Latest / The Academy Presents podcast / From Land to Community and Affordable Housing with Brandon Cobb

Transcript

From Land to Community and Affordable Housing with Brandon Cobb · The Academy Presents podcast

• 0:01
  Did you know that 90 % of the world's millionaires
• 0:05
  invest in real estate? Well, I'm Angel with the
• 0:09
  Academy Presents Real Estate Investing Rocks,
• 0:11
  and I'm here to help you if you want to go for
• 0:15
  your piece of that pie. Are you new? Are you
• 0:19
  new to this and you just don't know where to
• 0:20
  start? It's okay. Are you someone that has invested,
• 0:25
  but you feel stuck, you feel like you've lost
• 0:27
  momentum, you don't know where to really head
• 0:30
  from here? Are you a seasoned real estate investor
• 0:33
  who is doing great but maybe you just want to
• 0:35
  hone a few skills here and there? This is the
• 0:38
  place for you. The Academy Presents Real Estate
• 0:41
  Investing Rocks podcast will connect you with
• 0:44
  industry experts so that you can save time, avoid
• 0:48
  costly mistakes, and begin living the life you've
• 0:52
  dreamed of all through real estate investing.
• 0:56
  You're already taking the first step. just by
• 1:00
  joining us here today. Hey guys it's Angel and
• 1:06
  you're back with us on another episode of The
• 1:09
  Academy Presents Real Estate Investing Rocks
• 1:11
  and if you've been listening along you know that
• 1:13
  we are currently in the middle of a development
• 1:15
  of a development project and as destiny would
• 1:18
  have it We have a guest that is going to talk
• 1:21
  to us about development and he does land and
• 1:24
  he does all these super cool things. So I'm going
• 1:26
  to turn it over to you Brandon and let you kind
• 1:27
  of intro yourself and give a little bit of your
• 1:30
  background and then we can get going. Yeah, no,
• 1:33
  thanks for having me on the show. Brandon Cobb.
• 1:35
  I'm from Nashville, Tennessee. I'm a land developer
• 1:37
  and a fund manager. So we take new communities
• 1:40
  and we take it from farmland to new housing community.
• 1:43
  And we work with a lot of national home builders
• 1:45
  like Lenard, D .R. Horton. So we're the guys
• 1:47
  inventing the neighborhood and then usually selling
• 1:50
  it off to them. But we do all three phases of
• 1:53
  development. We do the entitlement, which is
• 1:55
  getting it approved by the city. And then we
• 1:58
  can sell it at that point if we want after we
• 2:00
  get all the approvals or we don't face to where
• 2:02
  we put the roads, the sewer, the water, the infrastructure
• 2:05
  in basically create a neighborhood, but with
• 2:08
  no homes on it. And then we can sell the lots
• 2:10
  to one builder or several builders to build the
• 2:13
  homes. And then we also do the third phase, which
• 2:15
  is actually build the houses though. I haven't
• 2:17
  done that a couple of years because the market
• 2:18
  hasn't been good for it, but that's us in a nutshell.
• 2:22
  Awesome. Well, again, if anybody's come to my
• 2:26
  Marvelous Mondays meetup or Fatalist Fridays
• 2:28
  meetup, they have been hearing the headaches
• 2:30
  that we've been facing. So I'm going to not push
• 2:35
  all of my headaches out there, but I will start
• 2:37
  with one. So there's not a whole bunch of people
• 2:40
  out there that are developing mobile home communities.
• 2:43
  Tons of people buy them, rehab, add, but nobody
• 2:47
  is really taking ag land and putting pads on
• 2:50
  them. That was the first set. So how do you,
• 2:56
  so you, so you buy your ag land and you don't
• 3:00
  necessarily flip just the ag land, right? So
• 3:04
  you can flip the land once it's approved. And
• 3:08
  we, that is one strategy that we do. So it's
• 3:10
  like, so it's called entitlement, right? Like
• 3:13
  if you have a farmland, you can't just go throw
• 3:15
  whatever on it and sell it, right? You got to
• 3:17
  get approval from the city. Maybe we have to
• 3:19
  rezone it for high density. whatever that may
• 3:21
  be, but once you rezone it or get it approved
• 3:24
  for a mobile home park or a multifamily building
• 3:28
  or a 200 -home single -family neighborhood like
• 3:31
  what we do, it's worth a lot more money. And
• 3:33
  then you can sell it at that point without ever
• 3:36
  having to stick a shovel in the ground or do
• 3:37
  anything. All right. So I'm going to break down
• 3:40
  why that is important to me. So we bought land
• 3:44
  to develop this mobile home community. It's still
• 3:48
  lagging. because getting the city to approve
• 3:51
  stuff is insane. And we hired the civil engineers,
• 3:57
  we have all the drawings, the utilities things
• 3:59
  where all of that stuff was approved. And then
• 4:01
  it goes to the city, we're trying to pull permits
• 4:03
  and the city's like, wait a second, this isn't
• 4:05
  approved. One thing that we teach in our matrimonial
• 4:14
  community is rule number one. Never buy anything
• 4:18
  until you have the approvals from the city. I've
• 4:20
  had so many people come to me that have monster
• 4:24
  losses because they bought the land thinking
• 4:27
  that they could do it. And then they go through
• 4:29
  the process and find out that the city won't
• 4:31
  approve it. And then they're stuck with it. I
• 4:34
  have made that mistake. I've lost seven figures
• 4:36
  on the deal making that mistake. So what we do
• 4:40
  is we put it under contract, contingent on getting
• 4:43
  the outcome we want. If we don't get the outcome
• 4:45
  we want, we get all of our earnest money back
• 4:47
  and everything back. That's how we kind of de
• 4:49
  -risk that. That is awesome. Yeah, so we didn't
• 4:54
  know that. We have a lawyer now involved. We
• 4:58
  think it's all going to work out because what
• 5:01
  ours was, it was a 60 acre farm and the guy split
• 5:05
  it into three 20 acre parcels. So we got the
• 5:08
  first one. The housing authority got the middle
• 5:10
  one and a multifamily developer got the last
• 5:13
  one. So I think we're gonna be okay But it's
• 5:17
  still I I wish we had had someone that could
• 5:20
  have coached us and said hey Make sure it's right
• 5:24
  because the guy that sold us to it. He sold us
• 5:27
  all the plans. He said this has already been
• 5:28
  approved and He believed it had been But yeah,
• 5:33
  I don't know about that Yeah, one of, one of
• 5:37
  our mastermind members who, you know, he, he,
• 5:39
  he has a similar deal. And so we're coaching
• 5:42
  them through a lawsuit right now. Cause he bought
• 5:44
  one. Cause the seller told him it was approved
• 5:47
  and it wasn't the only people that can tell you,
• 5:50
  you shared all the drawings and everything. Oh
• 5:52
  yeah. Same thing with him. They had all the drawings
• 5:54
  there, but that doesn't mean it's approved, right?
• 5:55
  You have to go to the city. and verify that it's
• 5:58
  approved. That's the only person that can tell
• 6:00
  you that it's approved, right? But my question
• 6:02
  to you is why are you doing a mobile home community
• 6:04
  next to something where a multi -family apartment
• 6:09
  complex is being approved? Because you're gonna
• 6:12
  be able to get a lot more money if it's a multi
• 6:15
  -family building than it is. going to be if it's
• 6:18
  mobile homes or single family. You could put
• 6:20
  a single family neighborhood there if you have
• 6:23
  the sewer access to support multifamily and get
• 6:25
  a lot more for it. So honestly, it comes from
• 6:30
  some of it comes from me. I taught at a very
• 6:33
  high poverty school where families didn't have
• 6:37
  any opportunity to become homebuyers at all.
• 6:40
  And mobile homes allow for a. a demographic that
• 6:44
  has never been able to buy homes to be able to
• 6:46
  buy them now. And their staying power is not
• 6:49
  a 12 month lease because it's a resident owned
• 6:51
  model. So their life cycle is more like 10 to
• 6:54
  15 years. And right now it's just four of us
• 6:58
  that are doing it. It's a JV. And so we'll get
• 7:02
  to realize the upside. But really the upside
• 7:06
  for me is knowing that some of the families like
• 7:08
  the kids I taught are gonna get to be homeowners.
• 7:11
  And that's and get to go to an amazing school.
• 7:15
  And that is going to lay a foundation for their
• 7:17
  education that wouldn't have otherwise been accessible
• 7:20
  for them. But you let's see if they're that's
• 7:28
  very altruistic of you to do it and look at it
• 7:30
  like that. It's not all about the money for you.
• 7:31
  It's all it's about the why. It sounds like you
• 7:33
  get a really good why behind it. Yeah, I know
• 7:37
  it's different. And I know that investors are
• 7:39
  like, no, where's my money? Which I get that
• 7:42
  too, because we also like in all of our syndications
• 7:44
  and everything we do, we also invest alongside
• 7:48
  our investors. We're not just GPs. We are also
• 7:51
  LPs. And so I think some of that drives us a
• 7:55
  little bit differently. We have a special needs
• 7:57
  child. So being able to care for his typical
• 8:00
  sisters while also maintaining significant medical
• 8:03
  bill payments, all of those things play into
• 8:06
  it. And I feel like you can be an impact investor
• 8:09
  the same way that you can be an investor looking
• 8:12
  for the return. So yeah, very cool. And my brain
• 8:16
  was spinning on some other ways to try to do
• 8:18
  that. But yeah, delivering affordable housing,
• 8:20
  because we, we a lot of what we do is in, I call
• 8:22
  it three level housing, not affordable. When
• 8:25
  I use the word affordable, people think section
• 8:26
  eight or government housing. That's not what
• 8:28
  we do. It's that first time home buyer housing
• 8:31
  product, you know, millennials are at prime home
• 8:33
  buying age and there's just, you know, They typically
• 8:35
  can't afford anything more than, you know, $2
• 8:37
  ,500 a month. And so we're out there inventing
• 8:40
  those types of communities that create products
• 8:42
  that are, you know, usually in like the low three
• 8:45
  hundreds, you know, mid three hundreds is typically
• 8:47
  what we talk about affordable. There's serious
• 8:48
  demand for those too. There's serious demand
• 8:50
  for those. And for like zero lots for people
• 8:52
  that are aging out and they're wanting something
• 8:54
  that they don't have to maintain a lawn. Like
• 8:56
  there's, there's a lot of, honestly, I don't
• 8:59
  know of any real segments out there in real estate
• 9:02
  other than that are hurting from something other
• 9:04
  than the economy, because there's always going
• 9:06
  to be demand for different types of housing because
• 9:08
  people have different tastes. it's a need out
• 9:15
  there. If you can satisfy that need, then it's
• 9:17
  there. People are always going to need a place
• 9:18
  to live, you know, and mobile homes do that.
• 9:21
  Now, are you detitling them and putting them
• 9:23
  on a permanent foundation or are you renting
• 9:25
  out the entire mobile home or are you just renting
• 9:28
  out the mobile home lots and having them put
• 9:31
  their own home there? So again, so there's, I
• 9:36
  guess there's Me and my husband are like one
• 9:38
  group, and then there's our partner, Frank, and
• 9:40
  then another guy, Joe. He's the one that brings
• 9:42
  the real experience. He's owned mobile home communities.
• 9:45
  He grew up in a mobile home community. And then
• 9:47
  he became a Marine. Now he's doing mobile homes
• 9:49
  again. And then we have a GC member on the team
• 9:52
  that he does all of the bidding. He gets all
• 9:55
  of the stuff taken care of. But Joe is also a
• 9:58
  mobile home dealer. So he has his dealer's license.
• 10:03
  And so what we're hoping to be able to do is
• 10:06
  do the infill with mobile homes that we can sell
• 10:10
  ourselves and then those will go on the pad and
• 10:14
  the resident will be responsible for their utilities
• 10:15
  and the pad rental. We will have some duplexes
• 10:19
  in the back that will be park owned but we ultimately
• 10:22
  our goal is to only have those be the park owned
• 10:24
  piece and have all of the pads infilled and resident
• 10:28
  owned with resident owned units on them. Got
• 10:31
  you. Okay. All right. Very cool. Yeah, sounds
• 10:34
  like it's a great development And yeah, you're
• 10:36
  just running some headaches with the city, which
• 10:38
  we all do So but so how do you so you've gotten
• 10:43
  everything approved How long does that usually
• 10:46
  take like for someone that knows what they're
• 10:49
  doing? It depends on where you live Now, Texas,
• 10:55
  you're, you're lucky. Okay. Because I talk to
• 10:57
  people in New York and California, and I complain
• 10:59
  about it taking, you know, a year and a half
• 11:01
  for me to get approvals here in Tennessee. And
• 11:04
  they look at me like I'm crazy. And they're like,
• 11:06
  yeah, it takes us three, four years. So where
• 11:09
  you're at makes a big, big difference. And then
• 11:12
  some municipalities are more developer friendly
• 11:16
  than other ones. Right. We had a, uh, uh, little
• 11:21
  spot where we had a pro development council and
• 11:26
  mayor. And so we just kept focusing on that spot
• 11:28
  and delivering what they wanted. And then there
• 11:31
  was a new mayor regime change and all of a sudden
• 11:33
  they're very anti -development. And so like we
• 11:35
  kind of stopped. They didn't want to rezone anything.
• 11:37
  They didn't want to do that. So different pockets
• 11:39
  are going to work with you and other pockets
• 11:43
  are not. So we try to work with those who want
• 11:47
  to work with us before anything else. And then
• 11:50
  certain products are going to have a higher affinity
• 11:54
  to the city and the council than other ones.
• 11:57
  If I come and I present a Drip of commercial
• 12:01
  in an area where the city really wants commercial
• 12:03
  and by the way, like they all always want commercial
• 12:06
  because of the sales tax So on that receipt that
• 12:11
  the business does the city gets a little piece
• 12:13
  of every transaction is that's a cash cow for
• 12:16
  them So the city is a very pro commercial So
• 12:19
  I might be able to get my single -family residential
• 12:22
  neighborhood approved if I attach some commercial
• 12:24
  to it. If I'm able to do that, I can probably
• 12:26
  ask them for higher density because I got something
• 12:28
  they want. They want to see the commercial. I
• 12:30
  need higher density to make my numbers work.
• 12:31
  They might work with me on that. Whereas, and
• 12:34
  you're probably doing the hardest thing, I don't
• 12:37
  know many municipalities that are just so crazy
• 12:40
  about mobile home parks, right? Like, man, I
• 12:42
  can't wait to put a mobile home park in my backyard.
• 12:46
  Those are the artist and so that's why you don't
• 12:49
  see many people developing them is typically
• 12:52
  the cities will not approve them because the
• 12:56
  citizens are concerned that they're going to
• 12:57
  bring crime they're not going to look good it's
• 12:59
  not a good look for the city so like i don't
• 13:01
  know many people developing them either for that
• 13:03
  reason so it depends on the type of product that
• 13:06
  you're bringing to them yeah i know i that's
• 13:10
  why we did get a lawyer involved And it's it's
• 13:15
  exactly what you're saying. So if you've heard
• 13:17
  guys, if I've heard somebody say NIMBY, that's
• 13:19
  not in my backyard. And the land that we bought,
• 13:23
  you had a lot of them. Yeah, we're 26 foot across
• 13:27
  from a very nice subdivision, probably like one
• 13:29
  that you sold the land to and they developed
• 13:31
  it. And I I bet those people are not very happy.
• 13:38
  Oh, they're not. Well, but the housing authorities
• 13:41
  in the middle, the middle parcel, I mean, they're
• 13:44
  going to be unhappy regardless. But I mean, it's
• 13:49
  that that it becomes a real problem. But I go
• 13:52
  back to that education piece that the school
• 13:55
  that those kids will go to is Midway High School,
• 13:57
  and that is literally the best school in Waco.
• 14:00
  The best. My husband graduated from there. I
• 14:02
  grew up 40 minutes from there. We would do our
• 14:04
  UIL competitions there. And the school was insane.
• 14:08
  Now, I went to a 3A school. It's a 5A school.
• 14:10
  It may even be a 6A now. But it was insane. The
• 14:13
  facilities were immaculate. The students and
• 14:16
  the competitions were amazing. And I just bleeding
• 14:22
  teacher heart. But I just want to see kids be
• 14:24
  able to access that and for their families to
• 14:28
  be able to have a home that they get to call
• 14:29
  their own that isn't theirs for 12 months or
• 14:32
  six months. It's theirs for as long as they want
• 14:35
  it. Yeah. I see both sides of the coin. I don't
• 14:39
  have a dog in the fight, and my job is just to
• 14:41
  try to deliver to the market what it wants. And
• 14:44
  you're doing the same thing, because on one side
• 14:46
  of the coin, you're over here going, hey, look,
• 14:48
  the kids who grew up in mobile home parks. That's
• 14:51
  all the parents can afford. They need the same
• 14:53
  opportunity as everybody else. They need to be
• 14:55
  able to go to good schools. And then the people
• 14:57
  that live in the development across the street,
• 15:00
  they're thinking, well, mobile home parks equal
• 15:02
  crime, poverty equal crime. I don't want that
• 15:05
  in my neighborhood. I don't want my kids going
• 15:06
  to school with the gangsters and the kids that
• 15:11
  act up. So I see both sides of it. It's a tough
• 15:14
  thing to deal with. I think, too, there's a stigma
• 15:18
  because we're not talking about $30 ,000 trailers
• 15:22
  that have pocket doors and walls this thick.
• 15:24
  The new mobile homes are they they have to follow
• 15:27
  HUD standards. They've got regular sized studs,
• 15:29
  regular side walls. They've got doors like full
• 15:32
  on regular doors. They are more like a stick
• 15:34
  build than ever before. Yeah, I've seen them.
• 15:37
  They're nice. There's like luxury mobile homes
• 15:39
  and I'm like, I live in that. Yeah, well, and
• 15:42
  I think, too, like there is. I think like what
• 15:45
  you said with the millennials being prime first
• 15:48
  time homebuyers now, there are lots of millennials
• 15:50
  out there making very good salaries. And there's
• 15:54
  a large portion of the population that's not
• 15:56
  making a really good salary and they're still
• 15:58
  gig working or hourly working. And I would like
• 16:01
  to see if they can have their own home, too.
• 16:05
  But I also see the need for it to be profitable
• 16:08
  for the people getting involved because our money
• 16:10
  has been tied up for a year and a half now. We
• 16:13
  don't have liquidity very much like our groceries
• 16:15
  are going on credit cards. And so that's been
• 16:18
  really hard for us. So yes, investors need to
• 16:20
  get a return on their investment. So that's the
• 16:23
  other side of it, too, is, you know, you want
• 16:26
  to provide housing for everybody. But if you've
• 16:29
  got a lot of investors, especially if you're
• 16:30
  syndicating the deal, they've got to get a return
• 16:33
  or they're never going to invest with you again.
• 16:35
  And so there's a lot of those things that go
• 16:37
  on to and. I think again, I'm just going to come
• 16:40
  back to like the coaching and the mastermind.
• 16:42
  You know, we do masterminds and my husband and
• 16:44
  I both coach and we have coaches and we're involved
• 16:47
  in masterminds, but that literally turns decades
• 16:49
  into days. And I know that you've got a mastermind
• 16:52
  too. Like these, we have these things out there
• 16:55
  for people to help them so they don't make the
• 16:58
  same mistakes that we've all already made. Like
• 17:01
  it's just hard. Yeah. But when you when you get
• 17:05
  it right though, it's fun. The fun thing is because
• 17:07
  you're never going to make everybody happy is
• 17:09
  I do enjoy how it creates win -wins across the
• 17:12
  board. So, you know, typically and I'll just
• 17:15
  speak from us. So like we do single family residential
• 17:17
  and typically when you have a new neighborhood
• 17:19
  come in, it increases everybody else's. values,
• 17:22
  because you're typically coming in and setting,
• 17:24
  you know, oh, new home sold for $350, $400 ,000.
• 17:28
  And, you know, it lifts everybody else's home,
• 17:30
  home values. And then when you have more people
• 17:33
  and you have more rooftops, that invites more
• 17:34
  commercials. So you're getting the cool stuff
• 17:36
  like the Chick -fil -A's and the Whataburger's
• 17:39
  or the Kroger, whatever have you, right? And
• 17:42
  so you get more amenities in the city that you
• 17:46
  live in, which people like. And then the city's
• 17:49
  getting forever tax revenue so that it can invest
• 17:51
  back into the community, back into its people.
• 17:53
  That's a good thing. Dog parks, better infrastructure,
• 17:57
  right? The road repairs on the main street you've
• 18:01
  been hoping for the last 10 years would get fixed.
• 18:03
  They can finally fix them. So the city wins and
• 18:06
  then the investors win. They make money, right?
• 18:10
  Because a lot of investors, people think the
• 18:12
  investors in these deals are like super rich
• 18:14
  people. A lot of them are. These syndications
• 18:16
  are, you know, mom and pop investors that just
• 18:19
  want a piece of private equity because it was
• 18:21
  usually reserved for only the rich people that
• 18:23
  could afford it. But now you can do a funding
• 18:25
  syndication, which means these private equity
• 18:27
  opportunities are open up to the general public.
• 18:29
  Now then, you know, that's a good thing. So investors
• 18:32
  make money and then we make money. And so that's
• 18:34
  really beautiful when you have development come
• 18:36
  to life where everybody gets the benefit from
• 18:39
  it.