How to Avoid Costly Real Estate Development Mistakes Before They Happen with Mark Mascia

Mark Mascia (00:00)
Yeah, I think, I mean, whether it’s us or, you know, a mentor or a lawyer that’s very sophisticated, you really need a guide through this process, especially if it’s early on. ⁓ It’s very, you know, we don’t do coaching, so that’s not a pitch for that. you know, I think something along those lines, because while you can, you know, it isn’t rocket science, you can, you know, stumble your way through this. I did 25 years ago. So definitely it’s possible. But I think if you’re looking to avoid many of the costly mistakes that we’ve

in our past career and that can be deal ending, career ending, or financial wherewithal ending.

Cody Crabb (02:08)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. Today we’ve got Mark Mascia a founder of Collaborative RED After 25 years as a developer doing $3 billion plus in projects, he now acts as a development GM for institutions and family offices, helping them execute complex deals without building in-house teams. Thanks so much for joining us today.

Mark Mascia (02:30)
Thanks for having me Cody.

Cody Crabb (02:31)
Yeah, so just to start out, you’ve been on both sides here, ⁓ developer and now kind of owner’s rep. First of all, of give our audience a little bit of an idea of owner’s rep, as that maybe is not the most familiar term for everyone. But so what’s something that investors consistently kind of underestimate when it comes to development? Because now that you’ve seen both of these sides.

Mark Mascia (02:55)
Yeah, I think there’s a common conception among people that haven’t done development either much or recently that it’s that you throw an architect and a contractor in a room and outcomes, you your vision exactly as you had hoped. And in that.

You know, obviously a little bit simplistic, but just generally not even directionally close to true of reality in today’s development environment. So you really need someone on the, you know, call it an owner’s rep or call it an owner’s project manager. Sometimes it’s called development gun for hire, but we essentially can can make it so that the owner’s vision is actually implemented in the way that is desired from concept to completion. There’s a, you know, hundreds of decisions that are made pretty much every month

to make a project come out the way that it’s actually intended.

Mark Mascia (04:26)
and so when you’re brought in to lead the project from concept to completion as that role, you’re implementing the owner’s vision, but in all the details that are needed to complete that. So we do bring together the architect and the contractor, they’re key members of the team, but there’s hundreds of other people that are involved along the way and we organize and coordinate all of that. So it’s a really excessively full-time job from the beginning to the end. And that’s where we provide the value.

Cody Crabb (04:53)
Yeah, I mean, that’s certainly seems like something extremely valuable to the people that you’re helping. So you mentioned like hundreds of decisions every month. mean, what’s a specific decision that like if you get it wrong, maybe not one, but just kind of what are some things to think about early on in development that will really come back to bite you later on if you if you you mess it up?

Mark Mascia (05:17)
Yeah, it’s a great question, Cody. Each section of the development phase has kind of those, you know, deal killers or, you know, things that’ll keep you up at night if you don’t get them right. So really all along the way, like when you’re in the entitlement phase, the early part of the project, getting the permits and whatnot, you can over kind of promise in terms of what the town wants to see. So to try to win your approvals in many cases, there’ll be a lot of questions asked and, you know, a lot of

but

a lot of early developers will kind of hand wave away and say, sure, we can give you that, or we can offer this without getting a real understanding of how the ramifications of that. So that can be as simple as a retaining wall that was recently done on a project that sounded like a simple ask to protect a adjacent property owner that was all up in arms, that ended up costing a million dollars. And so that kind of hand wavy, yeah, we’ll give it to you to make you our friend and support our project, cost the project dearly.

on a project that almost couldn’t support it. there’s things like that in the entitlement phase. I think also in team selection, a lot of people choose lowest bidder on a lot of things, which tends to come back to haunt them in the construction phase. But that can also happen in the consultant selection phase. You choose the cheapest architect. Often you’ll pay for that in a different way. And then I think towards the end of the project, there’s also design and implementation of that. did you design the intake case of multifamily? Did you design the units correctly in a way that

that your lease up team actually is aware of a lot of times. Lease up is brought in at the end and then they have units that they feel they can’t rent for the prices and that’s too late, right? And so I think you wanna kind of think about the major decision points and tackle them well ahead of when it’s kind of too late to fix.

Cody Crabb (06:57)
So, you mentioned picking the right people. I’d be curious, how should someone think about picking the right team for a project? mean, picking the lowest bidder, is, mean, sometimes it could work in your favor, but sometimes not. I’d be curious to know what red flags or green flags do you see in those situations?

Mark Mascia (07:14)
Yeah, again, it’s such a great question because it’s literally the name of our company. It’s called Collaborative RED, Real Estate Development, because we believe that many people choose more of a competitive process. They look at everyone like they’re trying to beat them down either in price or they’re adversarial with them in terms of the contractor. We often hear, the contractor is just trying to get one over on you and you have to constantly watch them with vigilance. in general, of course, there’s always bad actors in every space.

I’m not saying that’s never the case, but in general, everyone we’ve ever worked with and we focus on first is the kind of ⁓ mindset of the company and how they actually operate as people, as humans, because development’s really complicated. know, everything in real estate is complicated, but development especially. And you’re going to get kicked in the stomach a bunch of times and problems are going to come up. No matter how good your team is, no matter how experienced, no matter what, things are going to go sideways at some point. And you want to make sure from the get-go that the people you’re in the foxhole with when things get hard are in in a collaborative.

not in a competitive mode because if you got one over on the contract or the last five times because you were looking at it as a competitive relationship that was just all about driving down cost, when you need them to be there to deliver for you, they’re not going to be there because you’ve been beating them up the whole time. Our core focus is on working with great people that are really excellent at their job and that way we’re able to actually collaborate with them to find a better solution that includes costs. Costs, I’m not saying don’t choose the lowest cost provider because the highest cost provider

is always better. That is absolutely also not true, but it’s much more about mindset and kind of the team mentality and we’re all in this together to create the vision and outcome for the owner.

Cody Crabb (08:51)
Yeah, I mean, that’s like you said, mean, cost is just one piece of this. It may be a big, big piece, but it really is just one piece. know, and a lot of what I’ve what I’ve come to find is that cost ends up being a problem because of other things sometimes. Like if you if quality suffers and people have to redo things, that’s going to also run up your cost. So, you know, that I think that that’s a really good point there. So.

How should, you know, what you’re looking at development in general, like let’s say an investor’s like, I wanna get into development. What’s maybe something they are not super aware of that you think they should probably be aware of before they get fully into the development space?

Mark Mascia (09:21)
Mm-hmm.

Yeah, I think, I mean, whether it’s us or, you know, a mentor or a lawyer that’s very sophisticated, you really need a guide through this process, especially if it’s early on. ⁓ It’s very, you know, we don’t do coaching, so that’s not a pitch for that. you know, I think something along those lines, because while you can, you know, it isn’t rocket science, you can, you know, stumble your way through this. I did 25 years ago. So definitely it’s possible. But I think if you’re looking to avoid many of the costly mistakes that we’ve

in our past career and that can be deal ending, career ending, or financial wherewithal ending.

You really want to have some sort of a guide to kind of give you the next steps because if you don’t know what’s coming, know, budget and schedule are the most important things to manage in development. They’re our Bible and without knowing what’s coming, it’s virtually impossible to manage the schedule because you’re always going to be behind the eight ball solving the problem right in front of your face instead of thinking two or three steps down the line. So you really want to have somebody

who can be your guide in that, in my opinion.

Cody Crabb (11:06)
Yeah, mean, I always say like, why make the mistakes that someone else made? Because you can just follow, like you can learn from their mistake instead of yours. So how does someone, how would you, if you were gonna start from scratch today, how would you go about finding someone that could kind of serve as that mentor for you?

Mark Mascia (11:24)
Yeah, I mean, I did it through formal training. I got two master’s degrees and each one of those schools found mentors and teachers. And through the program, I still do mentor at the Boston Architectural College and NYU where I previously went. So I think sometimes hanging around institutions can be a way to do that. Otherwise, groups like Investor Fuel and the other groups that are out there, there’s definitely a great network of people. If you put up the flag and say, I need help, think 99 % of the time you’ll

find someone who’s willing to help you out and they may not be the be all end all mentor for you across all things. But I think if you can hone it into like, what is this person, you know, able to help me out on? Is that something I need help with? It becomes a lot easier to see. think often I see people that are kind of like looking at someone like they have to be the guru for everything, like their personal life and their professional life, their finances, everything. And I think it’s really, it’s a lot of pressure to try to do that both for them and you. I’d rather see something where it’s like, you know, what I’m really trying to learn right now is construction permitting and then you can really

find somebody who’s the expert in that and they can mentor you as opposed to trying to find them to mentor you on the entire development process.

Cody Crabb (12:27)
So something you said just now stuck out to me. said budget and schedule are your Bible. So how do you actually stay ahead of things instead of just kind of putting out fires when things can go so many different ways?

Mark Mascia (12:40)
Yeah.

No, great. Great question again. Yeah, we’re, you know, so we have a lot of experience and we’re very fortunate to, you know, have made a lot of mistakes to learn from. But really, again, the whole point of the collaboration isn’t just a moniker. It isn’t just a name. It’s a way of living. And the reason is because there’s hundreds of people on this project, as I mentioned, almost every single one of them is smarter than everyone on the team in one specific area. So if we can get the domain expertise out of that person instead of me pontificating about it.

answer that they know more about, we’ll all end up better off. And so we always say like, all, you know, all of us are smarter than any one of us. And that way you’re able to get out of them, their expertise to avoid the problem that they see coming that you didn’t. That’s really one of the things that we happen to pride ourselves on doing is getting out of the team. What are they worried about? What are they thinking about? Where do they think this is going? If we follow this to conclusion, nine times out of 10, they’ll tell you and they’ll be right ⁓ because they have the same level of experience in their domain.

Cody Crabb (13:37)
So I’m interested in knowing kind of some of your perspective because you’ve been on both sides of this. You’ve kind of got experience in both sides. I’d be curious to know kind of what is something investors should know before, well, let me put it this way. What is something about development that investors should know before investing, maybe not even in development?

but like a developing project. So they’re not doing the development themselves, but something they need to be aware of before they start investing in a project that’s being built.

Mark Mascia (14:06)
Yeah, I think the pros that they should think about is that most of our clients now are family offices or people who have land that’s underdeveloped and they don’t even generally know what they can build. They may be a single story multifamily building on a few acres or it may be a two story house that could be done into much larger.

projects. So I think, you know, the first and foremost is, you know, keep your mind open to opportunity. And even if you don’t want to do that yourself, because you don’t have the skill set, then you don’t want to develop that skill set, I think be open to the idea of exploring that with a professional and either doing it like with a group like us or selling it, you know, for the development potential. I think that’s one thing that a lot of people, you know, depending on your market overlook. And then I think the risk side is, again, like it is 100 % true, anybody can develop

But I think the hubris there is if you don’t look into the risk factors along the way with like a guide or even just doing your own research through through, you know, reading and whatever the listening to podcasts, things like that. There are a lot of steps. And if you do them in the wrong order or, or timeline wise, you will be in a world to hurt that was otherwise completely avoidable. those kind of like self and self-imposed errors are really the

ones that can be really most painful and easily avoidable if you have a little bit of a leg up on the education side.

Cody Crabb (15:29)
So I kind of want to know a little bit more about collaborative read. Tell us kind of about what you’re doing day to day, kind of how did you choose to get into the specific clientele that you did and why have you stuck with that?

Mark Mascia (16:22)
Yeah, so we were doing development projects on our own and that was great. And I think most people, you know, want to get into development to be their own developer. So it’s, it’s often funny. People look at me sideways and say like, well, why go from that, the lucrative side to like the fee for service side? and the real answer is I love building projects. That’s what I love more than anything. And so it was a way of pivoting to doing more projects when you’re in development, you know, it’s tied to your own balance sheet and network. So whatever you can handle financially is what you can do.

And so the only way to unlock doing more and more projects is to become more and more wealthy and risk more and more of that wealth and Not only was that not personally comfortable for me It wasn’t something you know I wasn’t born with millions and millions of dollars to be able to do that with But also just like from a risk aversion standpoint I didn’t want to constantly lever up my net worth every single time I did a project and so in order to grow and do more projects Which is what I love to do. This was the obvious solution. It’s basically using the capital raising and

and operations of other groups to build them what they need and what they want. So they need a new building and they have the ability to run that building day in and day out. They have the way to finance that building, but they have no idea how to build it. And so we were like, this is great. We get to use our skillset to give you exactly what you want so you’re happy. And we get to do the projects that we wanna do and it’s a perfect fit. And I think from a clientele standpoint, we chose Ed’s, our primary

focus there is ⁓ private K-12 schools or higher ed institutions because we really value education and we we value kind of lifting people up so that was a huge emotional win for us to focus on those clients and the others are families, family offices, so people who are trying to give you know their kids a better life than they have by giving them a cash flowing asset instead of an underperforming piece of land that’s been a great win for us as well we’re able to you know we’ve worked with family offices for the last 25 years so it’s a world we’re very familiar and comfortable

in and it just again gives us a good feeling to be like hey these kids are inheriting a cash flowing asset instead of a problem that they have to try to sell once their family dies that feels a lot better for all parties involved.

Cody Crabb (18:29)
That makes a lot of sense for sure. So how are you kind of spending your time day to day within Collaborative RED?

Mark Mascia (18:34)
Yeah, so I’m the executive project manager, so I still have my hands getting dirty on all the projects because I love that. But really, been growing the opportunities that we’re doing. The projects are getting more more complicated with the financing world that we live in and the kind of chaos of inflation and construction costs. So I’m spending a lot of my time kind of managing these risks at the broader level. So getting involved earlier and earlier in projects and helping people manage those specific risks. So whereas normally our projects

took 18 to 24 months, now they’re taking more like 24 to 36 months because we’re getting involved so much earlier to solve so many more of these complex challenges. helping people structure their trusts and estates to make sure that it’s set up and ready for that. So while we’re not licensed and performing the legal services, we’re putting the right people in place to make that happen so that when they are ready to execute. And it’s been really fun and challenging, but it’s just definitely taking a lot more of my time and getting more involved early than what we historically had.

Cody Crabb (19:30)
This has been really insightful. So I would be curious to know also, know, what, I’m kind of getting the feeling that like some of this is a little bit like, kind of feel good reasons as well. I mean, it’s the, you know what I mean? Like the people that you’re helping are not like these giant corporations and stuff. I get the vibe that in addition to kind of having some of these advantages, one of the other advantages is kind of that you get to work with situations that are kind of.

small time kind of helping actual people type stuff. that, am I reading that right?

Mark Mascia (19:57)
100 % yeah, yeah, it’s a huge part of like why we do what we do. So we love building, we love buildings, but we don’t love buildings for the sake of building, right? We love what people do in those buildings. And so now that we can do things that, you just with the clients that we’re looking to work with, you know, it feels amazing to help a school for autistic children and then see those kids use that space versus, you know, build an office building for some, you know, big corporation. Like there’s nothing wrong with that, but for us, it feels just so much better to

you know, help underprivileged children or even just regular higher education people who are trying to get a degree. It feels so much better to help somebody learning. Learning is one of our core values. It’s the thing I valued the most in my entire life. And so to help people have a better place to do that and do more of it feels amazing. And the same with the families. are not, you know, some of the families we work with are extremely wealthy brand name people that you would know. But a lot of them are just normal people that have owned something for a long time and are trying to give their kids a better

life than they had and you know that resonates a lot with me too. have kids of my own and I’d love to try to do something like that for them someday as well.

Cody Crabb (21:03)
Yeah, that’s awesome. And I feel like a lot of people kind of would love to do more of that. I think real estate has this kind of perception as it’s kind of like the, you know, the scummy landlord type view of real estate investors. So ⁓ if someone wants to find more feel good projects like that, how can they do that? Like what if someone’s wanting to get the warm fuzzies from work instead of the other thing, whatever that is, where do they look?

Mark Mascia (21:28)
Yeah, yeah. I mean, think it’s like getting back to what you love. That was at least for our path. That was the best way, right? We were doing projects all over the country, making more money, you know, doing things that people would find more compelling and interesting, you know, around the dinner table. But it wasn’t filling our soul. It wasn’t what we really loved and enjoyed. And so when we sold that company and started this one to pivot towards helping others, really said like, what would be amazing? What would be the best way to do that? Because building buildings is what we love. That’s great. But can we do

more than that and that’s how we were able to find this. But yeah, it’s not easy, right? I mean, it’s definitely, I could find ways to make more money doing something else in some ways, but to align that vision where it’s something you love, something you can make a good living in that you feel happy and successful around, and then also doing something that has a bigger vision or more meaning. I mean, I don’t think there’s any better way to live your life personally.

Cody Crabb (22:22)
Yeah,

for sure. mean, that’s you’re living the dream, as they say. So if any of our listeners want to get in touch, work with you, find out more, where can they go online to do that?

Mark Mascia (22:31)
Yeah, mean, collaborativered.com I’m very active on LinkedIn or feel free to shoot me an email, [email protected]

Cody Crabb (22:37)
Thank you so much. Yeah, our audience would love to get in touch. I’m sure this has been really interesting. Thanks so much for joining us and thank you listeners as well for joining us. If you got something out of today’s episode, and I’m sure you did, please go ahead and give us a like, subscribe, comment, review, all the things, and then don’t forget to follow us for more episodes with people like Mark. Once again, it’s been a real pleasure talking to you. Thanks so much, Mark. Have good one.

Mark Mascia (23:01)
Thank you.

You too, thanks.