Today on Unstoppable REI Wealth you are in for a treat. This entire episode my guest is giving some incredible value. Who is the guest you ask. Bryan Underwood. Bryan Underwood is the founding Principal of Responsible Residential (“RR”) and President of Responsible Real Estate, Inc. (“RRE”), a San Diego based real estate investment company. Mr. Underwood started RR & RRE after spending more than ten years in his family business, A-1 Self Storage/Caster Properties, Inc. Responsible Residential is a San Diego based residential development company focused on middle income housing. Prior to launching RR & RRE, Mr. Underwood worked as the Acquisitions Manager for Caster Properties, Inc./ A-1 Self Storage. Since joining Caster Properties in 2007, Mr. Underwood has played a key role in the acquisition and entitlement of over 1.5MM square feet of Self Storage space with a market value of $200MM. His primary responsibility was to achieve the Caster family’s investment goals. To do this, he led the acquisition team in their efforts to uncover new Self Storage opportunities and negotiate transactions. He worked closely with the construction and development department for initial project cost estimating, site planning, and entitlements. He was the lead underwriter for each project and facilitated escrows and the completion of all due diligence items. Ready to learn more from Bryan just head over to https://investwithbryan.com And after that head on over to... https://easysell411.com https://billyalvaro.com https://billyssecrets.com Who knows maybe you will be our next partner? To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
Today on Unstoppable REI Wealth you are in for a treat. This entire episode my guest is giving some incredible value.
Who is the guest you ask. Bryan Underwood.
Bryan Underwood is the founding Principal of Responsible Residential (“RR”) and President of Responsible Real Estate, Inc. (“RRE”), a San Diego based real estate investment company. Mr. Underwood started RR & RRE after spending more than ten years in his family business, A-1 Self Storage/Caster Properties, Inc. Responsible Residential is a San Diego based residential development company focused on middle income housing.
Prior to launching RR & RRE, Mr. Underwood worked as the Acquisitions Manager for Caster Properties, Inc./ A-1 Self Storage. Since joining Caster Properties in 2007, Mr. Underwood has played a key role in the acquisition and entitlement of over 1.5MM square feet of Self Storage space with a market value of $200MM. His primary responsibility was to achieve the Caster family’s investment goals. To do this, he led the acquisition team in their efforts to uncover new Self Storage opportunities and negotiate transactions. He worked closely with the construction and development department for initial project cost estimating, site planning, and entitlements. He was the lead underwriter for each project and facilitated escrows and the completion of all due diligence items.
Ready to learn more from Bryan just head over to https://investwithbryan.com
And after that head on over to...
Who knows maybe you will be our next partner?
To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
SUMMARY KEYWORDS
deal, property, real estate, people, storage, units, build, business, talking, building, figure, months, years, put, development, buy, places, san diego, construction loan, process
SPEAKERS
Billy, Brian
Billy 00:18
Welcome to Unstoppable Real Estate Investing Wealth. My name is Billy Alvaro, aka the unstoppable BA, former billion dollar mortgage banker gone bankrupt turn professional real estate investor, where each week you'll learn the tools, strategies, systems and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow and scale their businesses creating massive profits and how you can too, and we'll teach you how to put those profits to work. So you no longer have to get ready to finally experience financial freedom and generational wealth. Now let's get started. What is going on everybody? Welcome back to another episode of unstoppable Rei wealth. I'm your host, Mr. Billy Alvaro, the unstoppable BA trying to bring the heat and I've been on a tear man, I've been on a tear interviewing like the nation's top real estate investors in the apartment segment. And today I'm bringing in Mr. Brian Underwood from San Diego, Brian, how you doing, sir?
Brian 01:23
Gosh, I mean, how can I not be pumped man like, let's roll. We're going to talk about some cool stuff.
Billy 01:29
Yeah, no doubt. So offline. We were talking and so I'm interested in your story because a lot of guys they speak to not that educated in a way of school that went through the hard knocks you actually went the other way. You got your your MBA, I believe you said in real estate, and you got your masters. So let's go down that road first is that was what, like, 20 years ago
Brian 01:52
Yeah. So it was actually so let me take this like one step further back from that, right, because I don't want to spend too much time here. But I do have to share the story about like how I got into real estate. Okay, so, so full transparency here. No questions off the table. Like I come from a very big like real estate family in San Diego wasn't my dad, it was my grandfather and my uncle. Okay, so I grew up around real estate, like I got to see, like, what it can provide for generational wealth, and the comfort it can provide by knowing I'm not working every day for this paycheck. So I got to see that like, not directly in it, but like from afar, right? And so I was, I sort of always had this interest in real estate, but it wasn't until I was actually like, selling women's shoes at Nordstrom, which by the way, was an awesome job. And I was like 21 years old. And I just was like, you know, I was making $80,000 a year and it was awesome, but I'm like, this isn't my career job. Okay, so I quit. Yeah,
Billy 02:53
sure. foot fetish. Is that what I'm gathering? You have a foot fetish?
Brian 02:57
Well, I will say that my wife does have like the best feet you've ever seen. And my last name is Underwood's. So funny. Like it all goes together. So I went and basically found a guy who I knew in my network, and he was kind of stumbling into real estate from power electronics, because everybody in the mid 2000s wanted to be in real estate, because the tide was rising really, really fast. And so I said, you know, that's more along the lines of what I want to do. So I sort of joined him as like a mentor, like a mentor. Like he was my mentor. I was like the mentee, right. And I would like read a couple books at the time. And I was like, I sort of just had this fundamental question that was curious about like, how do somebody value real estate? Like, how do I buy that piece of land for some value or that building for some value? So as I was after, like, what does that even mean? And in the process of me just kind of learning, trying to educate myself by like reading books, I got my real estate license, and I found a piece of property in a sub market in San Diego called Santi, which further story I'm building in Santee, but this was like a small industrial piece. And it was on the market. We made an offer $150,000 accepted, okay, so this is raw land, and I said, Okay, I want to be in the deal. I don't want to just learn like I want to be in the deal. So I went to a family member, I wrote a business plan I said, I need to borrow $50,000 Because I'm gonna buy into this deal with my mentor. And we're gonna go build this industrial building. And I literally I didn't know much but I had a mentor right that had like, the head like some seasonality behind them and some credibility behind them. And you know, the family member lent me money and about six months later, we got an offer for $425,000 So I say well, that's kind of like our profit like today rather than wait for maybe the what if like, we got to sell this thing right. So here's my first deal. And I we close the deal I give the family member Yeah, family member their money back All their interest, I promised them I'm set with like 75 $80,000 in the bank and I'm going alright, how do I go do that again, like, I'm hooked, right? So that was like, my entry into real estate. Like I knew I loved it from afar. And then I got into it. I had, like, you know, an early success on my very first deal. And then I was just trying to figure it out from there, like, how do I, how do I know all of this? And so I went at that point, it was when I went to the family business in 2007. And I said, I want it basically, let me in the door. And my and my uncle, you know, he's still runs a company today, we have a real large family. So whether he was testing me or not, like, right, like not even like, considered it right away said, no, no. Yeah, I was like, what do you mean? No, like, here's what I've been doing. I love it. Like, so what if I sort of I got lucky, I'll take I'll take luck all day long. As long as I'm in motion, right. But like, I don't understand your reason? No. And I don't really take no for an answer. Anyway. I'm not that kind of guy. Like, I'm trying to figure out like, what am I like, maybe my messaging is wrong. Because if it's a good thing, like on paper, you know, if this is a good thing, like I shouldn't be hearing No, maybe I should be hearing some additional questions to vet me. But like, knows the wrong answer for many people hard
Billy 06:13
shut down. No up. No shit.
Brian 06:17
You're not coming. And so I said, Well, what's the reason? Right? So I'm poking around the edges. He's like, Well, I, you know, this guy over here that you want to work for? I pay $200,000 A year and you're not going to waste his time. Right? Fair enough. Give me six month trial period. Right? Like, I'll get in the door. I'll work for this guy for six months. You go ask him if I'm wasting his time in six months? And if he says yes, I'll leave. I'm out. But if he says no, you gotta give me a permanent job and acquisitions. And then you know, I was there 10 years, right? So yeah, yeah.
Billy 06:49
Look tenacious. on your end, you didn't accept no for an answer, which I love that just shows your grit. But what a blessing to have a family that's in the business that you were able to then get in, prove yourself stay there for 10 years and fucking learn the business from the ground floor up like that, man.
Brian 07:06
I'm the first person to raise my hand and say like, absolutely blessed like like God in and oh seven okay, then everyone, you know, got the carpet from pulled out right from under us, right? Boom, like, Oh, hey, hits, and we're like, what do we do now? Right? But this was like a very, critical time in my learning and also getting into the business. It was this time that I went to go back to the masters of real estate to I found out that you can actually get a masters in real estate and I was like, Okay, how do I do that? So had to take the GMAT, like get back into the school like mode, like got into University of San Diego, I went to school, got a master's in real estate 2009 10. But that was also the time that I got to sit in the office with this, you know, the really my high paid boss at the time, right? Tyler Exeter, and I got to just like a sponge man, like absolute sponge. Like this guy was still a mentor of mine today, like super sad. He came from run in three banks. He knew how to underwrite property, like he knew how to like create financial performance. I like I learned that from him. I learned how to like deal source, I learned how to like find property,
Billy 08:11
but like, what was the business that your uncle was in? Was he in commercial was it was residential? Was it? Apartments like self storage,
Brian 08:21
self storage? So in that, so going back to like, awesome place to hone my skills, right? So 2007 to 2017. And that time period, I got to figure out like, how do you? How do I find deals? Like what does a general plan mean, at the city? What does zoning mean? What is an overlay? What are community planning groups, right? Like all of these things dictate what you can and can't do with property? Right? So I had to figure out like, literally, old school map style, like looking online, going into cities and figure out like, Where can I eat? Like, where's my best chances to get a storage permitted? Right, like step one, step two, here's the block. Right? So I'm tracking down emails, I'm tracking phone numbers, I'm snail mailing, like, I'm tracking down owners like I want to buy your property, right? Because we are development, we weren't going for existing stores. Got it? Right. So I'm figuring out like, how to source deals, when I get a hold of them. I'm figuring out how to talk to them. Right? Like, how do you how do you engage with a seller? How do I how do I figure out like, selling to me is a good thing. Right? So you know, it's like, is your property for sale? No. Okay, well, are you currently making any money on your property right now? No, it's vacant. Would you like, monthly paycheck? Yeah, I'd love it. Would you consider maybe a ground lease? Like, what you wouldn't even like you'd be in first position to the bank? Well, what does that mean? That means if for some reason we got in trouble, you own a $12 million asset on your property, like, you know, and so just like de risking the deal for him, you know, like learning how to like negotiate with them. I mean, yes, we used attorneys, but like I wrote my own contracts, right. I had to have No, all of our escrow commitments to the seller, and to figure out what property due diligence was everything from reading a title report to figuring out how to read a geotechnical report, right? Like, like unpacking all this stuff, had to figure out how to, like, sit in front of like the community planning groups and tell them and convince them. They wanted to sell storage in their backyard, which by the way, nobody does. It's beyond me. But no one does, right? I secured a million and a half square feet of self storage development over that 10 year period. You know what I mean? I got to spend $60 million buying raw land like just like crazy amount of hats, and like crazy amount of experience over that 10 year period.
Billy 10:37
Note, I mean, what the information you've gathered, the knowledge and experience you've gotten over that 10 year mark, is like, you can't buy that, like, it's just, it's unfreaking believable that your uncle was a bull as he didn't give it to you, right, you earned it. But like you're in a position to really understand what the hell you have to do and like stuff that they really don't teach in these courses online, right.
Brian 11:01
They don't teach you the ship, like,
Billy 11:04
find land. And so when you're going out, you're looking at roll. When are you looking at? As of right, where it's already, it's already zoned that it could build. Are you looking to rezone? Because I noticed two different avenues and the reasons?
Brian 11:17
Yes, absolutely. So we are in California, almost nothing is by right? Everything? Yeah. I mean, it's like, I didn't do one, I got lucky. That was that was by right basically building permits only like so you still have to, like, have a civil engineer and comply with California Building Code and all that stuff. But I didn't need like an extra. So I always always distinguish it, like two ways, right? Like one is by right? We call it ministerial. That means no one can tell me No, as long as I get a building permit. And then there's discretionary. Everything else is discretionary. There's different levels of that. It could be the zoning administrator, it could be Director of Planning, it could be a planning commission, it could be city council, like there's a lot of different levels of of permission there. City council being the most rigorous. In in California, that process alone, like getting permission to build something could take two years. Okay, so this is like a long game man, like super, super long game. So I'm trying to figure out like, it wasn't uncommon for us to get what was called a conditional use permit a CU P. And that process was they had to figure out reasons to say no, they couldn't just automatically say no, they kind of had to, like really have a good case to say no. And if they didn't, all that meant was they got to put a bunch of like extra restrictions on us because it was conditional, right. But normally, we would get it done. So I would. So I'm looking in places that by right, but usually it took a conditional use permit, sometimes it's called a site development permit. But the point is, is you've got to go kind of check his boxes, you gotta go, it's basically like a six to 12 month process, you know, on the on the short end.
Billy 12:57
So taking it then Brian, that most of these deals you're getting involved with, you don't know that you're gonna get these dogs. So you're going to contract subject to getting this rezone. So you could actually build what you want to build?
Brian 13:08
Absolutely, especially when you've got something that's that risky, we're have to negotiate in our contract. This this very timely period. And that's a moving target, depending on the market conditions. Because, you know, a lot of industrial land allowed for self storage at the time, which I'm sure it still does. I mean, housing now we'll get there but a lot of self storage was industrial land. And when US industrial started getting really hot, you got people going in there literally buying land, like I'll close in 30 days, I'm like, I can't close in 30 days, because I have no idea if I community, build my project, right? So you have to get you know, it's you have to get like creative with your contract, just like hey, I need you to sit still for 12 months. I mean, flip the tables, do I want to sit still for 12 months? No. So give me reason to sit still for 12 months, right? Reasons was
Billy 14:01
usually money on top of so
Brian 14:04
like, again, yes, money is important. But I'll tell you what, the track record of your company, whether you work for somebody, and you're a part of that, or you're starting your own business, like your track record, and your reputation and your commitment, is is is huge. So I got to say like, here's our company, right? Here's our company, it's a one cell storage, look us up. We've got, you know, at the time, you know, we went from we went from 42 locations to 60 while I was there, okay, like we're not a fly by night group. Okay, so you can go maybe get more money and I'm gonna here's what's going to happen they're gonna say I can give you more money I can close in four months and then four months, they're gonna say sorry, I can't close I need more time is going to be the exact same thing that I'm asking you for upfront. I'm just being transparent about it. Right. And on top of that, I will put in like hurdles in my contract up So here's all the things that I have to do, I'm spilling it out for them over the next 12 months.
Billy 15:05
Going through the diligence process, right?
Brian 15:08
That's right and if I don't do this milestone, you can terminate, take all my money. So it's absolutely, and I'm okay with that. Because I'm so good at. And again, I'm not good by me, I'm good. Because of I've been doing this for a long time. Like, we're so good at these milestones, I know what they are. So I know I can hit them, I'm not going to promise you something I can't deliver. If for some reason I don't like it's, it's out of left field. And I had no control over that anyway. And like, we could sit down and talk about it. But you know, I'm laying out a contract. And I'll miss out on deals all the time. Because I'm transparent, and I'm realistic. And I don't want to put myself in a position that I'm over promising and under delivering, right. So I'm just very transparent about like, here's what it's gonna take, I'm giving you a fair price, we can even put in hurdles where like, I've got more non refundable money in escrow, we can even pass that through to you, you know, we can build it into like a long term option, like give me like, you can enjoy the cash you can enjoy whatever you're doing for the next two years, after six months, are stopping option payments, right, I've got another 18 months to go figure it out. And I either keep those or at some point, I exercise my option, and I buy the property right?
Billy 16:23
After money is getting credited towards your purchase price, if you should not perform that keep the cash.
Brian 16:28
That's right. And you know, sometimes they've got a month to month tenant in there. So we get month to month income. Now they're getting an option payment, they're making money making more money than they would otherwise. Right. So it was just trying to figure out like, what's that win win, man, and it's like, you know, like, we could get real creative, and I love creativity. But at face value, I try to keep it as simple as possible because the business is very complicated. And when you're talking to people that might be unsophisticated in real estate, they appreciate that, don't talk to them, you're, you know, you went to Harvard, or you got a master's in real estate, you've been doing this for 17 years, talk to them, like it's your grandma that has no idea. Anything about real estate, like you literally just dumb it down. And I mean that positively, like communicate with them. So they understand what you're saying, you know, and trust me, you'll get a lot further.
Billy 17:20
That's, you know, that's marketing one on one, when you're going to do marketing, you want to speak to people as if they're 14 years old, and it's no disrespect. But you have to talk in a language that everybody's going to understand not that they're dumb, like you said, it's that you have to make sure they get it. And if you come from a place of Harvard education, and you're over talking to them, you're gonna lose, they're walking out the back door.
Brian 17:41
Yeah, I mean, you've experienced it. I've experienced it like real estate, when you live and breathe. It is another language in and of itself. And if you're like, you're brand new, and you're sitting like in a movie, or in some meeting, like say, you went to your first like commercial real estate networking event, some speakers talking, and then like, people are just like throwing around all these terms, and you're going holy, like I have no idea what they're saying, right? So if you're if you're trying to put a deal together, and you're using real estate terms you lost. Like you just lost them, you got to keep it just super simple. So yeah, man that that was kind of that that 10 year stint that Oh, seven to 17 that that was a stint with the family business.
Billy 18:21
And so I want to get into what you're doing now. But I want to go back, I want to get touched on deal sourcing. So what is your process for deal sourcing whether it was back in the day when you were doing the the Self Storage? or Now when you're doing the apartments? What's your process? Do you work with brokers? Do you do marketing? Do you actually go out and find land that you want to like develop and and start doing heavy research? Like what is your whole process for deal sourcing?
Brian 18:45
Yeah, I don't, I don't do much. Because, I don't have to. And again, I mean that in a good way, not patting myself on the back. People know us and they know what we're doing. And they know our integrity, and they know we perform and they know how we are processed so people know us, right? So I'm not I don't have to do much deal sourcing today. But back then I back then I did about half of my deals were off market half or on market. So I very much care about broker relationships. And I still do today like I'm picking up the phone, we're talking like I'm responding to some deals that they put out, I have no interest in buying them. But I'm going to take a second and I'm going to like kind of look at it and give them some feedback based on my point of view and like what that means to my company. And I'll tell you what, like brokers appreciate that when, they just throw stuff out and like you never get any feedback that frustrates the heck out of them like you lose them when you like give them feedback like you're creating rapport with these brokers and like you can get someplace with them when you decide to submit an offer they take you very serious you're not just a fly by night okay, so that was really important to me right? That's important to me now. Even more so now because I'm a smaller name than I was with like the Castro name and a when self storage. Everybody knew who the casters were and it was all stores, they still do. Like it's a really big portfolio, right? But I also my on my off market deals, there's a lot more tools available today than there were back then. I mean, you could send, you could send text messages out. I mean, I get them all the time, right? Like, you could send voicemails out like your phone like half rings, you know what I mean? Like, you get voicemails, you're gonna have people literally hand write you letters write that as if you wrote them, that stuff didn't exist in like, oh, five, six, and seven. Right? So there's, there's a lot of really cool tools today. Like if you're out there, like legitimately farming, but because self storage is owned, like, you know, you got like a whole city of like 4 million people, right? You got tons of buildings and tons of land self storage is is like a dot here, a dot there a dot here, like it's a very small area in which you could put a self storage. And so I did, like, I took the approach of like, I'm going to get really good at finding where these areas are. And then I'm gonna get really good at finding who owns them. Now you can like, back in the day, we use title companies or do all this right now I subscribe to services that like I could get public record information. You could do skip tracing to like, figure out like, who owns that LLC, right, there's so again, these these tools didn't exist, then that now exists, which is really cool. It saves us a lot of time and energy. But I legitimately would like I would write very, very like pointed letters, like, here's our company, here's what we can do. And like, just try to get them on the phone the best way I possibly could. I mean, I love talking on the phone. And I'll tell you what, like, some people would call me right away. Some people would email me right away. Some people it would be like years later, they would call me. So it was like, Yeah, I put a deal together in San Jose. And like the daughter of the mom, I sent it to found it at her desk drawer like 18 months later. And was like, I don't know, my mom gets these letters all the time. I found yours. And I looked you guys up. And I because my mom's not doing well, like I want to do something with you guys, right? I mean, so. So you never know, like, where these letters go? Right? Like, sometimes you just pump them out, you're like, and whatever. Good luck. Well, they might make it an office drawer, because it's not like it's a timing situation, right? Like, you never gonna hit like the perfect timing, like sometimes you do, sometimes you don't. But that's that's the beauty of like a snail mail letter, in my opinion. It's timeless. Sometimes these people get these letters and they read and they go not now, but am I being a year? Let me save this. You know,
Billy 22:35
yeah, cool, the seller process the seller pain point. So depending on where they're at, and their pain, you know, if you're hitting on when there's really no pain, and they do hold on to that, eventually, they'll call you or if you have a consistent marketing program, sometime along that pain threshold, you're going to hit them at the right time, they're going to respond. Right? So you were very intentional the way in which you went about looking at your property. So I heard you say without you saying it, you would look at the zoning maps, figure out exactly where you wanted to hit, do your due diligence on the skip trace, find these people out and then start doing your your marketing campaigns.
Brian 23:07
That's right. And I and I like at the time, it wasn't that sophisticated. I tracked it all on like a big Excel sheet. You know, like, here's, like, you know, here's the owner, like, Here's the address, you know, here's the size of the property, here's what it's zoned. If it took some discretionary like period, you know what I mean? And then, and then I'd have I track, like, when I got a hold of them, you know what I mean? Like what phone call I had, or when I sent a letter, and I would kind of ping them every six months. So I go through these different areas that I was tracking, and like every six months, I send another letter trying to get a phone call. So I you know, you got to track what you're doing. So you can measure some sort of but you know, oftentimes, I mean, I would I would farm areas like that for two years. Sometimes it took me six months to find a deal. Well, I'm not going to do two deals in the same area. So once I found the deal there, like I was done, you know, I wasn't I wasn't sort of going back to the well, like, but But yeah, I mean, you're basically like, get all the property that fits a storage site and go get a deal. Like, go go figure out and go figure it out.
Billy 24:08
Well, you know, people that are listening, most of the people that are listening are wholesalers and or guys flipping that want to get into this business? It's the same process. You have to first cultivate your list. There's no difference. You have to target who you want to go after to start your marketing campaign. Do your skip trace if you're going to be calling or telemarketing or texting and or get that direct mailer, it's it's the same process. It's just a different type of real estate that you're going after. That's all the roofs.
Brian 24:34
Yeah. And I very well said you could you could take the same thing. You just have to understand what your product is like what are you trying to create? Right, what are you trying to deliver right to the market like obviously self storage, we were very specific and there's only so many places you can put it like multifamily is probably you know, I would say more restrictive than single family homes and a lot of areas but I go through the same process with multifamily. Like I'm Figuring out where are the locations that it makes sense to build from a population jobs and income standpoint? And I'm trying to figure out where can I get the highest densities on these pieces of property? And and that's what I'm targeting, like we target those areas. And I mean, I've got more deals and I know what to do with like, I'm in search of like, like capital and CO G partners for our deals because like I like I don't have I don't because I did it for so long. Like I don't have a problem finding deals like we could find them. Like it's it's the whole rest of the pie now we got the team, like stellar team to get these things out of the ground. Like it's it's it's capital, because we're kind of new.
Billy 25:40
Yeah. And just so we're on the same page Brian, you are ground up development on the apartment side now, right? You're not doing by value add your ground up.
Brian 25:48
Yes. So there's there's kind of two brands and starting to make this a little bit complicated, but we I do I do some smaller syndications. And I've done I've done three of them. And primarily our company urban housing partners, is focused on urban infill, high dense residential development in San Diego. So we've got an 89 unit development that we're getting ready to submit for plan check on a 240 unit development in National City. Kind of before before the launch of the bigger partners of urban housing partners. I did am wrapping up a build the rent townhome development in Santee 10 unit Townhome. I have a did a 506 b syndication on a 20 unit in the area of the park. And then I actually just closed my first deal up in the Boise area and Treasure Valley in Boise, Idaho, so So I do some smaller syndications, because we got teams in place to do those. Definitely the focus is the high density residential. For us. That's really our that's what our team is like, it kind of clicks on all cylinders.
Billy 26:59
Brian, give me a I want to get into due diligence. But before we do so just give the the listeners an understanding of what your organization looks like, who the people what are their present, just position wise. And what do they do?
Brian 27:12
Yeah, so we've got there's five of us, we're all partners, especially being in California, no one was really that motivated to have employees because it's it's just a lot of liability. So we're all we're part fight partners and all the deals and so you got Sean K, Casey, Jake and Mike. Okay, so Jacob shorts, okay, so this guy's like your financial analysts like guru. Like he's done development, he's puts together like to Pendry in downtown San Diego, when that thing was being financed. Like he put together the model on this. And it was crazy like to go through a financial model of this detail. You're talking about a hotel, we're talking about a club, you're talking about a pool bar, you're talking about restaurants, like literally a financial model for every single one of these right. And so urban housing partners is is Jacob, Casey and Mike. Okay, they have 25 experience of putting high rise condos and apartments together in downtown San Diego. They have worked for last 25 years, mainly fee based for like being an owners rep or project manager. When I've known these guys for about 10 years, and we engage on my townhome project, we realize, hey, we're all trying to do the same thing. Why don't we team up and do bigger projects, but they're ours stop working for a fee, you guys all want to do your own deal. So we're taking their 25 years of building towers out of the ground. And like our young entrepreneurship approach of like, hey, we can go do this ourselves. And like we've put together urban housing partners. And so Mike Dunham, he's built 10s of 1000s of homes in his life. He's done master planned communities to 300 unit like type one towers in downtown. So he's your guy interacting with architects and design consultants, your you'd like your general contractor early on for construction feasibility, he's managing the whole permit process. He's also managing the construction process. Casey and Shawn, these guys are like, extremely like they they pick up more deals than, like I said that we could currently handle. They are very, very talented with all the technology side, they know how to go out and put deals in front of us. And like we're kind of like yes, no, or no, but and then I'm like, all of us are visionary. To some degree. I'm definitely sort of more on the visionary side call me like a CFO role in that particular deal. Doing a lot of fundraising. We're gonna bring on an investor relations person right now. We're all kind of ping pong in that a little bit. That's something we definitely need as an organization. But yeah, we all have our roles. We all have our lane and like an incredible team to go get 1000s of products out of the ground over the next five years.
Billy 29:53
Sounds good, bro. You got like a Power team right there. Good for you, brother. Good, good. I appreciate it. I want I want to get into your due diligence real estate due diligence, right? So tell us about the due diligence process. We touched on it a bit, but I want to go a little bit deeper on it.
Brian 30:07
Sure. Yeah. So like, so for us right now. And let's talk about the multifamily side that we're doing. We're doing our best, unlike self storage, okay. There is just robust demand for new housing. And in California, it's very difficult to get it out of the ground. And we can build 15,000 units over the next eight years, and we're not gonna be able to catch up on demand. Okay. And right now we're building like five or six. Okay, so what we're what we're trying to do is focus on, like, Where can we build the highest density in the quickest process, and the city of San Diego passed something last year called complete communities. Now, this is an area that some owners know exist, but a lot don't. And when you look up on your zoning, and you look up in like what you can build on this property, you might find a piece of property that says it's 14,000 square feet, which I know is a postage stamp to a lot of people in the nation, but 14,000 square feet is actually a decent sized parcel in San Diego, 14,000 square feet. And it might be zoned for one per 1000. So you can build 14 units, they're complete communities came in and said, No, you can build a six and a half f AR, put as many units in there as you want. Okay, so floor area ratio, right? You go 14 times six and a half and pack it with units. We're we're building we have we have 89 units designed on 14,000 Square feet, it's a podium project and shit, bro. Yeah, two levels of concrete and five levels of stick frame, right. So like, these are things where like you can you can potentially go buy one of those sites for about one and a half to two and a half million dollars. RS was a commercial piece with the operating business. So we bought it for three, it was a little bit more expensive. But like those pieces right now and complete communities, because the words getting out our trading for five, five and a half million dollars, just because you could put that many units on that. So
Billy 32:03
let me ask you this, though, when they when when they passed that ordinance that rule whatever the hell it was, how did you then do the overlay to know that that property was tagged with that type of thing that they that they put out?
Brian 32:13
Yeah, they're a little bit slow. But there's a map that you can go to the complete communities map and like Google search it for City of San Diego, you'll find a map and you can it's literally like a GIS and you could you could kind of scroll around, you can see exactly where it's zoned, and the F AR and that's what we target boom. So in terms of due diligence, like that's one like you're trying to say, like give yourself the best chance at like putting together a deal, right? So this is our best chance at putting together a deal. But now we get to a point where like, Hey, we got us we got like a willing seller, okay, I'm going to put it under contract, canceling under contract for that long, but I know I need at least six months, I need at least six months. Because even though I, I we know this product really well, we're gonna go through what's called a multi discipline, preliminary review with the city of San Diego. This is essentially validating everything that we think we know to be true. And I need that before I buy the property. This is going to validate, I can build X amount of units by right. I don't need to ask anybody. It's going to validate some civil engineering questions that we have. It's going to validate like, like, we need that, like basically we're in we're raising capital we need that for investors be like No, we've been through it. It's a buy right project, right? Yeah, we're also I mean, you're gonna pull the tide report, you're gonna get an ultra survey, you're gonna see what's on title, what's recorded on title that might affect my rights as a landowner to build the project that I want, it can be a lot of things, okay. So like, you need to learn how to understand excuse me, title reports, you can use an attorney, but you could also do it yourself, if you learn how to read them and understand them. Right? You can also like, if you don't want to pay the 20 $100 for an author survey, you can have your title company map all the easements on on, they'll do it for free. So you can see like, what easements are going where, because no one can read legal description, nobody. Like it's impossible, right? So we're so we're looking at title, we're getting all the survey and all the surveys basically making sure nobody's fences encroaching on your property, or there's not some public trail through your property that's not gonna show up on title, but might affect your property. So it also surveys very, very, very important. We're gonna go get things like it depends on if we've got an existing structure or vacant land, like what we get, if an existing structure is there, we're gonna get a PCA. So property condition assessment, we're going to figure out like, basically think about like a home inspection on steroids, right? They're gonna go through like every component of that building, they're gonna write up a report for you, and it's gonna say, like, hey, the roof is 13 years old. And so we recommend that you put this amount of dollars in replacement, so they kind of have like, here's the stuff to fix urgent. Here's over the next 12 months, and then here's the reserves that you should be holding on the property. Right. So like really good report cuz you can also use that to negotiate. I just did that, actually. So I said, here's a PCA you didn't have it when I put it in property. Here's all the things that I need to fix, like right now that you had no idea about. And that affects me and affects my income that I can make on this property. So it's a tool to help negotiate like your deal, right? Even though I'm really good at researching zoning, I get a zoning report. So it's a third party that comes in and says, Here's, I mean, it's lengthy, right? Like, here's everything about the zone, places like California seismic matters. So I get like a seismic analysis done. What else am I doing? Phase one. So phase one is, like hugely important. Maybe not everywhere in the nation. But certainly in California, like gas stations, cleaners are number one, right? Like, how contaminated is my soil didn't make it to groundwater? Do I have to engage the Water Quality Control Board, like these can be serious problems that hold up your, your development. So you want to like know what these are like, when you've got sort of, yes, you're spending money your time, right, you're spending this money because you got time. And you want to like know how bad these things are. And they can be pretty bad. Like, it could take you two years to remediate your property? Well, you plan on breaking ground in 12 months, so that's not gonna be very good, right? It might take you five years, and in places like California. So anyway, phase one, hugely important. We're also working with like, geotechnical companies out there. So they're actually putting borings in the ground in strategic places, pulling the soil out, analyzing it, and saying, based off of the structure you plan to build, here's the type of foundation you're going to need. And here's what you need to do to the soil in order to build that foundation. And that can be very, very, very expensive. So you want to know what you're up against in due diligence. So, man, there's a whole host of stuff. I know, that's a lot of information right there. But like, all of it is very important,
Billy 36:45
bro, like you the knowledge that you have in your head with the experience that you've gotten over the last 1015 20 years. It's unbelievable, you know, this business, like the back of your hand, bro, like, unreal? How old are you? If you don't mind me asking?
Brian 37:00
I just turned 40. You see, so you're just gonna get the whole life. I like to think that it look it's like, you know, the, it's, it's literally like, you just like get in the trenches and learn, like, I always cared about it. Like, I didn't get a report, like pass it off. You know what I mean? Like that would have like, like, even when I was with the family, like we had an insight we give a construction manager, we built all of our own projects inside, right. So instead of me just getting the report and sending it over to Tom, I actually read the report and ask questions, right? So if you get these things like actually read them and try to understand like, It all matters to some degree. And like a lot of this business, like, tons of this business is like just mitigating risk. Yeah, just me, there's, there's so much risk that you can't mitigate. Because you don't know until it basically hits you in the face. Because you can't plan for it. Right is mitigating risk. So what we're doing with all this due diligence, what it's doing, at the simplest level, is mitigating everything that we can know today, if you can know it today, know it? Yeah, there's, there's tons of stuff that you won't be able to know. But you can mitigate that risk, right? By contingency planning, which I'm a huge fan of like you have to learn a contingency plan in this business. So like, one big way that we do it, I'm gonna give you like, sort of obvious, but like, it'll it'll kind of explain what I'm talking about. Our biggest risk and ground up development is taking out our construction loan and turning that into permanent financing. That's our number one risk. Now people are telling me Well, now it's your contractor. Now it's building cost. No, it's labor. Well, yes, that is true. But that's not my number one risk. My number one risk is four years from today. Is the debt markets going to be in a place where I can take out my construction loan? And that I can't? No, you can't know the best economists in the world can't know. So how do you had? So how do you build like, how do you feel confident building today? Well, I can people like Casey and Jake, that stress test our models all the time, based off of the information we know today, right? We put enough cash in the deals that I know, even if things go to crap, we're okay, I can still get that loan out. Because here's what I learned in the great recession. And you're talking about self storage. Darlene right, the Darling. Everybody that I saw get in trouble in the Great Recession that lost their property. didn't put enough money in the deal. Yeah, they're over leveraged. Because look look like leveraging is is like, leverages our best friend. Like, it's our best friend, but it could also sink the ship, okay? And when times are good, we're just going oh, my gosh, I can go get this favorable debt. I can put 10% down, I can go build this look. And then I can go, I can go refinance, or I can cash out like you're just looking at all that stuff that you're forgetting to contingency plan. Yeah, right. Like things do change. Like we're experiencing that right now. Right? Like things are changing, like really, really fast. And so when when like The it's actually it's kind of crazy, I spent a lot of time on the Self Storage side on this, it's like, I'm a minimum of 30% equity in every single deal. Because it's like, it's like that 35 to 37%. On a development deal, that is the sweet spot for me like building, having cash, creating value enough, where if if things like crap hits the fan, that value in cash is still there for me to get out of my construction loan, if I can really get out of my construction loan, like even if I made like, even if it wasn't a home run, if I can get out of my construction loan, and we own that property. 20 years from today. It's a homerun no doubt, like every deal. 20 years from now is a good deal. Every single one. So it's the short term liabilities, where like, you get caught with your pants down and you'd like sink the ship. So we just try to manage the short term liability is the best that we can.
Billy 40:56
Yeah, dude, I got so much out of this out of this podcast, you have no idea like the importance of due diligence, the importance of deal sourcing, and really the importance of having a quality team around you in the business that you're in building. You can't do it by yourself. I mean, there's so many different so much different brain power that you need specialists that if they're not doing their job, your deals fucked.
Brian 41:18
can absolutely yeah, absolutely. Yeah. You rely I mean, like, I can't stress enough like business with good quality like, like the best people you can find. Yeah, like you're relying on them. You're relying on their like intelligence, their professionalism, like you're relying on them, like, like building that team and getting those people around you. I don't care if they're your partner, or if it's a consultant that you're hiring, like, you need the best of the best. No, go yeah, go figure it out. Like people know who they are. Go ask questions. Brian,
Billy 41:47
what's next for you and your company? Like where do you see yourself going over the next 1015 20 years? I'm sure you guys have a plan out there.
Brian 41:54
Yeah, we're like so we've got a larger one, we got to 240 unit. But our approach is to put the minimum of two deals together. I'd like to have 1000 units for the next five years to urban housing partners, like either we bought or underway. So that's like I think very robust. I think we can actually we could actually go much further than that with some strategic partners. But like we could right now put 200 unit deals together every single year without a problem.
Billy 42:23
Journey a completely different part of the country. So your deal size is a lot bigger out there. So with 1000 units, what would that equate to? As assets on the management?
Brian 42:35
Give me a second to do the math in my head. I can see it. Yeah, you're you're probably you know, half a billion. Yeah, somewhere around there.
Billy 42:44
Yeah, good stuff, bro. Listen, if the listeners want to find out more information about you, I know you're not a big social media guy. But how could they how can they go about funding?
Brian 42:52
I'm working on it. Yeah, you can go to invest with brian.com invest with brian.com It's Brian with a why invest with Brian dotcom
Billy 43:02
perfect, bro. Honestly, look, we don't know each other. I'm gonna get to know you this and I'm not saying it to blow smoke very good podcasts. You're You're personable. You're fucking knowledgeable. And you are like bringing the heat you have really good energy. So gotcha, man. Well, hey, thank you. Thank you. Likewise, you know, it helps I appreciate it. Good, good conversation. Love being thank you so much for coming on, bro. Stay on