Construction Is Controlled Chaos: How Real Estate Investors Avoid Delays and Cost Overruns

Kristian Burchat (00:00)
It’s controlled chaos. And to not admit that is not being fully honest. There’s so many unknowns in the building game. And after having built power stations and train stations and bridges and churches and schools and roads and now houses, I can tell you that every project comes with a bunch of unknowns, and anyone that pretends that they’ve got a plan that’s gonna account for every eventuality is just lying to you. So let’s just come to the table with the developer, with the investor, with the designers, with the consultants, right from the beginning and say, hey, we’re all here to work as a team.

Cody Crabb (02:04)
Hello and welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’ve got Kristian Burchat with Chartwell Development joining me. Kristian has spent years in commercial and residential construction, and he recently launched Chartwell to build projects with a stronger focus on relationships, communication, and doing things right from day one. Kristian, thanks so much for coming on the show. I appreciate it.

Kristian Burchat (02:26)
Great to be with you, Cody.

Cody Crabb (02:27)
So take us back a bit. I mean, what, what led you into construction in the first place, and what eventually pushed you and your partner to start Chartwell Development?

Kristian Burchat (02:35)
Yeah, well, as you mentioned, I’m one half of Chartwell Development. I got my start way back in Australia as a combat engineer in the army back there. Spent a bit of time working with the Australian Army and then got out to pursue my degree in civil engineering. I spent subsequent years working in heavy infrastructure like power plants and sea wharves, train stations, big bridges, that kind of stuff. So that’s really where I cut my teeth in construction. After that, I, I decided I wanted to move out to the United States and, and have a go out there, and so now I’m here in San Diego. I ended up joining forces with Jody Watkins back then. He’s the other half of Chartwell, and together we worked on any number of things, from churches in San Diego to schools, hotels, a fair bit of restorative work in historic buildings and the Gaslamp Quarter down in San Diego, which is really quite challenging stuff. And Jody himself came to San Diego to build Petco Park. So he’s been no stranger to the Gaslamp and the challenges of working on, you know, the old type of construction that they had back then, where you really didn’t see the need for a footing or any reinforcing steel. So, yeah, we successfully ran a number of projects downtown San Diego and all over the county. And in recent years, we worked together building homes across San Diego. There’s been a, a gold rush on ADU buildings and a change to the terms that the city has for doing those types of developments. So we found ourselves, you know, helping out in that area with a lot to offer in building with commercial efficiency, but at a, at an affordability level that the housing market needs to be profitable. So we spent the last couple of years doing that, and that really helps me hone my skills in the residential market and the multifamily construction. And so this year, we decided we’d join forces once again and go on a new venture and launch Chartwell Development.

Cody Crabb (05:25)
Now, as we were talking before in the pre-podcasts, you, you kind of mentioned that, that you wanted things to be different this time. You were like, the, the—one of the reasons we wanted to do this is because things were not exactly how you wanted them in kind of the industry as a whole. So tell me a little about that. Like, what types of things were you seeing that you were like, we need to maybe do this from the ground up now?

Kristian Burchat (05:47)
Yeah, that’s right. That’s where we, we really come together because there’s so many examples, bad examples, of what not to do in the construction industry. And there is a bit of a tarnish, I think, to the industry of contracting, you know, that there’s not always the best practices, and it can be a zero-sum game. And, you know, some people feel like a, a contractor will just be out to cut quality and cut corners and try and squeeze the, the most juice out of the—

Cody Crabb (06:18)
Yeah, that’s like, that’s like the stereotype, right? Like, the, the joke is that, that that’s always what they do, yeah.

Kristian Burchat (06:23)
Yeah, I think that is the stereotype, and our goal is to change that stereotype. And, you know, it’s a heavy lift, but I think we’ve learned from enough years of diverse construction work that it doesn’t have to be a zero-sum game, and in fact, that’s not the best way to get good outcomes in the long term.

Cody Crabb (06:43)
Interesting. Tell me more about that. Well, yeah, what, what does that approach do in, in kind of actual reality terms of what the project looks like?

Kristian Burchat (06:51)
Yeah, I mean, you can come at a, at a client or a, or a project with a zero-sum attitude, and you might make a profitable project out of it. And it might help your company in the short term, but that’s gonna damage the most important thing that you have in your company, which is your reputation. So it’s always paramount to us that we build and protect a reputation as somebody that can be depended on and is going to be honest and communicate from the beginning to the end about the challenges involved in, in whatever the project may be.

And as Jody always puts it, it’s controlled chaos. And to not admit that is not being fully honest. There’s so many unknowns in the building game. And after having built power stations and train stations and bridges and churches and schools and roads and now houses, I can tell you that every project comes with a bunch of unknowns, and anyone that pretends that they’ve got a plan that’s gonna account for every eventuality is just lying to you. So let’s just come to the table with the developer, with the investor, with the designers, with the consultants, right from the beginning and say, hey, we’re all here to work as a team.

I don’t know everything. I’m—I’ve got experience. I’m gonna bring that to the table. I’m gonna make some mistakes.

And that’s where we need to work together as a team to support each other when something goes wrong. How do we solve this problem? How do we put our smart heads together and come up with the best solution that’ll result in the best outcome for all of us, and particularly for the client? Because we want to do repeat business for that.

Cody Crabb (08:19)
Yeah, yeah, for sure. I mean, repeat business is kind of the key to everything. And I mean, if you can establish that these relationships early on, people are gonna be kind of thinking of you before they even started another project. They’re gonna have you in mind up forever. So, for investors listening, what are some green flags that they should keep an eye out for? You know, maybe you—maybe they’re not local to you specifically, but like, what, what are some things that you’ve attempted to do that you think are like, that’s what every contractor should be like?

Kristian Burchat (09:24)
Yeah. The first thing is, like, you have to meet them. You can try and do business remotely, and if that can be the, the—maybe that’s the best outcome, is that’s the only way you can get it done. But let’s meet, have a meeting, let’s talk, get to know each other, build a relationship first. I can give you, you know, a sense of security that I know what I’m doing and, you know, my company’s got the capabilities that are needed for the type of construction you want, but as a contractor, I want to know what your vision is. Our visions have to be aligned. Because as we go along with this project, we’re going to have to deviate from the course we had to overcome some kind of unforeseen problem. But we always want to come back to that same vision. And if I understand what the investor’s vision is, the developer, the owner, I know what their vision is, then I can make those decisions throughout the construction process without them necessarily have to be having to be heavily involved. And I can take that action to still keep us on course to that ultimate vision.

Cody Crabb (10:24)
Mm. I like that because you’ve mentioned this already, so many headaches in this game are from miscommunication or from lack of communication or from too long between communication. And so I think if someone is aware of that in advance, I mean, that, that could, that really could make all the difference. So what are some of the biggest mistakes you see investors making specifically before things even start, before construction starts? Or even maybe a better way to ask this would be, how could bringing—bringing in someone like you save them time or, or money down the road?

Kristian Burchat (10:55)
Yeah, I can speak to California particularly because that’s the market we’re in and we’ve always worked in. And there are some things that are particular to California. It’s probably one of the hardest environments to build anything in, I would say, in the nation. But some of these things I’ll, I’ll list will be applicable in any jurisdiction. There have been two major roadblocks to the work we’ve done in the past couple of years in California.

Those two are city requirements, whether that’s permits or inspections or fees, et cetera. And the other is utility requirements. They’re often very reluctant to be helpful in any way. They don’t have a lot of incentive, either of those parties. Neither of them have any incentive to move the project along quickly or help you out in a bind.

There’s no incentive there. So it’s so crucial to get the right planning in place and our consultants that we have relationships with, that we like to bring on board because we trust them, and we know that they, they know all the shortcuts and they know the pitfalls. And when they give us a estimated time frame, we know we can depend on it. When they give us an estimated cost, we know we can depend on that too. And as always, we balance this with the uncertainties. Nobody’s going to know everything. Utility providers can do whatever they want, and they can do unexpected things, and they can change the requirements at any time. And so can the city. But we get the best brains on board, and we, we cherish and nurture our relationships with those consultants because they’re so valuable to not only getting us started—and I think, to your question, this is where some investors might not realize that—these things are so important to getting started, getting your permits and getting your, you know, your right-of-ways and your utilities sorted out, but also they bite you continually throughout the process. Because we’ve got to bring the city back for inspections. We’ve got to bring the utility provider back for inspections. We’ve got to have them sign off at the end of the job. And if they’re dragging their feet, if they want to wait two weeks, three weeks before they come out for an inspection, or if they’re going to be pedantic and pick up things that maybe they could let go, but they just want to make it hard for the builder or the developer because there’s a bad relationship there, they can do that. And that can really hurt. Two weeks of holding costs, a month of holding costs is a big deal to investors. And we understand that. And our goal is always to have a clear schedule that builds in all the contingencies we know of and then plan for the ones that are unknown unknowns.

Yeah. So that’s why, that’s why we like to work with those—the people that we do, and we bring that value to investors right from the outset.

Cody Crabb (14:10)
I mean, you—it seems like you’ve worked on just about everything. You’re talking about these big, giant commercial projects to these custom homes and multifamily stuff. Across all this different stuff, what do you think separates these projects that run well? We’ve mentioned communication is a big one. We’ve mentioned that the relationship is a good one, kind of seeing the vision. What else comes to mind when it comes to a project like this?

Kristian Burchat (14:34)
Yeah, it’s planning. I think that’s what the guys in the commercial space do a little better, is really good planning. So we hire people that we’ve worked with before as project managers that are really good at planning. And you’ve also got to be good at executing. But the planning piece is key to being able to execute well. So that means having a dialed-in schedule. We start every job with a dialed-in schedule that gives you the start point, the end point, and the critical path between those two points. Every job has that. And then the budget. We have a detailed budget broken down line by line for every trade, so that you know, as the investor or the developer or the property owner, exactly what you’re going to spend on each of those line items. And then often we’ll set up a contract, and we can do a number of different ways. Sometimes we do a GMP where, you know, we’re incentivized, every party’s incentivized to make this job move quickly and for it to make money because we get to split the savings at the end of the job. We can set the contract up that way, and it makes it beneficial for all parties and provides an incentive that’s aligned with everybody’s desired outcomes. But to come back to your initial question, it’s planning.

Cody Crabb (15:43)
Yeah. I mean, it sounds, it sounds like, well, duh. Like, of course it is. So, like, planning is what makes anyone organized in anything. But I think hearing some detail is like, that makes sense, because it seems that you’re bringing in these parties early. You’re just making sure to kind of think of things that you wouldn’t, you know, you might not have normally thought of. For people that are planning their next project or they’re trying to learn how to plan well, I mean, heaven knows I’m not amazing at planning. What’s one piece of advice that you would give before people broke ground even? What should they be—what should be on their list that, that people miss when they’re planning something like this?

Kristian Burchat (16:17)
Usually things take longer than you expect. So always allow a little extra time in your schedule.

Cody Crabb (16:23)
If you’ve ever had anything done to your house, a remodel, anything like that, I think that it’s—it should be obvious to you. Like, hearing that, like, obviously, yeah. ‘Cause it’s—it, it’s impossible to know a, a lot of times. There’s so many moving pieces that an estimate is just that. It’s just a guess.

Kristian Burchat (16:39)
Right. Particularly in jobs that we’ve done here in the Gaslamp, where you’re doing structural retrofits, you don’t even know what you’re gonna find there until you start. All of a sudden, there’s no footing. Okay. We’ve got to bring in machines to excavate, build a new footing. We’ve got to get structural design happening. All of this is eating into the investors’ profits and the time frame. So you’ve got to have a contractor that knows how to deal with these things, you know.

I say planning is the most crucial thing, but planning is nothing without execution. And what allows you to execute well is experience and relationships. That, that’s why I keep saying it all always comes back to relationships, because I have Jody, and I have relationships with contractors in San Diego that do all kinds of work. So if all of a sudden we find we have to build a new footing in a brick building in the Gaslamp downtown, we know the concrete guy we can call to bring him in. He can get a permit for it to park his material in the street. He knows how to do that. We know we can rely on him to do that. We already know roughly what he’s going to charge us because we’ve worked with him before on these kinds of things. So on the execution end, you can’t forget that these relationships are still crucially important because that’s what saves you in the end. Like I was saying earlier, you’ve got to protect your reputation. It’s your most valuable thing, because when you get into these tight spots, you get on the phone with those people you have a relationship, a reputation with, and you call them up and you say, “Hey, George, help me out here, mate. I need you down here.” He says, “I’m up in L.A., but I’ll send someone over there on Monday.” “All right, see you Monday.” You know, that’s the way it, it actually works. That’s how the rubber hits the road.

Cody Crabb (18:14)
Yeah. I love that. I, I think it goes—it goes back to—it all just goes back to relationship. Everything I talk about on this podcast ends up at, you know, if you can establish a good network and some good relationships, it will come back to—it’ll be—come back to you tenfold. I mean, again, and, and I think it go—it’s—it goes both ways too. I’m sure there’s gonna be a time where, you know, Dave down the street is gonna really need something from you. And you can do that for him, and then later on he’s gonna feel like he could do the same for you. So I think that kind of—

Kristian Burchat (18:46)
Everything about relationships is reciprocal. So you give what you give first to receive later.

Cody Crabb (18:48)
Yeah.

Yeah, love that. Love that. And, and I think you also have to have the mindset of, even if I don’t receive later, then it’s okay. Yeah. Well, so this has been really neat. I’d love to hear a little more about you. You said you have some things in the pipeline right now, things that you’re, you’re kind of working on. What, what has you excited about the next few years with Chartwell?

Kristian Burchat (19:00)
Exactly right. Yeah, that’s right.

Yeah, currently we’ve got a couple projects we’re working on downtown San Diego. We’ve got a few more on the pipeline that are all over the county. We have relationships out in Inland Empire as well and in, in Los Angeles because we’ve, we’ve done building out there also. So we’re not afraid to go anywhere, Cody. We’ll—we want to build the, the best and most reliable construction company that San Diego’s ever seen. And that’s starting right now.

It started this year, and it’s already off to a great start with—we’re right on schedule with the current projects we have, and we’re building our pipeline so that we can hire the best planners and executors that San Diego has and have them work for us, because we want to treat people right. We want to do everything the right way. And in line with that, I’m also working on getting my contractor’s license. Right now we’re operating under Jody’s.

That way we can provide even more service to investors and property owners in San Diego. We’re branching off on a, another company. This is breaking news here for your podcast, Cody. You heard it here first. The new company’s called YAKKA, which is a word from Australian slang that means hard work.

Cody Crabb (20:23)
You know, I—I don’t know how, but I kind of feel like I, that I can just hear that in the words somehow. Like, I love that. Yeah, that’s awesome.

Kristian Burchat (20:30)
Yeah, it kind of has that construction vibe to it. And so we want to bring that to Southern California. We think that by creating a sister company, we can specialize in certain areas and generalize in other areas. And then no matter what the client or the portfolio or the vision that may come our way, we’ll be equipped to handle it, whatever it might be. So that’s our vision for the future.

Cody Crabb (20:57)
Love that. I think this has been awesome. Thank you so much for, for the insight that you’ve given us. For, for someone who—for someone wants to learn more about Chartwell or get in touch with you, or, you know, maybe they’ve got a project, they’d be—they, they think, you know, hey, I need—I need this guy. This is my guy. How can they get in touch with you on, on the internet?

Kristian Burchat (21:17)
Yeah, we—our Chartwell website is chartwelldevelopment.com. So that’s an easy one. We don’t have a YAKKA website up just yet. It’s fresh, but we do have YAKKA Built on Instagram. So if you search YAKKA Built, that’s Y A K K A Built, then you’ll see some reels from current jobs that we’re working on and the kind of stuff we—we’re building right now. So those are the best ways to reach out to us.

Cody Crabb (21:43)
Awesome. Well, I encourage everyone to do that. It sounds like you’ve, you’ve really started building something really intentional and something that could really—it’s—change, change some things. I—I feel like when, when you work with a company that has some values and you work for—work with another company or you hire another company, it—there, you can tell there’s a difference, and you kind of, next time, you’re gonna be thinking twice before you kind of go elsewhere. So I think that kind of vibe is very much needed everywhere you go in, in real estate and just the world, probably, honestly. But thank you so much for, for all, all these insights. And audience, thanks for giving us some of your time as well. If you like this episode, make sure you don’t miss the next one. Kristian, have a good one. And audience, we’ll see you on the next one. Take care.