Real Estate Development Strategies: Underwriting, Raising Capital and Managing Risk

Tyler Williams (00:00)
this business, for real estate investors, it’s gonna always be the three Ps, And that is people, process, and profit. You gotta have the right people. If you don’t have the right people, it’s not gonna work. You got to have the right process and procedures. If you don’t have the right process and procedures, then

Is it’s going to delay the product and it can make the project fails. And then the profit. It’s just got to make sense on the end. If you can follow those three things right there, then you’re a key to success. And then for the newbies, everybody wants to know the how when they need to know the who. If you want to know the how, get to know the who, can show you how to do these things the right way, and then the how will be easy for you. That would be my advice for everybody.

Scott Bursey (02:14)
Welcome back to the *Real Estate Pros* Podcast powered by Investor Fuel I’m your host, Scott Bursey Glad you’re with us. And today we’re thrilled to be joined by a pro in the real estate world, Tyler Williams, who brings 25 years of experience as an investor, builder, developer, fund manager, and entrepreneur. Tyler has flipped, built, and sold over 50 million dollars in real estate while educating himself to empower.

the next generation of investors. Listeners, you can expect an energetic, high-level conversation packed with strategies on structuring deals, managing capital, and scaling your real estate portfolio. Tyler, welcome to the show.

Tyler Williams (02:57)
Thank you, Scott. Thank you for so much for having me. Yeah.

Scott Bursey (03:00)
It is wonderful having you here and to help our listeners get up to speed. Please give us the ninety second highlight reel of how your career Ignited and where you’re pouring your fuel now.

Tyler Williams (03:11)
yeah, that’s a good question. Okay. well, before I got into the real estate business, I was in the alarm business. I was a very successful ADT home security business owner. And we had one of the biggest ADT security companies in the in the nation. me and another partner in three years we built the company from the ground up. We had like 10 locations and almost 3,000 employees, And once that business ended it, we sold it, and I just needed to figure out, some different things I would want to be able to do.

And, coming from a more structural situation, I didn’t really know anything about real estate. and then all of a sudden, I got an opportunity from a guy that, said, Hey, I give you some money to be able to flip this house and back then it was called a lipsticks a flip, a paint carpet, and I think I made twenty thousand dollars on it. I was like, my gosh, it was just like insane, And that’s a

how I got into the business and it kind of started from there.

Scott Bursey (04:02)
Well, thank you for highlighting that, Tyler. And what really caught my attention about you was the way you’ve been able to navigate complex ground up developments and private capital funds while maintaining a relentless drive to teach and mentor others in the industry. And expanding on that. curious to know what do you consider your greatest operational strength when executing large scale builds and managing investor funds?

Tyler Williams (04:29)
Yeah, that’s a good question right there. the number one thing is that you always have to protect the asset, and the investor money. that’s the biggest thing. that’s it’s like the triangle. It’s the investor money and then it’s you on one end of the triangle, and then it’s the investor on the other, the money, and that’s invest is always bigger than everything the asset is. the biggest thing is making sure number one that you go in finding the right asset.

It has to make sense. If it doesn’t make sense, it does make sense. some of them can look like they’re wonderful projects, but that doesn’t mean that it’s a profitable project. And so a lot of the strategies that we put together is we got a ton of systems that we have in place. We make sure that our pricing are is right. we make sure that we have several exits out of the project because that’s key. and then we look at the cost it would be if we have to hold on to that project.

in the end. So the and then we put the right people in place, the people that can manage the project. And then the financial aspect of it, we always try to make sure that our exit out of the situation matches what the investor put in. So that way I always look at the back end that what if we have to sell this asset short? even if we do, that still protects the asset and protects the investor’s money that we put in place.

Scott Bursey (05:44)
Diving right in, Tyler, where do you see the biggest internal operational bottleneck or area of risk when scaling real estate portfolios today?

Tyler Williams (05:55)
valuation, sometimes

the evaluation has to be key and you have to look at market trends. Is this is this going to be the same value five years ago? and then location. Location is key. right now location is market sensitive right now. There are areas that

they will not lose value even in a down market, And that has have that’s been that has held true for years. so you have to really put a good eye on the deal. And what I look at where the sit people running situations is where they get a good deal in a bad area, thinking that the mark the area is going to grow and then they end up being stuck in that. So what we look at for safe investments for our investor and our team is to make sure that we kind of

stay in the trends and putting them in areas that have historically the values have stayed the same. And that’s what kinda puts us in this in a safe place right there,

Scott Bursey (06:51)
And kind of staying on that path, love to ask, what is the most lucrative market opportunity you see right now for real estate builders and fund managers?

Tyler Williams (07:48)
that’s a good question right there. it’s it just depends on people’s appetites, there are some great multifamily situations where if you’re looking for that residual revenue, I I think that’s always a win situation, but you have to be very careful with that because once again you have to buy right, I think honestly, I still think affordable housing is something that

everybody is still not really diving into. I think that’s a always a safe bet. Because I think you still need to look toward what the future is going to get. It’s gonna come a day when nobody’s gonna be living in five thousand, ten thousand square foot houses. And there’s gonna be days when people are not going to wanna just be living up a up under each other in apartment complex. I think the smaller tiny homes, microcommunities is what is where the future is going. and for me

the tiny home micro communities as well as the as the micro apartments. I call them micro apartments where you get a piece of land and you got 10 units, on that. And then you do those 10 units and then you’re gonna get another piece of land, you 10 units. And what that does is it’s profitable and it brings in revenue, but it is easier to manage than going out getting a hundred unit, apartment complex. If that fails, then all of the asset is tied to that one

where you got multiple assets and that puts you in a better, safer situation when it comes to investing.

Scott Bursey (09:06)
How can an active investor position themselves today to capitalize on the micro properties ahead of the competition?

Tyler Williams (09:15)
Well, the good thing about it is when you look at single family homes, there’s a lot of competition, it’s a dog eat dog. you you’re kinda out there because you can’control what somebody else’s situation is. You build a house for two million dollars and the guy down the street when you decide to sell the same house, the same square footage of you for a million dollars. He just puts you in a bad situation, but I think that the micro community situation, there’s not a lot of

Competition right now. when you start looking at some city to cities, you may see one micro community situation and you see it’s successful because they sell out so fast. and there’s so many different variations to it. I think that that’s a that’s an area right there that everyday average person, you can go buy a cheap piece of land somewhere and you can put a tiny home on there that maybe four hundred square feet and turn around and sell it for

$200,000 and all of a sudden, you can you can still make a profit. So I think that it’s easy and they used to not be financing for that. Now that’s financing for tiny homes, You used to couldn’t get a lender to do it. Now you can. So I think that that’s a niche right there that I think a lot of people getting into the business is safer, doesn’t cost as much, and it’s easier for the learning curve because you’re talking about four hundred square feet instead of four thousand square feet.

Scott Bursey (10:29)
Thank you for sharing that incredible clarity right there. And looking at the big picture, what do you view as the biggest external market threat facing developers and investors in the current economic landscape?

Tyler Williams (10:43)
a lot of inventory in the market. I mean, I mean I look at what happened during the real estate crash and I was a part of the real estate crash, you look at what happened, it could come in like a thief in the night, which it did, you wake up the next morning and everything is over, no lenders, no banks, no anything like that. So, in that situation,

When you have so much inventory on the market, be in a development situation, it can just be risky, So what you have to do is, you have to pace yourself, and it’s not about how much money you can make by having so much inventory out there, it’s how much you can keep. So you just have to micromanage your own finances and really start cutting, figure out ways to cut costs so you can be more profitable.

on short inventory situations than going out there, developing twenty different plots and then realize that you got so much out there. I think that’s I think that’s the biggest risk, for me.

Scott Bursey (11:37)
Thank you for emphasizing that risk factor. And following up, what defensive risk management rule should every investor implement immediately to protect their capital, in your view?

Tyler Williams (11:50)
don’t overspend, and don’t over evaluate, every deal. I mean, you have to play a safety, like everything’s risky, but if you don’t take risks, you don’t win, right? And so I think that, I always use the guidelines. I know I know everybody’s into the old 75% ARVs, I if you go back old school.

There was a reason why they put margins in place at 65% ARV, and things like that. It’s because of the fact that you’ve got to look at market trends, to make sure that in the event of these precautions that we put in place. But also when we look at deals, we also look at other deals that if we’re short here, we can win here. So sometimes

You got to be able to have, you have to have a and a B plan, so that you can see your way out of the situation,

Scott Bursey (12:40)
And switching gears slightly. When mentoring aspiring real estate investors, what is the most common flaw you see in how they analyze deals?

Tyler Williams (12:49)
Mm-hmm. yeah, I think they followed in love with the project more so than really paying looking at the numbers. they s they new ones, they got to understand that it this doesn’t work without having the right people. And also financial literacy. you they’re gonna so I I’ve seen some of them going into projects where

they have to manage a five hundred thousand dollar budget. And they’ve never seen five hundred thousand dollars in their entire life. And now they have to go and they have to manage this stuff. So I see a lack of management on that, as well as falling in love with the design shows and things like that, and just putting too much into a house and just not following proper protocol, So it’s a lot of factors. That’s why they need some.

some extreme guidance when you’re jumping out here in this business,

Scott Bursey (13:38)
Let’s touch on underwriting just a tad, Tyler. What is the single fastest shift an investor can make to master deal underwriting?

Tyler Williams (14:28)
Well, one thing about it is they gotta understand the numbers, they got to understand that, you one thing about it they gotta look at I always look at d DOM days on market, when I’m looking at something. That’s my key point right there. I always look at how many days did each one of these houses in this market, stay on the market. That’s key. If you’re looking at st stuff that’s

been on the market for, a year and then sell, that that’s probably not a good area that you want to be able to go in and start doing that. That’s one key thing to my underwriting guidelines on that. the other thing is getting the scope of work, the cost to be able to do this. You really got to get that under control. And with all of the international resources right now, it really helps to get your cost under control. And it’s surprising that

So many people are not utilizing all those resources to be there. But those are the key things that were they mess up when it comes to the underwriting of a property and project,

Scott Bursey (15:22)
Excellent insight for anyone looking to scale safely. And Tyler, if you could take us down the path of what does your professional network look like right now?

Tyler Williams (15:33)
my professional network, looks like a whole group of people. you got architects, skilled architects, you got engineers, you got attorneys, you got land surveyors, you and you got a ton of multiple level skill contractors. and then very seasoned real estate agents that we all work together as a team to figure out the best.

Home for this, for this particular project, the best asset to be to put on this land. going through all the numbers, going through everything to make sure that everything is set in place. And so when I tell people you gotta have a team, you need to have a team, you can’t really do this, by yourself. And some great investors that are that are looking at you to make the right decisions,

Scott Bursey (16:18)
Thank you for sharing how you surround yourself with elite operators. That makes all the difference in the world. And Tyler, in your view, what is the most powerful strategy for raising capital and securing investor trust on multimillion dollar deals?

Tyler Williams (16:35)
Well, yeah, I mean, i it’s a learning curve because raising money is just like managing money. you can’t roll off the bed and do that. it could be risky to you and risky to the investor. you definitely need to team up with somebody that that’s seasoned. because nobody wants to give you a million dollars if you’ve never done anything in real estate before. I mean it I mean they I’ve seen it happen and I’m I’ve seen a lot of disasters.

but you gotta they wanna see you wanna put together a solid team, and you wanna have a solid plan and you want to put all your legal documents and stuff and get them and contracts and get with attorneys to make sure that everything is put in place and you have a viable plan to be able to make sure that you get your investors their money back, even if it’s a risk, still the plan is to win and not to lose,

Scott Bursey (17:20)
Thank you for unlocking that for us. And Tyler, you have given us a great amount of advice here today. Words of wisdom. Is there any additional golden nugget or two that you would like to leave with our listeners?

Tyler Williams (17:35)
yeah, I just think that w every business for me is unilateral no matter what it is. And for me, for this business, for real estate investors, it’s gonna always be the three Ps, And that is people, process, and profit. You gotta have the right people. If you don’t have the right people, it’s not gonna work. You got to have the right process and procedures. If you don’t have the right process and procedures, then

Is it’s going to delay the product and it can make the project fails. And then the profit. It’s just got to make sense on the end. If you can follow those three things right there, then you’re a key to success. And then for the newbies, everybody wants to know the how when they need to know the who. If you want to know the how, get to know the who, can show you how to do these things the right way, and then the how will be easy for you. That would be my advice for everybody.

Scott Bursey (18:25)
Love it. Great advice. And Tyler, for those of our listeners that want to keep this conversation moving, stay in your lane. Collaborate with you on future deals, perhaps. What is the best way for them to reach out to you directly?

Tyler Williams (18:39)
Yeah, they can reach out to me at [email protected] That’s [email protected] because money is the key to everything. We can get them approved, set up, and we realize they need the training. We can then tag into them to get them to be able to come over to some of the free training that we’ll be giving up.

Scott Bursey (19:03)
Tyler, thank you so much for joining us today on the *Real Estate Pros* podcast.

Tyler Williams (19:07)
Thank Sky, so much for having me.

Scott Bursey (19:09)
It has been a pleasure, my friend. And to our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We’ll be filling your tanks with the lineup of elite guest, just like Tyler Williams, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.