Latest / Real Investor Radio Podcast / Episode 17 | Developer Case Study: Franklin Cruz Part 2

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Episode 17 | Developer Case Study: Franklin Cruz Part 2 · Real Investor Radio Podcast

• craig fuhr (00:00.157) Hey everybody. Welcome to Real Investor Radio. I'm Craig Fuhr with Jack BeVier and we've been speaking with Franklin Cruz on episode 16 and we're just continuing the conversation. Franklin is a developer, long time investor. Franklin Cruz (00:01.206) Yeah, they're taxing me. craig fuhr (00:28.889) Currently in the Lakeland, Florida area doing some pretty exciting stuff Franklin tell everybody quickly again where they can find out You know just search for Franklin Cruz on Google Franklin Cruz (00:37.974) Yeah, that's like the easiest way, man. I was like, just go to Google Franklin Cruz. That's it, super simple. C-R-U-Z, not like Tom Cruise. craig fuhr (00:45.985) Right, so and the reason why I would I would encourage all everybody listening to go out and check it out is I honestly look at Franklin is sort of like you know where I was 20 years ago where jack was that you know 1518 years ago sort of going into that first house in Baltimore going only you know holy crap what do I got here. I think the numbers work I mean Franklin is doing that in sort of the development game right now from the ground up doing very. Jack BeVier (00:46.415) Thanks for watching! Jack BeVier (00:54.991) Thank you. Franklin Cruz (01:06.606) Uh huh. craig fuhr (01:13.569) high character houses on smaller infill lots currently in the Lakeland area and we've been talking about that so go check out episode 16 for sort of the history and now we're going to get into the numbers and sort of the nuts and bolts of the deal jack so we've been talking about this um i'm sorry 12 lots in Lakeland correct that was 12 lots and um how did you come upon the uh Franklin Cruz (01:33.826) Yes. craig fuhr (01:41.157) the structure, if you will, or that particular sort of designed house, which is rather unique. Why was it that and how did you come upon that? What was your thinking behind that quickly? Franklin Cruz (01:52.206) Uh, that's probably like the fourth rendering or fifth rendering within two years. I've been always playing with knowing that what basically what happened was how I came up with that is because when I did the deal with KB and I met all the national home builders, a big epiphany hit, which is the epiphany was like, we're never going to have homes of the future. I was told when I watched back to the future part two, I was going to have homes of the future and that shit's never going to happen. And it was like a big shock for real. I swear to God, like I'm talking, it hit me. I was like, these guys all they care about is this spreadsheet and the Performa. We're never gonna have homes of the future, ever. And then I did all the research. It was like, who's doing modern homes at scale? And nobody's doing it. Like they say, oh, well, I could do it in a factory and I could do this. And no, you can't, man. The trick of development is land. If you don't know the land part, dude, you're fucked. Like you can't do this. You've gotta learn land. Jack BeVier (02:22.837) Mm-hmm. Franklin Cruz (02:47.382) You cannot make something in a factory and think you're gonna pass all the permits and all the building codes and everything else with a municipality that's 100 years old and they're just gonna change up because of you? No, man, it don't work that way. You gotta figure out the house on the ground in the trenches. And I just wanted something cool. I wanted to be inspired. I wanted to go in that house and be like, this is cool. Like, you know, I wanted kids to walk by and be like, dad, I want that. I want that, you know? craig fuhr (03:03.579) Yeah. craig fuhr (03:14.041) It's very different. Yeah, I would honestly, if we had a way to throw up on the screen your designs right now, I would love to do it. Most people I'm sure are listening anyway. So again, you know, search for Franklin Cruz and you'll see these very high character homes that you're doing. Franklin, I'll be honest with you. When I first sort of saw the sticks, you know, I'm thinking like, what in the hell is Franklin doing? But bro, I'm so impressed by the PR that you've gotten off of this. It's been insane. Um, the, just sort of the buzz around the community and frankly, or I would bet around the state. So you get to the point where you're in the lot, everything's ready to go. Um, talk, let's talk about sort of like, first of all, where did you find that design or is that something that, uh, did you sort of find it? Franklin Cruz (03:44.81) Yeah, it has been. Franklin Cruz (04:05.006) No, no, man. That's yeah. So my architect, I'm a huge Frank Lloyd Wright fan. And if you don't know what Frank Lloyd Wright, that's why we call it Elon Wright is our building side. So we go horizontal with Elon Wright. That stands for Elon Musk and Frank Lloyd Wright. If they had a baby, it would have been Elon Wright. And so, you know, Google Frank Lloyd Wright, if you've never heard of him. And to me, he, you know, his designs were in the 1900s, but it still looks like it could have been built right now. Like they're unbelievably beautiful. craig fuhr (04:19.664) I think. craig fuhr (04:32.305) very funny. Franklin Cruz (04:34.914) So for me it was, but I'll be able to know this, Frank Lloyd Wright never did a development. He never did a full development. Everything he did was one-offs. And so to me it was like, what if you could mix them? What if you could take Elon, what if Elon Musk was in the building side and what would he do? And to me, I was like, he would do modern homes at scale and make them cool as hell. And then, you know, keep the cost, keep driving it from keeping, you know, be vertically integrated as much as you can or just... craig fuhr (04:35.023) Mm-hmm. craig fuhr (04:40.726) No, there was one off. Yeah. Franklin Cruz (05:04.138) really know the micro details so you could keep your costs down and have a product that's 10 times better than everybody else. Good. craig fuhr (05:07.537) So. Did you get any pushback from the community for sort of the, like, you know, for lack of a better word, the difference of design of, I'm sure than the rest of the community. Franklin Cruz (05:20.558) Oh hell yeah. I've got, dude, this is like the, it was, it's a love hate relationship. You get people that are like, oh my God, that's unbelievable. I've got, I had the president of the habitat look at me on my face and say, I think they're extremely ugly. I think there's like one of the ugliest homos I've ever seen. And I was just like, okay, at least you got an opinion. I was like, I'm happy you made it, you got an opinion, thank you. craig fuhr (05:37.734) Hahahaha Franklin Cruz (05:50.454) But I've had people look at me on my face. Even they thought I was the builder. They know I was like the developer owner. I've had people drive by and they're like, God, that looks so ugly. Look at that. That's the ugly thing. I was like, thanks. Thank you. Thanks. You know, I appreciate, you know, driving your Chevy 1969 Impala that has three wheels on it. Thanks. So. craig fuhr (06:03.225) Thanks. I own it. craig fuhr (06:12.677) Jack, bring your high bring your highly analytical mind to the conversation here and guide us in some numbers and sort of like, you know, do what you do now, Jack, tear this thing up and let's get into the particulars. Franklin Cruz (06:18.996) Hahaha Franklin Cruz (06:28.29) Please do. Jack BeVier (06:28.359) No, no, I think it's great. Like, and I've only been like, messing. I've been messing with this the same way Franklin has, like, just kind of like bumbling through figuring it out. But then you figure it out. And you're like, Oh, yeah, look, like, it's that's not brain surgery either. Right? Oh, it's just real estate. We just it's just some new vocabulary to learn. Like, it all makes sense. It's just no one's given you a course to how to teach it. It's just you're fumbling through the dark figuring out like, you know, as you go. Franklin Cruz (06:54.53) Mm-hmm. Yeah, you got it. Jack BeVier (06:57.243) So like the, what's the, it's a three bedroom, two bath, right? Franklin Cruz (07:02.899) Three, two and a half bath, two and a half. Jack BeVier (07:04.207) Three beds and two noth bath. And parking is outside our garage. Franklin Cruz (07:07.926) Yeah, we have an oversized one car garage that what we did too in there, we painted it all black inside the garage and put a hectic on light, which is standard in all of our homes. Just because what we thought about was like, nobody ever gives a shit about the guy. Nobody ever cares about the man cave. So, you know what, fuck it. We're gonna actually make the man cave. Because what happens is when you move, you put all your shit in the garage. And then years pass and as the man, you... You're just, your shit's in the garage so you could never make the man cave, but you're the one that paid for the fucking house. So it's like, what? Now, don't get it twisted. I know there's some women watching, it's like, oh, I paid, oh, that's cool, whatever. But there's something about that damn area that's mine. You know, and so we painted it black. We just made it cool, you know? This is like, what would I want and something that I can afford? I wanted to make it that anybody that had a job, if you had a job. Jack BeVier (07:43.885) Yeah. Franklin Cruz (08:05.258) you can afford this and you could shoot for it. You could be like, that's what I want. Instead of like when I would go to these million dollar areas and I was like, that's amazing, but that's not realistic. I didn't feel like I could never, yeah. I wanted something that somebody could be inspired. Like when I've got a Moto X Tesla, right? And so I could say that's something that somebody could shoot for and it's something that's realistic. craig fuhr (08:17.625) It's never within your reach. Franklin Cruz (08:32.606) Not in your head, you're like, oh, it's $100,000 car. What that's a dude, if you just work, if you just make $100,000 a year, you could drive that. You could drive, you could be inspired by it. Jack BeVier (08:40.939) Yes, it's not a super car. So yeah, it feels like a $300,000 car. It's faster than the $300,000 car. Yeah. Franklin Cruz (08:47.25) Yeah, I smoke my friends all time. It's hilarious and like I got seven seats in it, you know, it's like Like with a weighted vest and all my tools in the front, you know, so it's like Yeah, I don't care I got a home people all the time just by the rugged just big five big towel that's it You're fine. What's he gonna? You know, it's a car so Jack BeVier (08:59.147) Got the screw gun in the back. Jack BeVier (09:10.563) So there's, so the, that's the 12 and then, hey, you know what, I apologize for, for like kind of circling back in the conversation here, but how are you sourcing these deals? I mean, so like, you know, like people are like, Hey, I could do postcards. Like sure, you could just do postcards on vacant lot owners and just look for, and just like, you know, that, that seems like obvious, but like I'm sure you're not finding like larger parcels that way or, or are you? I don't know. How are you finding deals? craig fuhr (09:38.077) That's a great question. Great question. Franklin Cruz (09:39.466) Yes, a great question. So there is my belief is one, if I'm going to find deals, there's got to be scalability to me. Postcards for me was never scalable. So I figured out the online game, very meticulous, but you know, what's my zip codes in my area and hone in on that zip code and do that. Now when it came down to development, surprisingly, a lot of my deals, 90% were referrals because what I discovered was a lot of people don't know. an active developer. And when you say, Hey, I'm a developer. They actually were like, Oh, I know one. Because I even remember I was like, I you know, my phone Rolodex is 8000 people. I don't know, I can't say on two people I know, and one went bankrupt and the other one will pick up the phone is a developer out of 8000. But I'm in I'm in real estate. You know, so it's like, they just don't know. So I just put myself out there. Jack BeVier (10:11.403) Yeah, who's buying land? Franklin Cruz (10:37.134) I was like, hey, I'm a developer, this is what I'm doing. If you know anybody, you know. And then what I discovered was landowners don't even know what's possible with their land. They don't even comprehend it. Because even some developers don't understand the land all the way up. Usually they just hire a civil engineer and they say, hey, do the work. You know, I think I got a deal. And if they have a lot of capital, they can play that game because they could, they've got to move money, you know? So what I learned is just put myself out there. The big deal, the KB Holmes was a referral. Actually from Chris Chico, we know Chris, Craig. He actually had a lead, he's like, hey dude, you know this lady, what can you do? So he referred me and then he didn't even know about the land, I didn't know either. And then all these other deals, like I got 130 acres right now, we're working on a master plan, 460 units with a 200,000 square feet business park. That was a referral because the guy didn't know anything to do. He just said, hey, I know this owner, I think I could be in the middle, I'll bring in all the money. craig fuhr (11:11.158) Of course, that does them. Franklin Cruz (11:34.306) but can you be the person in the middle to make this deal happen? And I did, we're into that deal for like 3.5, we immediately got LOI from KB Homes again for 11.2 on the deal. But I created the deal just from him saying, look, I don't know what I'm doing. So he brought me in. All the street, a guy said, hey, there's a sign there for one acre in an opportunity zone. I look at it and I find out there's a second sign next to that one sign. that says eight acres, same owner, it was nine acres of land. You know, so everything you just if you have it, what I discovered is like, if you have integrity in what you're doing, and you're egoless about it, deals will come to you, man, because that that's good. You're having good energy out there. And so it will come to you. I know that's probably not the best sophisticated answer. But that's what it got. craig fuhr (12:21.959) So right now, right now. craig fuhr (12:26.969) I mean, right, Jack, I feel like right now we're not, we should not be in an era and in an era of competition, but rather more of collaboration and connection. So right now I'm at a conference of about 700 real estate investors from, you know, the smallest mom and pop to, you know, guys who do big scale and in the room as well are people with money, you know, invest small, you know, capital, private. who will go long term, short term. And so, you know, there's a lot of competitors in the room, but there's this sort of mood of, hey, let's not be competitors anymore. Let's find out how we can help each other and connect. You know, not in a way just so I can make money off the deal, but like, you know, look, it's a good karma thing too. I'm gonna introduce you to somebody who might be competition, but I know there's a way that you two can work together. Just last week I had, I have a mastermind with some guys Franklin Cruz (13:11.991) Oh yeah. craig fuhr (13:26.597) I had two of the greatest competitors in the chimney space in Maryland in the same place. These guys have had lawsuits against one another. And by the end of the night, they were talking like, why, why are we doing that? Why are we doing that? When we know together, we're far more powerful as the one and two in Maryland than, uh, you know, being adversaries. And so, um, that's, that's the spirit in which I, I see my role in this entire podcast and sort of my role in general right now in life is, you know, how can I bring value and connect people together? So, um, You know, back to Jack's question, there are many MLSs in the country where if you do sort of a topo, you know, sort of that aerial view satellite, it gives you the outline of the land and you can see where all of the lots are sort of vacant, how they're zoned a lot of times. And Justin, the MLS, Jackie, you found that correct when you're doing those kind of searches. So is that sort of the way, other than referrals that you would go about doing Franklin Cruz (13:56.366) I love that. Franklin Cruz (14:12.587) Mm-hmm. Jack BeVier (14:18.059) Yeah, yeah, absolutely. craig fuhr (14:26.041) you know, a preliminary not at all. Franklin Cruz (14:26.496) No. Franklin Cruz (14:29.854) Yeah, never. Just because when I found those people aren't motivated. So what I discovered was one, you've got to have, so right before I got in a commercial, I did 61 transactions of all single family in one calendar year. And so what I, and all of that was online marketing, specifically Facebook, specifically newsfeeds ads, and very laser targeted in my area. And what I, and you know. At that time I had 81% closing ratio. So if I had the conversation with you, we're gonna do something fast, slow, or creative. Either I'm gonna buy your property, slow is gonna be listing the property, or doing something creative. And what I discovered through that is when people are contacting you, they are motivated to do something. You've got to solve their problem. So for me, it was all about solving their problem in a fast, slow, creative way. And then I would always ask them, hey, which one are you leaning towards? It didn't matter which one they leaned towards because all of them still pointed to all my companies. So, and I'm happy because we were able to help them. And if the deal was too tight, I personally don't believe in, I don't believe in not being in-person wholesaling at all. I believe if you're gonna do wholesaling, you need to see that person face to face, like a fucking man, and you actually need to let them know, hey, if I can't move this, I'm going to buy it and I'm gonna rehab it. If you can't say that, then I want you to be there physically when you say that you didn't find a buyer so you could see that mom crying to her kids because they already spent the money. So I took it really personal to figure out solutions no matter what. And so... Jack BeVier (16:00.707) Mm-hmm. craig fuhr (16:02.909) So. craig fuhr (16:06.981) That's that's called by the way, that's called old school wholesaling where there you know, we didn't have 10 weasel clauses. I'm not going to, you know, go out 90 days and then tell you I never felt you know, couldn't find a buyer for the place. So I get I love that. Yeah, it's great. Franklin Cruz (16:12.444) Okay. Franklin Cruz (16:18.146) Oh man, yeah. Yeah, so then even deals that like, for example, I just got a deal because somebody called me the other day, the guy, older gentleman, he wanted $420,000 for the house. I figured out the house is actually worth about $600,000. But the thing is that number is so big on a wholesaling side. I was like, dude, I'm not, you know what? I'm gonna list it for you and I want you to make $600,000. We'll just make the listing fee. He started crying. craig fuhr (16:46.257) So you're actually. Franklin Cruz (16:46.314) I was like, that's what it's about to me. craig fuhr (16:50.053) you're actually still doing, you know, sort of sink one off residential deals. And at the same time, you're doing these larger development deals. Franklin Cruz (16:56.577) Oh yeah. Franklin Cruz (16:59.982) Oh yeah, you gotta get your reps in. To me, in development, it's real easy not to get your reps in. And what I mean, your reps is like having conversations with sellers, negotiating, still being out there in the field. I'm not in the field as much as I used to be, but I still go because I wanna make sure that I'm getting my reps in. It's like, you've gotta get it in. If you choose to be in this field, you gotta see what's happening. How's the market? Just like right now. When we put out one, I put out one ad in my area, I got five leads that called, and we locked up two amazing deals. It's $60 of ad spend, and the conversion ratio is stupid. One of them is a manufactured home, we got for 80 grand, it's worth 280, with a lake in the back, but it needs a lot of work. But those deals are there because a lot of people don't have capital right now, or know-how, of how to fix these rehabs anyway. So what I learned was, If you start layering your specific skills in this game of real estate investing, it's only gonna help you. Just right now, I'm layering in development skills and building skills. Jack BeVier (18:09.535) Yeah, something that we've found is that like the development stuff, the bigger projects, like the hits are great, but like, but they are they are unpredictable, right? Like you can't it's hard to build like a pipeline of like larger deals, like they hit when they hit and then you may go quiet for six months, but then you go like, boom, right? And like, you know, I don't know, you know, it's just what it happens. So like, it's hard to like, it's hard to like build a steady, consistent pipeline out of it the way that you can with single family. Franklin Cruz (18:29.559) Oh yeah. Jack BeVier (18:37.971) Even the infill stuff that we've done, we've probably done like, I don't know, 20 or 30 infill deals over the past like three years, but I haven't been able, I'm up in the Northeast, I'm in Maryland. So like it's a much less like, you know, permit friendly state. There's not as much like undeveloped land still to find. And then the permitting process itself is like unpredictable and can be very long and painful. And so even just trying to line up crews like. Franklin Cruz (18:43.982) Mm-hmm. Jack BeVier (19:04.983) Like I've been able to put together enough infield deals to say that we do infield deals and like, yes, we buy land, but I can't say that that's all we do. Like I can't keep a whole team busy just doing that. I've got to like have it sprinkled in. So it's, you know, sprinkled in with my construction projects where it's maybe a different set of subcontractors, but my project manager goes from doing, you know, like a kitchen and bath rehab to a full gut rehab to a... moderate rehab to do a new construction. And that's just something else that they can do to keep to keep my project management side busy and kind of and so you know, they're bigger pops because the margins are better on them. But but you know, I think I think about it the same way. It's like it's another tool in the bag. I'm always working on it. I really like doing it. It's fun. But you got to do others. Well, we at least you know, have had to do other stuff as well. but it's a nice part of the portfolio, so to speak. Franklin Cruz (20:04.05) Oh yeah, 100%. I look at, go ahead. craig fuhr (20:05.445) Al... I love that mentality, Jack, because I think that anybody who's sitting here that's sort of from the outside looking in, and frankly, I've never done any land up development. We did a small subdivision next to my house on some land with a builder. And by the way, that was six houses. And that took two years, Franklin. Two years to go from raw dirt, old person dies, has three and a half acres, this guy comes in, I've got a small piece that they can put together. Two and a half years. Franklin Cruz (20:27.704) Oh yeah. craig fuhr (20:34.765) And as I spoke to the, the builder on the very last house that they were building on the lot that I sold, the guy said, so two and a half years to get to this place right here where we've, where we're on our last house, it's really closer to three at that point. He says, and on this last house, it was 65 grand in impact fees, permits and impact fees where they had a shovel in the ground. It was $65,000 just for that one house in Maryland. So Franklin Cruz (20:54.786) Hmm. craig fuhr (21:01.381) Imagine the environment that we're in versus the one that you're in and sort of like looking from the outside go, this guy Franklin, he's killing it. He's making millions of dollars when in fact, what they don't understand is like, well, I'm on to the next deal and that deal is going to require some down money. And so there goes that part of that million. And so I think that's what Jack is saying. These deals don't just land in your lap at that perfect time where you can go, I'm going to go from this one next to this one. Franklin Cruz (21:17.442) Yeah. Franklin Cruz (21:26.012) Hell no. craig fuhr (21:27.865) And so I love the fact that you're still like, you've kept your roots in sort of the single transaction, maybe the double transaction. You're still out there getting your reps in with wholesale deals and traditional real estate investing deals that like Main Street guys like us do. But while at the same time, you know, guys like you and Jack, you're figuring out, hey man, there's this different place. And so in Baltimore city, Jack, I'd love for you to talk just briefly about like this thing that you found. Maybe to inspire Franklin and others who are listening quickly, just go through that like, hey man, we learned this sort of multifamily, it's going to be affordable in a tough area of Baltimore, but like, can you talk about it quickly Jack and sort of how that came in your lap? Jack BeVier (22:09.099) Um, yeah, so we bought a piece of dirt in, um, we bought a piece of dirt in Northeast Baltimore. It's not a bad area. It's a, it's a, it's a really nice area, but it's like, you know, where the land's not worth a lot though. Um, so we, um, we bought this piece of dirt for 700 grand. It's zoned as of right for 61 units. And we're going to end up doing actually like a, like we were going to do townhouses, multifamily townhouses, but. Franklin Cruz (22:32.994) Okay. Jack BeVier (22:33.643) because of the design guidelines in the city, which again, it's one of those like super, it's a super local business, right? Like literally you have to under like, but who the hell is going to read like your County design guidelines, right? Like before you get started, like, no, like, let me put it, put a deal on the table and I'll think about it. But like, I'd rather, yeah, like I'm not doing it before I have a deal. Yeah. So it's like, get something under contract and then Franklin Cruz (22:51.625) Yeah, you're not going to tap that out. So true. Jack BeVier (22:59.255) figure it out, right? And like you either have the confidence as an investor to be like, I know I'm going to figure it out. If there's a deal, I'm going to be, I'm the guy who can figure out if there's a deal here or not. And you know, like you said, manage the seller's expectations that like, Hey, I'm not sure. But, but I'm the guy to figure it out. And I'm just going to go work for free and figure out how to like get you the value that exists out of this land. But anyway, so we're doing this. It was one of those situations where it was like, I, you know, as of right, we could put 61, 61 units of Rezi on this piece of dirt. And we started down the path of doing multifamily townhouses, but the design guidelines screwed us up. So now we're pivoting back to just doing a multifamily building, um, which should be fine. Um, but, you know, but I'm carrying this $700,000 piece of dirt the whole time. Right. It's been, it's been a year change. I'm, you know, now pivoting and, you know, going back to the architect to get a new set of. plans to do this project. So I mean, those like, you know, that there's a little scale to that one at 61 units, but like, you know, that stuff, that stuff happens, right. And it's not from the faint of heart. And you have to have some, some cash to carry that along the way. But it's gonna end up being like, you know, an affordable multifamily project. And our basis in the dirt is like, you know, less than 15 grand for the raw dirt. And then we're gonna have to and we're already utilities onto the site. So we're gonna have to like, maybe, you know, Franklin Cruz (24:06.892) Oh yeah. Franklin Cruz (24:26.198) Let's say it's money. Now, let me ask you, so on that site, are you, is it an approved area for affordable housing? Like actually to get your grants and the funding from affordable housing? Jack BeVier (24:27.49) Yeah. Jack BeVier (24:39.595) There's some property tax credits, but it's not a, and there is an affordable housing requirement. I think it's like 10% must be dedicated to less than 80% of area median income. Franklin Cruz (24:53.258) Yeah, there's gotta be like a medical facility, a bus area next to it, school nearby, stuff like that as well. Jack BeVier (24:59.987) Yeah, we don't have like the, you know, outside of like low income housing tax credits, we don't have like any municipal or state, you know, affirmatively, like, hey, here's credits for creating affordable housing. Rather, it's a bit of the opposite. It's if you're going to do new construction, you must put an affordable housing component, which right just like drives all land values down. So you know, instead of the carrot that they're using in Florida, they're using the stick because hey, it's the northeast and you know, that's the northeast. Franklin Cruz (25:13.987) Alright. Franklin Cruz (25:28.586) Yeah, that's interesting. It's interesting because if you look at that workforce housing chart, it's called AMI chart. So now we don't call it workforce, we call it workforce housing, not even affordable housing. I just say it's workforce housing. It's technically the same thing, but to me, it's like, I want people that's gonna work for it. You know, like have a job, you know? Who's like, so, but what I've discovered was, it's like, it's still pretty high. So if you have a family of five or a family of seven, craig fuhr (25:30.109) Hehehehe Jack BeVier (25:30.115) Yeah. Franklin Cruz (25:58.486) Those numbers are still typically like the rent rates that you're allowed are high. Is that the same way that you're seeing it or? Yeah. Okay. Jack BeVier (26:04.747) Yeah, yeah. And we get pretty much in especially in most parts of Baltimore City, the AMI charts are fine with market rent, like for renting to somebody who's got a voucher, like we're getting market rent in everywhere except for like them, you know, the highest end areas. Yeah. Franklin Cruz (26:17.108) Uh. Franklin Cruz (26:20.502) And why didn't you want to sell it off? You didn't want to just do the approvals and entitlements, sell it off to another like family office or somebody else? Okay. Jack BeVier (26:27.327) I wanted to figure it out. It's just, it's one of those like we wanted to, yeah, we were just like, Hey, let's, you know, we wanted, we've never done that. Like we could have, we could have, we could have just like, yeah, we could have put all the paper in place and then sold it to a lie tech developer or something like that. But we were like, no, you know what? Like, let's, let's see if we can go do this one. We'll learn a lot. It'll like, it'll, you know, it'll be part of our learning process. Our cost basis in the land is low enough that the carry is not killing us. And so Franklin Cruz (26:35.054) That's my 96th minute. Yeah. Jack BeVier (26:54.536) We use it as a learning opportunity project and also just because it sounds fun. I've never done it before and I want to say I did one. Franklin Cruz (27:02.27) I'm in the same boat on my 96 unit. I negotiated a carrier unit. I negotiated no payments for three years when I bought it. I had 2% interest. But I also gave them a lot more than what they wanted. But that property, man, I'm into it for 450. The last LOI I had was for 2.4 million. And I said no, because that one was the deal. I'm like, I want to learn this one. Jack BeVier (27:11.169) Dude. craig fuhr (27:29.627) Yeah, man. Franklin Cruz (27:29.822) Now, don't get it twisted, I've got a huge asset that's 450 plus units with 130, that one I'm selling. That one I'm like, I don't wanna do it way too big. I don't even wanna learn that master plan because master plans are different. I'm like, I just let me learn, you know, I got the subdivision, now I wanna do one, I wanna go horizontal and vertical, so I totally get you. Jack BeVier (27:52.655) Dude, tell me about, talk to me about the master, Franklin, talk to me about the master plan thing. Like what, cause that's not something that I've done before. And whenever I think master plan, like I'm up in Maryland. So I think of like Columbia, which is like half of Howard County was a master plan community, which is one of the biggest master plan communities that have ever been done. But I'm pretty ignorant to like this, like, you know, the smaller scale ones, like what are the... craig fuhr (27:52.837) So Jack, I was, go ahead. Go ahead, Jack, go ahead. Franklin Cruz (28:01.494) Okay. Jack BeVier (28:17.623) you know, talk to me about that. Like what are the advantages of it? How difficult is it to get it done? Like why go through that? Like why do a master plan community? Franklin Cruz (28:27.254) A couple things. So the great question about master plans. So there's different sizes of master plans, right? So in entire city, community, zip codes, they can have a huge master plan for different kind of asset classes within that, those zip codes or municipality, right? But then if you bring it all the way down to a master plan subdivision, so you've got small subdivision, which is about 50 homes or less, right? That's small subdivision. Then you've got a large subdivision, which they, and this is how it reads, large subdivision, hundred homes or more, right? And then master plan is if you're mixing in residential with business park, with cell storage, with industrial, all on one big parcel. So we have three different parcels that we did in assemblage to correlate to 130 acres with the lake in the middle, and they're different zonings in different areas, but we own it all. So we have like a very small, in comparison to like a big city, you know, dealing with their large master plan. This is just a master plan dealing with the development. So then you would say, OK, in this section, we're doing this, in this section, we're doing this, in this section, we're doing this. So that's why they would consider it a master plan. Jack BeVier (29:38.543) So you don't have to like subdivide and say like, hey, I'm gonna subdivide and put the office building here and put the restaurant over here. They'll let you, do you, oh, you're doing it too. Franklin Cruz (29:47.798) No, you're subdividing it, yeah. Now if you want, I could subdivide it and sell it and have different parcel IDs, or I could resell it. Like right now, we've got a couple family offices that are interested in it because they like those different asset classes. And so they wanna keep it all together and just own it all without the subdivision, which for them, it's a lot easier. You're just dealing with, one parcel ID with all of the assets within that ID. But yeah, you could subdivide it. It all matters the time. Cause you know, like I know, man, like development is different when it comes to time. You don't even know how long it's gonna take to get the studies done. You have, you don't know. It could take a year. It could take two years. You have no idea how many conceptual plans you're gonna go through. Something can change. You know, so to me it was like, this site is huge. We've got a, we've got a, We've got a good enough spread that we could figure out what is going to be the, what I call maximum buildable capacity. What is the maximum buildable capacity on this site? And what is the easiest that the municipalities will also allow us to do without fighting us. That's the other thing. So it's like, it's political and it's, you know, legal that you've got to understand all this at the same time. Cause we're, we're the quarterback as the developer. So on this site, we're gonna do the master plan and we're not doing any horizontal or vertical. We're just getting it approved and entitled and we're selling it off. Jack BeVier (31:20.719) Talk to me about the politics side of things. Like how have you, like how has that experience been? Like are you the guy? Like who's the face? Like does it need to be you? Can you outsource that? Like for the introverts out there like me, who like don't really want to be the face of that, like, but like you seem to be like maybe, you know, an ideal front man, or point man rather. Franklin Cruz (31:41.378) Man, I'm the only, the only reason why I'm the front man dude is because at the time I had no money. So it's like, I couldn't afford nobody. I couldn't like, I was like, I was like, I can't even afford a model. I gotta be a model. Like I gotta be the, I gotta be the attorney. I gotta be the civil engineer. I gotta be the out there doing the ESA report with the guy so I can understand what he's doing. So I don't have to, he has to have to charge me so much. Hopefully he can feel sorry for me or something. Um, it's like, I just had to learn it. Jack BeVier (32:06.332) Hehehehe craig fuhr (32:07.761) Franklin, to Jack's question, have you had to go and sort of do the dog and pony meet and greet glad handing the local official and the city planners and the county council and stuff like that? Franklin Cruz (32:17.258) Oh yeah, look, here's the mayor's phone number right here. It's like, yeah, I mean, 100%. But it makes it go faster. So what I learned is I don't wanna outsource it. I wanna meet the mayors, the city commissioners, the senators, because then you get inside information of what's happening before anybody else. The mayor is the one that told me about my site on Olive Street, the 96th Units. He's like, you know, I think that's an opportunity zone. I was like, what, what's an opportunity zone? I never heard of that. It is an opportunity zone. Oh, this is great. Jack BeVier (32:28.791) Mm-hmm. Franklin Cruz (32:46.538) You know, it's like, you don't know this stuff. You don't even know where to look, you know? So mine was just a money thing. I wish I could have somebody else. I'm like, hey dude, you know, Jack, can you go do this for me? I wish I had that kind of money I could do that. No, I was like, Frankie, you have to figure this out, man. And I would tell people, I don't even know what I'm saying, but if you could help me, that'd be great. And I was just like, just being as honest as I can. Jack BeVier (33:11.991) How are you finding it though? Are you like... So how are you finding it though? Are you getting up in a community meeting and someone raises their hand and they're like, yeah, that's the ugliest fucking house I've ever seen. And you just rolling with it well? We've got a lot of enthusiasm for it. craig fuhr (33:12.945) I wish you could be more authentic. Franklin Cruz (33:24.204) Yeah. Franklin Cruz (33:29.622) Well, the funny part, I got that through social media, actually. So there's local social media groups. So what happened is I posted something and then somebody forwarded it to a local group. And then the Lakeland leisure and news news, like news reporters are a part of that group. And then they started seeing the flow of hatred and love for the con for the projects. Uh, and then they reached out to me and I was, you know, and then they started coming out in groves about the project. And so he's just like, I didn't, At first I thought about it, I was like, man, probably I should hire like a PR person. I was like, man, it's expensive. So I was like, nah, I don't wanna do that. I'll just post it. If God wants it to be out there, God will make it work. And if you don't, it won't, that's it. Yeah. Mm-hmm. See, so. Yeah, yeah. I wish it was like way more sophisticated that I could tell you like the sexy answer. I'm like, it's not. Jack BeVier (34:12.003) Yeah, I got you. craig fuhr (34:14.476) Amen to that. So. Jack BeVier (34:23.115) It can be like emotionally trying though, right? Like you got a lot of money, you got a lot of energy in this, you got a lot of money in this, right? If you're carrying this thing, it's something you're already taken down and then all of a sudden you've got like this, like coming at this negative coming at you, like threatening not only like your vision, but your pocketbook. Like, dude, that seems like, that could be like an emotionally, like psychologically difficult process to go through, right? Like... Franklin Cruz (34:28.768) Oh, dude. Franklin Cruz (34:40.693) Oh yeah! Franklin Cruz (34:46.842) Oh, dude, imagine that. And I went through a four year long divorce at the same time, at the same time. So let me tell you the real talk, when it comes down to this, man, there was times that I had to ask friends for money. Like I didn't have money for my own car payment because I put everything I had. I just believed in my soul. I was like, I know this is gonna work. And then it's like, I could pay this sub who has to get this study done, but I know this is gonna work. And then, then a deal that I thought was gonna happen. Jack BeVier (34:50.159) at the same time. Franklin Cruz (35:15.798) doesn't happen, right? Cause I've had probably five of those. You think you're gonna cash out 200 grand on this deal or 50 grand on this deal or 150 on this deal. And then it just, none of them for some reason in this long stretch didn't happen. And I'm like, you got to be kidding me. And you know, it's embarrassing. I actually had to, you know, hey, I think this is gonna work. No, it's like, I know from, I think, but I know that it's like, I had to trust myself to like, I know this is gonna work, man. Like, why would God take me this far if he's just gonna like leave me homeless? You know, it's like, I know this is gonna work. And then it did. And then out of nowhere, it's like, I went from like, no lie, I remember, dude, I thank God somebody sent me Apple Pay for $300, because that's what paid for my Instacart. I was like, because to me, it was like, I still need to work. So I need to put in all my time. Somebody gave me enough money to feed myself. And then out of nowhere, then these big checks started coming. So I went to like zero to like, you know, how to learn how to meditate, not praying because I didn't even know what to say to God. I was already embarrassed. I was like, God, I don't even know what to say. So I was like, I'm just going to learn how to meditate and shut my mouth. Why don't you just tell me what to do. So it's just real talk, man. Just keeping it. Yeah. A hundred percent. I. Jack BeVier (36:18.819) Cresla. Jack BeVier (36:34.723) Shit's stressful, man. It's, yeah. craig fuhr (36:34.833) Jesus take the wheel, Jack. Jesus take the wheel. Yeah, man. Jack BeVier (36:38.534) Mm. Franklin Cruz (36:40.302) I got so stressed I just stopped shaving. I just said, fuck it, let's get a beard. I was like, let's just go. I was like, I used to be a pretty boy, Craig knows that. I shaved my arms. I was like, man, I only got time to shave my arm. I'm not shaving nothing, I just gotta work. I wake up at three o'clock in the morning, not, you know, go to bed at nine or 10 and then wake up at two or three again. Like I just, I wouldn't have no phones. I like, I just get laser focused on everything. Cause I knew if I can. If you can get development for real, whoever's listening to this, you've got the keys to these family offices and these billion dollar families that they know that we didn't know. They're playing in that commercial world and development world for a reason. And it's all knowledge-based. And I've seen it in my own eyes, these developers, a lot of family offices, they won't even teach anybody within their development company because they only wanna teach the son to be the CEO. And it's so interesting. And I was like, I just have to figure this out. If I could do this, I know I could share this with a lot more people because if one day I won't be here, but if I could share this knowledge through everything I learned, then it's well worth it. That's how I looked at it, personally, just me. craig fuhr (37:55.193) Yeah. Jack. Jack BeVier (38:02.082) No, no, I'm good. craig fuhr (38:03.201) Yeah. So then we got about, you know, we'll go for about another five minutes if you got it, Franklin. You know, as I was, yes. So as I listened to you, I know that you've done some build to rent, you know, you sort of you've done that. Correct, Franklin. I thought I read that somewhere. Yes. Franklin Cruz (38:09.994) I was about to say, I think I have about five more minutes. It's perfect. Franklin Cruz (38:24.362) We are, yeah, the 96 units we're doing built to run. That one we are. That one I'm keeping until I'm 150 years old. craig fuhr (38:27.777) Okay, got it, got it. But just. Yeah, I love that. And so, gotta go. Jack BeVier (38:33.219) So what's the, so you're into the land right now and then you're gonna go do vertical construction on that. Have you started that vertical construction yet on the 96? Franklin Cruz (38:42.994) No, what we're doing right now is we're finalizing our code developer. So here's the other thing I discovered. When you're playing in this game, when you want to go horizontal or vertical at a larger scale, let's say it's over 20 or 30 or 40 units, you got to have another player that's done it before on your team, period, because the funding is different, so it's a $60 million plus development. craig fuhr (39:04.816) Mm-hmm. Franklin Cruz (39:08.682) You know, so you're not going to get that if you've never done it before. And I wouldn't give it to you if I had it, if you've never done it before. Like just real talk, like hell no, I wouldn't give it to you. You know what I'm talking about. Um, but so what I'm doing is that's why we're learning how to do the 12. So then that co-developer that we're already talking to several groups that want to co-develop with us, they would bring a hundred percent of the capital, a hundred percent of their background, a hundred percent of their experience. And then we would be the boots on the ground here. Cause we do have all the subs. for all the horizontal, the land work, all your utilities, we have all that in-house that we can do, okay? Jack BeVier (39:44.623) How'd you build that bench? How'd you get that together? How'd you get comfortable with that? How do you figure out like, you're like grading, right? Like moving dirt, right? Like how's a guy supposed to know, all right, I got this site, we need to move some dirt from here to over there. Like how much is that supposed to cost? How do I know the land got, you know, like one, how do you find those contractors? And two, how do you know what that stuff's supposed to cost? Cause that ain't lumber at Home Depot, you know? Franklin Cruz (39:48.119) Actually... Franklin Cruz (40:07.594) Yeah. So what really helped is that we did the house at Habitat and we did all the work ourselves. So we understood who were the like we didn't do the foundation. So we had to call that in. But we figured out all you got to have an account with SimEx. Oh, you got to get a concrete pump. Oh, these are the subs and usually the subs that are doing a concrete pad. If they could do one they could do 96 and then you know, the utilities players. So then you got to find what I found. I got lucky and I found. who's the supplier of the utility pipes underground? And that's usually a company, it's not Lowe's or Home Depot, that's called Core, CoreMain. So CoreMain is like the Home Depot or Lowe's, but for underground large utilities. So they're the ones that factor in your mini manholes, your manholes, your, all these things, they're the ones that you buy it from. And so they have all the context. So I just asked the guys like, hey, who's some... key players that could do a nine acre site. And he's like, oh, Tiger Development, or there's Tiger Development, there's another, there's three other main guys that you could call for site work. So I called him up and I said, look, this is the site. And when, you know, they're experienced guys. So all you gotta do is send them over a conceptual plan. They'll say, look, roughly it's gonna be between this and that. And then I took a course on YouTube University on land development. And then I just started like, Okay, I would just ask them questions that I'm learning. I'm like, because it's not that far off from doing a house. It's just, it's just, you know, your utilities, you're doing your own utilities. It's infill, thank God it's an infill nine acres. So I could tie in right to water and utilities, but I still got to, you know, build everything out within my own infrastructure. So I found those guys again, just like finding where this, where do they get their materials? And then asking the guy where they get the materials like. who's your key customers, and then getting their phone numbers and referred by them. And then I would talk to them and I got bids from all of them. So that's what happened. Jack BeVier (42:09.281) Just getting out there networking, asking stupid questions, asking for referrals. Franklin Cruz (42:16.586) Yeah. And just to me, that's the fastest way to learn is like, just start calling people and having conversations. Don't do the emails because it's too slow. You know, actually go out there and just talk to people, you know, go to a go to a subdivision that you're seeing built right now and ask the subs. Hey, who's your guy? Hey, who did the land? They'll know. They'll know Juan Lopez will know you just talk, you know, it's like, they're gonna know. So you just have that conversation. And that's it. That's all I would do. And it helped because I'm a little bit tan, so they're just thinking I speak Spanish and I don't. And I was like, look man, you know, I'm like, Spaniol, so who's the boss, who's jefe? Yeah, man. craig fuhr (42:59.301) Who is FA? I learned that. Jack BeVier (43:04.167) Did you use a consultant? When you're looking at a piece of raw dirt, and you're like, hey, how much is it going to cost to move this dirt, to put the roads in, to put utilities in? Like you said, you had to have a site plan. You can send them to get individual bids. Did you ever work with a consulting company who could give you an estimate based off of a site plan, based off of a proposed site plan? Would you do it? You just did it. You did it one contractor at a time for like for each piece. Franklin Cruz (43:31.423) No, no. Franklin Cruz (43:37.046) Yeah, and it was only the 96 units. Everything I did, like I really wanted to get really, really great at approvals and entitlements. So I never wanted to go horizontal in the beginning. I just wanted to get good at one thing first and then elevate after that. But I didn't even feel confident until I did one house. And then it's like, it gave me the confidence like, okay, this is doable, these are the subs. Now I know the vertical side. Now I know the land side really well. Now I got to get that horizontal piece of the actual work. So I didn't even know you could hire consultants for that. Like Lakeland's small. There's only like two, there's, yeah, man, there's only like two attorneys you could hire for land planning. And then, and then there's another, you know, the attorneys between who could be your civil engineer, you know, there's only one guy that actually is a land planner in Lakeland that's really good. You know, so it's like, everybody has these mini monopolies within development. Jack BeVier (44:10.627) and flat. Franklin Cruz (44:32.458) And that's why it's integrity so high. Like you have to have integrity to play in this game or they just won't pick up the phone. They're like, no, I don't wanna work with you. Jack BeVier (44:41.175) Mm-hmm. craig fuhr (44:41.713) Yeah. Franklin, I, man, I knew this would be inspiring, enlightening, and most of all entertaining. And you obviously did not disappoint my friend. Seriously, I, I couldn't be happier for the growth that I've watched, you know, from afar lurking online. And honestly, the opportunity there is insane. I was reading prior to the show here that there are 26 affordable rental units for every Franklin Cruz (44:44.042) Is this being helpful? craig fuhr (45:10.537) hundred houses with incomes, households with incomes, you know, of zero to 30% of the AMI. That's a deficit of like 400,000 affordable units in Florida right now. And so the niche that you're fulfilling sort of with that affordable housing for buyers, as well as I'm sure at some point you'll get into the bill for rent, you know, it's there. I think it's only going to continue to get bigger. And the fact that you're learning it by doing it. is should be inspiring for every single person that is listening to this, who's always said to themselves, look, I, if I've got four walls and a roof, I can make this thing pretty again. It's a whole different ball game when you decide, you know, I got to learn some new skills to put in the, the infrastructure, the roads, uh, the utilities and all that stuff. And so I just love the inspiring story and I thank you for sharing it with us, man. And if, um, again, if folks want to find out what Franklin is doing. Franklin Cruz (45:51.863) Mm-hmm. craig fuhr (46:08.409) I would highly encourage everybody to go out and get inspired just by searching for Franklin Cruz. It just Google Franklin Cruz, affordable homes, Lakeland, Florida. You're going to find out what he's doing, man. And or look for Franklin on Facebook. He's got great, you know, the press that you're getting right now is, is both, I haven't seen any of the bad, I've only seen the good. And I think it's really wild how you've been, how you captured that sort of almost viral moment with what you're doing down there, bro. And so Franklin Cruz (46:16.398) Appreciate it. craig fuhr (46:34.865) keep on doing, honestly, I almost want to strap on a tool belt and come down there and learn how to build houses with you, man, because I think it's very cool. So thanks for sharing with us, man. Yeah, I get the sense that might be in the making. Franklin Cruz (46:36.194) Thank you, man. Franklin Cruz (46:41.057) No I'll probably be coming up with a course for that. For sure. Yeah, yeah. I mean, first of all, I want to say thank you for this, because thank you that, you know, it's been four years since I've actually been asked any questions related to what I'm up to. And to me, I've just been like this laser focus because I didn't want to have I didn't want to open up until any until I knew that I knew what I was talking about. And I was actually good at it. Because it was a big thing. I didn't want to sit up here and say something I didn't do or don't know. So thank you for that. craig fuhr (47:15.086) As the pastor of my church says, there ain't no testimony without a test and you've been tested my friend and so you've got a great story to tell. Continue to tell it everywhere you go. Yeah. All right, brother. Franklin Cruz (47:22.623) Oh yeah. Franklin Cruz (47:26.206) I will man. Thank you so much, brother. And thank you Jack as well for the time, man. Thank you guys so much. Jack BeVier (47:29.836) Thank you. I really enjoyed the conversation. Thanks a lot, man. It was great to learn from you. Franklin Cruz (47:34.282) Perfect, perfect. Hopefully we can do this again. craig fuhr (47:35.825) Well, thanks. I'll go ahead and wrap it. Hey, guys, thanks for listening. It's been Craig Fuhr and Jack BeVier with Real Investor Radio. Thank you. Thanks to Franklin Cruz. We'll talk to you guys again next time.