Subscribe via:
Show Summary
In this conversation, Walter Bowman, CEO of Tebow Residential, discusses the evolving landscape of real estate development, particularly the shift from flipping properties to engaging in larger development projects. He emphasizes the importance of understanding market dynamics, building strong banking relationships, and being adaptable to changes in the market. Walter also shares insights on the unique challenges of developing in the DMV area and highlights the significance of external factors that can impact real estate investments.
Resources and Links from this show:
-
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Doc Walter Bowman (00:00)
Absolutely. And you can find yourself in serious financial turmoil to be exact. that timing again, it’s a science, but it’s not a perfect science because there’s just some things beyond our control. There’s just some things that you cannot forecast. A classic example, COVID. I mean, developers across the nation, any developer watching the show know that at some point doing covert, you could not afford to build a project with a two by four costing $2,030, jumping to $15,080.That’s a seven-time multiplier. And imagine if you got 3,000 pieces of 2x4s you need across that project. There’s no way possible.
Dylan Silver (02:09)
Hey folks, welcome back to the show. Today’s guest, Walter Bowman is the CEO of Teabow Residential. He’s known as the Doc of Real Estate and Teabow Residential is a full service real estate and development company. He’s a licensed Class A general contractor in Washington DC, Maryland, Virginia and Florida. And since 2016, he’s been on a mission to help families build wealth through real estate. You can find him across social media, Instagram, TikTok or his YouTube channel.or on his website, teabowresidential.com. Walter, thanks for taking the time today.
Doc Walter Bowman (02:43)
Hey, thanks for having me. I really appreciate being here.Dylan Silver (02:47)
Absolutely. And you know, when we talk about real estate investing and development, it seems like right now where I’m licensed in Texas and across the country, development is really a hot topic. There seems to be maybe more new construction now than ever.Doc Walter Bowman (03:02)
Yeah, absolutely. You know, as a developer, as population sizes increase, as people want to be in quote unquote the high communities, you have to keep up with the demand of that. And that’s what development becomes a critical, crucial part of making sure those communities keep pace with the demand of people wanting to move into those areas.Dylan Silver (03:22)
When we talk about development specifically, I’ve noticed that there’s a lot of people coming into the space from some other segments. And I’m speaking from my perspective in Texas, so it’s probably going to be different on the East Coast, right? But I’ve seen a lot of flippers who realize, hey, you know, if I’m competing with new construction that is really the same cost as these flip homes that we’re doing, then I’ve kind of got to find a way. If I can’t beat them, I got to join them.Have you seen that as well in the markets that you’re active in, that there’s more people getting into ground up construction?
Doc Walter Bowman (03:56)
Not necessarily. mean, you have different unique markets. A flipper, I you don’t need as much capital. There’s not a lot of execution that goes into that compared to a developer. And especially when you start developing multi-homes or multi-family buildings or apartment buildings or condominium buildings. It’s just a different monster. It’s a different pain. You know, as a flipper,You know, you can get in with as little as $20,000, literally, and you flip a house and your margins could be, if you find the right flip, 30 to 80%. Those are great margins. But when you get into development, you now start talking to six-figure numbers at a minimum. You need to get into, by the time you look at the land acquisition, by the time you look at the whole entitlement process that you have to go through, as well as the pre-construction before you even put a shovel in the ground, you could spend six figures in cost. So different dynamic, different demand.
different level of execution, whereas sometimes flippers just don’t want that risk. They don’t want that level of exposure, so they’re very comfortable in their flip space. Those people who create a system and develop a way to flip many properties very well at one time, like maximizing return on investment, those are the people you start to see that makes an easy, seamless transition into the development world. You have way more flippers than you have developers. Different market, different needs, different demand.
Dylan Silver (06:06)
I mean, that’s for sure. And one of the things that we were talking about this before the show is really a hallmark of an effective real estate operator, not just at a five year span, but in a 10, 15, 20, 25 year span is the ability to pivot. And so, fix and flip might be working for one time period, but then the market could change. As a wholesaler myself, I know I wish I was a wholesaler from like 2014 until 2020, because I feel like that was maybe the heyday of wholesale.I know that you’ve also had to make some pivots in your business as well, whether that’s operating in one geographic market and moving to another. But I know, know, development is constantly changing based on local laws, based on, you know, the demand, and then based on, you know, what other developers are doing in the area as well.
Doc Walter Bowman (06:56)
Yes, absolutely. And there’s something that’s very powerful that developers have to look at and think of is market saturation, right? You and I were talking earlier about the development that we did down in Florida. We got in at a critical point where no one was really executing this model. But at some point, that model runs this course, and then you got to look for the next market. And one thing you have to be very savvy in is just having a sophisticated system that can work anywhere, that can pretty mucheasily assimilate to whatever code regulations or compliant rules and regulations for that specific area, but you’re executing the same model, whether it’s Florida, whether it’s Texas, whether it’s Maryland, DC, or Virginia, that system becomes very critical in systematizing your whole process as a developer. So that market saturation instance in DC, you can’t give condominiums away right now. And time is everything in development. Sometimes it can take you
two years just to get through entitlement and get through pre-construction and get a full set of construction plan and nobody can predict the market two years from now. Nobody can predict this Trump market two years ago. It was impossible. And of course this is an anomaly, but again, now that you’ve gotten through the development, now that your project is ready for delivery to the market, if the market is not there, talking about pivot, you got to figure out a way to pivot fast because those interest payments, once you come out of that construction loan still has to be paid for.
Dylan Silver (07:58)
That’s right.Doc Walter Bowman (08:20)
whether or you got those units sold, whether or you got them rented. So you also got to, there’s another balance of having cash flow and revenue that is still doing this in the event that your development plummets, where that cash flow can keep that development afloat until that market turns. And that’s another tricky thing that going from a flipper to a developer takes another level of understanding and intelligence to make sure that when your project is ready for development and it’s ready to hit.that you’re not coming into a flop market without a backup plan.
Dylan Silver (08:51)
I mean, you raised a really good point that I think people could miss, which is that in most cases, this isn’t true carte blanche all the time, but in most cases, when you’re looking at larger multifamily, larger developments, typically, these are variable rate debt loans, mortgages, right? And so you don’t know what you don’t know, and you can’t see two years into the future. And so you could start a project, you’re finishing it after a year or two, and then the whole…pro forma could change, the whole market conditions can change. And you contrast that, let’s say with single family where you could, in many cases, unless you’re using like an arm loan, you can fix your mortgage premium, your mortgage rate. And so on the flip side of that, you take like a multifamily situation where, for instance, COVID, rates doubled, you had materials increase, you had…
Rents in some areas like where I’m licensed in Texas and in capital Austin, rents were stable, going sideways, even going down in some cases. This can create like, you know, a really tricky storm for developers and investors.
Doc Walter Bowman (10:35)
Absolutely. And you can find yourself in serious financial turmoil to be exact. that timing again, it’s a science, but it’s not a perfect science because there’s just some things beyond our control. There’s just some things that you cannot forecast. A classic example, COVID. I mean, developers across the nation, any developer watching the show know that at some point doing covert, you could not afford to build a project with a two by four costing $2,030, jumping to $15,080.That’s a seven-time multiplier. And imagine if you got 3,000 pieces of 2x4s you need across that project. There’s no way possible.
So developers literally had to bring their projects to a halt. We had to work our deals with the bank to let them understand the nature of the beast that we were in. And of course, when you got another good thing I want to bring up that’s very, very, important, if I could just tell anybody watching this how critically important it is to have great banking relationships with your bank.
knowing the president of your bank, going to community banks, not these big major conglomerate banks like Wells Fargo and Bank of America, which you’ll probably never be in the room with a CEO, but going to your local banks like a Main Street Bank or a Capital Bank, Eagle Bank, some of the big local community banks here, to be able to go into the office and talk to the president once you develop their relationship after doing a few million dollars in transactions with them successfully. And being able to just say, look, we in this thing together, we in this thing to make money, we’re not here to lose money.
I’m out here fighting every day, here are the situations and circumstances that we’re dealing with to make sure that we get things back on track. Here’s what I need you to understand is here’s what I can deliver in this moment in time that you can hold me accountable to, even though that changed from what we talked about six months ago or a year ago into this development project. That makes a profound difference in terms of the level of stress that is off of you as a developer, but also just knowing that you’re in a partnership with your lender.
because everybody’s in this to make sure that they provide for their families and make some kind of profit in the process of doing this whole thing.
Dylan Silver (12:42)
Yeah, I mean, how often does that get overlooked? Right. I mean, people can look at their lender and forget that there’s people behind that. Right. And so it’s all about relationships. All real estate is about relationships. Of course, you got to have some licenses. Right. You know, it helps to be able to understand the the logistic and strategic steps in order to get a deal from the cradle to the grave. But I’ve been told this so many times, you know, if you have the relationships in place andyou can find a deal, you can get your way to the finish line. And for the most part, that’s been true. I mean, the flip side, which is if you have all the knowledge, but you don’t have the relationships, I think you’ll find yourself in quite a bit of trouble at some point. I do wanna pivot here though, Walter, and ask you specifically about developing in the DMV, in Washington DC specifically. This has gotta be an interesting.
endeavor, right? Because there’s probably, and I’m imagining and correct me if I’m wrong, there’s some more red tape that you kind of have to jump through when you’re developing in an area with that type of population density.
Doc Walter Bowman (13:49)
Yeah, here we have a unique mixing bowl. I mean, your biggest sectors of government, believe it or not, the highest concentration of government employees are right here in this area. You got the Pentagon, you got the White House, you got Capitol Hill, the Senate, you got everything right here. So just imagine the number of workers that come to support all your congressmen and senators right here in this area. Then your next big population of people is, you you got the lobbying group. So the legal firms thatYou know, again, our right hand Washington that has all the support staff to make sure that they’re lobbying for these big firms. And then you got, you know, not the government government, but your educators, your police department, your firefighters, which is another sector of local government living here. And then you got everybody else after those three big populations. And those three big populations really, you know, are market dependent. You know, a lot of the high end government officials.
like to be in what I call our recession proof communities, the McLean community, the Bethesda community, the Potomac community, where I don’t care what the market is doing, those communities are recession proof. Those multi-million dollar houses are gonna stay worth multi-million dollars. So there’s a different strategy you can go into in building in those communities. And then you got that young government population who’s coming to Washington, DC, who’s coming to make a difference. And you know, I love the optimism and everything.
That’s that population right out of college, majored in some kind of political science, and that’s a big part of the population. Those, and understanding that population, those are the people gonna buy your entry-level condominiums, or even your high-level condominiums, because they have trust money that they’re coming to the area with. So when you start to understand your different target markets, and start to understand what your product is gonna appeal to, that also helps for a great, smooth exit strategy at the end when it’s time to sell those units.
In DC now, all of that’s been disrupted. When you start talking about closing out entire sectors of government, NIH, entire sector, USIAD, the Department of Education, I mean, just three big sectors off the top of my head, where you’re talking about almost a million jobs wiped out just like that. And that has a direct correlation to how that is going to impact how real estate move in this area. Because even if a million people, even if, as I said, 10 % of those people
we’re going to be in the market purchasing our development projects. You’re talking about 100,000 people that are literally wiped out just like that overnight. So in understanding the dynamics of that, when you’re developer, you just can’t be in this solid internal vision and only think about building. You also have to understand and have some kind of astuteness and awareness of the different external factors that can affect you internally as a developer.
Dylan Silver (17:18)
Yeah, I mean you talk about a million jobs. mean even if you if an area lost, you know, 20,000 jobs, 10,000 jobs that could have an impact. I mean, I can’t even imagine. I literally can’t even imagine how much of a disruptor that that must have been. We are coming up on on time here though. Any new projects that you’re working on and then also what’s the best way for our audience to get in contact with you or your team?Doc Walter Bowman (17:41)
thanks a lot, Mr. Yes, we’re actually working on Lakehouse New Build Custom Home on the Lake out in Lake Carolina in Virginia. We’re doing this beautiful 26,000 square foot plus chateau mega mansion in McLean. One of those affluent areas we talked about. And you can easily reach us. mean, this is our company right here. Our logo just www.teabow.com. Look at just the number of unlimited services we offer frombeing a design build company to also help you acquire your property, acquire your lands, you too can custom build. We also do consultations. know, again, we consult all the way from here to California. We believe in sharing this plethora of information that we’ve been blessed to have learned and experienced over the years. And it’s not all ours to keep, but ours to share with all of those people out there who are on this journey of becoming a developer. We’re here to assist you.
And that’s where we come from. We come from contribution. Because when you truly come from contribution, you know, the world is an oasis. It’ll gladly reward you when you do that with sincerity and genuineness to truly help people in their quest. There’s enough pie out here for all of us to get our piece of the pie. And we truly want to see that for everyone who tune into our YouTube channel, who tune into our social media, who tune into our projects. We’re here to serve you.
Dylan Silver (19:03)
Walter, thank you so much for your time today. Thank you for coming on the show.Doc Walter Bowman (19:06)
Thank you for having us.
