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Show Summary
In this episode of the Real Estate Pros podcast, host Kristen interviews Arthur Ryapolov, owner of August Development. Arthur shares his journey from the auto industry to real estate development, emphasizing the importance of taking action and learning from experiences. He discusses the significance of building a strong team and company culture, focusing on affordable housing solutions, and understanding market trends. Arthur also highlights the benefits of building personal homes as a wealth-building strategy and the importance of outsourcing expertise in real estate projects. The conversation concludes with practical advice on key metrics for success in real estate investments.
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Investor Fuel Show Transcript:
Arthur The Developer (00:00)
Well, the difference is if you go build the house, it costs you less than the house that sells on the market. Typically, my rule of thumb is it costs you 20 % less than what they sell for, which averages out to $100,000. So somebody that works a 9 to 5 job can go get a lot, hire a builder, put 5 % down, build out a house, and instantly move in with $100,000 of equity.Kristen (01:53)
Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Arthur Ryapolov He’s the owner of August Development. They do builds from the ground up. They’re in Portland, Oregon, Vancouver, Washington, and I’m excited to get into it. Thanks for being here.Arthur The Developer (02:06)
Thank you so much. It’s an honor.Kristen (02:08)
So tell us how you got into this industry. I know that you kind of, you were in a different industry for a while.Arthur The Developer (02:14)
Yeah, so my background is 15 years old. You know My dad came from Ukraine, Russia, migrated here. I was born here in the States, in United States. And he was very entrepreneurial. He believed that getting freedom is through business and through just doing something where you’re not trading time for money. And that was the auto industry. So long story short, 15, 16 years old, I saved up enough birthday money, enough mowing lawns, washing dishes, whatever it took. And I had just enough to buy one car.because my dad was buying and selling cars, bought my first car, sold it, made a profit, and fell in love with just the, I guess, business. And so I was doing that even through high school. And my background was a lot of cars. I sold cars. I worked for a dealership. I did the sales side. And then I also would buy and sell as many cars as I could get a hold of or afford at a young age.
Kristen (03:06)
I mean, that’s awesome because it sounds like your father really, he fostered the entrepreneurial spirit in you. You saw him as an example. And I think for young people, you you’re 16, trying to get into something, encouraging that goes a long way. What would be some of your advice to someone who maybe didn’t have that upbringing and maybe has a limited mindset on, you know, their growth potential?Arthur The Developer (03:29)
Yeah, I would say some action or the wrong action or even bad action is better than no action. One time I went to this event, and I would always go to these different events because I’m like, man, I’m doing this car thing. I’m making $500, $1,000, $2,000 a car. For some people, that’s a lot. For other people, that’s maybe not enough. But as somebody that doesn’t have family, kids, I’m slowly trying to save up the money. And Tony Robbins said one thing at this event, and he said,Literally, the only thing that will change your life is massive action. And I realize that that’s really it. Even if you, maybe you buy a car and you make nothing on it. Well, now you understand how to not make a profit. And now you’ll know how to go and start making profit. Or you start a sales job and you don’t do as well. But eventually, you get into a groove where you fail your way forward and you become successful through it. That’s probably some of the biggest lessons. And that’s pushed me through to where I am today.
Kristen (04:24)
Absolutely, it’s not a perfect road in the beginning. And then how did you get to the point where you’re building August development?Arthur The Developer (05:23)
Yeah, so a little bit of my story. So background is, it was in the car space. And to date, I’ve done about 1,000 lots developed. So it’s homes. I’ve created lots or land for builders to come in and build these homes. Done about 1,000 of those. I’ve done commercial development, everything from Dutch Bros, which is a local company here in the West Coast, a coffee company. Starbucks, most people know them. Jiffy Lube, oil changes, things like that. Chipotle, Trader Joe’s, work with these largerbusinesses, and I would do commercial development for them working for this developer. And then ventured off on my own, started August Development. And to date, we’ve done just about 240 doors. I put the deals together, find them, hire the right team, hire builders. I’m not a licensed contractor, and then execute and build on it. So that’s a little background of who I am, what I do. How I got there was I was in this auto space. I was going to all these different real estate events. And I’m like, man, I really want to get into real estate. My dad said, cars are great, but
I heard in real estate, you can build wealth, and it’s more than just maybe a smaller piece of the pie. And so I’ve always been pushed towards real estate. The only thing I knew was fix and flip. And so I started going to these different fix and flippers, local here in the Portland, Oregon, Vancouver, Washington area. And I said, hey, can I come do an internship? Can I work for you for free? And I guess maybe it was my mistake. Maybe I was naive. But I would say, I really want to do what you do. So I want to do an internship and learn everything. Well.
When you’re 17, 18 years old, they’re like, man, why would I create more competition? That makes no sense. So I’m going to do an internship, teach you everything, and then you’re going to go do it on your own. Long story short, these fix and flippers said no. I had no clue what real estate development was. Never heard of it. But I was involved in church. I was actually, played an acoustic guitar. And I heard that this one guy that was in the church was in real estate. Didn’t know his development. Long story short, was super persistent.
I found what his email was, and I was emailing, emailing, emailing. And finally, I said, hey, can I have coffee with you? Can I go get coffee? Finally, he said, hey, I don’t have time for coffee, but swing by my office, and I’ll give you 15 minutes to just chat. I sat with him, chatted, and shared my passion for cars, shared my passion for real estate, and what I want to do, who I want to become. And him being kind-hearted said, you know what? I’ll at least give you a foot into the door of this real estate game. So if you want, come do an internship.
you’ll work under another project manager. And whatever help he needs, essentially, you’re like his right-hand man or his assistant. I did that for a couple months. Long story short, my mindset was, man, forget the famous actor. He was in White Girls. his thing was, when he was in Hollywood, he was not an actor. He was just helping set up and clean up, et cetera. But he’s like, I did everything as if I was getting paid $1 million.
And so you start doing things with a much different mindset. Long story short, I did the same thing. I took that mindset and was like, I’m going to take this internship and I’m going to do everything I can. Well, at end of the three months, he’s like, wow, you actually provide a lot of value. The project manager vouched for you. I’m looking to hire a junior project manager. Fast forward, that’s how I did those 1,000 lots. That’s how I did the commercial involvement and was really involved. And I did acquisitions too. So was so hungry, I was bringing deals to the table. And I’ve got to really learn the game.
through this person and getting exposed to this real estate development side. ⁓
Kristen (08:42)
I’m actually so surprisedthat people were saying no to you in the beginning.
Arthur The Developer (08:46)
Yeah, that’s where I drew a passion to teach people. So online, I post a lot of content, YouTube, Instagram. What’s cool is we’ve reached over 60 million people in a single month. And all I’m doing is providing as much value as I can, because I realize there’s a lot of people that are very stingy. They’re like, well, I’m not going to teach anyone. But I’m like, man, the more that I give, the more that I’ll have, because it’ll create partnerships. Somebody else will be developing. They don’t want to buy this property. Maybe it’s too big for them, and I take it on. I’ve already had that where.I get deal flow. People are building projects. People are building personal homes. They’re creating equity. It’s been really rewarding and really cool.
Kristen (09:21)
Yeah, I mean I totally agree with you. When you’re able to collaborate with people and give value, you really do get that back and it really does help you scale. If you’re a little bit more stingy, you’re not gonna scale as quickly. And I know a big part of kind of your journey is partnering with people and working with the right people. How do you know who’s the right person to work with?Arthur The Developer (10:18)
Yeah, so when it comes to a real estate deal, specifically new construction and development, most of the time I’m hiring the builder and building it out. Some people just like to develop and not touch the construction side. But you’re really just working with a great team of people that are also trying to win with you. So that’s what I love about this space. It’s not like I’m the one that’s trying to get a project forward and everybody else is kind of almost against me. Instead, it’s all of us running as one team. And you always want to have a great team.Typically, the team’s built up of an architect. Architect designs the plans. And then you have the builder. The builder is the one that executes on the vertical side. And then I have a lender. A lender is like my solid partner. They’re the one that’s giving up. They’re bringing most of the money to the table. So typically on a deal, I’m putting anywhere from 10 to 15 % down. The lender brings the rest. You have those three people assembled. And then you, as the developer, understand how to underwrite the deal, run the numbers, make sure it’s profitable. That’s how you can get that deal to be successful. And then
Partnerships where maybe you bring in capital or as we have students, just anything that is part of that, they see the team. They see that you execute. They understand and they have trust in the process because there’s proof of work.
Kristen (11:28)
Definitely, and how do you create that internal culture?Arthur The Developer (11:32)
So the biggest thing in our company, what we love to do is we say any person that comes through the door, obviously into our office, we want to make sure they leave a better person. They may be a great fit. They may be an A player, a B player, a C player. But does not matter what player they are. We want to always make sure they leave better. And so some people may stay with us for 5, 10, 15, 20 years. Others, it may be a short season. Does not matter for us. The biggest thing is creating that culture where everybody wants to grow. Everybody wants to be better.and everybody around them encourages them, that is where we’ve gotten the most feedback that this is one of the best companies that we’ve worked at. The three core values is, one, extreme ownership. We take responsibility for what we do. Two is we have a servant’s heart. So we’re serving people while taking that extreme ownership. And then the last one is relentless unity. Relentless unity, meaning we’re doing it all together. So when you assemble those three different things, everybody is responsible, like I’m doing my part.
But I’m also doing it together as a team, and I’m also serving everybody within the company. It creates this beautiful ecosystem.
Kristen (12:35)
Absolutely, and being intentional about it, like you’re being and you’re actually creating core values. think a lot of people just hire and then the culture is bad and they don’t really know how to fix it. But being very intentional like that, I think goes a long way. So talk a little bit more about August development. You’ve kind of mentioned how you guys syndicate and then build. Tell us more about that process and kind of what makes you guys unique.Arthur The Developer (12:45)
Yeah.Yeah, so August development primarily is residential. So I did have commercial experience. Commercial is great, but it’s more to hold. I would love a Starbucks tenant. If I developed and built the building, Starbucks is going to pay me for the next 10, 20, 30, 50 years. I feel confident I’ll collect rents. When it comes to residential, I’m trying to supply for the housing shortage. We have a shortage of three plus million homes in America, and most of it is affordability. Right so
We focus on affordability. We do a lot of townhomes, duplexes, triplexes, single-family homes that are more entry-level, 2,000 square feet, three to four bedroom. And then we’ll have some of these nicer high-end homes. We enjoy that as well. And so we’ll do a few of those. But 90 % of what we do is affordable so that people can come into a home maybe for the first time. What that looks like is we do, I would say, three different types of development. The first is infill development.
And that’s more in city limits, a lot more developed. it’s already, most houses are older. We’ll come in, we’ll tear down a house, and we’ll build four or six units. And that’s the infill side of the development. Then we have the residential just, we find a lot within a neighborhood that was never built on. We’ll go in there and maybe build a duplex, something like that. And then the third development is where we do residential development. We take on a parcel, maybe two, three, five acres.
And we actually create a new subdivision. You add the roads in, you the utilities in, the new landscaping, sidewalks. And you’ve created an entire community of maybe 20 to 40 houses. And you’re building all of those townhomes or single family. That’s kind of the three main different buckets of development that we focus on.
Kristen (14:34)
That’s awesome and how do you determine the right product for the right location?Arthur The Developer (15:21)
everything comes down to the comparables. So in short, in real estate, you call it comps. When I’m looking at a neighborhood, let’s say, for example, right now I picked up a deal that’s going to be a fourplex. The reason I know it’s a fourplex is as simple as Redfin or Zillow. That’s where you can look up homes. I go and I look at what’s the new construction activity. So you can filter what year was it built. And I put minimum 2024, meaning it was built in the last couple of years, one, years. And I look in that neighborhood and I see what’s for sale.and what has sold in the last year. When I see what has sold in the last year, let’s say the common product is a townhome. And then the less common product is some single family. Well, I’m going to go with the more common product. And then I can go into even more detail and say, well, how fast does this sell? Well, the townhome product is selling in one to three weeks, meaning it goes pending. That means they got an offer. And then obviously they have to go close. Well, if the product is selling in one to three weeks in this pocket or neighborhood, I’m just going to duplicate what already works.
You don’t have to be a genius. You follow the data. You follow what’s working, and you go and you rinse and repeat. But then the little twist of August development or the, guess, the cream of the crop is where you start to add your own design in. If you go to our website, can see we’re very, we love design. It doesn’t cost anymore, but we’re very particular with our paint colors, with our stone, with our tile, with our cabinet, with our flooring. It feels like you’re buying a
$500,000, $700,000 home when you’re coming in and buying a $250,000 to $400,000 home.
Kristen (16:50)
And how do you kind of create that feeling? What are some of your tips for making something look more high end?Arthur The Developer (16:55)
Stone is a great one. I can’t always do stone, but stone is definitely one of those options where it costs maybe $5,000 more in the construction budget. Layout is the most important thing. I have a much more open layout, so I don’t segregate the kitchen, dining, and living separately. It’s all generally in one area. Cabinets, right? I always do cabinets to the ceiling. I do nine-foot ceilings on the first floor and second floor. It just feels like a bigger space.And then I’ll do little things like I do a bigger slider door. You don’t really think about it, but most people have a slider door that is roughly six feet wide. Well, if I can, I’m going to fit a 12-foot slider door. The cost is actually nothing more. The slider door cost me more, but my lumber goes down, my siding goes down, my paint cost, everything goes down. So it actually doesn’t cost me more. But somebody walks into a home, they’re like, wow, these windows are huge. The slider door is huge. This feels like a big house when it’s only 1,500 square feet.
Kristen (17:52)
⁓ those are really good tips. I can totally see how that would change a home. And I know the personal house game is something that you’re really passionate about and you love sharing with people. So can you tell people why that’s such a great opportunity?Arthur The Developer (18:03)
Yeah,I absolutely love the personal house game for two major reasons. One, the amount of cash you actually need, and two, the tax benefit. So I always say, if you are approved to go buy a house, please don’t. You’re going to go buy it. You’re going to move in. And day one, you’re going to have negative equity, because you have agent fees, closing costs. If you were to go try to resell the home for the same price, you’re going to end up losing money. Instead, go build one. Why? One, you don’t have to be a builder. You hire the builder. Two,
There’s a lender product that says, hey, you can actually put down the same amount as buying the house. A lot of people are first time home buyers. They put 5 % down. So on a $500,000 house that they want to go buy, they put $25,000 down, 5%. Well, there is a lender product that is the same thing. You can actually go put 5 % down on the land and construction so you don’t have to buy the land for cash. And they’ll give you a loan. The builder builds this project out, and then it automatically converts to a 30-year mortgage.
Well, the difference is if you go build the house, it costs you less than the house that sells on the market. Typically, my rule of thumb is it costs you 20 % less than what they sell for, which averages out to $100,000. So somebody that works a 9 to 5 job can go get a lot, hire a builder, put 5 % down, build out a house, and instantly move in with $100,000 of equity.
Boom, that’s the first bonus. Why do I say this? Because I’ve done it. My brother’s done it.
My family’s done it. We’ve pushed everybody we know to do it. We’ve always been pushing, hey, build your personal house. My brother-in-law had over $160,000 of profit by doing this. I had over $300,000 of profit on my personal house because it appreciated right after COVID. Things went fast. And I got to take advantage of the appreciation of the market. But I always say, $100,000, that’s a fair number. So that’s the first, right? Building.
The second is, well, there’s the tax advantage. It’s topic 701 or section 122. It’s one of those two in the IRS code. says, if you have a primary residence, it’s where you live, and you live in it for at least two years, you can make up to $250,000 of profit and not pay a dollar in tax. And you can put that money into your bank account. You don’t have to buy another property. There’s none of that exchange. It’s literally $250,000 if you’re a single person. Well, if you’re married,
and you file your taxes together with your spouse, you can make up to $500,000 of profit. Well, let me ask you a question. Can you go buy a house, and it’s going to appreciate $250,000 in two years? I don’t think so. But you can build the house and force it to appreciate by creating that equity. And then guess what? Over two years, you start out with $100,000, and over the next two years, it’s going to keep going up. And when you’re ready to sell, you have this nice equity or cushion.
You don’t have to sell it after two years. You can live in it for five. You can live in it for 10. Doesn’t matter. It’s just minimum two years to get that tax advantage. So to me, that’s like, it’s the cheat code right now in America of creating wealth for your family. It’s not some 401k or whatever else there is out there. This has been the game that has changed my life personally.
Kristen (21:06)
I mean, it makes a lot of sense. think a lot of people probably take value from that. And something you mentioned is you don’t have to know everything about everything. You can hire out what you don’t know. Can you talk a little bit more about that, like outsourcing?Arthur The Developer (21:20)
Yeah, so that’ll bring me to my first project. My first project was I was working for this developer, and I wanted to invest in real estate. I’m working full time. And when you’re working sales, like I did car sales, it was more flexible, right? I didn’t have to work every single day. It was more performance based. Well, I’m on a salary. I’m working for a developer. I’m working a nine to five. I’m like, I can’t flip cars. It’s really difficult to try to buy and sell cars while working for someone. So I slowly started selling off my inventory of cars, and I had enough of a down payment.to where I said, well, I’m seeing these developers doing 100 lot subdivisions, 500 lot subdivisions. What if I just built one house? And I’m not the builder because I don’t have the time to do it. I don’t have all the cash to do it. I’m going to get a lender. then I don’t know how to find deals, so I’m going to call a wholesaler who specializes in finding deals. Met with a wholesaler over the weekend, said, hey, I really want to build a house. Can you find me a lot? Within a month, he found me a lot.
And I had a builder. I said, hey, builder, could you build this for me? Yep. The budget’s going to be $250,000 to build this, and you have to pay me $20,000. That’s my flat fee. The wholesaler said, I found this deal for you. It’s $20,000 is what my fee is. So think about this. I’m paying a builder $20,000. I’m paying the wholesaler $20,000. And then I go and get a loan to get the construction budget, because I only had about $50,000 down. And I move forward with this. I’m working my full-time job. I said, hey, builder, show me a few of your projects that you built.
They sent me some links from Zillow. said, I like this one. Can you just copy everything you did there? Do it for my project. Because again, I didn’t have the time. So I’m working my full time job. I’m not really focused on this. But this home starts getting built. Within four months, I have a brand new 1,300 square foot home that’s built. And I put my $50,000. I put kind of all my eggs in one basket. But I’m working a full time job. I feel like worst case scenario, my salary will cover the payment or I’ll move into this house. Like I’ll figure it out.
Eventually, I sell it. It was about four months to build it and two months to sell it. Six months in, my $50,000 turns into $100,000. So I doubled the money. I had zero real estate experience. I simply just followed the data. The houses were selling in the area. The wholesaler got me the deal. The builder gave me the budget. I put everything together. I saw I would make around $70,000. Well, I didn’t know that there was interest payments. I ended up paying $20,000 in interest, and I walked away with $50,000. I doubled my money. That was my aha moment that
I’m not smart. I don’t know anything about real estate at that time because I just barely started for the developer. The only thing I knew was auto. But my lender gave me some money. The wholesaler brought me the deal. The builder executed on the project. And I walked away with a profit. That was about the least amount of work I’ve ever done on anything in my life. I was like, this is what I’m falling in love with. This is what I’m going to do. Now granted, I got lucky because I ran the numbers-ish. If it was the wrong deal, I may have lost money.
Kristen (23:56)
you.Arthur The Developer (24:07)
I learned my lesson there, and now I understand how to run numbers. And I make sure before I even close on the property that I am for sure going to either make a profit or rent it and cash flow.Kristen (24:18)
And how do you even, if you’re someone who doesn’t really have a lot of real estate experience, how do you even know what numbers to focus on?Arthur The Developer (24:26)
It’s real simple. It’s three main buckets when it comes to building. You have how much is a home going to sell for? How much is it going to cost me to build? And how much do I pay for land? That’s really it. So in this case, for this specific project that I had, knew the house is going to sell for $400,000. My budget is $250,000 according to the builder to build it. And then my land price was the remaining $70,000 at that time. So I take all those numbers, and I have my remaining number.which was that $70,000 minus closing costs and interest was $50,000 of profit. In that case, the rule of thumb with three buckets, and then you just want to make sure your profit is at least 20%. So if you have a $500,000 project, 20 % of that would be $100,000. You want to make sure that you have $100,000 of profit. It gives you room in case markets correct a little bit, and it also allows you enough equity to where you can rent it out and have some cash flow.
Kristen (25:22)
I love that. That’s very practical information for people. Well, this is, I mean, it’s gone by really quickly. You have so much good stuff to share. Tell everyone where to find you and how to work with you.Arthur The Developer (25:32)
Yeah, so I go by Arthur the developer on any social media account. You can follow the Instagram. The Instagram is where we’re doing kind of short form. We’re giving you project updates. We’re building some $1.5 million homes. We’re building some duplexes. And then YouTube is a lot more value dense. If you want to understand, like, and how do you find the law, or how do you talk to a lender, or the entire process, start to finish. I call it my seven step process. So I teach you that entire process, start to finish. YouTube’s definitely great for value as well.Kristen (26:00)
Amazing well thank you so much for being here Arthur. Thank you everyone for listening I hope you learned a lot got some inspiration for your own business your own journey definitely check out Arthur definitely check out August development and we will see you back next time.Arthur The Developer (26:03)
Yeah, absolutely.
