How to Become a Real Estate Developer (Simple Steps)

I mean you're 29 and you've done $30 million of development so far

What's up Wealth Matters Today

I've actually got somebody from our coaching program

Who's doing things that we dont usually teach too much

He's actually doing development

and he's doing it at 29 years old

with over $30 million dollars in apartments developed

His family actually built the number 1

rated resort in Oregon

which actually includes a golf course

so, i'm going to pick his brain today.

about developing amazing properties

because you guys know, I want to one day delevop

a golf course.

I got Dirk Vandervelde, whats up man

Hows it going Ryan, thanks for having me

Glad you came dude, this is exciting

to have a guy who's built a golf course on the show

well your family, youve been a part of it

you've seen it firsthand

Let's jump right into that

Yea, I didnt build it myself

but I watched my father and mother do it.

My father was a European tour player

Mother was a schoolteacher

Big dreamers, always big dreamers

We grew up in the Netherlands

Once my dad retired from the European tour

his next dream was to build his own golf course

In their fashion, a European player and a school teacher

who are big dreamers, they partnered up

with one of their best friends

and they built what is today actually

this year got voted the number 1 resort

in the Pacific Northwest

and whats that resort called?

its called Tetherow Resort

so, they built the actual course on there

the resort itself, it's mainly just hotels or do people live there?

Yea, they live there. Its a beautiful golf course

You'd love it. Scottish link style

Dave Mclay Kidd, he designed it

It's a membership base, people live there

it's on a 720 acre piece of property

there's members that live there year round

and there's 50 hotel rooms

boutique beautiful hotels, restaurants, rec center

as well as vacation rentals

How are the economics of all that

because like you said, your dad is a dreamer

he grew up like literally playing golf

professionally, so he knows what that's all about

and Oregon is a beautiful spot

How do you decide to just go build a golf course

and a hotel along with it?

My dad always jokes, hes a developer by default

So, when we first moved over from the Netherlands, 2005

He finished his European tour playing

then he coached for the Netherlands,

so he became a coach, coached the Dutch Federation

took them to a world cup, they won the world cup in Golf

said "okay, that's a big accomplishment what's next?"

So he wanted to start a golf course

So he came over, we used to vacation

From the Netherlands, in central Oregon

Its a destination town, beautiful place

and slowly but surely, everytime we would go there

my mom and dad would dream about moving there

right, they would dream about moving there

every year they would talk about it

and so, then the idea came

hey, let's develop a golf course here

originally, he got hired on as

the developers representative for

the golf course

so he came on and was there working

with Dave Mclay Kidd and his team

as the development representative

sculpting the golf course

talking about what they should do,

where they should put the bunkers

how they should lay out the greens right

so he sculpted that

It took him from 2005 to 2008 to get everything built

built the golf course, get the plats

and then boom, the original developer

as 2008 hits, the original developer goes into default.

We were packing up all of our boxes

because we were actually going to move back

to the Netherlands, my dad lost his job.

We were going to move back to the Netherlands

and then through a series of conversations

and relationships, the bank who actually

took over the golf course reached out to

him and said "hey can you help us sell this thing"

he said "yea, i'll help you sell it" and

a lightbulb went off in his head

one of his best friends

who did really really well in oil

always wanted a golf course

so in a 3 month period, he brought his

friend over, they looked at it, purchased it

and like he says he was a developer by default

He just built around it

yea, they bought the course, the clubhouse

nothing else was done yet

they had like 3 homes that were sold

and then step by step they built hotels

they built the rec center, they sold the lots

and as everything came out with 2008

they ended up on the right side of it

and it turned out to be good

so, they still own it to this day?

yea, oh yea

they just make cash flow from the business

on the course and the hotel and everything?

yea, the biggest thing is the membership right

thats the biggest recurring

How much is the membership fee there?

I think its too low, but I think right now it's

like $650 for a golf membership, monthly

that's very cheap

thats what I was saying

there's a deposit fee that goes in

and then for social membership its $3-400 bucks

and then whats like the initiation fee?

its $50,000 non refundable

ok, so 50K to join which, very normal

in alot of nice courses and $650 a month is cheap

so when you develop your course

one thing that i've looked at

all those master plan developments

they get dictated by something called the

CC&R's, you already know about it

yup, the HOA.

Well, one of the challenges was

the original developer hadnt written into

those CC&R's that you could only increase

the dues by 4% every year.

Well we were in a bad economic time right

So rather than increase dues, we would try

to get people just to move in

So the key would have been once

the problem is once you record those and

people start buying, you have to get like

depending on the document

either 75% of the homeowners to vote

for adjusting them or sometimes its even 90%

the key would be, when you develop your resort

you dont tie it to a 4%, just tie it to CPI

you can increase dues

tied to the CPI and it automatically

happens every year so you dont fall behind

on your membership program

We would probaly be talking $1500-1600/month

if it was tied in that manner right

yea, alot of the courses i'm in are 1500

to $2000 bucks a month

Which is where it would be

if the raises were happening or it was tied to CPI

Then you get, once you're stuck, you're kinda stuck

Well, i'll tell you this, one of the

things I love about real estate is that

you know, you take, in this case a piece

of land in the middle of Orgeon

right, some guy looks at it one day and its

like "this would be a great spot for a golf course"

Im going to build a business on here.

then a real estate guy looks at it and is like

we should build some houses, we should build a hotel

we should build another business and its just like

it's this one plot of land whatever someone imagines

ends up becoming the business.

and that's what attracts me so much to

developing a golf course community one day

you know lets just say you go get this amazing piece

of land, in Oregon, for instance and you

can go get it for $10 million bucks

and all of a sudden, you could go literally create

a billion dollars of value on this piece of land

you built the right homes, you get the right amenities

you get the right businesses on it, and you can

create a billion dollars of economic value

Its not hard to do, well I dont want to say it's not hard

but it's like very feasible

That's even my addiction too right

you take a idea, you see if its financially feasible

and then you get to bring it to life every single day

and theres nothing like doing that

it's a addicting process, and there is alot of equity created

Alot, I mean a ton both on if you do it on a single family

side right, lets say you're going to flip a house right

flipping a house, whats the average profit

you guys usually make on flipping a house?

we aim for 10%

so in a number like 30 Grand, 50 grand?

Yea, the median house right now is 400 grand

so were trying to make 40

make 40, on the ground up side you're probaly

going to double that, more like 80-100 grand

now its going to take a little bit longer, probaly double

the time, you're not going to just be able to put

lipstick on it but there's definitely a lot more equity

creation in there, alot more profit in there.

If you do it right

The thing I like about developments too, so this

is all my theory in talking to guys like you

and other big guys, but it's just like you have to

find less deals, if I want to go do 100 house flips

I have to find a 100 different deals, negotiate them all

and try to make my 10%

With developments, you can go find one piece of land

you got your 100 lots, go build

and you got your 100 deals in one transaction.

And now you're going to spend your next few years doing them but still

It's a different ball game, and its actually

more certain than a flip because you know your costs

its just there, we're not getting into these flips that you know

we get into something and were like oh boy here's

an extra 20 grand that we didnt see before and all that.

Exactly, when you're doing a flip, you don't know

exactly what's behind the walls, it is tricky

Even in the ground up game, you said it right

it takes just as much energy to do a big deal

as it does a small deal right. Same process

same timelines, so you might as well do a big deal

Might as well do 100 lots, rather then, i've learned

that less in the hard way. I've had two houses

60 miles away and we're doing the same exact house

on infield lots, ill never do this again.

I will only build in 3's, if I do something

I will build in 3's or 5's or 10's

like all in the same vicinity?

yea, same subdivision exactly like you said

If i'm 60 miles apart then you have to factor in

my superintendents that have to drive both ways

You just have to factor in all these things that I learned the hard way

You're 29 and you've done $30 million of development so far

So, what has that consisted of?

We just finished up a 84 unit, my first big deal

I ever put together was a 84 unit deal,

Tell me about that 84 unit deal.

So its 6 buildings, the land was,

as you know real estate is a relationship game,

so one of my best friends is a local realtor

He was at church, and a guy that owned property

he bought 10 acres, so super smart guy

Kind of goes back to what you were saying

He bought 10 acres, subdivided it into 4 lots.

Built 110 assisted living units, that's his business.

Then he had 2 more lots he was selling, he told my

buddy jake at bible study one night

"Hey, i'm trying to sell this land, do you

have anybody that would be interested?"

He brought it to me, we looked at it quickly

We were able to very quickly understand there was

alot of value in it, and put a deal together

Kind of crazy how it all happened.

Yea, tell me like the numbers and how it happened.

It was, He wanted about 1.2 for it, and the way

that mutli family games works.

If you wanted to quickly understand what you can actually pay

for a piece of land, you want to begin with the end in mind.