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In this episode of The Hive With Us Podcast, host Daniel Martinez and co-host Kyle Thompson welcome back Chris Powers, a seasoned real estate investor with over $1.2 billion in assets under management. Chris shares a compelling land deal that significantly impacted his career and provides insights into the intricacies of land investment and entitlement risk.
Chapter 1: Introduction and Guest Overview (0:00 - 1:00)
Daniel and Kyle introduce Chris Powers and provide a brief recap of his background in real estate investing, highlighting his expertise in land and industrial investments.
Chapter 2: The Landmark Land Deal (1:01 - 5:00)
Chris narrates the story of his pivotal land deal in 2010, where he assembled 8 acres of land in a burgeoning area of Fort Worth. He discusses the initial purchase, the challenges of entitling the land, and how this deal significantly influenced his career.
Chapter 3: Lessons from the Land Deal (5:01 - 7:00)
Chris shares the key lessons he learned from the 18-month process of rezoning, navigating city politics, and dealing with infrastructure issues. He emphasizes the importance of understanding entitlement risk and the potential returns it can bring.
Chapter 4: Broader Implications and Strategies (7:01 - 9:00)
The conversation expands to discuss the broader implications of land investments, the advantages of selling to large companies, and how Chris's experience reshaped his approach to real estate. He also touches on the importance of working with talented professionals on big deals.
Chapter 5: Practical Advice and Closing Thoughts (9:01 - 10:54)
Chris offers practical advice for aspiring land investors, stressing the importance of making sound purchasing decisions and being prepared for the complexities of entitlement. He concludes by sharing where listeners can find him online and promoting his podcast, The Fort Podcast.
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Transcript
hello welcome to the H podcast I'm your
host Dan Martinez today we have
returning co-host Kyle Thompson and
guest Fort Worth Chris and Chris name
Chris Powers wow why am I getting Tongue
Tied
today we're going to run with it today
I'm just going to keep rolling if you
haven't heard the episodes please go
check it out we talked about land
industrial investing and $1.2 billion
under assets a assets under management
why am I getting Tongue Tied today this
is crazy I is really good and now I'm
messing it up it's all good though we're
going to run with it excited but today
is deal breakdown we cover cool
interesting stories now Chris has been
in in uh doing real estate for over 20
years from single family to Industrial
I'm sure he has a lot of cool
interesting stories for us but I think
he's got one good one for us ready to go
whenever you're ready okay so real so
just tell you about a deal that we
worked on yeah a cool interesting deal
interesting story in real estate or
business okay I'll tell you just about
the the deal that I think kind of pted
my career and then the kind of the deals
Chapter 2: The Landmark Land Deal.)
that fell after that but it does go back
to land this was
2010 and was super naive uh but had been
developing some student housing by TCU
and and looked at this other part of
town called West 7th which if you've
been to Fort Worth it's a really
thriving District but back in 2010 it
was on the up and
up and I didn't even know what land
assemblage was at the time I just knew
what big developers were looking for and
so we put
together we basically we we we bought a
a gentleman who over 40 years had bought
like I think 26 homes or something all
contiguous and then we assembled another
six or seven around it and created this
8 acre Block in one of the hottest areas
of the
city and when we bought it we bought it
for I think our all in bases to the dirt
was like nine bucks a foot we had cash
flow coming in from all the rental
houses on top
and I honestly like I knew what I was
doing but in hindsight didn't really
like there was so many things I was
naive of but we thought okay well we'll
buy this and either we'll sit on it for
three or four years collect cash flow
and the land will probably be worth you
know we were in at nine I think we
thought in a high case we could sell it
for 25 bucks a foot and that was because
again this was 2010 in 06 0708 leading
up to the great financial crisis there
was land that was selling for 30 35
bucks a foot so we were conservative and
said well maybe we could sell this for
25 and we'll just either do that or
maybe our development company will take
off and and we'll develop the piece of
land one day and so it was 38 single
family homes uh I think some of them
were zon duplex but it was pretty low
density but it was in a great area of
town and I really didn't even know what
zoning was or higher intenser zoning
that just wasn't the plan but anyway
about 60 days after we bought it we got
approached by a group one of the biggest
multif family groups really now on the
in the on the globe and they were like
we want to buy this from you and
um this was the biggest group IID ever
worked with at this time I was still a
local real estate guy just doing small
deals and I had a partner on the deal
and I remember we sat in our office and
we're like you think we should tell them
that it's 25 bucks a foot to buy it
there's no way they'll ever pay that and
we called a friend who I'm so glad we
did and he goes no tell them tell them
it's $50 a foot and again we had owned
this for 60 days bought it for nine
bucks a foot and thought in five years
maybe we'd get
25 and I only say the numbers not to say
we made a bunch of money that that
happened but it also is an insight into
how land really works so we told them 50
and I think we settled at like 48 bucks
a foot
now that took 18 months to do so this is
where I really got my education we had
to rezone all the Land There was a road
that ran through the middle of it that
we had to get the city to basically
vacate there was a sewer line that ran
out to lake Fort Worth which was where a
lot of uh the city's water comes in from
so you couldn't build on top of that
sewer line again when I bought the land
didn't even pay attention to it but for
entitlements we had to figure out how to
build a bridge over it had to sit in
countless zoning meetings and City
Council meetings for 18 months it was
just a very diffic it was a even though
it was eight Acres of all these homes it
was just a very complex
transaction and and the guy that ran the
company that that bought it from us he's
still a great friend today all I asked
him when we did it we became friends
throughout the deal was to the extent
you can help me I I was young I think I
was 23 24 at the time will you just
teach us what you're doing and how this
all works and after 18 months I tell
people like I got my
MBA and so what I learned quickly was
one buying un taking what I guess you'd
Chapter 3: Lessons from the Land Deal.)
call entitlement risk which is buying
unentitled land and then taking the risk
that once you own it you can get it
entitled for higher and better use have
created some of the the biggest irrs or
multiples on a deal it's obviously a lot
riskier yeah you know I know people that
have bought unentitled land thinking
they would entitle it and they never
could but once we did that we realized
oh wow there's a lot of benefit to this
how could we go find other uh potential
multif family sites that people aren't
seeing and put them together and so when
I told you we were doing a lot of land
it was all Urban infill Land but we
spent the next three or four years
assembling sites all over DFW taking
entitlement risk or we built
relationships with developers and they
would kind of say hey if you'll go buy
they couldn't hold land on the books hey
if you'll go buy that deal we'll work
with you on entitlements we'll pay you
this once it's all entitled
so anyway it just set off a a a huge uh
you know wave of business learned a
about how cities work you know often
entitling land especially in the middle
of a a big city is a lot like being a
politician um you have to hold a lot of
hands and make sure everybody's happy
but it's a deal I'll never forget it
really kind of catapulted our career I
got to see how the big companies worked
and looked at things and the and the
funny thing is I remember thinking after
they paid us whatever it was 46 or $48 a
foot I thought there's no way in hell
these guys are going to be able to make
any money they just paid me some crazy
number so I think they closed on the
land in 2012 built 400 units on it and I
think they made like 50 or 60 million
bucks when they ended up selling it and
it again it just changed my mind that
there's just such a bigger world out
there and when you sell to bigger groups
they have cheaper cost of capital they
have different return thresholds they
need to meet they have way more scale
and they can get their cost down when
they're building they just have so many
advantages and so I think leaving that I
really realized we need to get the
business as quickly as possible to a
Chapter 4: Broader Implications and Strategies.)
place where we're dealing with those
types of folks because also bigger Deals
they don't take they take the same
amount of time as smaller deals but they
also have some of the most the smartest
people working on them so the best
Architects the best brokers the best
lawyers the best companies so the the
the talent that works on big deals is is
is much higher often not always and so
there's just a lot more resources to get
them done and so it was just a it was
was a great land deal we made some good
money but it was really a deal that kind
of I would say changed my
career that is amazing I'm I I think I
would I I would love to have gone
through that that land Journey I'm going
through it now like we' we've gone
through some excit stuff now but I would
have L have gone through that when I was
23 100% because you learned so much you
learned so much going through that
everything you learn you learn so much
and if your exit can be to a big company
whether it's a public company or private
there's just so much more opportunity
and and and again those companies are
not in the business of assembling land
and taking a bunch of entitlement risk
like in a lot of the companies their
their documents say they can't they have
to buy land once it's entitled and what
they call shovel ready ready to go and
they're willing to pay you a premium to
be the person that takes that risk on
their behalf the caveat all that if if
you're listening to this and you're
going to go do one is buying the land
and part of your assumptions is we're
never going to be able to get this
entitled so are we comfortable owning
the land at the basis that we're in or
are we going to take some huge loss
selling it um I would never encourage
anybody to go overpay for land hoping
for entitlements you always have to
still buy it at a price that makes sense
kind of the way it is and its current
form absolutely yeah you have to yeah
like one thing we do especially when we
buy stuff like we buy bigger stuff is we
already know what's the worst case
scenario exit we're still going to make
money yeah okay then let's let's let's
dive a little deeper and see if we can
get a huge multiple on this and see if
Chapter 5: Practical Advice and Closing Thoughts.)
we can have fun doing it what kind of
land do y'all buy we buy a rural rural
vacant land uh large acreage usually
outside the city using for Like Home
Development or to split up into ranches
or we do we do ranches and home
development is what our Niche is so
we'll buy big land do ranches if ranches
is always our go-to if we need to exit
but if we can and it has water access
we'll do Home Development so we Cory
currently own 400 acres of land 200
Acres were turning into 180 home sites
and then the other 200 returning into
ranches so it really depends on how
close we are to the city and access to
utilities I love it it's it's such a fun
model it's such a fun model and then we
do bigger land deals with bigger people
that do bigger operations so we're not
selling desert squares we I tell I tell
people I like investing in land where
people want to buy land like don't
invest in land in the middle of nowhere
like you want people want people want
it it's a great business land is such a
great business I love I love the uh the
deal the deal you brought today is the
land deal it's amazing I love it land
guys I I love the opportunity land
provides so for everybody here work
people find you online this has been a
great episode I know you got to go so
let's let's end it here this has been a
great episode though this has been
awesome again I really appreciate you
guys having me on I'm rooting for you
you can find me on Twitter at Fort Worth
Chris you can check out my podcast the
fort podcast uh it's on all the major
platforms interview entrepreneurs
leaders and business done 350 episodes
or you can visit our website Fort
Capital lp.com go check out the other
episode too it was really good it's been
a really good episodes for everybody
here go like share subscribe we'll see
you in the next episode thanks guys hey
if you like to meet us in person we do
an annual event every year the hiis
live.com Summit we'll see you there have
a great day
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Daniel Esteban Martinez
Host/ Ceo/ Speaker
I have been an entrepreneur since 2018. I come from a regular home just like most people. My dad worked on the roads in the Chicago area for over 30 years. He always taught me to work with my brain, instead of my body. Your body can only take so much abuse. I learned so much from my father. He always pushed me to work smarter and not harder.
I have owned and operated a trucking business for 2 years. I started learning real estate in 2019. Fell into the Data & Skiptracing business in 2020. My partner Anthony & I started Hivemind in 2021.
I have done a ton of different jobs coming up from painting, to door-to-door sales, telemarketing, truck driving, and loading trailers. What I learned most is that I want to stay in the digital business space. The leverage you can have delivering digital products to the marketplace can yield limitless possibilites.
I started The List Guys in 2020. It is a data and skiptracing service. We provide seller and buyers list nationwide. My clients have been getting great results and I am proud to help people killing it.
I started the Hive in 2021 with my partner Anthony Gaona. It is a real estate and business mastermind. It also comes with a all in one CRM, that can host unlimited websites and users.
Starting the Hivemind has been an amazing journey so far. Seeing one of our users make his 6 figure month in June 2021 leveraging our software, I know there will be plenty more to come!
Anthony Gaona
Host/ Ceo/ Speaker
Hi! I am Anthony Gaona.
I’ve been in digital marketing for almost 15 years.I grew up in construction working for my dad when I was only 12 years old. Normally we had a ton of work or no work at all so a lot of my free time was spent learning how to generate leads.
It didn’t take very long for me to master online marketing because I became absolutely obsessed with it. For the last 15 years I’ve been generating construction based leads. At first I was running the projects myself. This led to sub-contracting all of the excess projects and eventually wholesaling the leads off to other construction companies.
One day I was preparing to build a single family residence for myself. In mid December, 2018, a simple YouTube search led me to the term wholesaling and the rest is history. The plan was to use my construction background to start flipping houses. By January 1st of 2019 I launched several marketing campaigns both on and offline for real estate seller leads.
Within about 4-5 weeks I had my first real estate contract locked up. It didn’t take long for me get a land lead where I made almost a full year’s pay on a single transaction. This came from a land lead and that forever changed my life.
I ran low volume larger land deals for the first two years of my real estate career. Like anyone who has been in real estate investing for an extended period of time, I started thinking about scaling my business.
Instead of deciding to vertically integrated and start hiring I imagined a model where I would teach my real estate investing method… Read More