(Click The Video Below To Play)
The Andrew Greer Interview
Are you ready to jump into the real estate development game? Then watch this where Oliver Graf talks with Andrew Greer, CEO of Thomas Strafford Investments about how to build real estate development projects.
Andrew shares some inside tips on how to become a real estate property developer:
1. Building relationships with key city personnel
2. Learning how to go from land to approval to construction
3. Knowing what changes you could make to help you get approved and get bonuses from the city
Here is how the interview breaks down:
:44 How a real estate development deal works
0:38 The fundamentals of a development deal with plans, permits, construction (12-18 months) and discretionary process taking longer
2:26 What can a realtor do to facilitate a development deal
4:13 Did that bird just shit on my head?
4:46 Andrew’s strategies to find quality consultants Recommendations from city Look through OpenDSD
4:50 How do you find your local office in your area
6:10 The conceptual phase of a development deal, asking planning department for community plan look for path of least resistance.
7:50 Changes in zoning, density and how knowing about it can help
11:35 How to prepare your real estate development project report with the city with pages of comments
17:45 What departments need to sign off on the deal
17:06 Automate and Outsource “Persistence”… be everywhere
22:20 What is the difference between zoning and a community plan
23:20 How to get information on easements and setbacks
25:55 What are “bonuses” from the city and how to qualify for them
27:39 What Andrew wishes he known from the beginning
Andrew explains the fundamentals of a development deal, discussing his strategies for finding quality consultants and developing a positive relationship with the city. He walks us through the permitting process, the costs involved in putting together a consultant team, and the components of the package a developer presents to the city. Andrew speaks to California’s affordability bonuses and offers insight around navigating zoning challenges. Listen for advice on securing local vendors and learn how Andrew uses a community plan to identify the path of least resistance! Everything you need to know on how to build a custom home.
Full Transcript Below:
Oliver: Hey, there. It’s Oliver, coming at you with another episode of In the Know. Today I’m out here in the San Diego harbor, at the Marquis Marriott. Gonna be talking to Andrew Greer. We’re going to be covering everything that you need to know to complete development deals. Let’s get started. Today, I’m drinking a St. Archer Blonde, and Andrew’s got the ever classic Stone IPA, so cheers. Let’s kick this thing off.
Andrew Greer: Great way to start.
Oliver: Yeah, it’s a good way to start. I got the trusty yellow pad here, so we’re gonna dive right in and get right to it. Why don’t we start with just kind of a 30000 foot view on how a development deal works.
Andrew Greer: So, development is always based on the land, so the most important thing when you go into a process is determining what the land is that you’re investing in, and looking at what’s available to be done on that land. You go from land to ministerial approval, turn in your plans and permits, to construction. So, the other is going through a discretionary process, which is where you take land that maybe you could build six units on, and you go, Hey, I want to try and get a bonus on this, an affordability bonus, a sustainability bonus. I’m going to put 10 units on it, I’m going to minimize my parking or change my parking, and I’m going to max out the build. So, that goes through what’s called discretionary process. You turn in all your plans, conceptuals. That goes through a permitting and approval process. Then, if it’s approved, it goes to the next step, which is where the other step started, and it continues on with actually doing the, This is how we’re going to build it, ministerial review. Like, I’m putting a board here, I’m putting a dry wood there,” type process.
Oliver: So, in a nutshell, is the difference whether it’s already zoned for more units or not?
Andrew Greer: That is the majority of the time what sets them apart. And then, if you want to subdivide or not.
Oliver: Got it.
Andrew Greer: So, if you’re building a complex where all the walls are attached versus four units that you want to separate onto four separate lots.
Oliver: Got it. Okay, very cool. So, why don’t we talk about what the difference there is in terms of the setup and what they would need to know as an agent to either do this type of a deal themselves, or even just be able to help find more investor clients that they could represent on deals like this.
Andrew Greer: The time difference is gonna generally vary from somewhere to 12-18 months longer if you’re doing discretionary. So, it’s the process of going through, finding out what you want to do, then going to your architect, your civil engineer, your title 24. You might need mechanical engineers, you’re going to need soils engineers. You’re going to do all your tests, all your studies, put all that together and do your submittal. That process can take three to six months, depending upon how involved the project is.
Oliver: And how do you know all the things you would need? Is there a standard operating procedure on that stuff?
Andrew Greer: Unfortunately, not really. City by city, there’s 19 different municipalities in San Diego County alone. They all have different submittal processes. So, you have to go to each city or municipality you’re going to, and get their checklist. And when you get that checklist, I generally, when I was starting out, I would ask them, Hey, who’s doing plans in this area? I know you can’t give me a recommendation, because they’re the city, But can you give me five people I can call? Another thing I did is, when I came to San Diego city, I went down, they have a plans floor, and I just pulled all the names of the guys off the plans and started calling them, because I knew they were turning stuff in.
Oliver: Smart. That’s very resourceful.
Andrew Greer: Yeah, and that was my route for finding the right people.
Oliver: On development deals like this, you really got to be in good with the city. There are strategies that you could recommend in terms of getting things done a little quicker, or maybe getting your foot in the door. Did that bird just shit on my head? Did it?
Andrew Greer: No. It didn’t.
Speaker 3: Oh my freaking god. That would be hysterical.
Oliver: I just felt something. I was like, Get the fuck out of here.
Andrew Greer: I think it’s [crosstalk]
Oliver: That would have been so epic, though.
Andrew Greer: It would.
Speaker 3: I’m so leaving that in the video. Shit on my head.
Oliver: Let’s start with how does someone go about finding their local office in their area?
Andrew Greer: One, go that route and ask them who they recommend. If somebody’s really good, you’re still going to get a glowing recommendation from somebody at the city. You’re going to be able to tell. The next is, you can go on, in San Diego, and see all the permits that are pulled on a regular basis. It’s called Open DSD. Login, look for the permits that are pulled, and you can literally see who the architect was, who the soils engineer was, in the system. So, if you are in a neighborhood and there’s five houses that have been built, say, in the last few years, go into Open DSD, do a search for that address, pull up all the consultants that were on it, now you have a list of people that do business in the area.
Oliver: That’s a really good tip.
Andrew Greer: It’s the fastest way to cut through everything and get the best free. Quite literally.
Oliver: And you know the people that you’re talking to are people that have done it already, which is huge, and people that know that local area know that immediate market.
Andrew Greer: Yeah and if you type in Open DSD, it pops up number one search.
Oliver: Let’s touch a little more on the actually getting to the decision maker, right? Let’s say I live in Ocean Side, for example. Let’s say I wanted to do a deal in Ocean Side. I found a great property, and now I take it to the city. What happens there? How do I get to the person that is the person I really want to talk to?
Andrew Greer: The person you want to talk to 99% of the time, when you’re in the conceptual phase of a project, is the planning department and whoever is the head of that department for the area you’re in. Planning is kind of the gatekeeper for everyone. They know the community plan, they can guide you in the direction of, this is what’s allowed to be built here, this is what we are building here, so you know that you’re not going to run into that first level of resistance, because then there’s still the building department, there’s still the engineering department, essentially. They’re not going to be the people.
Oliver: So let me ask you this, is, then, step one to go to the planning department and run this idea by them before you even pass go?
Andrew Greer: Number one is doing that, so going in, finding out that it fits. That’s how you find out, Oh, I can put six on this lot. That’s how you find that information out.
Oliver: And what are some other good questions to ask? What sort of units are you guys looking for? Stuff like that.
Andrew Greer: You’ll ask them for their community plan.
Oliver: Community plan?
Andrew Greer: They might have a general plan, an exact community plan, but every planning department for the city goes in and votes in this neighborhood’s medium density, this neighborhood’s high density. This neighborhood has been this for a while. We want to switch that up, so we’re changed the zoning here, so if somebody comes in with a favorable product to be zoned there, it’s going to go a little smoother. You know, they want six units here, it used to only be two. Holy cow. I can go in and buy these units and I can maximize them now, and that’s what happened in Little Italy.
Oliver: In that scenario, is that something that would be pretty much a slam dunk for them because you know it’s got two on it, it’s got the potential of six. You also know that they want more higher-density stuff, so is that, at that point, a green light for you?
Andrew Greer: Yeah, that’s a path of least resistance. It’s something that we’re always looking for. If you can play to what they want and not encounter any extra resistance, because you’re gonna get resistance somewhere, the more friction I can remove up front by doing what they want, the better. And it’s definitely the path we choose to go most of the time now.
Oliver: Yeah. It’s the help me help you pitch.
Andrew Greer: Exactly. And you literally lay it out on the table for them that way.
Oliver: What about getting your foot in the door? What’s the move there, to get your foot in the door, because obviously I imagine you can’t just walk right in and talk to the head guy in charge?
Andrew Greer: No, the best way to get your foot in the door is to go the route of doing the research. You go in, you kind of toss it out there with the ideas, they give you and idea of what’s there. Go do your research, come back with good questions, but in between then, you need to hook yourself up with the right architect or civil engineer that’s going to help you on that inroad. They’re spending a lot more time with them, and they also speak the same language. They don’t speak entrepreneur, they don’t speak realtor. They speak, Our plan and our goal is this. And that’s what architects and even more so, civil engineers speak. So, getting to that influencer, I guess you would say, on your team, is huge. I’ve inserted myself in all of our projects, so I now have a relationship with the city where people won’t. The other thing I’ve learned, this is actually now that you bring it up, this has turned out amazing for me, and it was just by chance that I started doing it, I go to all my meetings where the engineer or the architect are called in, and I sit down and I stay involved in the conversation. There’s a lot of guys that just have their team do that. If it’s a face to a name and it changes the dynamic, and that was just the way I was doing it.
Oliver: Alright, cool. So that’s kind of the overarching strategy, but what about in terms of just the actual process of getting the permit? Take us through that.
Andrew Greer: You got through a process where you turn in the construction docs and they go into what’s called review cycles. You turn in all your sets of plans, they get routed to all the different departments, and this is something that I didn’t understand until I did it, but we came in last week, we gave them 12 sets of docs for our project. It was like $1300 in printing, full size plans, every single thing, studies, reports, all that information. You work with your consultants, obviously, to generate it, turn that in, it gets routed to all those departments. They have 30 days to respond, and then you get back a letter with all the questions about your plans on it. Everything that’s redlined, everything that comes back. What happens after that, is you get your comments back from all those departments, and it’s really overwhelming the first time. My first set of comments on a development, and this was a small house subdivision, 48 pages. And it’s bullet points of everything they want you to answer.
Oliver: 48 pages?
Andrew Greer: 48 pages about-
Oliver: How common is that?
Andrew Greer: It’s relatively common, because there’s lots of requests mixed in there. At the same time, there’s changes, and then there’s, what they call, significant issues or information, so they write you a six page letter, basically, at the beginning, kind of summarizing all the issues. But then your issue could be as simple as, Need to see door frame height, or it could be, significant issue, historical significant issue: you have issues with your drainage, and then you have to go through and go back through that process and start going over it, and get them back in.
Oliver: And so, from the time you’ve submitted to the time you get all that conditional stuff back and questions back, what is that timeline?
Andrew Greer: It’d be 30-35 days, usually.
Oliver: 30-35 days. And then, from there, how long do they give you to get them all the information they need?
Andrew Greer: You have, basically, as long as you need. I mean, we’ve gotten stuck in a cycle once where it took us four and a half months.
Oliver: But the ball stops moving until you provide everything.
Andrew Greer: The ball stops moving. Yeah, so you provide everything, and this is what throws everybody off, then they come back with more questions. And it’s going to be 20 pages at that point. You go through, you answer all those questions, then you go back in, then they can come back with more questions. There’s no certain number of reviews that you will go through. You just go through reviews until you’ve answered all their questions. And it doesn’t follow a logical path.
Oliver: What would you say the average amount of back and forths?
Andrew Greer: Three to four on a standard project.
Oliver: Three to four back and forths?
Andrew Greer: Yeah.
Oliver: And that generally takes about how long?
Andrew Greer: Takes about a year.
Oliver: Takes about a year.
Andrew Greer: Yeah, so that whole process can take 12 months, maybe 18 months, because you have the cycles, where it’s in for review, then you get it back and you have to go through all your consultants and get everyone lined up and get it all back in again. So, you could spend two months answering all the questions before you go back in. As it gets to the end, and the comment become fewer and fewer and fewer, it goes a lot quicker, but early on, you could have some major design questions, major layout questions that you have to answer that effect the rest of the project.
Oliver: And how does that process work, exactly? Is that all emailed back and forth, are you going back for meetings and re-presenting?
Andrew Greer: If you have what you consider a significant issue, where there’s a conflict, like we have one where we’re building a handicapped ramp off the side of our property. Logistically, we can’t build it in a safe way and we presented it to the city several times, and then we told them, We have no problem building this. You have to do a design variance on it, and you guys have to be fine carrying the liability on it. So, the handicapped ramp is 28 degrees. It’s like a skateboard ramp, but it kind of shows some of the process, where you run into an issue and you’re like, This doesn’t make sense. And working with our engineers.
Oliver: And then, so in a situation like that, which I imagine is somewhat of a roadblock, what happens then?
Andrew Greer: I request conflict resolution meetings a lot sooner, I think, than other people. If we’re going back and forth over email and I don’t see the tone of the conversation changing appropriately, I just get everybody in a room.
Oliver: Let’s talk about the things you need to get a permit. What are the things you submit, who’s on the team, who’s doing what? So, okay, so you’ve got your team together and then what does the package look like that you’re presenting?
Andrew Greer: The package, I wish I had one with me. It’s going to be all of their tactical drawings. When you imagine a 24 x 36 piece of paper, it’s going to show the site, all the elevations, elevations are looking from the North, East, South, and West, so it’ll be a page of each one of those or layered, depending upon how big the project is. Then it’s going to call up everything from are we changing the curb, where are we putting the numbers on the house, how’s this house being built. All the math for the actual structural will be in a booklet they create just for your property. This whole packet, in total, could be about 350 pages, and that’s all put together for the majority by those five technical consultants that you bring in. Yeah, it is a tedious, tedious project. You’ll want to get a rolling cart, because you’ll need to turn in 12 of those.
Oliver: And the 12 is for each one of the departments that needs to sign off on it?
Andrew Greer: Yeah, so it’s going to go environmental, fire, planning, might get a couple sets to planning, historical, engineering, streets, transportation, everyone. Everyone gets a copy, and as you go down the chain, they start falling off requesting copies, because different departments have signed off that they’re okay with it.
Oliver: Cool. So, we just went through the outline of the permitting process. Why don’t we talk about the actual plan process, how long that takes, costs, things like that?
Andrew Greer: Actually, creating the plans, you’re going to order the five different consultants, the architect, the civil engineer, landscape architect, and the structural engineer. Those are going to be your four real costs. Title 24 is going to come in there, but they’re going to be $500-800. They’re not going to blow the bank.
Oliver: They’re not breaking the bank, yeah.
Andrew Greer: Civil engineering, depending on the complexity of the project, could be $20000, it could go up as high as $100000, though, all depends on what you’re working with and how it’s laid out. An architect is going to cost you somewhere in the range of 15-25 depending upon what the project is. That’s if it’s a single family home. If you’re building out multiple homes, you could easily see a condo structure, four units, costing $80-90000.
Oliver: 80 to 90000?
Andrew Greer: Yeah. And that’s because, when you build condos, you have to carry a different type of insurance, the architect’s on the hook, they want to make sure it’s done. If we do condo maps, we like to get them re-reviewed and certified by an outside architect. There’s a waiver for everybody to protect us from any issues.
Oliver: Nice. Another good tip.
Andrew Greer: Yeah, and it’s worth it, because the amount of time it takes to respond to a lawsuit is worth as much as that one person to review it.
Oliver: Yeah, just avoid it.
Andrew Greer: Just even to respond.
Oliver: Yeah. Talking about architects and plans, do you notice any of a difference between buying pre-drawn, pre-turn key, ready to go ones versus custom, more involved plans in terms of both efficiency and what you prefer, and in terms of getting it approved?
Andrew Greer: I don’t do it. I refuse. Reason being, that architect is going to be the person that works with me and the city. If it’s a pre-approved, stamped, set plan, you don’t have that person on your team. You got it from them online, and then they’re just not there for you. If it’s a HUD build, you can do that, but that’s kind of a whole different concept. There’s approved plans for HUD housing that are approved everywhere.
Oliver: Ah, like universally approved.
Andrew Greer: Yeah, and you can use those. They’re not sexy and they’re primarily for communal housing and stuff like that, where they use HUD approved homes.
Oliver: Cookie cutter.
Andrew Greer: Yeah. I’ve dove into it a little, I haven’t done one yet, but I’m considering it just because of some of those efficiencies, but it just has to meet certain criteria, what the return is going to be on the product. So, if it doesn’t work, it doesn’t work.
Oliver: Yeah, it’s got to pencil.
Andrew Greer: Yeah.
Oliver: In terms of the differences between doing just room additions versus lot splits versus new builds.
Andrew Greer: Perfect. That’s a great question. Room additions are very easy. I mean, in the scheme of things, it’s ministerial, you’re adding it on to the house. So, you’re not going through the same engineering process, the same process with the city. You just have to make sure that you’re allowed to build that much square footage onto the house, stay within the rules of the existing zone, and it’s strictly a, This is what we’re building and how we’re building it, kind of permit.
Oliver: And I’d imagine that’s a lot shorter.
Andrew Greer: A lot.
Oliver: How does zoning play into this, and what are some strategies you have in terms of zoning challenges?
Andrew Greer: Yeah, so zoning and planning together, a lot of times, the way people think of zoning is more along the lines of what planning is. A lot of people think, Oh, the zoning for this area is x, y, z, but it’s actually what planning is put together in the community plan created by the zone. For zoning challenges, going through and trying to fix an issue or get different zoning, any time you’re trying to do that, it’s discretionary. That’s what you’re requesting. You’re saying, hey, I need the city to take its discretion and tell me if I can change this. The best way to get that done is to go out and do a study of the neighborhood, and you can do this with your eyes and a notepad. “I want to put this here. I’m going to go look around me and see if there’s any of those around me. And if they are, I’m going to note all of their locations, then I’m going to go pull their zoning. If everybody else is a single family, and I really think a 10-story tall hotel is going to work well, it’s not going to fly. But if there’s four other 10-story hotels, maybe it’s going to fly.
Oliver: You’ve probably got a shot.
Andrew Greer: Yeah.
Oliver: What about easements and setbacks?
Andrew Greer: So, setbacks, super easy to find. You can go into Open DSD, subpaths and it’ll tell you, based on what your address is, what zoning you have.
Oliver: And subpaths, just for those that don’t know, is just basically how far away the property can build from the lot lines.
Andrew Greer: Yeah, exactly, and you’ll notice when you look down streets, all the houses kind of sit on the same line, and then, when you walk down, you’ll notice they’re all kind of the same distance from the fences in most areas. Those are your subpaths.
Oliver: Same distance apart from one another.
Andrew Greer: And easements usually come up, nowadays, for drivers. That’s the number one thing that comes up for easements.
Oliver: So, when you say that, would you mean two houses on one lot that share a way in?
Andrew Greer: Yeah. (silence)
Oliver: Long story short, know the easements, take a good long hard look at them, and if it doesn’t make sense, just move on.
Andrew Greer: Yeah. Or start buying every house around it.
Oliver: Yeah. Yeah, that’s the other option. Overall, you also mentioned bonuses. Tell us a bit about what you mean by bonuses.
Andrew Greer: Yeah, so you can get affordability bonuses in the state of California. One bonus is that you can intensify the density of a property by one and a half times if you give an affordability bonus. That might be 5% low income or 10% very low income. There’s a bonus scale based on how many units you give on what you can do. But one of the biggest bonuses being used right now is removal of parking spots. So, a two bedroom apartment has to have two parking spots. If you have affordable units, you can reduce it to one. And there’s even scenarios where you can reduce it to half.
Oliver: What is a half parking spot?
Andrew Greer: It means that two units have one spot.
Oliver: Wow. It’s like a shared spot?
Andrew Greer: Yeah. Or it’s, I have 12 units and my building has six parking spots. So, you’ve got to figure out how that works. Next is autonomous cars are going to change how that works. The value of a parking spot is going to diminish. I think that going that direction now is going to be a real win for people. Obviously, it’s a bet, but I just don’t see people having cars.
Oliver: That’s some big time foresight.
Andrew Greer: Yeah, I see no reason for, and I also think that having the ability to rent out spots to autonomous cars, where they can charge or be serviced, is going to be another point.
Oliver: There you go. That’s some hyper advanced stuff right there. So, I just want to wrap up with one question that I like to ask people, and that’s really what’s one thing that you wish you knew when you started your first development deal?
Andrew Greer: I wish I had gone the route of paying a little more for hyper local vendors instead of saving a couple bucks for not being hyper local. Hyper local is incredibly important. Right now, I work with different consultants on different projects, even though they’re all going at the same time, just because they’re in different parts of town. And that has been the best relief of stress and pressure on us, because they just know the answers in that building department.
Oliver: Yeah, that’s a great piece of advice, because really, those hyper local people, they know the market, they know the city, they know the people, they know the zoning, they know what works, what doesn’t, they know the community plans, and that’s just a great way to kind of reposition yourself ahead of the game.
Andrew Greer: Yeah.
Oliver: So, great piece of advice. Had a really great time chatting with you today. I think there was a lot of really incredibly valuable pieces of information there. If you have any more questions for Andrew or want any more information, they can found you at Better Tomorrow Group, and HowtoFlipHousesOnline.com, and if you’d like, share the video, leave us a comment, tell us what you thought. You loved it, you hated it, and we look forward to seeing you on the next one. Now, you’re in the know.
“If you can play to what the city wants and not encounter any extra resistance because you’re going to get resistance somewhere the more friction I can remove up front by doing what they want, the better.”
“I go to all of my meetings where the engineer or the architect are called in … and I stay involved in the conversation. It puts a face to a name, and it changes the dynamic.”
“If we do condo maps, we like to get them re-reviewed and certified by an outside architect as a waiver for everybody to protect us from any issues.”
“The best way to get discretionary approval is to go out and do a study of the neighborhood, and you can do that with your eyes and a notepad.”
“One bonus is that you can intensify the density of a property by one-and-a-half times if you give an affordability bonus. That might be 5% low income or 10% very low income.”
“Hiring hyperlocal vendors has been the best relief of stress and pressure on us because they just know the answers in that building department.”
- Permitting Process
- Better Tomorrow Group
- Building department
- Open DSD
- Community plan
- San Diego County
- Handicapped ramp
- Marquis Marriott
- In for review
- Thomas Strafford Investments
- St. Archer Blonde
- Stone IPA
Connect with Andrew Greer
Connect with Oliver
Thanks For watching!
Want more Oliver Graf real estate tips? Watch these recent episodes:
How to Crash Proof Your Real Estate Business with Mike Ferry: https://youtu.be/Utn9ttIemjM
Leverage Your Title Rep to Grow Your Real Estate Business: https://youtu.be/paPmuQp6sAw
If you’d like to see all the episodes go to: www.OliverGraf.tv/FoundersClub
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