REAL ESTATE DEVELOPER – Market Mondays w/ Ian Dunlap

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[Music] Let me ask you this as far as you know We talk about real estate a lot on our Platform how to invest in real estate But we don't really talk about real Estate development too much and there's Nobody to talk about that better than You so if somebody's interested in Becoming a real estate developer Um what steps should they take like what Advice could you give to somebody that's Interested on the developments uh I mean I I want to I would say become a student Of the business learn the business learn The fundamentals what I learned about Where I got started was I started as a Sales agent so I understood how to Market I learned how to Market Um and then I became an appraiser so I Learned how to estimate value so I Figured if I could estimate value I Could go out and create value and so Those are the things that you know are You you get started by learning the Fundamentals of the business you don't Have to be a con you can be a contractor Too but you don't have to be an engineer You don't have to be a finance major you Can understand the basic fundamentals of Real estate which is marketing and Understanding value and you make your Money in real estate going in when you Buy real estate you make the money then And you realize your profit on the price

On which you bother asking yeah exactly And then you can go in and create value So what development is all about you Talk about that as far as making money On the front absolutely so you want to Buy if you think about this imagine real Estate is a is a 12 hour clock and the Ultimate time to sell is 12 o'clock so From about one o'clock until four or so You want to be kicked back in The Spectator then around four so you start Looking for the opportunities and then You start buying and you buy all the way Up to about nine o'clock and then at That point you start looking to sell So if you buy and you want to buy when Fewer people are buying and it's hard to Buy what time are we at right now oh I Think that we're probably at about three O'clock And three o'clock noted yeah and I mean Look I think that the thing is is that There's opportunities everywhere so I Remember back in um 1991 92 during the junk bond crisis Um you know Banks were failing they were Closing in 1989 there were 300 and some odd banks Closed in one year this and then in 1990 Another 300 banks closed so they were Liquidating all kinds of assets so I Started buying assets in downtown DC and I was buying stuff at 20 cents on the Dollar or so and my view was I didn't

Need all kinds of you know scientific Charts I didn't need any kind of real Calculation I felt that the nation's Capital of the most powerful nation in The world would come back at some point Or the money wouldn't be worth anything Anyway so I loaded up and bought Everything I could and and that 20 cents On the dollar when I started selling at 80 cents on the dollar 90 cents on the Dollar I was making four or five times I Love what I paid and if you leverage it Then you're making you know 600 times What you made is that amazing please Flap it up for that I have a two-parter for you I'm sure the Audience wants to know uh number one What are the five cities in case they Miss them because I'm sure somebody was On Instagram sending a DM saying that They should be here right so what are The five cities you would have let's Invest in and let's say hypothetically I Had like 5 000 Amazing Friends that were Investors how can we put our money Together to get in some of these Commercial deals so we can build wealth Together well I think the first thing is Where I would be investing is I like Florida because it's got strong Fundamentals no state income tax a Growing economy Um and a good quality of life overall so Miami's very stimulated so you got to

Look beyond that so what are the Emerging cities in Florida and that's Jacksonville and Tampa those are the two Strongest markets in that please write Those down then if I were gonna go Texas Great fundamentals no state income tax Decent pretty good weather overall Um and very business friendly but um Austin has been on fire yes so where do You go you go to Dallas and you go to Fort Worth Um those markets are still you know Growing and they're underserved uh and Then Arizona Scottsdale Phoenix has Always done very well Tucson sleeper I'd Go there Um and then Nashville and Memphis it's No state income tax in Tennessee quiet As it's kept and uh and then you know Look reach I'll tell you how strong Stating no state income taxes are when Jeff Bezos started Amazon he did it in Seattle Washington Bill Gates always Stayed a resident of Seattle Washington Because Washington state has no state Income tax but those would be the Markets that I would focus on and I Would look real hard at LA because I Think that La bounces back it's a Resilient Market it's uh you know Um it's a it's got an industry that is Going to run in perpetuity the Entertainment industry Um and it's got technology and then New

York but I would say New York is real Early right now uh so I'd be waiting on New York and look I think that you know One of the things that we have been Looking at is how do we Empower people Especially people of color Yes to be Able to reap the benefits of economic Growth through real estate on a larger Scale Um and and just to give you a sense this Analogy I gave where I put up to 20 Million and a Goldman Sachs or someone Put up 180 to buy to do a 500 million Dollar building well our buildings Generally are going to make somewhere of About 40 to 50 percent return on cost so Say that it made 50 return on cost after We developed it and stabilized it that's 250 million profit well the way that Would work is that we'd get about half That so we would get 125 million on that 20 million dollar investment and so you Can do the math on that it's over a 600 Percent return on our money wow so That's all about leverage so No clapping up for that because 600 Return is incredible I know most people Think there are not a lot of big gains In real estate but thank you for Mentioning that yeah so so the uh so it Used to be back in the um the 19 Um 80s real estate commercial real Estate was powered especially Office Buildings and hotels were powered by

Real estate syndicators so real estate Syndicators would go out and buy an Office building chop it up into a Thousand pieces and sell it off in Pieces and the investors would get the Tax benefits from it and then they would Get the rent income and the appreciation When the banks all failed in the late 80s or early 90s Um the and the tax law was changed in 1986 to take away those depreciation Rights and so forth it the the Syndicators went out of business Essentially overnight so we are looking At how do we Make access to doing and investing in Say an affirmation Tower accessible to a Larger group of people and we're working On doing that now we're considering a Platform that's somewhat like Crowdfunding but a bit more liquid Um and uh but I think that that I think There are some ways now like for example We are looking at investing in some REITs Um so FL green which is just built one Vanderbilt Um office building right at uh Grand Central Station the most successful Office building in the marketplace Um their stock is down you know 75 80 Percent and Vornado Um which owns um far the Farley station Which is the historic building across

The street from where we are now on 8th Avenue and they own all these Office Buildings above uh Penn Station and Madison Square Gardens Um their stock is down 70 or so percent And so that's another place to play as Well because they're the market has Penalized them heavily and that's Another way to invest in larger scale Real estate Um but overall it hasn't been accessible And so people have to become Entrepreneurs themselves to do that and That's a bit harder but I would say that The way you started in the development Business is do a house or two buy an Apartment building Um and and renovate it renovate the Apartment building and release it up or Buy a condo in a market that's emerging And it's an old building and renovate The apartment and resell it there that's A way to get started and then you start Scaling it up but the thing about real Estate though is you if you're going to Get into development you got to think Big and you got to be willing to scale Up quickly so think about this the first Building we developed was in 1989 I Started on that in 86 that was 10 Million dollars affirmation Towers 3.6 Billion [Applause] I'm just thinking to myself as you look

At the landscape and we always talk About building generational wealth and We know one of those ways to build it is Through real estate as you look out at The landscape from your position looking At the new developers people the agents The Realtors how encouraged are you when You see us in this space now because I Would imagine 40 years ago when you were Starting it didn't look like us and I Was looking at the statistic actually it Said uh in the second quarter of 2022 The homeowner should be a white Households with 75 percent compared to 45 of black households 48 of Hispanic Households and 57 of non-hispanic Councils of any other race and so Are you feeling encouraged like what What is your thought from the landscape From where you're sitting at I mean look I'm encouraged by what you all are doing I mean I think you all are the bright Spot thank you real estate thank you Entrepreneurship for black Americans What happened is during the 1960s we all Were fighting my parents and my Grandparents and all of our parents and Grandparents for fighting for civil Rights basic civil rights access to Universities access to you know Accommodations and access to educational Institutions Um and then in the in the 1970s we got It and so what happened is that prior to

That The best and brightest of us were Entrepreneurs in many instances because We couldn't get jobs no one would hire Us so we would create businesses and Serve our communities and those Businesses what happened is in um and Then we and then those of us who went to College went to historically black Colleges by and large so what happened Is in the 70s and 80s Um that changed Um so we didn't become as Entrepreneurial we began to get jobs and Better paying jobs and that was the goal And so what we see the real estates of Entrepreneurial business and it's Severely underrepresented when it comes To Black Americans Um homeownership rates for black Households is lower today than it was in 1968 when Dr King was assassinated so Um and in fact in Boston the average Household net worth of a white household Is 250 000 and the average household net worth Of a black household is eight dollars And so what it is is that we haven't Been entrepreneurs so there is a Tremendous opportunity though for real Estate for Real Estate entrepreneurship The thing about real estate and Everybody ought to appreciate this when You go out to raise if I've got an app

If I've got some technology Etc it's not a hard asset so to I got to Go and find friends and families to help Get me started and then convince people To put money into it and real estate is A hard asset that can be valued so You're you are going to be 70 percent Already on the way because you can Borrow 70 in debt and so it's easier to Get started as a real estate asset owner Because you have this hard asset and Then once that and that asset is Appreciating at the same time if you own A rental building or a rental house You're collecting rent it's paying down Your mortgage paying down your debt and The property is appreciating over time And so you're getting an equity buildup That is pretty quick and you'll Ultimately be at a borrow against that Too so where I think there's no better Time for us to be in real estate Um it is the number one business in this Country overall wow say that again Please number one business in America is Real estate and the biggest wealth Generation And what's up [Music]

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