Ground-Up Apartment Development: Finding, Analyzing, and Executing with Sam Bates

Sam Bates joins us to discuss the ins and outs of ground-up multi-family development. Sam shares his wealth of knowledge on the topic, from understanding why one might want to focus on this type of investment to protecting potential downsides when structuring purchase and sale agreements. He explains how they find and entitle land, analyze the market, and decide what properties to build on raw land parcels. He also covers how they use third-party market studies to make informed decisions, negotiate with sellers, how relationships with cities and counties come into play, and more. Plus, Sam shares his insights on rising interest rates and debt costs that affect new developments, competitive advantages in investing in real estate due to population growth, and demand for housing across the country. Tune in for a wealth of information for those looking to invest in ground-up multi-family development.

[00:01 – 06:28] Discovering the Benefits of Ground-Up Multi-Family Development

• Cap rates and interest rates have decreased over the past 40 years but are starting to rise again
• Ground-up multi-family development can create a lot of value for investors and developers
• Investors with different time horizons should consider other types of investments
• The minimum median household income for ground-up multi-family development should be 70,000

[06:29- 16:28] Navigating the Complexities of Developing Multi-Family Properties

• BG and other market study providers can show supply and demand characteristics
• It is more difficult to find land to develop than to acquire an existing property
• Landowners often need assurances that progress is being made to negotiate a purchase and sale agreement

[16:29 – 23:36] Navigating the Challenges of Increasing Interest Rates and Costs of Debt in Real Estate Development

• Flexibility and willingness to pivot during development are key
• Class A properties use top-of-the-line materials, such as quartz or granite, and stainless steel
• Property taxes in Texas are very aggressive
• Increasing costs of debt will impact new development, and investors should expect lower returns
• Multi-family has a competitive advantage due to access to financing and population growth

[23:37- 28:49] Closing Segment

• Best investment ever made: the development in the 3000 population market
• Worst investment ever made: doing single family all by himself
• The most important lesson learned: being decisive

Connect with Sam through LinkedIn, or visit www.BatesCapitalGroup.com/invest. 

Invest passively in multiple commercial real estate assets such as apartments, self-storage, medical facilities, hotels, and more through https://www.passivewealthstrategy.com/crowdstreet/

Participate directly in real estate investment loans on a fractional basis. Go to www.passivewealthstrategy.com/groundfloor/ and get ready to invest on your terms.

Join our Passive Investor Club to access passive commercial real estate investment opportunities.

LEAVE A REVIEW + help someone who wants to explode their business growth by sharing this episode or clicking here to listen to our previous episodes.

Quotes:

“If you have a longer time horizon, if you’re more geared or inclined to take on, I won’t even say risk, but just longer time horizons development’s the way to go.” – Sam Bates

“Sometimes too much debt is a detriment, but we do get 60, 70, 80% financing at fairly cheap money, especially compared to pre-for investor expectations.” – Sam Bates