Subscribe
Share
Share
Embed
The Real Estate Addicts (REA) podcast is a must-listen for anyone interested in real estate development, investment, construction and entrepreneurship. Each episode dives into a wide range of industry topics and features conversations with savvy, successful entrepreneurs who candidly share their career paths, challenges, breakthroughs, and the stories behind the remarkable companies they’ve built. Expect big personalities, thoughtful insights, and conversations that both educate and inspire.
Co-hosted by Ray Hurteau, Dan Rubin (Instagram: @rhinvestgroup), and Marc Savatsky (Instagram: @choose_boston)
Follow the Real Estate Addicts Podcast on YouTube: @RealEstateAddicts
00:08
This is like the banter before the banter. oh This is the banter before hands up. Yeah. Welcome back to the real estate addicts podcast with your host Ray Hurteau, RH Investment group, Dan Rubin, RH Investment group. wanted to go second.
00:27
Welcome to the Real Estate Addicts podcast with your host, Ray Hurteau, RH Investment Group. So listen, go first. No, we're all good here. ah I wanted to tell you guys something. We had a gentleman who came to the union this past week. He was here from San Diego and we're talking rent control. And he told me something interesting. said that landlords who are thinking of selling in the next three, four or five years in San Francisco, once a unit becomes vacant, they leave it vacant.
00:56
because the building is worth so much more with vacancies in it than with tenants under a rent control scheme, ah than the short term boost of a couple bucks a month in rent. it like New York where it's grandfathered in and so if they do decide to rent it, they still have to go back and adjust based on prior or is there some period of time that everything resets? I think it resets. I think that's the whole point.
01:26
So I think that's another... So they just leave the units vacant. Yeah. mean, he was talking about... costs more money to renovate it and they're never gonna get it back. Well, they're not gonna get it back, but moreover, like, whatever the rent is compared to the increased property value, when you do sell, you know, in 2030 or whatever, you're better off as long as you don't, you're not strapped for cash, which probably most landlords out there aren't. They're just like, eh, I'll let the building be two-thirds vacant. I'm gonna sell in four more years. It's wild. And so it just puts price pressure on all the rest of the inventory.
01:55
So yet one more example of how like, just can't like subvert markets. Like, didn't we learn anything from communist Russia? Well, when the wall came down, like the answer there is a tax vacant units. Make it this is sensitive for them being vacant. You sure you're just going to eventually turn your city into a slum because people are then going to vote with their feet. Right. And they're going to say like, all right, I can't make money here. I can't feed my own feed. My family might be a gross exaggeration, but. Yeah.
02:25
It was the base basketball player who said I got to feed my family. He took so much shit for that. Uh, what? No, I don't remember. I think it was Carmelo Anthony. I think so. Um, anyway, all right. That's a aside. That's a good segue into our topic for today. Well, no, I think, yeah, I mean, it's just, it's going to be very interesting. I tell you guys another interesting one? Yes. Somebody said, is this guy just talking about rank control? that what he was in for? Um, no, he, he actually had a cool.
02:52
software application. He was visiting Boston and he Googled coworking spaces and the union came up top of the list. So he called me. It's like, we don't really have like a daily membership, but if you want to Venmo me, I was like 40 bucks a day. He's like, cool. So he pushed me 160 bucks and he hung out for like five days and kids Oh, he was just out here and he wanted a place to like, just, just like, just to work, take calls, do some work. That's pretty amazing. Yeah. Me and him like shot the shit. So he's got a software called GL.
03:22
Uh, LP, uh, GP LP match. Okay. So, uh, general partner, limited partner match. it's a website like much like, you know, I don't know, hinge or Tinder, uh, where you put two people together who are interested in mutually beneficial relations. You don't think so? What if it's like a sadomasochist masochist, like what's the opposite of that? Like, subversive.
03:51
That maybe that's some submissive, submissive masochist relationship. what are we talking about here? is uh going off the rails real fast. Well, I'm so the GPLP match. was a cool website. Shout out. Shout out to Ryan. Yeah. Good website to match GPs and LPs hinge. Uh, maybe not the best example, maybe more like a little kind of GPLP relationship. Anyway, let me give you a better analogy. threw this out there the other day and I got, I got some laughs.
04:19
kind of side-eyed looks, but we were talking about development and some of the pitfalls. And I said, you know, two slices of pizza might taste good. It doesn't mean that six, that you should put six on your plate. And, you know, it gets to the point of like execution. like that. There you go. Good segue. That's the we're looking for. There's the pitch. There's the pitch. So I think, I think before we started, we wanted to talk a little bit about uh like operational excellence when it comes to
04:49
executing a project to its fullest and kind of some of the pitfalls that you could fall into and things that you might want to avoid and ways that we try to push to get these projects to the finish line as quickly as possible because obviously that's the goal, right? It stands out in public if you see a project down the street and you're like, what the hell is taking so long?
05:15
you know there's something going on there, whether it's the labor or the owner or something in between. money dried up. Well, I like to acknowledge certain advantages that we have. like I say this humbly, like Murphy Court, five townhouses, 13,000 gross square feet. I built that start to finish nine and a half months. That's incredible. That's fast, right? Very fast. And so like it begs the question though, like, are you just bragging? Like, how do you do that? And is it fair to compare that schedule to
05:44
You know, fill in the blank third party GC. And I say it's not, I'd say that I have, I have like, uh, certain advantages as do you, which are hard to replicate if you are not self-performing as the GC. So real examples, you know, Hey, the toilet can't go to the right of the vanity. There's a, turns out there's a triple LVL right where the waist stack wants to be. What do you want me to do? Me, you, right. You can stand in that bathroom and just say like, Oh, well, we're going to naturally flip the vanity in the, in the toilet, uh, put the toilet next to the shower.
06:14
But any other job where you're like working as a contractor for an owner, you have to write a request for information, has to go to the architect, has to opine on it, maybe call the owner, then circle back and approve it. Like if that happens in a week, that's pretty good. And the problem is in the meantime, your plumber probably takes his tools and his crew and goes to another job and will come back once he finishes that one. And also the other big benefit that we have too is, you know,
06:42
you and I or you and us, we don't take on more than one or two projects at one time. How many projects do you think this third party GC, they could have 10 jobs going on Well, they could, but mean, ostensibly they have more labor than us. You would hope. And supervision and all those things, but- Sometimes they don't on smaller Or the individual's tasks are so specific. this is, all I worry about is this one pillar, whereas we have like 50 pillars to worry about.
07:08
But to your point about the pizza slices, I mean, that's exactly it. Dan and I found ourselves in a situation in the late 2010s where we had five, six projects, balls in the air. And it was like, Dan could only spend hours at each project and I'm trying to balance seven different bank accounts. You don't do as good a job as you can if you're not focused on just definitely fell off the rails a little bit during Yeah, it's not that we didn't do a great job, it just, everything took longer.
07:36
Well, I think there's no doubt if you were to draw a graph and its number of projects and its profitability, profitability is a percentage. I think that the correct answer isn't six and it's not one. You know, the truth is somewhere in the middle of that apex of that curve where you can still execute. That's without bringing on any help. um You know, let me say this too, cash, just the ability to have that.
08:04
Cash is the lubricant. It's the grease for any job. And when you have a sub who's a small sub who needs to be paid weekly, um it's also a superpower to say like, eh it's one bucket of money, you know, in some instances, careful if you have LP money, because then it's not one bucket. You actually have to be very careful about keeping your buckets distinct. But assuming it's your money, just pre-fund a loan if you're that fortunate or whatever it wants to be.
08:33
But the way you build 13,000 square feet, nine and half months is you let the money flow. just. Exactly. We actually had something similar to that where in our early days, we didn't figure that out. Right. And so as we refined our models and underwriting a project and figuring out what the returns will be and what the carry will be and the total raise will be, we pre-fund exactly that amount. figure out, okay, here's how much we're to need between draws and here's how much cash we're going to have. It really just comes down to, like you said,
09:03
the job moves along if everything goes well. Good planning, good payments, and everything in between. And the whole team is vibing, if I'll use that. Like, nothing hurts a job more than just like bad energy in the job trailer. When the owner is being very vindictive, or the contractor and the owner, or the owner, the architect and the GC. Any of these kind of head-to-head collision type relationships are almost, you can't come back from it. Like, you can be absolutely correct.
09:33
but it just can be so detrimental. It's like at the end of the day, you own whatever juice is squeezed out of this project, you know? So if the dynamic is off between that like three-legged stool owner, architect, contractor, good luck. Yeah, and I think scheduling is also very important. And I think we've gotten into that on some previous episodes, but you know, making sure that you know.
09:58
When subs need to be on site, when, right? Like I know that my rough framing is going to be done in three weeks. What subs do I need to line up so the day after framing is done, we can keep moving forward with the rest of the rough. Naturally, but I think that the step there that's more important is to bring that sub out to the job and have a pre-installation. meeting or something like that. You know, so like if I know that I'm going to start siding soon, I'm going to bring my, you know, in this case, like Morgan Koopman lumber.
10:28
Might bring Ryan from Coopman out my siding sub, uh, roll out a set of plans and we'll talk through like, what do need first? Is there, we going to rip down one by 12 there? Are we going to use a five quarter? Are we going to use a one by for the trim? Um, you know, flush out questions like that because God knows there's a lead time. Like on this project we're doing right now, it's all black PVC. Uh, that's not stock. So, you know, the first thing we do is we do, like I say, color in the, the doing a coloring book, you go around.
10:57
the perimeter before you kind of turn the crayon sideways and do the field. And so like if we run out of black PVC, it's actually like less than ideal. You could argue like, just move your pump jacks, go to the front of the building. like, that's a ton of work. It is, it is. And then going back and redo it's never, it's never gonna be perfect. yes, I agree with you. Having three-con meetings is very important. know, like for instance, like in Amesbury, like, you know, we started roughing the sprinkler today, but two weeks ago, I...
11:27
met the sprinkler sub on site. We went through, we talked about where we're going to run the mains and where we're going to run all the stacks up and where the wet system is going to be and where the dry system is going to be. And are we going to have, where are we going to have concealed heads versus exposed heads? we talked through everything. about how many layers of drywall for the pendants because they got to set those to the right height. But yeah, it's a great example and you're never going to get a hundred. The hope is if you can get 80.
11:57
You know, your phone's always gonna ring, there's always gonna be something, but man, if you don't do anything and you're not hitting 80, but you're missing Well, if you're waiting until they start, if you're waiting until the day they start the job, then they're gonna spend the first two days of the job not doing any work. They're gonna spend the first two days of the job doing what you should have been doing three weeks prior in the pre-con meeting.
12:24
So that is where you make up a lot of time as well. Totally. And I think in the bigger jobs, in the Lynn project that we did, you know, that was 25,000 square feet. so, you know, I think having- That was a ton of coordination. think having the look aheads, the two or three week look aheads plus the master schedule. I mean, I don't, I know you don't necessarily need those on the smaller projects, but having those on the larger projects, I think personally really helped me push and helped me
12:54
kind of align what I need. Because if I have a three week look ahead, I know what I need to be doing in three weeks. I know what I need to order. know what subs I need to talk to. I know how to kind of, what the order of operations needs to be. having those types of tools in place for larger projects, I think really make a difference in the time frame. We built that project in 16 months. Definitely. anything else we can?
13:24
from an operational standpoint that, I mean, you build stuff, I don't know how you do it. You're like a fucking magician. uh But you're pushing all the time. I think a lot of it is also relationships with subs, Like the ability to bring manpower as needed and keep people moving productively. mean, how many trades are you stacking on? Are you bringing them all in at once or like how do you?
13:52
Like MEP is the most chaotic part of the job. like naturally I want to let the plumber go first, the HVAC guy go second, the electrician go third. I'd like my recess lights to be up before the fire protection guy starts and the fire alarm guy whenever he can show up in in between. it's more a matter of like how many guys are they going to give you because
14:17
You know, there's a lot of money going out the door for the subs. So uh if your job isn't organized and people don't have clear direction, you know, it's a big risk to tell seven, eight carpenters to just, hey, go to Mark's job. ah But if you know that all the doors and the trim are there and that there's not people in their way and it's a well-run job, then cool. So that's a key to uh success is kind of that level of trust. How soon are you buying finished materials? How far out?
14:46
It's a tough one. The quandary there, the tension is like, do you handle the stuff twice? You'd love to like live in a world where you get just in time delivery, but. Or you have some storage container on site that you can store everything and lock it up. Yeah. Not all jobs allow that. It's tough. Cause the worry is you pick all this shit out way in advance and then it's either out of stock when you need it.
15:14
or they don't even make it anymore. I know. Because stuff is just circulating so quickly. uh I think it's a fine balance when it comes to finished materials. I really like to look at things individually and say like, all right, that's a lighted LED mirror. If a 60 inch lighted LED mirror goes out of stock, I'll get another, we're gonna be fine. If a subway tile that's white, it's gonna be okay. But like there's always things within the finished schedule where I'm like, oh man, if I lose, that's the whole thing in the powder room.
15:41
is this fluted terrazzo. like I'd be heartbroken if I have to pick something different. Or it's one of one, Yeah. I want to go back to your earlier comment though. uh Sorry. The pizza? Not that early. The hooch. I want to see how much of it is who versus how, because we do talk about operational excellence and we do talk about making sure that we're running a tight ship. But if you don't work with the right people.
16:07
The responsibility is just as much on the sub to make sure they're not sending seven guys to a place that they're not reporting. Well, you have to be honest, too, right? Like, here's the other problem is there's this tension as well whereby, like, we always want to be over-optimistic as owners, as developers. Like, you know, hey, when do you need me on site? It's like, well, shit. I can give you a realistic time, an aggressive time, or a really, like, liberal time that's way out there. And how do you tell them so that...
16:36
If you have lines up, when you want them actually, if you get a reputation, it's sort of like when you're the white tough negotiator and everybody just pads their numbers that you can squeeze them down. Um, similarly on schedule, when you're like, Oh, going to be ready for you June 1st. This job is going to start. We're going to have our permits. And it's like, no, you're not. And I can't just take people and put them on a shelf and take them off and put them on a shelf. like you kind of screw people up. So there's, there is like a reputational thing to.
17:05
what you tell people and you certainly don't wanna push them out. If you really think you're gonna be June 1st, don't tell them July 4th, 5th, that's a problem too. I agree with you. How do you dance that dance? Sorry? Or something that, I mean the main thing is something will come up that's out of everybody's control and then there's a delay there. And so you can't really put anybody. Well there's always gonna What I'm saying is you wanna make sure you're working with the right subs too.
17:32
because they need to be able to make sure that they're not just ho-humming their own schedule. And I get that, so I've beaten the horse dead. No, I think it's, but the responsibility I think is equally on both, right? You as the owner and general contractor, you're responsible for the overall timeline, timeframe of the project. I guess where it stuck with me is like coming out on site and this is the first time you're walking the project. Like that, that's just, it shouldn't be that way. No, it shouldn't.
18:02
but there's a lot of moving parts, a lot of different things that go into Do you keep any type of documented scheduling or is it all up? It's all in my head. Well, you're a one man show, Yeah, well right now, uh Crystals work with me on a project, so it's actually forced me to start writing some things down, but it's been super helpful. um But you typically aren't really doing more than one at a time either, right? Two is the most that I would build personally at a time. um
18:32
I'll give you a controversial take, I know you like these. on smaller projects, three, five, six units, think superintendents are overrated. And I think you don't need full-time 24-7 superintendent on site. I agree. know, if I were to- only how does it even work?
19:00
The overall budget doesn't, it just destroys your... I mean, it certainly would, but cost aside, it's just like, I try to think of myself, like, if I spent every day, you know, every time there's one painter on site, I have to be on site for that whole time. You know, it's just, what are you doing? You're just sitting on your thumb. So, like, it almost forces me to be a lot more sharp with my time. Like, line up questions and answers. I'm not just sitting in the trailer waiting for somebody to knock with something that's not right. And it forces the guys in the field...
19:28
to kind of use their head a bit and think through problems and challenges as they come up, because I'm not there all the time. But they need me, I will be there at lunch, I will come at the end, I will be You set a schedule. I also think technology now is very different. it's a lot, it's really easy to jump on a FaceTime with someone and they can just kind of show you if it's a basic question, you know, it's not the end of the world. I know, some subs still can't quite. That's a big differentiator for me actually, as far as the quality of sub is how they can communicate to me.
19:55
Like I know that I, you I made this LinkedIn post that went, it went pretty, I don't know, viral, but it got a lot of engagement. And the idea was sort of like the story of Babel, which is biblical story. And everyone's embarked on this grand mission to build this wild tower that no one in biblical times has ever seen. And the whole thing crumbles and nobody can work together. And it's, and they all speak different languages. And that's kind of true of a construction site, but for you as the general contractor, like your job.
20:24
is to like listen to all of those different Russian, Polish, English, and kind of translate and bring that vision together. um So I forget where I even started to go with You want the subs need to be good at communicating with you just as much as you need to be good at communicating with the subs. That's right, yeah. You know, and I agree with you. And not letting them.
20:43
just go rogue and make decisions. Because then you end up with a whole tower of But also like some of my subs I really do trust and I want to empower with decision. Like you don't have to ask me every time you need to go to the bathroom. know, like that might obviously That's like the little game for us. It's like, can I go to the bathroom coach? like, yes, please go. want to make suggestions and. I'm okay with the decision often. Yeah, absolutely. Sometimes they'll wait for me and I'll be like, hey, what choice do we have? Like, let's look at this together.
21:12
Sounds like I need to soft it, huh? Like, okay. Yeah, I agree. definitely, yes, you want to empower them just as much, right? With decisions and that's what, and that comes down to choosing a good sub. Better decisions get made in that kind of setting anyway, but to your point, come to me not with just the problem. How about like two or three ways that you think it might work?
21:36
And you can work together. other thing that kills schedule and it's tough these days, I used to be better about staying strong, is, buyer changes. So I like to think of buyer changes as like somebody, a client at a restaurant who's just ordering, you know, whatever they were, had their heart set on that night for dinner and it's nowhere on the menu. You know, it's like, you've got a chef back there. He's making dinner for 30 people. We have seven things to entrees to pick from. Like.
22:03
It's really tough when the chef needs to leave and go to the, you know, and come back and make your thing. And like, I try to get that through to buyers and that is very, you know, on a custom single family, bless your heart, but on a multifamily deal, it's really tough. That adds like a lot of, not to mention. Or it's like, have the set menu.
22:23
And then it's like, oh, but can like you tweak this and like, want to like, I don't like potatoes. Can you like substitute those for carrots? Worse yet is like, they don't even know what potatoes taste like because they've never even ordered the dish. So it's their first time buying construction. And then it comes out and then they're like, oh no, no, no. And you're like, I've prepared that for 40 minutes. ah Sure I can bring it back to the kitchen, but like, if you don't know what you like, you better like what you get. Yeah. I agree. We don't, I can't handle. It would have to be worth
22:53
the, you'd have to just put a value on it. Like in order to make this change, to accommodate this change, here are the real downstream effects. And so this is what it will cost. If you so want it. My God, I'm having the hardest time with this. Cause they are the customer. Customer is always right. Right. In this industry environment. Yes. Well, this the difference between spec build and custom home build. Right. We're more spec build, but we can do semi custom. Very semi. I don't know.
23:23
I would prefer to wait until I'm very far along in the project and that way I can say, sorry, all of this has been picked out. You can pick out your paint colors. Yeah, you can count that. Maybe you can have potatoes or polenta. I mean, I know you you allow people to go a little rogue sometimes, but. No, it's really tough. Oh man. As long as it doesn't really screw with
23:52
where things are located from an infrastructure standpoint. Is it that bad or is it just more like, oh, here's another change. Oh, here's another, like, is it death by a thousand cuts? Yeah. Okay. It is death by a thousand cuts. I'm trying, I'm debating whether I should give you real examples from a recent project. You don't have to. have a hypothetical, you know? Yeah. Well,
24:18
It's not even necessary. It impacts the operationalization. It can affect things. I had a buyer recently push back. I have a 20 % markup on buyer changes. This happens to be a project that I'm just a third party GC and it amounts to $4,000 to me. It's like a decent number of changes on this.
24:37
So the sum of all the changes is a $4,000 increase to the buyer? No, that's to me. That's the 20 % on the bottom line. That's my profit. That's what I'm making. rest of it you're just making too much money. Yeah. They asked if I'd cut it in half. No. You do it once, you're going to have to do it every time is the problem. But it makes them think, is this a change I really want to push for? It's so short-sighted. You get one more example of somebody who's clearly very
25:06
smart and capable and well to do. They're buying a condo that's north of a million bucks. Like they're doing something right in life. Uh, but here you are. And the fight that you want to pick amongst all of these is my $4,000. Yeah. That with the guy who's going to make all of your stuff happen, or it can be really difficult. like, just like, that's the one guy who I'd be like, here's your four grand. actually, uh, here's a case of beer. What's your favorite drink? You know, like, what are you doing? People.
25:35
People always want to win some way or like feel like they're winning. I never understand that because it's such small potatoes. it's just, I don't know. Can I ask a question? Is this a Gen X buyer or older? um No, they're millennials. Okay. Swinging a miss for me. Ultimately, it's kind of like fighting customer service and thinking that you win something, but like you just pissed off the people trying to help you. Yeah. I mean, ultimately the developer did the right thing here.
26:05
And he stepped in and said, yeah, you guys can have it for half price. Don't worry about it. Yes. Very much. And sort of nudged me and said like, don't worry about it. I'll pay you the two grand. And to me, it's like not even about the two, four. It's like, it's kind of like a principal thing. Like, I'm writing you an email at 11 45 at night after a very long day, and you're asking me 15 questions and there'll be 15 more tomorrow. Like you think I really want to do this for four grand? I just sound that way, but.
26:29
That's why we don't want to any buyer changes. point. How long are you in the project? Just finishing MEP rough. Yeah, see, I guarantee you this will happen at least three more times. Well, you know what? A burden hand is two in the bush. In this market, yes. And these are good buy, like very qualified buyers. Hopefully we don't lose them if they're listening to this. Are they ad-vid listeners? I don't know. If they are, they should comment and say, fuck you, Mark. No. No, no, no. I'm just kidding. Cut that. No, I'm kidding.
26:58
All right, well, I think that I think we've we've covered this topic. Yeah, man, great. Pretty well and pretty in depth. But any if anyone has any recommendations how they kind of run their job sites or operationally definitely comment below. We'd love to know kind of how you guys operate your jobs and always willing to learn. It's always good figuring that stuff out. So thank you for listening, rating, reviewing, strapping and watching. Catch you on the next one. Cheers.