Strategic Real Estate Investing: Brandon’s Future Vision

In a recent REsimpli podcast episode, Brandon and REsimpli founder and CEO Sharad Mehta discussed his real estate investing strategy and future aspirations. This fascinating conversation included company growth size, personal reflection, and risk management.

Brandon started his presentation by highlighting the need of many exit routes for the reduction of actual real estate investment risk. Speaking on land syndication—land banking—he discussed working with investors to hold and sell land as its value rises. He pointed out how current residences provide builders foundation for further sales lot expansion. Brandon also underlined the need for employing equity, financing house development, sales should first buyers back out, and renting properties to retain revenue.

Brandon also stresses financial control including debt. To move beyond erratic markets and financial restrictions, he likes private financing with high rates and long-term loans. His approach to risk management is based on this one and the capacity to keep assets during recessionary periods and preserve them for value rise. While having end purchasers lined up before development projects reduces market and timing risks, having strong margins protects against value losses.

Brandon made clear his intentions for business growth. In his approach to professional general construction, deal-finding and vertical integration are underlined. This optimizes development and streamlines processes. Brandon plans to create $100 million in projects yearly, even though his main priorities are asset preservation and big projects. He aims to increase activities and acquire more developers significant property rights.

Especially after conquering self-doubt and reaching financial independence, Brandon felt happy with his direction. Family vacations away from the norm and cooking particularly steaks are something he appreciates. Brandon uses several strategies to improve mental and physical performance and initially gives fitness top attention.

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Transcript:

Brandon Cobb  0:00  

Killer has the Forest Gump thing for sure, because, I mean, I’ve been Zoom Room. Everyone’s zoom rooms multiple times a day. It’s really, really odd, yeah, so sorry about all the trouble.

Sharad Mehta  0:14  

No waste, no waste. All right, give me one second. I cool. All right, is there anything in particular that you want to talk about in the podcast?

Brandon Cobb  0:29  

You know, the six strategies we’re using to mitigate risk that’s gone over really well. So that’s, that’s kind of a key point. We really transitioned our investment philosophy and strategies after interest rates went up. And so these, these key are something that we’re really hitting on. And so we can kind of probably go back and forth and talk about each one that’s been really a lot of podcast interviewers have really enjoyed that particular topic. We’ve also got the follow the money strategy, where we talk about which areas to invest in, which asset classes to invest in. Why? And so that’s another thing, but those two, or

Sharad Mehta  1:04  

you can talk about the the six steps to, what do you call it? Six steps to, like, mitigate your risk.

Brandon Cobb  1:15  

Yeah, six risk mitigation steps, yeah,

Sharad Mehta  1:17  

okay, yeah. We can. We can go over that. Cool. All right, cool. All right, let’s go. 123, hey guys. This is Sharad host of sorry, let me just make sure. Oh yeah, you can hear me good, right? I just want to make

sure you sound loud and clear, man. Thank you. Tom Perfect. Okay, cool, fine. Two, three,

hey guys. This is Sharad with REsimpli, host of the REsimpli podcast, bringing you a very special guest, Brandon Cobb, on this podcast. Brandon, welcome to the podcast. We’re I’m so happy we’re finally able to do this after all the Zoom troubles that we’ve had.

Brandon Cobb  1:55  

Yeah, it’s been some technical difficulties. I appreciate your patience, but it’s great to see again, and it’s a pleasure being on the show. Thanks for having me Absolutely,

Sharad Mehta  2:04  

man. Thank you so much for being on the show. Yeah, before you know, we get into the meat and potatoes of what amazing things you have to talk about, just tell us a little bit about your background. Where do you live and kind of, what do you do in the real estate industry?

Brandon Cobb  2:20  

Yeah. So I’m from Nashville, Tennessee. It’s where I currently live, and my investing journey began with these words from my former boss, Brandon, we no longer think you’re a fit for us. I hope you learned something from this. You’re fired, and that was the day that I learned I wasn’t gonna have a job. I was shocked. I had no clue why this was happening. I had these amazing Rookie of the Year sales awards six months prior. My boss was somebody that I aspired to be. Man I looked up to this man. He was like a father figure to me. I wanted his job, you know, I told him that, and it was one of those positions where I put my blood, sweat tears into it, right? You know, medical device cells was what I was doing. So I was the guy going in, in surgeries if you had a sports related injury, usually, like an ACL tear, meniscus tear in the knee, rotator cuff tear, labral tear in the shoulder. And we’d go in and we’d put my biologics, my sports tissue, or my implants in and I loved what I did. I had this amazing job where I was rubbing shoulders with orthopedic surgeons every single day. I was training hospital stuff on how to use my product. I was helping patients the intrinsic satisfaction of making a difference in somebody’s life, giving them mobility, giving them the ability to get back on the field. I meant a lot to me, and so I felt like I was being completely abandoned when my boss told me that I was fired. That was the day that I learned something. I learned that it doesn’t matter how loyal you are to a corporation or a company, many hours, how much blood, sweat and tears you put into it, at the end of the day, the company has to do what’s best for the company, and for whatever reason, that was letting me go. And so that day, I learned that nobody was going to look out for my financial well being, but me, you know, I’d played it safe. I’d followed in my parents footsteps, like any young guy in his 20s, all you want to do when you get a job is you want to make your parents proud, right? I mean, that’s, that’s the initial you want them to go, Hey, look at you. Congratulations that. You know, I’m proud of you. So I was chasing this, these affirmations that I really wanted from my parents. I really wanted to please them, and so I did what everybody else did. I started a 401, K. Started a HSA, a health savings account, a Roth, I mean, all of my retirement accounts trying to set those up. And just like my parents, I started putting money into it. I was maximizing them out. I was basically. Following in their footsteps. And boy, did things change. When I got fired from my job, I gave myself a six month ultimatum. I said, If I don’t make any money in the next six months, I could just go back and I can, I can get another job. And so there was a lot of big limiting beliefs that I had when I was first trying to get my business on its feet. I grew up in an environment where, I mean, my parents were tight, man, when the iPhone first came out, I didn’t buy a single one of those 99 cent apps, because my dad was like, you don’t need that. You know, you don’t. You don’t need to spend money, you know, save your money, you know, don’t do that. And as an entrepreneur, trying to get your business on its feet, that’s the exact opposite thinking you’re going to have to invest in yourself, you’re going to have to invest in your business in order to get that done. So I really struggled with what I had learned growing up. All of the same principles and the skill sets that my parents taught me, or what they thought I needed to be successful, were not what was going into the real estate world. And so after freeing myself from some of those limiting beliefs that I had and actually starting to invest in the business, it was okay to spend money on yourself, on educational products. It was okay to join mastermind programs, my dad was always very skeptical of God, you know, don’t don’t trust this person. Don’t trust this person. Everything was a scam to him everything. So had a lot of hesitation on investing in the coaching and the mentorship programs, but when I finally figured it out and I freed myself from that thinking, that’s when things really started to take off for me. So if you fast forward today, we’ve probably got 650 units in the pipeline. You know our specialty is entry level housing products, affordable housing. And when I say affordable housing, I’m not talking about Section eight or government housing. I’m talking about that entry level housing product, that first time homebuyer, that most likely millennial right now who’s trying to get in a home they can afford about 25 2600 bucks per month. They can’t find anything. And so that’s where we invest. We go in and we will put land under contract, and we turn farmland into new, first time homebuyer housing communities. That’s what we do.

Sharad Mehta  7:13  

Oh, awesome, man. Congratulations on all the success you’ve had. Sometime, you know, the worst thing that happens to us, ends up being the biggest blessing in our life. And I’m so happy to see that you’ve done this devastating you know, thing that happened, you letting go, you will let go from this job and turning into what you’ve turned it into. So amazing. Congratulations. So when you found out that you no longer had a job. How did you get into real estate? Did you had you always thought about real estate? Was that something in the back of your mind? Or you gave yourself six months and you went online, read a couple of books, and then did some research and then decided to go into real estate?

Brandon Cobb  7:59  

Yeah, when I got fired. It’s kind of funny. I didn’t know what to do. I started watching Shark Tank four or five hours a day, kind of looking for business ideas, because I was very lucky to have saved up. I had a nest egg so I didn’t live downtown, where all the other youngins my age were living and partying and having fun. I had my monthly rent, or my annual rent, was probably about 114 of what I made, and so I didn’t have any bad debt either. I had put myself in a very good position, and I started doing everything. So let’s just see what sticks so big Tony Robbins fan. Thought I wanted to be the next Tony Robbins. I started a life coaching business, started an online motivational blog, thinking, I really like motivational stuff. This will be fun, right? You know, chase your passion, they tell you. And then I started an online course on how to break into medical device sales. I said, Well, I’ve got some experience doing this. I’ve had a lot of people reach out to me about getting into this industry. I said, maybe there’s a market here. And then I was also doing real estate. And I went out and I started hammering those we buy houses, signs up on telephone poles, and probably put three or 4000 of those things up. I’d get phone calls from the codes department the police threatening me to go to jail. Like I was scared. I was like, Oh my God, I’ll go take them down. I’m so sorry not really knowing what I was getting into but I ended up getting a phone call from a gentleman one of those signs down in Shelbyville, Tennessee. It was a little bitty home that he was facing foreclosure on. He needed a quick sell, and the numbers, from what I could tell, looked pretty good. I called up my, you know, partner at the time. I had been going to all these real estate meetups. I was looking for a mentor. I was looking for someone that knew what to do, and this guy looked like he fit the profile, and he was looking to get a business up and running in the Nashville, Tennessee area. And so we decided to partner on this deal. I went in and I sold all of my retirement accounts, and I bought this right. Pretty and for an hour and 20 minutes there and back every day, I became a general contractor, managing subcontractors. Just to give you an idea, I don’t know which way to swing a hammer with no construction background whatsoever, just a guy with a lot of time on his hands and a big dream, and ended up flipping that house. I think we made $30,000 on that house, and I beat my ultimatum to make money as an entrepreneur by eight days that December. That’s it. From that point on, I said, Well, made some money. I guess I gotta keep going. And so as soon as the money became real for real estate, I hung up my aunt, I closed all the other businesses that I would consider failures, and I just focused on real estate. That’s

Sharad Mehta  10:53  

amazing, man. So you bought you flip your first property within six months, made 30,000 and then what happens after that? I mean, you’ve grown your business substantially. Like, how did the transition happen?

Brandon Cobb  11:09  

Yeah, so the next few years were tough. I was not paying myself a salary. I had about $111,000 in savings, and I was wearing all the hats I learned how much a young, motivated man can work, waking up at 5am in the morning, going out to the job sites, answering all the phones from the marketing we were doing, going on all the sales calls, managing all the marketing, trying to learn everything, all the new stuff I needed to the bookkeeping at the same time, when he took we took that $30,000 and we literally just threw it in the marketing and if you’ve ever seen the movie Batman, where the Joker slides down the big pile of money, takes the gasoline, tosses it on it, and lights the whole pile of money on fire. That’s what we were doing with marketing dollars. And so the phones were blowing up. But I learned very quickly that wearing all the hats I did this for about a year, I went from excitement to I don’t want to do this anymore. This is horrible. Within two years, not only had I had sold all my retirement accounts to fund these deals, but I’d burn through the additional $111,000 of cash, and I had racked up $98,000 of credit card debt. I was wondering what I was going to do. I wasn’t going to be able to close my flips in time. I had hired a team, a little team at this point, and I felt like I was out of options. That was a pretty dark moment. I was so stressed out. I was getting plenty of sleep, but my body would mentally shut down during the day. I don’t know if anybody listening has ever had a day where it was so stressful that your body literally shut down and you had to take a nap. That was happening to me almost daily. I was like, What? What what is going on? Why am I so tired? The mental stress from it was literally causing my body to shut down. And so we we made some adjustments. You know that the credit cards didn’t get paid for a while. Some people didn’t get paid for the while. It looks like all the things that I was scared of, all of the thoughts that mom employees had about me, that contractors had about me, had this reputation. I felt like I had to live up to, like, don’t let people down. Brandon, don’t let people down. And the reality was it wasn’t as bad as I thought it was going to be. And so everyone ended up getting paid. We closed on and business kept trucking, and so we grew that business up to doing about 3540 home flips per year. We saw the writing on the wall to pivot into new construction when we had the opportunity to purchase a home that had some fire damage, and we were able to buy it for less than what the land was worth. And we said, Well, man, the first the first floor and the foundation are fine. You know that second floor? Yeah, we’re gonna have to cut out all the black stuff, all the char and reframe. And so that’s what we did. We hired we got the city involved. We hired a structural engineer. We rebuilt that home, and the light bulb for us went off when we made three times as much money on this new build as we had one of these full gut renovation projects around the road. And when I say full gut renovation, I mean imagine tearing a house down to the studs there, left, right. That House took us six months to renovate and flip that new build took us about five when we made three times as much money, and at that point, we saw the writing on the wall to just completely pivot and going into new construction. So we had built that up to doing about, you know, 2530 new builds per year, and we ran out of all our own money. Funny, how that happens. Real estate has an act to really suck things up. Right? And so at that point, hBg capital was born, you know, we had a need to bring in outside investors into our deals and let them get a piece of the pie. And we were able to pull all of our own money out of the deals and replace it with investor funds. We had the liquidity to then focus on the business and grow the business. And so since then, we’ve learned that, hey, if you’re going to build 25 homes all over the place, you might as well build them in the same spot. It makes sense you get one location or two or three locations to go to per day, instead of 20 that are all spread out everywhere, right? And so when we did that, we started managing things a lot more efficiently. Our team was able to be more efficient. We got better bulk pricing on all of our materials. We got better contractor pricing, because they’re able to show up to these same developments every single day and get that bulk discount from there, when you can keep guys working in an area for years, you’re going to get better pricing. They’re going to want to work with you. And so that’s what guiding us into doing these, you know, single family housing developments that are focused on entry level housing. So we do a lot where we can, we’ve got three different exit strategies. And, you know, one of those exit strategies is building houses. The other two have to do with getting the land entitled and rezoned, and then we can sell off that land, or we can actually develop that land and sell it to a builder who can build on it. So we’ve got those three different exit strategies that allow us to pivot into whatever’s best. That’s

Sharad Mehta  16:33  

awesome, man. That’s incredible. I mean, I’ve always wanted to do new construction, but honestly, I’m like, scared to get into that. And part of that is like some factors that are out of your control, like higher interest rate environment that we’re in right now, right how do you how do you manage that? Because in a wholesaling a house, it’s a quick transaction. You get a property in the contract. You don’t even have to close on if something changes. You can just back out of the contract. It sucks, but you know, you’re not invested, like, hundreds of 1000s of dollars into it. How do you mitigate some of the risk with the macro economic environment?

Brandon Cobb  17:13  

Yeah, there are many different ways that you can mitigate the risk, right? So there’s three big things we’re focused on. Number one is capital preservation. We want to invest in things that will never go to zero, like individual stocks. We don’t do that. That’s why we like real estate. It’s always held its value. It’s always gone up. Number two is return of capital. We want to make sure that we can actually get it back right, because if it’s locked up for 2030, years, what’s the point? And number three is return on you know, how much is your money going to go out and make it? So those are the three things that we focus on. And so, for example, right now, we’ve got a 75 home development, and it’s already pre sold, so it’s not even going to go to market. We’ve already got a builder who’s buying the lots from us when it’s done, and they’ve got a significant earnest money deposit in the deal, so there’s no time risk there. We own that development outright with our investors. There’s no monthly interest payments. There’s no due date. They can get called with the bank. I don’t care what interest rates do, because I don’t have it. We have a fixed rate of return that we have with our investor partners in that deal. We own it outright with them. In the worst case scenario, something happens. We sit on it. This same development we actually bought in September of 2022 worst possible time to buy a pizza land that you’re planning on developing, because you’ve everybody stopped buying every froze. Interest rates rose faster than ever had in history, faster than the last, you know, 40 years. And so what was the worst case scenario there? We just hung on to it for a year and a half with our investor partners, no monthly payments. Had we had a bank loan out on that bank would have definitely called it due, or we would have to make the monthly payments that would have put stress on the business, so we remove the risk by introducing investors into the deal and not having bank risk. Now let’s say that we’re building some houses and we are going to get some bank debt out. Typically, when we’re raising funds from our capital and partners, we’re raising for a few things. One is the down payment for the debt. Two is liquidity, extra liquidity on the side, purchase materials, or if you go over budget, three is an interest escrow account. So however much time you think you’re going to need the money, double that and raise that amount of money. And then we also have some money set aside for, you know, GC fees or anything else that might come up. So that gives us a lot of liquidity to be able to weather whatever storm. So if you can do that, if you can have plenty of liquidity, you’re going to be fine. A lot of the homes that we built in 20, you know, 23 you know, like we’re just now getting the end of selling them, that would have been a problem if we did not have the capital reserve. On hand, but we had so interest rates doubled, holding lines doubled. A lot of people had some foreclosures happened because they ran out of money. But as a developer, you want to stay liquid. You always want to have money in the bank, and so if you’re able to mitigate that risk, you’re, I mean, you’re set. And then obviously the the next risk is going to be your your price, right? So if you put something on the market, you know, we had some homes that, you know, went from $575,000 down to $475,000 it’s a pretty steep price drop, but, yeah, we still didn’t lose money on it, because we had so much equity built in those deals. Our loans on each of those was 375, each from the bank. And so we had plenty of equity in there, baked into the deal where we had a lot of downside protection built in. And so downside protection, liquidity, the ability to control, you know, the debt, these are all ways that we’re mitigating things. And I can talk more. We’ve got, we got six main strategies that we kind of we started implementing after interest rates rose. And we can get into

Sharad Mehta  21:07  

that if you want. Yeah, I would love to hear that and before, sure. So before we get into that, just quick question on your capital partners, are they equity partners, or are they lenders on the deal?

Brandon Cobb  21:19  

So they’re equity partners. We own the deals outright with our investors. Now they could be equity partners, or we could set up a debt fund where, you know they’re they’re the lenders on the deal as well. So there’s two different ways of doing it, but the whole goal is to mitigate risk, not only for ourselves, but our investor partners as well. Okay,

Sharad Mehta  21:38  

so what are the six strategies that you have, that you’re implementing in your business

Brandon Cobb  21:42  

right now? Yeah, I would love to get your thoughts, and maybe we can kind of ping pong this back and forth, sure, but the first one is to have multiple exit strategies. You know, we talk about this a lot, no matter what you’re investing in. Very important, have multiple exit strategies. So what does that look like for us? There’s four that we focus on when we have this again piece of land that we’ve gone and we’ve put under contract, we do our value add strategy before we buy the land. So most people like, when you fix buy a house, you’re typically buying it, you fix it up, and after you fix it up, you have forced appreciated it, and then you can sell it like there’s a strategy there where you are able to control the value of it. Same thing, multifamily. You go in, you renovate the units, you increase the rents, you lower expenses. This all increases the net operating income, which forks appreciates the value of the property. We go in and we take farmland and we turn it into new housing communities, and we do that via a rezone and entitlement process with the city. We go through them and get all the approvals in place, and once those approvals are in place, that land is worth so much more money, when you can put 50, 100 200 homes on it, then it’s worth if it just as a farm or a house with a bunch of acreage. And so afterwards, we buy it, exit strategy number one. So we syndicate funds with our investors, we just crowdfund together, and we own it, and we land bank it for a year or two, and then we sell it if it’s in the path of progress, which a lot of times, it’s not even in the path of progress. It’s in progress like there’s literally development all around it. We’ll just hang on to it, to all those developments sell, and we know the value is going to appreciate even more, and we’ll just sell it with our investor partners. That’s exit strategy number one. Exit strategy number two is we’ll get a builder involved, and this is typically a DR Horton or a Lennar, and they’ll say, hey, I want to buy these lots from you for $90,000 per lot. And we run the numbers and go, Oh, that’s a really good deal. And so we’ll develop the lots for the builder, put the roads in, with the water, with the sewer, the utilities, we’ll get it ready for that builder to start putting homes on it, and then we’ll sell them to lots. That’s exit strategy number two. Number three is say that builder backs out for whatever reasons. We’ve got this piece of land that we own outright. We force appreciated it through the rezone. We force appreciated it again through adding all the roads, utilities and everything. We’ve got a piece of land with a ton of equity, if we have to, we can now go get debt and actually build houses and sell the houses. And so that’s exit strategy number three. And then the fourth exit strategy is, if we build these houses and we got to hang on to them, we can rent them out. So that’s an example of having four different exit strategies built into a deal. Yeah,

Sharad Mehta  24:44  

I love that. Absolutely. 100% agree with that. So that’s your step one,

Brandon Cobb  24:49  

right? Step one. Step two is we kind of talked about this a little bit. You need to be able to control the debt. I do not have any monthly interest payments on. Any deal right now, it’s all deals we own out right with our investor partners, or it’s private debt. In other words, we’ll tell the investors, hey, we can give you an interest rate that’s much higher than what the bank’s paying, but there’s not going to be any monthly interest payments until it sells. This prevents us from getting into a cash crunch. It allows us to run our business, and the investors love it, because they get very high, healthy, double digit returns on the deal. So having that ability to control the debt is really key. If we do go out to like a lender, like if it’s a bank or somebody else, we want to get three year loans. We want to stay away from these 12 month loans, any any deadline where it can be 12 months or less, like three years, gives you plenty of time to kind of ride something out in the event that something happens, and that gives us time to be able to perform and do something about it, so you want to be able to control the debt. And the third risk mitigation strategy, Yep, sorry, just

Sharad Mehta  25:55  

really quick on that. Just for context, how much are you paying your private lenders in terms of interest rate.

Brandon Cobb  26:04  

Yeah. So if we do a debt deal with our investors anywhere between 12 and 14% it seems pretty good equity deal, then we’re doing 18%

Sharad Mehta  26:15  

so 18% of the profit, or 18% preferred return. 18%

Brandon Cobb  26:23  

preferred return, if it’s an equity type of deal correct,

Sharad Mehta  26:28  

got it, and then the profits are split among investors.

Brandon Cobb  26:33  

So we do an 18% pref that’s just what’s worked for us in the past. So we have a waterfall structure. And for those listening they don’t know what a waterfall is. It’s when the home sell or the land sales, and money goes into the bank account. That money goes 100% to the investors until they get their original principal investment back, plus an 18% preferred return. And

Sharad Mehta  26:59  

once that’s happened,

Brandon Cobb  27:00  

I’m sorry, 18% annual. 18% annualized, yes. And then once that’s been paid, we profit on the remaining homes and remaining lots.

Sharad Mehta  27:10  

That’s pretty good. Yeah, sorry, step three. Step

Brandon Cobb  27:14  

three is, we’ve kind of talked about this, but the ability to hold so say something happens, you want to be able to hold that asset. So like I was telling you earlier, we bought that piece of land that we’re developing right now, doing 75 homes for another builder on we bought it in September 2022 with our investor partners, the market did what it hadn’t done in a long time. It turned but we had the ability to hang on to it. Nobody was calling the note, do we owned it outright with our partners, so having the ability to hold that assets very important. And the fourth risk mitigation strategy we’ve kind of talked about this is the forced asset appreciation. So we’ve kind of already covered this. You need something in place to be able to force appreciate the value of that asset. One thing I love about what we do is, you know, we used to fix and flip houses, and we used to have this big marketing machine. We’re spending $40,000 a month on marketing. We’re getting all these leads coming in, and we had to, like, sort through them. We were getting, I don’t even know how many calls a year. It was a lot. We probably talked to 35 people a year, because we know what we’re going after we have a very focused strategy. We know which parcels of land we want, and we have such a compelling value proposition when we can go to someone who has, you know, piece of land and say, Hey, your land’s worth four or $500,000 if we offered you 1.2 million for it, would you be interested? They’re going to be like, Well, yeah, how are you going to do that? You know, how are you how are you going to pay me double what I know it’s worth? And so it becomes a very easy conversation to have, but my offer on 1.2 but it’s going to be worth 2 million when I’m done with it, so I can force appreciate that asset before I buy it. It’s like being able to buy the house flip after you’ve renovated everything and the values there. So we really like that. That’s our fourth risk mitigation strategy. The fifth one is having the end buyer lined up. So one of the biggest risks is market risk, time risk, and the longer a product sits out there on the market, the more risk it incurs. And so a lot of times, while we spend this year, year and a half, doing the the the rezone process, doing the entitlement process with the city, we have time to go and line up a developer buy it, or we have time to line up a builder to go and buy it, contract in place. And so these these lots, if we develop and sell the lots, we can develop and can sell them off to a builder, they never go to market. Same thing with the homes, like we’ve we’ve sold some stuff to build the rent funds before, and so being able to build something and have it immediately sell, that’s huge. Again, you’re eliminating the time risk. So having that bin buyer. Line up very good risk mitigation strategy. And then finally, Number Six, downside protection. You want to make sure you’ve got plenty of downside protection. A lot of these Guinea deals here are, they’re causing a lot of pain. A lot of the people that took out bridge debt on, you know, multifamily and commercial over the past several years, they’re they’re having to file, they’re having to hand the keys back over to the lender to the building. It’s a tough time right now because interest rates went up and it chopped the value of these buildings by 20, 30% I mean, it’s a that’s a huge fall in value. They didn’t have that kind of downside protection underwritten for us. For example, I’m going to go back to the 75 home development that we’re doing. We bought the lots for around, I should say pads, because they’re not developed. But we first bought this, we paid about nine, I want to say it was $9,000 per pad. And so there’s 75 of them. Our development costs are right at about $52,000 per pad. So we’re all in for somewhere around 6061, 62 with costs or selling them under contract for $85,000 per finished law. And so we look at the margins on that the value of the lots would have to go from 85,000 down to 6061, for us just to break even, not even lose money. That’s a 25% reduction in value, right? So we could stomach a 25% hit and be fine. And again, we don’t have to sell. We have the ability to hang on to this and hold it and write out whatever has to happen. And so that’s an example of building in downside protection into your deals you want to de

Sharad Mehta  31:58  

Yeah, that’s amazing, man. I wrote down all six of them, and it’s very interesting, kind of, you know, going back to earlier in the show, you mentioned when you had your full time job, you know, how you were, like, conservative with finances, putting money away in 401, K, always making sure that everything was, like, protected. It kind of seems like your investment strategy is influenced from that, also, which I love. I mean, I think it’s absolutely brilliant for your investor, for your money partners, you know, you have so many checks and balances to make sure that they’re not losing money at all on any deal. So, yeah, I absolutely love that. And thank you for sharing this. What? What do you see your business doing? Like, where do you see your business going in next? You know, 235, years? Like, in terms of where the market is, what are your growth plans? Oh,

Brandon Cobb  32:52  

it’s, it’s extremely scalable. So we’ve got a very clear blueprint to do in $100 million of development per year. I mean, it’s, it’s clear as day, and it starts with D, vertically integrating. PD, vertical integration is this fancy word a lot of people throw around it means, hey, look, all of our own businesses are in house, and it’s streamlined. And that’s great to a certain point, what got us to doing $20 million of development is not what’s going to get us to doing $100 billion of development. And so we realized that the biggest Hoke hold in our business is our general contracting business. We brought that in house initially because, again, we were risk averse. We’d heard horror stories of bad contractors. We’d actually hired bad contractors. We wanted to make sure we could control timelines and mitigate risk, and we felt bringing that in house was the way to do that. Fast forward. Now, in order for us to grow that GC business, also has to grow and I see what kind of huge company that looks like, and I don’t want to grow that business because we’re doing a I would call them a plus opportunities. Now we can attract a plus talent and a plus partners. So, you know, for example, we’ve got a partnership with a, you know, company that is able to do all the operations, to develop the land. They’ve got the machines, they’ve got the equipment, you know, we sub it out to them and their turn key. We literally can just manage them and only them. And we’ve got the financial controls, like we control the money, and that gives us a level of comfortability that we did not have before. So for us, being able to get rid of the general contracting firm not only saves us a bunch of money on overhead, it frees up a ton of time for us to focus on our unique ability. What is our highest per dollar activity that we need to be focused on. It’s not general contracting. It’s finding deals and raising money and taking them through that process to force appreciate them. That is our highest and best use of time. And so by going to a world class builder, what we’ve learned is there’s guys out there that right. Only build for less than what we do, but they’re faster and they’re better at it, and they enjoy it. That’s their unique ability. So finding those strategic partners and bringing them into our business, that is what the future holds. And so you’re going to see us doing a lot more development, because we’ve got these great operators that we could do these partnerships with in our local market. And so we’ve got a very clear path. You know, we want to be developing, you know, at minimum 500 lots at a time, you know, over the course of four or five different developments. And you know, hopefully building at least 50 units and holding those for a year. We want to introduce a construction element. We still want to build, but we want to build, but we want to build and hold more assets at a time, and then anything with we run out of money to do the land development piece or the build piece, and we’ve still got these, these lands. We want to be assigning at least 1000 units per year of these paper land deals that we take all the way through to other developers that want to take it from there.

Sharad Mehta  36:02  

That’s amazing, man. Yeah, I, you know what I absolutely love is like, you know what your the one thing is like, what your unique ability is, and rather than trying to do 10 different things, you’re just doubling down on where you add the most value to your business and leave a little bit money on the table for other guys to come in what they’re absolutely best at, and then just it creates a world class product. So I love that. Yeah, yep, you

Brandon Cobb  36:31  

hit it on the head. Yeah,

Sharad Mehta  36:32  

cool, man. Oh, this has been absolutely incredible. Before we go into the next segment of our podcast, I want to ask you, what do your parents think of what you’re doing now.

Brandon Cobb  36:42  

Oh, they’re so proud of me. It’s funny. Real estate is this amazing vehicle when it’s very

Sharad Mehta  36:48  

relatable investment, right? It’s not like crypto, where half of the people don’t understand what the heck it is. So yeah, just yeah,

Brandon Cobb  36:57  

very easy. Everybody lives in house, right? They get the value. It’s easy to understand. But, you know, real estate really enabled me to let go of needing, you know, my parents are very proud of me, and I’d put a level of pressure that I’d imagined, a level of pressure that I thought was there from them, that really wasn’t. But, you know, at the beginning stages, you know, I felt like a fraud just calling myself a business owner, like I didn’t feel like I was a leader, you know, because I was learning everything. I was very insecure about hiring people and, you know, because I’d never done those things before. And so I kind of just felt like a fraud early on in my business career, but after achieving the level of success that I’ve achieved, you know, making more money than I’ve ever made in any job. You know, I’ve made more money in my like, fourth year of real estate than I’d ever made of all the money I’ve made, like, combined and and since I’d started a corporate job in like one year, there’s something powerful about building an undeniable stack of proof that you are who you say you are. And so I was outworking myself doubt. And so being able to look back and see what I achieved, I no longer needed admiration from, you know, like my dad, I no longer needed them to tell me, like, hey, you know, you’ve done it. You know, good job. I was free of that. You could look in the mirror and just be proud of who I was as a person. The only measuring stick that I needed at that point was like my own measuring stick, and it took me a really long time to figure that out. When real estate was a tool, it gave me the freedom, not only the external freedom, of being able to do the things that I want when I want. You know, I travel six weeks out of the year now, and I it’s a lot like I take a lot of trips, and I love that. It’s a very work, hard, work, hard, play, hard mentality. And I get to do these amazing trips. Every year. I do a mom and son trip. Every year my mom’s history teacher, I take her somewhere she’s never been before. We’re going to, I think Boston this year, to do the American trail. I go on a sibling trip with my brother and sister. I take them every year. We go knock out something on their bucket list. I do a father son trip every single year. And these are what I want to do with my life, like my why is creating unforgettable experiences with with those that I love and so externally, real estate has been a tool to build that and do that, but it’s also been an internal tool where it’s released a lot of the internal pressures that I’ve put on myself. I’ve stopped caring about what other people think. You know, I’ve kind of got that release from my mom and dad. I know that they’re proud of me. I don’t I don’t need them constantly. You know, tell me that anymore, and it’s just freeing to know that you know you don’t have to care what other people think anymore. Yeah,

Sharad Mehta  39:49  

absolutely, man, yeah, no, your parents should be very, very proud of all the amazing success you’ve had. Cool Brandon, this has been incredible, right? The next segment of our. Pockets. I want to ask a couple of questions, what do you do for fun?

Brandon Cobb  40:04  

So I am huge steak enthusiast. I love cooking. It’s how I turn my brain off at night. I love cooking for my wife. I import my steaks from Japan, Australia. And believe me, when you come over to my house and you know I’m cooking steak for dinner, everybody starts talking about it. That was something I really wanted to build. I wanted food as a tool to bring people closer together. And I’m working on being that guy where I have my, you know, kids grow up and they’re like teenagers, and they don’t want to hang out with me, but if they know that dad’s cooking, the whole neighborhood wants to cook dinner. So I love cooking really nice wagyu steak, and I’ll smoke it. I’ll sous vide it. I’ve got all these unique ways to cook it. That’s what I really love doing. Number two, I’m a travel junkie, like I said, I think about six weeks off per year, and I travel all over the world, all over the United States, nowhere is off limits. And so for that, that’s really cool. And then I build in these unique, unforgettable experiences with those that I love. That’s, that’s, I’m always working on something like that for one of my close friends or one of my members of my family. And that’s, you know, that’s kind of it. I work out a lot, too. I’m a bio hacking junkie. I am, you know, I’m in pretty darn good shape. I obsess over my health. Have like a cold plunge in my garage. I get my blood drawn every six months to see what my biomarkers are. I measure my sleep. So I’m really into health and fitness on how to optimize my mental performance, optimize my mental clarity and optimize my energy levels. I’m always trying to figure out probably just how to build an extraordinary life. Cool,

Sharad Mehta  41:44  

man, I might want to connect with you about coffee one of these days. That’s something I’m struggling with. Yeah, yeah. Thank you for sharing that. All right, I see you have some books on your shelf. What’s the most impactful book that you’ve ever read. It could be a business book or personal book or one of each

Brandon Cobb  42:06  

it’s gonna have to be Think and Grow Rich. That was the second self help book I ever read. I read that book when I was 23 years old and I was stuck at my life. I was new college graduate making $8 an hour at Ace Hardware. I thought everything happened to me. I was a victim. I couldn’t get a job. The economy hadn’t really bounced back yet from the oh eight collapse, and I just thought that life was just happening to me. That book really opened my eyes. It taught me that I’m not a victim, that I create my own realities, and that book sparked something in me that was lying dormant, and I’m so glad it did, because I would not be here today if I did not the kick in the butt that that book gave me.

Sharad Mehta  42:53  

Yeah, that’s an absolutely amazing book. All right. Final question, if you could spend a day with anyone, dead or alive. Who would you want to spend the day with and why?

Brandon Cobb  43:06  

Oh, man, spend the day with anybody dead or alive. You know, I’m a big Tony Robbins fan. I would have to say him. He’s I’ve got more Tony Robbins products. I’m probably at the top of the list on his his spin list. I love all of his content. He’s done a really good job of not only inspiring literally billions of people, but he lives it. And so I’d love to be able to just tag around for him with a day and just see how he spends his time, and you know, how he interacts with people,

Sharad Mehta  43:38  

cool, awesome, man. Yeah, I would love to, I’d love to spend some time with Tony Robbins, who Brandon. This has been absolutely incredible. Man, if someone listening to this wants to connect with you, learn more about your story, your journey, what’s the best way for them to do that? Yeah.

Brandon Cobb  43:52  

So if you’re somebody who’s interested in creating passive income from real estate, if you’re trying to build a legacy, if you’re trying to make an impact, and retire one day. And you think that adding these increase level housing developments is a good way to diversify your portfolio? Head on over to our website, net. That’s pronounced Harry bobgarry capital.net, somebody stole the.com so it is a.net but on that website, there’s a free ebook 100 questions business owners ask before investing. I wrote that ebook after I got a phone call one day from an investor who asked if I would help his friend out. His friend had lost all of his money on real estate investment, and he wanted some advice. It became very evident early on in this call that there’s not much he could do. He did not properly securitize the investment with the correct paperwork. He did not know how to do deal, how to do the due diligence on the operator. He didn’t know how to do the due diligence on the asset itself. He was green. Had he been able to ask the right. Questions. Questions are the key to unlock the answers we need to make more informed investment decisions. And so with the idea that, how could I prevent this from happening to just one other person, I wrote that ebook so it’s 100 questions business owners ask before investing. If you grab that ebook, you can literally just go down the list and ask, and that’ll that’ll help you make more informed investment decisions. So you can grab on our website, and then you, you know, we’ve got our own podcast, recession resistant real estate radio. You can listen to us there.

Sharad Mehta  45:31  

Oh, perfect. We’ll make sure we put link to that your website and the ebook on the show notes. Brandon, thank you so much for coming on the podcast. Man, it’s been absolutely incredible. Thank you so much for sharing all the wisdom and knowledge you’ve gained and your amazing success story. Thank you. Hey,

Brandon Cobb  45:47  

thank you for having me. You.