Fix & Flip to Land Development: Building Subdivisions for Massive Profit

Steven Brewer (00:00)
I’ll take you to the 2008 crash. ⁓ I I literally can tell you of two lenders, hard money lenders that committed suicide. Because things went so bad so fast. We were at the time we had invested over $250,000 we were securing at the time.

a development that were was going belly up on a golf course. And at the time we had all the resources committed, we had everybody lined up, ready to go.

Freddie Steen (02:11)
Hey everyone, welcome to the Real Estate Pros Investor Fuel Podcast. I’m your host, Freddie, and today I’m joined by someone I’ve been looking forward to chatting with for quite some time. It’s not just because I have familial roots in the great state of Texas, but he hails from the DFW area as well. He’s doing some very, very amazing things in Texas.

The space of land development and how he went from fix and flip to fixing from the ground up. He’s been making serious moves in the real estate space, in the construction space, and even helping veterans. Glad to have you here, Steven I think our listeners are really going to take something away from how you’re approaching land development and how you’re also able to scale.

in multiple verticals, but still understanding the main thing. And for you, that’s land development. Let’s dive in. So first off, for people who may not be familiar with your world, give us the short version, Steven. What’s your main focus these days and what markets are you operating in?

Steven Brewer (03:19)
Well, first of all, I appreciate you having me. It’s excited to be here. Yeah, we’ve been looking to do this for a long time. Yes. But jumping right into it, we ⁓ just open ourselves to different aspects of the market. ⁓ like you said, we do some vertical ⁓ build construction up. And a lot of times you just got to be ready to diversify or shift. And we have shifted in different areas. We did fix and flips, do fix and flips if the deal is right.

But typically, as you know, everyone still needs housing, regardless of what the market is. That’s one thing you’re gonna find. An individual prepare for housing before they wheel a car or any other thing. But we have decided to really shift, especially with what’s going on in the current ⁓ market right now, is to be able to ⁓ create ⁓ land development in terms of creating

I’ll give you example. We just recently contracted the 50 acre ⁓ parcel with the goals to turn that into roughly about a hundred and some odd lots, and we’re still determining what those lot sizes will be. ⁓ case in point, we are looking at what we want our price points to be. ⁓ let’s see if we’re well, ⁓ case in point.

2,500 square foot home. Typically, we’re looking at our LTV to come in at those homes, roughly about ⁓ 450 to 500,000. But in the same area, there are homes that are coming in around 4,000 square feet that are pricing out at around $600 and something thousand dollars. So in the course of Yeah, well, so what do we do is we see if we’re gonna split the baby.

Well, I come in and have roughly 2,500 square feet ⁓ to 3,000 square feet and increase my price points. But everything is also tied to the cost of my infrastructure. So if my infrastructure based on, let’s say if I go with larger size homes, then of course I’m gonna decrease the size of my lots. And so everything is tied to you, what is your ratio?

build out infrastructure versus the the number of lots. And of course that can vary depend on what you want your price points to be. Typically your zip code makes a very big difference. You you know a lot about Dallas Fort Worth. this particular parcel of land is on the south end of of town. But now my price point on purchasing that land

Is relatively different from what it would be up north in Frisco. So if I was to take that same parcel of land and actually the same size of house, we’re talking about apples and oranges. So at the end of the day, we will analyze and we’re analyzing now what will be our ⁓ lot minimum, house size minimum, and the actual

maximum size of the house. In this particular parcel, we’re looking at kind of creating ⁓ based on the size of the parcel, the ability to ⁓ put probably three different sizes, basically. So we’re in the final phases of understanding that, but ultimately our goal is to be able to create that model because all your major home builders are still buying

D.H. Horton, David Wheatley, ⁓ those individuals are heavy into the market because they they’re not into the actual ⁓ development, so to speak. They basically have a real estate agent that they work with and they’re always looking for ⁓ subdivisions that they can just purchase outright. So we’ve really been heavily working on that model, even though we do still have vertical construction that we’re working in.

But just to shift, being able to shift with the time.

Freddie Steen (08:05)
You mentioned something earlier, and there’s a powerful backstory to a word that you’re saying that only has two letters, that’s W and E. Can you explain to our audience of investors? Can you explain to our audience of real estate pros and real estate a little nervous to get started how your family was raised to fix from the ground up?

Steven Brewer (08:29)
Well, I first of all, it’s sort of ⁓ I wanna say we’re about four generations now. My grandfather was from a little small town ⁓ in Arkansas. And he was one of ⁓ a few black men that actually helped build up ⁓ the small town. And he would ⁓ build houses, cut the trees down, you name it. Well he passed it on to my father.

And then my father, he passed it down to his sons. I have four brothers and and four sisters and ⁓ roughly about 20 somethings ⁓ nieces and nephews. And and out of the the lot, it’s about a clan of about 13 of us that are in construction. And I went off to the corporate world and just didn’t want to get my hands dirty, but came back to what was ⁓ I guess born what was born inside.

But anyway, long story short, to to answer your question, ⁓ mom also was a fix and flipper up until the day she died. And she was known for for fixing her houses and and had pink paint. So whenever you saw a pink house, you knew that was Valentina Brewer’s house. And you still see some of those painted ⁓ houses to this day. But anyway

The long history has afforded us the ability to pay attention to trends, pay attention to ⁓ a shift in buying, ⁓ a shift in ⁓ type of housing, even having to pay attention to interior. And so you really Well, ⁓ case in point, there was a time where you had every house you looked at had a fireplace. Okay. As times went

By and a lot of ⁓ science have entered into construction to actually have a fireplace is is a draft hazard in terms of sucking out your energy. And so now you have a lot of ⁓ electrical fireplaces that are being installed. Just give you an an an example. you have trends in paint colors, you have trends in cabinet colors, you have trends in

Whether on your island, if they want a waterfall island or they just want a standard island. Well, you have to pay attention to all these things because as buyers come in and you start to listen to their feedback, what they want, or what they saw on TikTok, or what they saw on Instagram. So it’s ever changing where you have to be knowledgeable. And you also have to be knowledgeable in how you structure your deals. are you price right in your deals?

Do you have the right lender? Not only the interest payments that you’re paying. Well, what about the points that’s added on the front end? Do you know what’s added on the back end? So it’s a lot of information that you really have to pay attention to as an individual that’s in this space.

Freddie Steen (11:19)
Love it. What caught my attention about you, Steven, was the way you’ve been able to do creative land developments. That’s not easy, especially in this climate. What’s been the key to keeping that machine running smoothly?

Steven Brewer (11:34)
Is how you buy. You have to number one in this market, you better find a motivated buyer. Typically, when you find a motivated buyer, you have an opportunity to take control of a land. I’ve I’ve had land where I’ve literally given someone five hundred dollars down and and and did a ten year contract with ⁓ payments of roughly

$500 a month. And here it is, I’m controlling under such a contract the ability to now go to a lender with land under control. So it’s all how you do your deal. It’s tied in the deal. Now, if you take down overpriced land, you’ll find yourself stuck. So the key is to literally understand your structure from start to finish.

If I go in and I take down, let’s say five acres, and then I calculate what I’m gonna break those acres down to lot wise. I need to know what my exit strategies gonna be. Am I just going to develop and exit out of the lots after I replat them? Or am I gonna build them out? So everything is about the structure. Everything’s about understanding your numbers and really, really understanding ⁓ how your financing structures are gonna work because

If you do not, those things can kill you and kill your deal.

Freddie Steen (13:31)
Now every operator that I know has a moment when things got real. Maybe a deal that went sideways or a time that they had to pivot fast. You mind sharing one of those moments for you to our audience?

Steven Brewer (13:45)
absolutely. I’ll take you to the 2008 crash. ⁓ I I literally can tell you of two lenders, hard money lenders that committed suicide. Because things went so bad so fast. We were at the time we had invested over $250,000 we were securing at the time.

a development that were was going belly up on a golf course. And at the time we had all the resources committed, we had everybody lined up, ready to go.

Freddie Steen (14:25)
What happens?

Steven Brewer (14:26)
Well, we didn’t see it coming. Everything at this time, I mean, we had lenders that were underwriting, were just closing houses left and right. There was not enough inventory. And we couldn’t produce enough inventory. So that’s what led us to jump out there and and ⁓ this particular project was right outside Bryan, Texas, right outside the college. And this infrastructure was just ripe for it.

We had lenders that were ready to put their office right on the spot and everything. Commitments. We had investors. We had everybody. And one day, when everything hit, everything was gone. Nobody saw it coming. Well, I take that back. There were people who saw it coming. What we did was we put our head in the sand, we ignored it because everything was so sweet.

And that was a lesson that we all learned from that period that when you see it coming, conceal yourself.

Long story short, we we lost roughly about five hundred thousand dollars and it began to to affect every one of us ⁓ as things began to snowball in other projects that we had. It was a complete collapse. It was it was a moment of of total chaos, bankruptcy for everybody. And ⁓ there were again a lot of people who responded to that that crash ⁓ through taking their own line.

Freddie Steen (15:48)
Now, Steven, not seeing it coming, that’s the kind of stuff people don’t talk about enough. And honestly, it’s what separates the folks who just dabble from the ones who stay in the game long term, like you and your family for four generations. Steven, let me ask you this. What are you most focused on solving or scaling next? What’s the next real goal for you?

Steven Brewer (16:10)
The real goal is we have to be realistic in being able to see the future. Well, how do you do that? With what’s going on with the capabilities of AI, the ability to truly create your back office infrastructure for your cash flow. Yes. You see, we could be project rich, we could be invoice rich, but at any given moment, because of our cash flow.

flow or lack thereof, it could crash. We’ve come to realize that if we don’t stay with what’s going on now, a prime example, we also ⁓ dabble in in construction, ⁓ commercial construction. And we have outstanding invoices of 30, 60, 90 days. And typically we utilize our credit lines to fund those projects. Well, we’re in a climate

Freddie Steen (16:40)
Mm-hmm.

Steven Brewer (17:02)
Where those invoices could creep up to 120 days.

What’s the cost of my cash flow? What’s the cost of my my credit line now versus what we had allocated for that project? What do we think our our our returns would be on that project? So we have to, and what we’re doing now is getting a better grip on what our our back office, our infrastructure is, being able to take.

certain AI apps and and let me in a moment’s notice determine who I need to collect money from or what bills I have going out. And in doing that in the moment, we were so used to dealing with our our CPAs and we’re getting reports 30 and 60 days later telling me that 30 days ago I needed to to collect money.

Well, I get that in a in a in a report later and I find myself in a crunch. So we’re correcting that. And I think anybody in this industry really need to look at correcting their ability to understand their cash flow.

Freddie Steen (18:47)
That’s big, ⁓ Steven, especially when you’ve already got this experience of four decades and these projects that you have won that have been millions and millions of dollars in development, that next move can either compound things or create chaos depending on how you play it. So now I I know a lot of people listening are either earlier in their journey or looking to level up. And I think they’d benefit

from hearing this. When it comes to building relationships and growing your network, what’s made the biggest difference for you?

Steven Brewer (19:22)
It’s really your ability to follow through. People have to know that you’re a walk away from a deal. Every deal is not perfect.

And it’s the old adage, just do what you say. Just do what you say. ⁓ people want to know that when they get in a deal, they can come out of a deal. And in order to come out of the deal, you really need to understand the deal. You don’t get in it just to get in it. I’m involved in real estate. There has to be a lot of practical information that you process. And so our network, even our lenders.

know that when we get in the deal, we know how to exit out of a deal. And those are the most important factors that individuals have to to understand. If I get in, how do I come out? And have multiple ways of coming out.

Freddie Steen (20:05)
How how many projects do you come complete per year, roughly?

Steven Brewer (20:10)
We can average ⁓ anywhere from fifteen to twenty. And I could I could have a individual and investor come to me and say, Hey, I want to do five deals ⁓ at one time. They could come and say we want ten deals and we run them. ⁓ the beautiful thing about it is that the way that we structure things, we always structure things in proximity.

which makes it easier not only for us but also for the investor as well.

Freddie Steen (20:39)
Why does the proximity make it easier for you?

Steven Brewer (20:41)
It’s easier for me to run and check on five projects typically on the same street and hold accountability to my subcontractors on the spot instead of having to run from North Dallas to West Dallas or East Dallas, so to speak. And again, that’s coming down to structuring, structuring deals. In other words, an investor says, hey, I like to do this. Well, how do we make it where it works not only for you, but for us to be successful?

A lot of those things make sense, especially when you have project managers and you’re holding them accountable. Well, it’s easy to hold them accountable in proximity.

Freddie Steen (21:19)
Yeah, yeah. You proximity breathes relationships and you can’t fake that. I mean, relationships are everything in this in this space. So all right, before we wrap, if someone wanted to reach out, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

Steven Brewer (21:39)
Well, believe it or not, I’m I’m getting into the podcast space and ⁓ we’re going to start actually collabor creating ⁓ relationships through ⁓ our community. ⁓ Beyond Potential, you can find me on Instagram at Beyond Potential, and we’re really looking to educate more. ⁓ we’re shifting into the education space as well.

to really help people to understand that especially ⁓ that are breaking into this industry, there’s a lot more to meet your eye than just wanting to be an investor. So on Instagram you can reach me at Beyond Potential and very soon you’ll be able to reach me on YouTube at Beyond Beyond My Potential Media as well.

Freddie Steen (22:27)
Perfect. Well listen, I appreciate your time, your story, and your perspective. We need more people in this space or who are doing it the right way, Steven. Thanks again for being here. And for those of you tuning in, absolutely, absolutely. And for those of you tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming with operators just like Steven Brewer, who are out there building.

Real businesses. We’ll see you on the next episode. Steven, thank you so much.

Steven Brewer (22:59)
Thank you. It’s been a pleasure. Have a good one.

Freddie Steen (23:00)
Have a good one. We’ll see you on the next episode.