How to Develop Lakefront Real Estate | Land Acquisition, Spec Homes & Investor Capital

Guice Mercer (00:00)
Man, so we were in the middle of a deal and the investor backed out and I had a lot of money sitting on the line already through all of our due diligence and everything that we had done. And the bank actually backed out of our deal. And we were needing sixteen million dollars, and they backed out after we had already spent eight million of investors’ money and our time and development.

Freddie Steen (01:56)
Hey everyone. Welcome to the Investor Fuel Podcast. I’m your host, Freddie. And today I’m joined by someone I’ve been looking forward to chatting with, Guice Mercer of Me Too Designs. Guice is based in the DFW area, but he has a great legacy with another company that you might have heard of with A21 Investments. Guice, I’m glad to have you here.

Guice, I think our listeners are really going to take something away today from how you’re approaching land development and spec deals. I’ll give them a little tip. He actually, Guice Mercer, his niche is developing land around lakes and golf courses. So let’s dive in. So, first off, for people who may not be familiar with your world, give us the short version. Guice, what’s your main focus these days? And what markets are you currently operating at?

Guice Mercer (02:47)
We are currently focused on a lake called Cedar Creek Reservoir or Cedar Creek Lake. It is southeast of the Dallas-Fort Worth Metroplex, kind of between Dallas and Tyler. It’s one of the largest lakes in Texas. And we are really primarily focused on lakefront property, lakefront living.

Freddie Steen (03:06)
Guice, many of our listeners are active in standard single family, flips or wholesaling and may not be as familiar with your niche. What were the biggest structural and operational shifts that you had to make when transitioning into high-end luxury lake communities?

Guice Mercer (03:22)
For me it was easy. If you build a home, your price per square foot is going to be the same, whether it’s on thirty acres, it’s on a quarter acre, it’s in downtown Dallas, out in the country, your price to build is going to basically be similar. The advantage that I found was being on lakefront, the price per square foot to sell the home once you get it finished is quadruple what you would sell if you were just in a regular spot. So I saw the opportunity that if we could build a spec home and it costs us basically the same to build it, other than the land cost. Land cost on water is going to be a little bit higher, but you have to be really smart and you have to buy the right land, the right lot, and you really have to know the water that you’re looking at and where to build and where to buy.

But they don’t have any water depth. And people don’t want that. They want to be able to swim. They want to be able to get their boats in and out. So you really have to know your market. You have to be very, very careful whenever you’re buying the land, because that could make or break the whole deal.

Freddie Steen (05:10)
Guice, waterfront and luxury developments come with massive upfront capital expenditure. How do you structure your risk and debt to protect your investors when dealing with long-term infrastructure plays?

Guice Mercer (05:22)
Well, you try not to make it long term. You want to turn it as quickly as you can and you have to be very methodical about that. You don’t want to sit on carrying costs. With the previous company that I started and ran, at one point we were spending sixty-three thousand dollars a month just in carrying costs because we got stuck when the market crashed back about four or five years ago, when the interest rates kind of did their deal and the whole market, everybody just kind of froze. And we got hung out with that and it almost bankrupt us. You got to be very careful with that. So you really got to chew—you got to be—it’s you’re going through a haystack looking for that needle. And when you find the needle, there’s big money to be made.

Freddie Steen (06:00)
Guice, the buyer persona for a custom home at Cedar Creek Lake or the Pinnacle Country Club is very different from a suburban retail buyer. How do you adapt your marketing and project design specifically for this high net worth demographic? Let’s talk Me Too Designs.

Guice Mercer (06:19)
Well, it’s the difference between somebody that wants to buy a Chevrolet Malibu or a Mercedes-Benz. You have to know your customer and what they’re looking for. They’re looking for that high-end experience. They’re looking for those touches. People don’t see the two-by-fours. They don’t see the sheetrock. They see the finish out, your fixtures, your light fixtures, what kind of granite, stonework you use, what kind of flooring, the paint, the design of the house and the layout is so important, especially when it comes to lakefront living. You have to build a property that is going to be appealing to that person. And when you do that, it’s going to sell.

Freddie Steen (06:58)
Love it. Guice, what caught my attention about you was the way that you’ve been able to take land development to actual lakefront, usable lakefront, profitable developments in markets while still keeping your margin strong. That’s not easy, especially in this climate. What’s been the key to keeping that machine running smoothly?

Guice Mercer (07:21)
Location, location, location. That’s the biggest thing. You have to understand. I don’t care what market you’re in. I don’t know suburban markets as well as I do waterfront lots and stuff of that nature. But you got to have the right location. You almost—I always build the house on paper before I ever break ground, before I ever even present a deal to a potential investor. I want to know what the market is now. I want to know what’s sold around me. I want to know what those margins are. And if I can buy the land right and you can work the right deal, that’s where you start. You have to win on buying the land.

Freddie Steen (07:59)
You actively operate—

Guice Mercer (08:00)
Yeah, quite.

Freddie Steen (08:01)
… absolutely. Guice, you actively operate in both the Dallas core Dallas-Fort Worth Metroplex and secondary lake markets like Henderson County. How do your acquisition and development strategies change when dealing with city municipalities versus rural county infrastructure?

Guice Mercer (08:21)
That is a great question.

Freddie Steen (08:22)
Thank you.

Guice Mercer (08:23)
So, every county, every city has its own rules and regulations, correct? Correct. So you have to almost be a chameleon in the way that you conduct yourself. I can put on the suit and tie, I can walk in the high end, have my Rolex on, have those meetings with those guys, and you have to be able to also slip into your blue jeans and your boots with a little mud on them and go talk with Bubba down here at the lake that understands small town politics as well. So whenever you’re dealing with—if you’re talking specifically about building in those two different areas, you have to be able to conduct yourself in a way where you can fit into both worlds, if that makes sense. And I hope I’m answering the question that you’re asking properly, because you can’t—and always be humble. The biggest thing is you got to be humble. Okay. And you have to also understand that you are working with someone who’s an expert in their field and let them be that expert.

Freddie Steen (09:58)
That’s key.

Guice Mercer (09:59)
Does that make sense?

Freddie Steen (10:00)
Guice, absolutely. When I think about your trajectory and what you’ve been able to accomplish, you rely so heavily on off-market real estate acquisitions at a time when competition for land is so fierce. As you told me offline, “The real estate that’s here is what we got.” So what specific direct-to-owner or institutional strategies are working best for you and Me Too Designs right now?

Guice Mercer (10:28)
Cash talks, baby. You got to set yourself at a position to where when the right deal comes, you can just cash the check. You don’t want to be set up in a position where you can’t. But the other thing is, and let’s say you don’t have the cash, okay? Let’s say somebody’s struggling. Let me talk to those people real quick. If you don’t have the cash, don’t not put the deal together. Go talk to the owner. Maybe you got to put up a little bit of earnest money. If it’s a two-hundred-thousand-dollar piece of property, you got to risk two grand. You put up the earnest money. You give yourself a 30-day opportunity to look at everything and make sure it’s what you want it to do. And you just bought 30 days to put a deal together. Put the deal together on paper, make sure your plan can fit the build lines that are within that property. Do a little bit of research. You don’t have to spend a ton of money on it.

And then present that to an investor and that investor will fund the project. Just make sure that you’re not greedy. Make sure the investor—they’re taking all the risk if that’s what you’re going to do, you know what I mean? So you have to make sure that there’s enough meat on the bone for the investor to want to do it. And then you want to do not just that deal, but multiple deals, because if the investor makes money, you’re going to make money and everybody’s going to be happy.

Freddie Steen (11:34)
Now Guice, every operator I know has a moment where things got real. Maybe a deal that went sideways or a time they just had to pivot fast. Mind sharing one of those moments for you?

Guice Mercer (11:45)
Man, so we were in the middle of a deal and the investor backed out and I had a lot of money sitting on the line already through all of our due diligence and everything that we had done. And we’re talking millions here. The bank actually backed out of our deal. And we were needing sixteen million dollars, and they backed out after we had already spent eight million of investors’ money and our time and development.

And when the bank—basically the banks have these buckets, right? And they have so much that they can do out of each bucket. And by the time we got to the point of spending the amount of money that they wanted us to spend, kind of like a down payment, we went back to them and it was time and they’re like, “Well, we’ve already funded all these other deals. You guys took too long,” and they backed out. And we really had to pivot and we had to pivot quick because the carrying cost and everything else that was involved in the deal. And luckily enough, we were able to approach some people that were already somewhat interested in the project that we had. And they came in. Now we had to give up almost forty percent of our company, but they saved our butt.

The project went through, it was completed. The first two homes are being built there now in that subdivision that we built. We did all of the horizontal stuff, and now it’s time to do the vertical. So it’s coming along quite well. But the biggest thing is you don’t panic. You have to stay super focused and just—you can’t lose until you give up. Just don’t give up.

Freddie Steen (13:08)
Guice, your pivot, understanding a very rough patch like that and pivoting to be able to do the work horizontal and vertically. That’s the kind of stuff people don’t talk about enough. I mean pivoting. And honestly, it’s what separates the folks who just dabble from the ones who stay in the long game, in the game long term, like you. Yeah. Would you agree with that?

Guice Mercer (13:27)
I would agree with that. This is not something for the weak. You have to be strong-minded. You have to be strong-willed. You have to understand that you’re not always going to hit a home run. You don’t win Super Bowl on one game. You win on being consistent. You win on working harder. You win on making changes. Maybe you got to make a quarterback change in the middle of the season. Maybe there’s something that’s got to be done. Maybe you got to change your play calling. You’re going to face different teams and different adversaries, but it’s the persistence, it’s the showing up every week, it’s the mornings when you don’t want to get out of bed and you literally have to tell yourself, “Look, man, we’re not going to make no money laying here, we’re not going to make no money sitting at home watching TV. I’ve got to get out.” Even if it’s another day of no’s. Those no’s literally—I hate when people say the no’s get you one closer to a yes, but that is—the more people you talk to, it’s a numbers game. You have to put yourself out there. You never—and never ever ever underestimate somebody. You never know when that person has a friend or—I’m not one to boast about things. You would never know if I’m dead broke or if I got twenty million in the bank because I’m just your average guy. But you never know who you’re talking to. You never know who their parents are, who their best friend is, what connections they have. So you have to keep that in mind.

Freddie Steen (14:45)
Let me ask you this, Guice. What are you most focused on solving or scaling next? What’s the next real goal for you?

Guice Mercer (14:52)
The next real goal for me is to solidify some new investors. I’ve got projects that are on the table right now that we could make really good money on. I’m trying to develop those new relationships, especially with Me Too Designs, so that’s what I’m focused on right now. And I really honestly think we’re in a great time to do that. And here’s why. The markets are going to come down. Interest rates, they’re already talking about it. The interest rates are going to come down. Do I want them to go back to zero? No. Let’s get them to two, two and a half, three at max, maybe, and the money’s going to start flowing again. People are going to be able to do it. Whenever the banks—the banks have to survive also. We all need each other. Yes. And when the banks are getting zero percent interest, they’re not surviving. And it hurts the market in the long run. It’s great for us because we can sell—just, I can sell ice to an Eskimo when the interest rates drop. But whenever you have to—the interest rate goes up, carrying costs go up, expenditures go up. I’m a little bit nervous right now about fuel cost just because everything comes by train or truck. Everything. And when fuel cost goes up, the trucking companies can’t survive. They have to increase their price. Whatever they’re delivering now, they have to charge more for it. And just the shipping cost alone is going to drive up a lot of your market.

And we really, really need the markets to kind of come down on that side of things. It’s going to take some time to adjust, but if the fuel prices do stay high, we really need them to do something on the interest rate on that end to help guys like me and you and push forward because real estate, like we talked about before that we started, they’re not making any more dirt. The dirt we got is the dirt we got. We’ve got to be able to utilize it and take advantage at the point we’re at now. And we can’t worry about what happened in the past. We do have to worry about what’s going to happen in the future. And right now I think the future with the interest rates are going to go down. And if we’re going to build, we need to be ready because as soon as they drop, buyers are going to be ready to buy and we’ve got to have a product for them to buy.

Freddie Steen (16:42)
That brings me to my next question. I love what you just said. The developer-investor dynamic, of which you’re an expert in this. Guice, Investor Fuel Podcast features a lot of syndicators and fund managers. When you are funding a brand new lakefront community development or golf course development, how do you structure returns and then manage expectations for your passive investors, given that development timelines can stretch across multiple years?

Guice Mercer (17:10)
They can, and you don’t oversell what you’re providing.

Freddie Steen (17:16)
Don’t—

Guice Mercer (17:16)
Overpromise. I would rather come and be like, “Hey, we made more than we expected,” than to tell somebody some pie-in-the-sky number and not be realistic. You have to be realistic, you have to be honest, open books, let people look at what you’re doing. And it’s not hard to be a good person. Today we are lacking across multiple levels of people that are just—it’s just greed in a lot of ways. I’ll take less on a deal if it’s going to help my investors because I know if he does good, he’s going to want to do another deal. So I really enjoy my investors. They’re like family. I like to be personal with them, because if they’re doing good, I’m going to do good. So I try to offer deals that I know is going to be profitable enough for the investors. A lot of guys—I’m not going to risk $100,000 if all I’m making is five grand at the end of the day. But I’ll risk a hundred grand if we’re going to make twenty-five or thirty. You got to keep those percentages up. And the way you do that is by controlling your costs, controlling your builds, and controlling your labor and not letting things go out of hand. Now there’s always going to be that one-off situation that’s kind of odd and weird and you’re going to have delays. Mother Nature obviously you can’t control, but you have to anticipate that and just be honest, and communication is the biggest key. Always, always, always, whether it’s good, bad, or ugly, communicate with your investors and let them know where you’re at and what’s going on. It’s whenever they’re in the dark and that they don’t feel like they’re included in the project that things can really go sour.

Freddie Steen (18:46)
Well, Guice, that’s big. Especially when you’ve already got such a foothold in lakefront communities, golf course communities. The next move can either compound things or create chaos, depending on how you play it. Guice, I know a lot of people listening right now are either earlier in their journey or looking to level up like you and Me Too Designs. And I think they benefit from hearing this. When it comes to building relationships and growing your network, what’s made the biggest difference for you?

Guice Mercer (19:14)
Be personal. It’s not a business deal, okay? It’s not about the money. Not all money is good money. It’s about—you have to understand, let’s say we’re going to build a—let’s say I’ve got a property and I’ve got a floor plan, we’re ready to move forward with it, right? You’re going to be an investor, you want to come on board, we’re going to make this money, right? We’re not just making money for me or for the investor. We’re also making money for our families, for our kids’ kids. We’re doing it because we want to succeed, but it’s not always about me. It’s about building something as a partnership and really—you’re not—all the way down to the guy that you hire to clean the house at the very end. He’s providing for his family. Now, am I going to go pay him three times what—no, you got to be smart with your money, but you got to make it sure that he’s making money too. And you let them bid the job, if they bid the job and it’s X amount and that’s what we got to do, that’s what we’re going to pay. I come from a background from Louisiana, I’m Cajun. And there’s a saying that’s called lagniappe. Lagniappe is the little extra. Whenever you used to go to the store, you’d get a scoop of beans. The old guy would scoop in and he’d get your beans and he’d throw it up there and weigh it. And maybe you’re wanting a pound of beans and it comes to point nine five or something, right? A little less than a pound. But he’ll reach in there and give a scoop and throws it in the bucket. Now it’s at one point five. Well, you’re only wanting a pound, and he’s got one point five in there. That little extra is free. And he gives it to you because that builds that community. It builds that personal relationship. You’re going to go back to that guy because he gave you that little extra because he cares. And even if you’re doing a $16 million development or a $200 million development, and you’re fixing to put in 400 rooftops and you’ve got all this stuff going in, there’s still guys out there that’s laying the concrete. There’s still the contracts that’s got to be done. There’s still items, all of your infrastructure that’s got to be done, your water, your sewer lines, electric, fiber optics, drainage, everything that goes into it, you have to have that personal relationship with those guys. And when you make it personal, then they have pride in what they do more so than just doing a good job. And at the end of the day, me and my investors are going to be happy. We’re going to make the money that we want to make because it’s going to be done on paper. We know what we’re going to make before we even break ground. Or we know we have an idea of a ballpark. Markets can change, but if you have your stuff in organization—or you got to be organized. Whenever you pull the trigger to go, that’s when the money starts flowing. That’s whenever the carrying costs start. And every day, every minute matters. And you’re going to have, like we talked about a while ago, those delays, you got to stay on top of it and just like you were saying though, you just got to be personal. Understand this business is a people business. It’s not a money business. We make a lot of money doing it, don’t get me wrong. And real estate is a great—I wouldn’t be doing it. I used to have a trucking company back years ago. I won’t go back there. But they’re not making any more land. You make it personal, you build a business, you build a family, you build those relationships. And not all relationships last forever, but that’s the way I do it anyway. And I put God first. If we can’t be equally yoked, then we don’t need to do business together, even on that aspect of things. And that’s just the way I do business. Like I said, it’s not hard to be a good person.

Freddie Steen (22:26)
Well, Guice, you’ve taught us two nuggets. Lagniappe, we know that word now from the bayou. Yes, we know that word from the bayou, lagniappe that you just taught us, which is a little extra. And also, our real estate pros definitely resonate with you in your faith tradition. Relationships are everything in this space, Guice, and you can’t fake that. All right.

Guice Mercer (22:47)
All right.

Freddie Steen (22:47)
Now before we wrap, Guice, I could talk to you all day. But 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?

Guice Mercer (23:00)
I’m very personal. The best way to reach me, send me a message through either Instagram or Facebook.

Freddie Steen (23:06)
But—

Guice Mercer (23:07)
… and just do it on my personal page. Just send me a private message. Let me know you saw me on the podcast, we’ll talk and go from there. I’m always looking for investors that want to invest. Like I said, I only do lakefront and golf course communities, I really focus more on waterfront than anything because you can sell it. The price per square foot when you get it built is way higher than if it’s just off water. And I’ve got some really, really good deals right now, like we were talking earlier. I’ve got a deal all in will be for about 700. We can list it for 1.2 on the high end, on the low end, maybe we make a million, but there’s still almost $300,000 there to be made. Where else can you do that? And I’ve got—I don’t know if you can see behind me here, I’ve got nothing but blueprints and success stories and I’ve done this. I have yet to lose one. I’m not saying that it can’t happen, but I’m very smart at how I do it and it’s all laid out on the table. Reach me at Guice Mercer on Facebook. My Instagram is actually a little silly. I have a little more fun with that. It’s called @alligatoroutlaw. Kind of a little bit of my old bayou roots there, I guess, coming out, but yeah, just reach out to me on Facebook or Instagram and I’d be more than happy to share my experience, show you where the potholes are for some of these younger guys that are coming up and hey, I’m always willing to learn too, so—

Freddie Steen (24:23)
Guice, that’s perfect. Well, listen, I appreciate your time, your story, your perspective. We need more people in this space who are doing it the right way. So thanks again for being here. And congratulations on the transition from A21 Investments to Me Too Designs.

Guice Mercer (24:39)
Thank you.

Freddie Steen (24:40)
Guice, it was an amazing conversation. So again, from our real estate pro audience to—from all the way to me, thank you so much for being here again.

Guice Mercer (24:48)
Hey, I need to say one thing before we cancel. There’s three things that you have to remember in anything you do in life. Number one, God cannot lie. He can’t. Number two, forget your past because He has. We’ve all made mistakes. And number three, and this is the most important part, you got to stay obedient. If you stay obedient to God, you do what He tells you to do. You pray, you listen, you read your Bible. And it’s real easy to be obedient. Dad’s Dad. We’re kids. If we’re down here running around being knuckleheads and not being obedient, Daddy can’t bless us with candy at the end of the week. You stay obedient, just be a good person. Dad’s going to take care of you. So want to leave you with those three things.

Freddie Steen (25:24)
Gratitude, Guice. 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 Guice Mercer and Me Too Designs, who are out there building real businesses just like you. We’ll see you on the next episode. Thank you, Guice.

Guice Mercer (25:44)
Thank you.