven Stages of Real Estate Development 16:25 Getting Started in Ground-Up Development 18:30 Overcoming Fear and Building Your Network 20:12 Best Markets for Development in Texas 22:40 Finding Development Deals Through EDCs 24:30 $5.5M Deal with Only $50K Down Case Study  REAL ESTATE DEVELOPMENT MASTERCLASS 🏗️  Discover how Katie Kim built a $100 million real estate development portfolio and learn the exact strategies she uses to structure deals with little to no money down! 💰 In this episode of The Real Estate Investing Club podcast, host Gabe Petersen sits down with developer Katie Kim to uncover the secrets of ground-up development that most investors never learn.  WHAT IS REAL ESTATE DEVELOPMENT?  Katie breaks down the seven stages of real estate development that every investor needs to understand. From land acquisition and land banking to building operations and repositioning existing properties, you'll learn how development isn't just about construction—it's about creating value at every stage of the real estate lifecycle. Whether you're doing fix and flips, adding operational value to rentals, or building from the ground up, you're participating in development! 🎯  CREATIVE DEAL STRUCTURING STRATEGIES 💡  Learn how Katie structures deals using what she calls "creative stacking" to help business owners expand three times their space for only one and a half times the cost. She reveals how she helped clients get into a $5.5 million development with just $50,000 down and only $1.8 million in bank debt, delivering a 353% return to investors in just four years! This isn't about risky financing—it's about strategically layering different capital sources and incentives that most investors don't even know exist.  DEVELOPER FOR FEE BUSINESS MODEL 🏢  Katie explains her unique developer-for-fee service where she helps businesses from consulting companies to restaurants to financial advisors add real estate to their wealth-building strategy without taking on massive debt. This business model allows entrepreneurs to level up their operations while building long-term wealth through property ownership. She's helped countless professionals leave their W2 jobs and launch successful development companies using this exact framework!  Want to learn more about our guest? Connect here: https://www.katiekim.com/ Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool?  Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen

Transcript

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

00:10having a great day whatever day it is for you and wherever you are usually it is friday on the

00:16podcast but we're coming from a thursday new energy it's a good day though because we got

00:19katie kim with us on the podcast here from the kim group and the katie kim educational platform

00:24katie is a developer she has done over 100 million dollars in development so all you guys out there

00:29who are interested in going ground up you don't want to buy uh buy a flip you want to take it from

00:34the dirt this is the episode to listen to i'm excited to jump into it because i have never done

00:39development i don't know a lot about it and so katie is here to teach me so katie thanks for

00:43hopping on thanks gab appreciate to be here absolutely i told you before we got on here

00:48we always like to start with stories we like to hear how people got to where they are so

00:52why don't you take us to the beginning of your story in real estate and uh tell us how you got

00:56here nice well i love stories because we learn the scars through them and gives us a chance to

01:01vet and therapy a little bit so i grew up in a construction real estate development family so i

01:05i like to tease that i was a victim of child labor law going on to job sites and having to go to like

01:10soccer practice and then build walls or you know hang shingles or you know anything and really grew

01:16up in the family business but learned how to be like the doer in the business and then i went and i

01:22got my college degree went for a stint in consulting went for a startup and then was kind of looking at

01:27how to get back and what i wanted to do next you know really like what's my passion what's my mission

01:32and my parents might come back and take over the construction company i'm like no i don't want to

01:36leave chicago i love it and after my husband and i started talking about it's like yeah let's learn

01:42how to do the development we had started investing in real estate and a couple of their of your other

01:46episodes i was listening to they talk about build you know buy a property a year and just keep going

01:52and that's what i did as soon as i graduated college i i bought a condo then i bought another

01:56one and another one and you know i was single with you know a nice salary and a boyfriend that took me

02:02out for you know dinner and stuff so i really didn't have any living expenses besides my condo and

02:07that is one thing i wish i would have kept doing i i stopped a little bit after five years but you know

02:12in that that cycle learning how to put together the deals was really where i started to get creative

02:20i mean i i had kind of go back again i'd done my first deal at 16 where my i was basically a front

02:28for some structuring um on it but definitely got a little little little clip for it and uh and then i

02:35realized like you can do deals with no money in if you if you start to really structure them right

02:40and you can actually get paid to do deals and after i kind of learned that you know if then else

02:46type of a setup and deals and developments and kind of like put everything on the map and then funnel it

02:52down my brain just went crazy and about what are the opportunities how do you make an impact and really

02:59how do you get not only your development to be sustainable financially viable but then ripple into

03:05the community where you can have additional opportunities and so i love that and getting

03:11into as you said ground up i love a good urban infill i love renovating historic buildings and

03:17really all things that just really change the game that's what i like nice i like it i'm always a little

03:24jealous of people who started you know their their family was in real estate and they got that you

03:28know growing up you're swinging a hammer putting on those helmets that's uh it's always good to hear

03:32yeah but i'll tell you one thing game when you're when you're in those families they teach you what

03:38to do not how to do it so then you have to fight to learn the how so in essence they want to keep you

03:44as like that free cheap laborer and you want to learn the deals right so there's there's a pro and a

03:51conduit there you go i agree i have a uh two and a half year old daughter right now and i'm hoping

03:56one day she'll i can start teaching her both how and what to do and uh and she can join that join the

04:01business like you did but you know that's a long ways off well don't wait start with her now we

04:07have family and health and wealth meetings with my kids and so they at like eight years old created

04:12their own personal financial statement so i think they do simple now i like it no yeah we literally

04:18just took her we own a um a rental that's really near our own house and we just we took her over

04:23there and you know we were getting it ready and she met the tenants and all that stuff so she's

04:28she's well on her way she's well on her way but you've mentioned a few things in your intro

04:32intro story you you touched on creative financing financing a bit or creative structuring of deals

04:38and that was something i wasn't expecting you to kind of kind of broach on which is great so you kind

04:43of you got into the construction side with your with your family um you kind of understood how that

04:48was working but it wasn't until after when you were doing your own deals that you realized

04:52the potential in creatively structuring deals and uh you mentioned like the the acquisition fee

04:58that i'm assuming that's what you're referring to they're getting paid to get the deal done so tell

05:02us a little bit about that what did uh what were some of the aha moments there yeah so i really didn't

05:08get into and i call it creative stacking because i one i think creative financing has um bad blood with

05:14it to be honest from like the 08 09 and and it's really not the financing part it's it's how you stack

05:22it and and that and what sources you bring in and if you know about some of the sources some people

05:27don't and i left the family business in 2015 and relaunched the kim group which at the time was just

05:34doing real estate and property management with a developer for fee service and where we would be

05:40someone's developer we'd help guide them through the process taking their business adding real estate

05:45to it and really enabling them to grow say three times the size for one and a half times the debt

05:51and that was kind of that key sauce so when you talk about and are these sorry are these only

05:58you said you're helping businesses grow are these specifically real estate businesses are you going to

06:04like a i'm just giving an example mcdonald's it wouldn't be mcdonald's but a mcdonald's and helping them

06:09build their their construction side or give me a little bit more depth there yeah so we um so i'll

06:15rewind it for a second like the construction side we would do design build lease with an option to buy

06:21all the time and so we worked with consulting companies office office um like furniture companies

06:27uh we had some daycares restaurants not necessarily mcdonald's but a couple other franchises like

06:32kfc subway long john silvers and we worked with a lot of of those as well as financial advisors

06:39for people who are looking to start a development company so we actually we've helped a lot of

06:44people really start their development company leave their their w-2 job whether they're working for a

06:51construction company or you know they're doing investment on the side but they just don't know

06:56how to make that leap we help coach them guide them and then um then launch i mean really so it's all

07:04all realms of the businesses really it's if you're looking to level up your business but you don't

07:09want to bring that debt of the growth onto it and you want to bring real estate into your wealth

07:16building portfolio or your strategy that's where we come into the conversation and really help you

07:22think from a strategic standpoint interesting okay and this is this is my own naivety when it comes to

07:28you know building i people always refer to development and building construction they refer

07:33to them independently and in my mind building something ground up is all they're all the same

07:38so can you kind of tease those apart so i understand specifically you know in development

07:43what are you guys talking about when you say development when you're saying you know we're a

07:47builder when you're saying we're a contractor what are you talking about there okay that is a

07:52great question that it's not just you so many people get like don't understand so

07:56development actually has seven different stages of development and so where you choose to play

08:04at in that defines like what type or what sorry what phase you're at and then you can have what

08:11product type so you know you can start like the first phase is land acquisition right the second

08:17phase is land banking where now you have more multiple parcels together and at each phase you're adding

08:23a value add product right so like if you buy a land maybe you start to get entitlements and utilities to

08:29the land well you're a land developer right you're a land banker developer my close friends she's like

08:36i'm not a developer i'm like yes you are you do fix and flips your value add like that's one of the

08:41stages and uh one of my girlfriends who does um short-term rentals and turns them into like midterm i'm

08:47like you are doing a value add to the operations of that property so anytime you take real estate

08:53and you anytime there's a construction component there's a development component yeah there is

08:59developer yeah if you're adding value and making it more valuable if you're adding some kind of

09:04component make it more valuable you're a developer with real estate but i mean on the flip side you

09:08can do you can add value without without any change to the structure of the property itself

09:14operationally you can add value just sales and marketing you can add value i wouldn't consider

09:18that to be development so it's development and the fact that you're you're enhancing that model

09:23of the product and so it's not a construction development but it is an operation development so

09:30it's it is one of the seven stages building operations and maintenance is actually one of i kind

09:36of feel it's a light phase of the development but in those seven stages it is one okay you know and

09:42and that's hard for people to see because when you think a developer you think of those like

09:45massive subdivision developers or like the big multi-complex and and yes those are developers too

09:52and then when you look at the the contractor or the construction part that could be a general

09:59contractor it could be a subcontractor it can be somebody that's actually either called like

10:04gc's is a general contractor that would oversee the whole project and sometimes they self-perform and

10:11sometimes they don't sometimes they're a paper contractor and then in terms of that you have

10:16to see like somebody could build something and never own it like construction companies a lot

10:20of times don't own the real estate a lot of times they don't own the real estate in the company which

10:25is a strategy but they just construct for other people so a developer would be doing it for themselves

10:30and or their company and when we do developer for fee we do it for someone else so it's their

10:36development they own it they own all the decisions got it interesting okay so you've mentioned

10:41multiple times you said seven stages of development why don't you break that down it doesn't have to

10:45be super in-depth but um just take us through the seven stages in your mind how does development kind

10:50of play out yeah okay so one is it kind of starts from the origin story right so you have land so you

10:57acquire land that's the first one and then at each stage um i can give you a cool slide to put up

11:03here with it we teach in the academy um you know you'd add it with like the entitlements what are

11:08you providing a value the next is land banking so you put them all together right and then can be

11:13like that site development and making it what we call pad ready in terms of that which means all the

11:19utilities are there ready to go ready to go up and and and then you have building development which

11:25a lot of people think of development and really that's the biggest one because you can see it

11:29right and so that's where people relate to it the other one would be the building operations

11:34and management right so you're enhancing how it performs and then you may repurpose it would be

11:40the the sixth one so maybe you take hot right now is taking office buildings that are blight and vacant

11:45turning them into multifamily or turning them into a different use taking the old k-marts and turning

11:52them into self-storage right yeah i would call that repositioning so that you would just call it a

11:58repositioning stage of development interesting yeah okay because you're adding value right you're

12:04taking something you're repurposing it you're repositioning it and you're adding it to a better

12:10and higher use for where it's at right now and then the last one would be like a demo and complete

12:15redo like so you're taking existing building going all the way back down to the core got it cool

12:22yeah no it's good to know you know i feel like in real estate there's no standard well there there's

12:27most you know there's standardization when you're talking about specific kpi like cap rate everybody

12:32knows what it is but when you're talking about how it's done there's not quite we haven't quite

12:37reached that level where there is standardization and it's good to kind of put it into a framework

12:41that people can understand especially when it comes to development because i've heard that word

12:45thrown around so many times and i'm always like i don't know what you're talking about like that

12:49sounds like something else to me i know and when you say that game it's it's it's not you it's

12:54everybody like that's one of the hard parts when people are like oh you're a developer it's like

12:58this magical box like what does that mean what do you do and um you know it does step into it because

13:04it is so complex but and i would say when i first started to dig in because i have a i have a

13:09master's in computer science so i'm very analytical i want to get to the numbers i want to get to the

13:14details and so when i was looking at how do i put together deals i started going around and asking

13:21developers how they put together their deals like i would ask them to go out to lunch to coffee i bought

13:26some of my attorney's time and just picked their brain like you invest in real estate how do you do

13:31it and he he told me afterwards like this is one of the most fun hours we've had or i've had with any

13:37client because you know what are you doing they want to tell you how they put it together and i would

13:41say if anybody's interested in saying i don't know how they do it just ask like i feel like we we

13:46forget how to learn right we forget how to engage and i love being able to teach people because when

13:52i was in that process i had this aha moment and i was like okay so and it was with my attorney and

13:59he knows how my brain thinks right so it was like so what you're telling me is i have all these options

14:05out here that i can do and i think like this is a property i want to engage on can i bring this in can

14:11i bring this in start putting them into the funnel and then however i can craft that deal

14:16is development and he goes yeah that's it and i'm like so and then so i phrased it a different way

14:23right because you have to do two different analogies and so i it's so like the coloring page right where

14:28you have like the outline you just mentioned your daughter right so i'm sure she right now she's

14:32probably not coloring inside the lines right so which is the best part so you have this design on a

14:38page right so the page is all the the legal boundaries the sec boundaries everything that's

14:43going to keep you out of jail right i mean and a good human being the outline is what you think you

14:49want the project to be what you think you want it to do and then when you color you may color inside

14:54the lines and then you may go outside you may add some things that are out here it's but as long as

14:58you're within that box you're good to go nice i like it that is a that's a good metaphor

15:03yeah so we are uh we are running down the time but before we do i always uh like to you know you

15:10have a specialty in development if somebody wanted to get involved they want to start um either doing

15:15exactly what you do or they want to hire somebody like you what are the first steps that they should

15:19take so first steps um i host the master class every month and just to kind of walk through like

15:26is this something you want to get into talk about how to think through it we launched an academy

15:30to help people exactly where they're at and then you can also just engage with me and see where you

15:35want to where you want to go what you want to do perfect i like it all right well with that i'm

15:42going to push us off to the quick question right are you ready i'm ready let's go let's do it it

15:47starts with education and i need to rephrase this question because people always misunderstand it but

15:52what i'm looking for is a specific individual recommendation like an individual book you read or a

15:59conference or a mentorship program so we need a recommendation for an educational piece of content

16:03that you've been you've consumed yourself and you enjoyed it could be a book could be a conference

16:08could be a mentorship program but like a specific one that you've uh you've enjoyed and you feel other

16:14people would benefit from as well yeah um besides self-promoting so let's put that aside

16:19i would say right now personally i'm reading the motivation manifesto that's a really good one to get out of

16:26your head and to level up because each time we level up we kind of get comfortable again and we

16:31need to continue to push our capacity in terms of like conferences and network groups i really think

16:37those depend on where you're at in your journey seeking some of them um i'm a member of go abundance

16:42women invest her globe street siri there's a lot of different organizations i would just recommend

16:50qualifying them that they are the right group to speak into where your goals and your mindset are

16:56because if they're not aligned with them they're going to be a waste of your time nice i like it and

17:01i like how you said you have to get comfortable when you're leveling up but that it rings so true

17:05because whenever you're going to the next stage of your career of your you know what you're trying

17:10to do in real estate or anything else it's always a little bit destabilizing so you just feel like

17:15you're a little off your feet but that's the right feeling you need to stay there and let let

17:19yourself figure it out let yourself get comfortable again and then you can go on to the next stage and it

17:23just continually iteratively you get you keep arriving at that feeling of discomfort and i always

17:29try to well i used to always try to go away from that feeling but it's a good one whenever you're

17:32there you know you're on the right path yeah you got to get comfortable with being uncomfortable and

17:37uncomfortable with being comfortable and that's when i like i'm like i'm comfortable and people like

17:41okay it's a problem that's a problem next question is for your younger self let's go back to the katie who

17:47was uh just on the job site with her mom or dad go back to her look her in the eye give her one piece

17:52of advice moving forward go don't be afraid go and be curious i think a lot of times we overthink

18:00things and we think it's too complicated as opposed to surrounding yourself with the right people who

18:05have been there done that and want to help you and as soon as i started to engage with people and we

18:09talk about leveling up so each level having to really assess who's around you and in your circle and

18:15do they have the equity in your life to talk to you right do they have the equity in your life to

18:20guide you to that next level and if not you got to get new five you got to get a new five people to

18:26surround you nice and uh that kind of goes along the vein that so many people echo here on the podcast

18:31that i wish they got started sooner or i wish i would have you know not waited so long anytime somebody

18:37says something remotely like that i like to point it back to you the listener if you're out there you

18:41haven't gotten a deal done this is your kick in the pants just go out there get it done doesn't

18:46matter what it is it could be a small flip could be a small rental whatever it is just make sure

18:50and get it done because that's going to start the ball rolling you're going to get into that feeling

18:55of discomfort and you know once you hit that you're down the right path and the ball the ball's

19:00rolling and that's what everybody wishes that they would have done sooner is just get that ball rolling so

19:04with that i'm going to move us to the next question this is about the u.s it is a big place there is a ton

19:10of opportunity out there give me the single metro you're most excited about investing in today

19:15right now is the texas triangle there's huge huge huge growth i was actually at an edc meeting last

19:21night and they are growing at a pace of a hundred percent each year and they have like two new grade

19:29schools a middle school and another high school all coming online in the next three to five years

19:33and the growth is insane um and just the opportunities are huge yeah texas we own some

19:40self-storage and um dfw and then some mobile home parks in san antonio and they're doing

19:45that's a it's a great area just you know dallas to houston to san antonio austin they're all great

19:51great markets is there any sub market in that you know those are the major metros is there any like

19:55sub market that you really like or uh yeah so i like to go to the secondary and tertiary markets

20:01because a lot of times those are the communities that are trying to poise themselves for growth and

20:06they're not there yet so people haven't looked at them they have a lot of the opportunities for

20:10economic incentives which are where i like to play and so you can pick up ground for cheap or free

20:16and to develop in and so a couple opportunities in cities that are really poised for those growth is

20:22hutto which is right outside taylor and the samsung plant that's there liberty hill is the one i was at

20:28last night that they're growing at 100 right a year and they're trying to really focus on their

20:33schools and keep them at that quality still so i appreciate that um and then i would say the third

20:37is killeen yeah i think killeen gets overlooked so much and they are so poised for for that yeah we

20:44actually just did a land deal in um in tyler and uh tyler yeah doing pretty good yeah tyler's right

20:50next to hutto and that's where the the samsung is yeah oh nice oh yeah yeah whole area crushing it

20:56all right next question let's talk about finding deals it all starts with getting in contact with

21:01the seller depending on that purchase agreement so uh what is your favorite way to generate new

21:05leads i can't talk this much and get in contact with the seller so i'm always a fan of building

21:11your network as you said like get in the game get started if you build your network and ask and put

21:16out there what you're looking for your network will help you help it come to you so one of the things

21:21when i'm looking for new deals if i'm going into communities i'm talking about the edcs and the

21:26cities first to see where they own land and where they want um development to happen and those are

21:32that's my strategy people what edc is sorry economic development either council or committee sometimes

21:38um they rename it different place but that is really the entity that is focused on your economic

21:45growth within your communities so they're looking at companies and jobs and coming in perfect

21:51all right um next question is about lessons learned not every deal we get into goes the way we expect

21:57it in fact pretty much every time something's going to go wrong and that's when we get to learn a lesson

22:02so what was the deal that went a little bit sideways for you guys and then what was the lesson you pulled

22:06from it i would say there's a couple of deals that we had that were either in construction or about

22:12to start construction when covet hit like take a deep breath and really leaning in to my network my

22:19partners my team and being open and honest about what was going on and communicating that and

22:25allowing their brain power to come into the deal i always tell my team like if i'm not listening to

22:31your brain i'm wasting money and i think that that's a great way to look at your partners when you're

22:36bringing them in partner with people that have different scars than you do and they have different

22:40experience than you do and so when you have those times bad news is bad news nothing is going to be

22:47solved by holding it in so communicate it to your team and start working on those solutions faster

22:52and people will appreciate that openness and that candor and that communication and you're going to

22:57see that you're going to get a lot more buy-in into your partners into your investors nice i like it

23:03that's uh that is good advice um next question is the obverse of that we're talking about the highlight

23:07reel sometimes deals just go the way we expect it and we kind of ride off into the sunset and they sit in

23:13our mind is those deals that they're the highlight they're the ones we like so take us to that deal

23:17for you um what is it and how to go so in in development construction i don't think anything

23:22ever goes like perfectly smooth but i would say the the one that went according to plan would be our

23:29trefskers bakery project where we where we did a very creative financial stack on that and we were able

23:35to get our business owners into a development that had them expanding three times the space for one and a

23:41a half times the cost and the building was six times the space so they had other tenants renting

23:47from them and they got into to a 5.5 million dollar deal with only 50 000 in only 1.8 of bank debt

23:55and we exited our investors in four years with 353 return not bad sounds like a deal to me i love it

24:03all right and that uh that leads us to the very last question this is for the listeners you've given

24:09us a lot to think about i'm sure people want to reach out get in contact with you this is a two-parter

24:13where can they find you and then what can they expect when they reach out love it so for the

24:18education component you can find us at katiekim.com or on all the socials at the katiekim and when you

24:24reach out there's a place where you can book a call with us to see you know where you are on your

24:28journey and our team will help guide you into the resources that we can offer you at what stage

24:33you're at and you can definitely look at our projects our resources and join us for a master

24:41class they're free and it just starts that conversation perfect i will put that link in

24:47the show notes so if you guys want to reach out to katie all you got to do is click the little more

24:51in the description it's going to pull down that full description in there you can find her links

24:55all right katie that wraps it up thank you very much for offering on the show

25:00thank you very much absolutely for everybody who's with us today thank you guys for showing up

25:05you are the reason we do this so if you guys have any questions reach out to me gabe at the

25:10realestateinvestingclub.com if you guys want to support the show just leave us a comment or a review

25:14other than that i hope you guys have a great week keep rocking real estate and i look forward to seeing

25:19you on the next episode

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