The Keith Andrews Podcast

Revitalizing Downtowns Through Urban Development | Katie Neason E26

• Season 1 • Episode 26

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In this episode of The Real Estate Junkie, Keith chats with Katie Neason, a seasoned real estate developer specializing in urban revitalization. Katie shares her journey from growing up in a family of real estate professionals to taking a leap of faith into development after reading Rich Dad Poor Dad. She discusses how she moved from flipping houses to transforming downtown Bryan, TX, through urban infill development, focusing on mixed-use properties with residential spaces above retail.

Katie explains her four-step framework for evaluating development opportunities, covering strong market fundamentals, action-oriented government, first movers, and vision alignment with the city. She also dives into the intricacies of financing development projects, raising funds, and leveraging local banks, as well as the importance of educating tenants and ensuring sustainable businesses for long-term success.

Whether you’re interested in tackling urban development in your own backyard or simply curious about the process, this episode offers practical advice for getting started and avoiding common pitfalls in the world of real estate development.

Connect with Katie:
Instagram: https://www.instagram.com/katiedevelopes
Website: https://www.katieneason.com/

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Connect with Keith:
Instagram: https://www.instagram.com/iamkeithandrews
TikTok: https://www.tiktok.com/@iamkeithandrews
YouTube Channel: https://www.youtube.com/@iamkeithandrews

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We want to build things that improve the community, will create generational wealth. And when like our kids, kids are real estate investors, they would die to get their hands on our property, not to scrape it. But like we are now, when we get some cool building that we get to buy and refresh, we wanted to create those buildings for the future. Welcome to episode 26 of the real estate junkie today I'm chatting with Katie Neeson a real estate developer with over 20 years of experience in revitalizing downtown areas We're gonna talk about how to transform communities Create vibrant spaces and make money while doing it whether it's through mixed-use projects Long-term gains or tapping into government incentives. Stay tuned for a great conversation All right, Katie. Well, Hey, it's great to have you on my show. I've been looking forward to this for a while. I've been watching what you're doing on Instagram and I'm really impressed. So I can't wait to dig in and find out more about you and your story and how you got into real estate in the first place. Well, I appreciate you having me here and I could talk real estate all day long. So you just cut me off when you're ready to get this moving in the right direction. no worries. That's why I have a podcast about real estate is cause I could talk about it all day long too. So this is perfect. Awesome. Well, I grew up in a family where both of my parents were in real estate. My mom's been a realtor for 50 years and my dad did still erection as a subcontractor. And then we went through the eighties, which were really tough, especially in Texas and California, when they restructured some laws, had the saving and loans crisis. And we went through bankruptcy. So I always had an entrepreneurial spirit, but the one thing I knew is that I did not want to be in real estate. So I went to college like I was supposed to, got a degree, jumped into banking, did credit underwriting, actually loved it. Cause I was the weird kid that likes to talk about money, but it was never appropriate. Plus nobody knew about money. And so I got to be a banker and actually asked smart people to tell me about their money. So actually loved that. Wow. I read the book that I think everyone reads at some point when they get into real estate and I read rich dad, poor dad. is the famous book. It's changed a lot of lives. I've given it to all of my nieces, all my nephews. It's their graduation gift. But the pivot moment for me in rich dad, poor dad is that I realized my parents bankruptcy wasn't because of real estate. It was because they had started out from super humble beginnings. My mom came from a really poor background and they ended up being really successful and they just outpaced their financial education. And so they were making a ton of money and they were spending a ton of money. And when things changed, everything changed for them because they had a lot of consumer debt. So for me, it was like, I actually do love real estate. Now I know how to underwrite credits. It's what I know. and now I understood the cycles and understood financial education and realized that real estate probably is where my heart is and totally made the most sense for me. So that's how I got into real estate. So I decided, Hey, I'm going to quit my job, move back home so that I could be close to family. Cause I had a kid at that time and we wanted him to be close to nieces and nephews. And so for the first time, I took a job based on the people who worked there in education instead of salary and became a real estate development officer, I guess, for lack of a better word for a startup company that took care people with Alzheimer's and dementia. And we built the same building over and over again, 16 residents and took care of people with memory care. And I was in charge of finding the city, finding the land and getting it built and licensed by the state. And. The crazy part of all of that, this just goes to show you don't have to be smart to be in real estate. When I ended up being in real estate development for myself, I never realized what I was doing before was actually real estate development. Really? I mean, for me, I wasn't really developing the land. I was just buying a track of land from a commercial broker that I could build that building on. So most of the development steps were really out of the process. And then I just oversaw the construction and the licensing. So I didn't even realize that I was actually developing real estate. just had a lot of the pieces already taken care of because the land was entitled and all of that to do what we actually wanted to do. And then that company sold and I had quasi equity in it. What that means is when you get your bonus, it's tax at the highest taxable rate. that quasi equity was like one year salary for me. So I thought if I'm ever going to bet on myself, this is the time. So I just set it up where every two weeks, just like I had been paid previously, that money deposited into my account. I decided I'm going to bet on myself, go full time into real estate. And at the end of the year, if all the money was gone, I'd go get another job. And that was 2015, think. So, okay. Still working. Nice. 2015. So what exactly were you doing when you hit the road, the ground? I, after I read Rich Shepard ad, I went and bought a condo for $17,000. Cause if you Google Robert Kiyosaki and Rich Dad, poor dad, it ain't all positive. And so I was like, is this a scam? Can this really be done? And then I Google it and I'm like, well, no, I still don't know. And so I said, you know, I want to go through the whole cycle with a project that really would have minimal impact on me, even if I lost everything. So I bought it for 17,000. I got a family member to finance it. So I would have a mortgage and interest payment on it. Cause a bank doesn't want to mess with the $17,000 load and put a tenant in it. It cash flowed like all the pieces worked. And so I convinced myself that it was possible. And then I thought, you know what I want to do? I want to buy fourplexes and do low income housing. Because the government's paying me, it's a steady paycheck. And here for whatever reason, everybody was charging about $200 less than HUD said they would pay. And so I was like, there's arbitrage. So we bought out of foreclosure, we bought some fourplexes. And when I say we, convinced my mom to go on this crazy journey with me so we could create passive income for ourselves. And, we bought big step, bought the first fourplexes, put tenants in it and hated it. Hated it. I hated being a landlord. I hated the product type. I was frustrated with the tenants. they were all just lying and we were gullible and we were managing them ourselves. And, at this point we already had like four, four plexes, like we were buying on fast and we were like, wow, all section, all section eight, section eight. I was like, wow, this is miserable. But what we did love is the fixing them up part. So you said, I said, you know we need to do? We need to pivot. We sold them all to investor who loved that glass and we started flipping. And we flipped for probably 10 years and loved it. Our fallback plan. Cause remember that the thing that's always driven my real estate journey is that bankruptcy from the eighties. It generated my curiosity and money, my financial education and the reality that I know what awaits me if I'm not careful. So the fallback plan was since real estate is a cycle, you had to be able to rent the flip if we couldn't sell it. Cause the market changed. So what that did is it threw out all high end flips. We had to go for a flip that we could buy really cheap, which meant pretty much a hundred percent gut job. And that pushed us closer and closer to our downtown. Cause that's where those houses were. But the crazy phenomenon was young professionals loved them, the character and the uniqueness of them and the neighborhood that was walkable close to downtown. And people were buying them like crazy. And then COVID hit and we were like, my gosh, all we've done is created a job for ourselves. Now it's a job we loved and we had a big ego from it because we thought we were good at it and everyone was telling us we were good at it. It was like, man, we got into this for passive income and we're not doing that anymore. You're just chasing the next deal, the next deal, the next deal. Yeah. COVID did, thank God it didn't turn out that way, but for two weeks we never knew if anyone would be able to walk into a house again. And so it just stopped. So fast that I realized this path of, we'll pick up a cash flowing asset here and there was not going to get us where we needed to be. And that we were super vulnerable to, you know, our cash flow. Cause if we didn't find the next deal, we didn't get the next deal. And so that's when we're like, well, if we're not going to do flips and we know we hate low income, like what assets do we want to own? And we're, we love owning something when people come to town, we can be like, we built that to show it off. which was not the fourplexes. last thing we wanted to do is drive down the street and be like, we own that. But we did love doing that with some of the houses we flipped. So like, want to build things that improve the community, will create generational wealth. And when like our kids, kids are real estate investors, they would die to get their hands on our property, not to scrape it. But like we are now, when we get some cool building that we get to buy and refresh, we wanted to create those buildings for the future. And so that's when we intentionally said, dude, let's do some urban infill development, which is right around where we're doing on these slips. And we already know people want to be nice. so you're going after like mixed use type properties, right? Yeah. So ideally we would buy some cool warehouse looking building and convert it into mixed use with retail in the bottom and lofts on top. We just have one problem. There are very few. Cool old buildings in our downtown. And I don't know if that's because we've had a lot of fires here. If it's because we were just an old cotton place and we don't have cool old buildings. We didn't have much manufacturing. don't know. So we've bought a couple, but mostly we've had to do ground up construction and just create them and make them feel like they are part of downtown and have unique character, not try to recreate old, but also make it feel like it fits in. And it could have been there forever. Got it. Wow. So I mean, for me, I wouldn't even know where to start with that. Like I've gotten my hands on plenty of gut job projects, right? But the basic structure is there. So I'm just cleaning it out from the inside, maybe making it pretty on the outside, but you're just starting from the ground up, which means permits and everything else. like how, how do you even start on something like that? Like, I guess, I guess your job. kind of helped you with that a little bit. think, but I still hadn't made that connection at the time when we bought our first deal. So what we did is we bought three modular homes on three tiny sites in our downtown that were all contiguous. We're like, you know what we should do? We should build townhomes here. Now, one big fear is there had been no new construction houses in my downtown in my lifetime. So it was hard to decide, is this emotionally driven or could this really work? So we bought these three, they had rentals on them, low income housing rentals, definitely the worst three houses on this street. Not that the street was great. I mean, it had like an industrial warehouse and then just some really old houses on it. We're like, okay, let's go to the city and just tell them what we want to do. They'll let us, right? So we go to the city and we find out that the lot sizes are tiny and not buildable. So if we tear the houses down, they're too small to be to buildable lots for today's standards. So we couldn't rebuild. We also proposed building five 20 foot wide townhouses so that we could fit the five on there. That's why they were 20 foot. And the minimum townhome width is 25 foot. So 20 foot townhomes aren't allowed. And we were going to put the parking in the front. They were not going to let us put parking in the front. And on top of all of that, it wasn't zoned for townhomes. So they weren't even allowed by zoning. So we just realized like how ignorant we were. But two things worked in our favor. One we controlled and one we didn't. The one we controlled, we knew that if it all failed and we didn't know what we were doing and everything went wrong, we could sell those three houses because they cash flowed to a low income investor. yeah, we bought it without knowing all this stuff, but it cash flowed like it was. The thing we couldn't control is when we told the city our vision, they loved it. And they said, Hey, We want higher density housing within walking distance to downtown. If you crazy fools will build it, which is what it felt like they were so excited. It felt like we must be a fool here, but they're like, if you'll build it, we'll rezone it to allow for it. We'll let you build the 20 foot wide town homes. We'll remove the setbacks so that you can put the parking in the back and we will give you property on two sides. So we have these really wide 80 foot right aways. Because that's how they controlled fire back in the day. Now they make you over fire, regulate fricking everything. So you don't need really wide right aways. So they gave us 20 foot along the front and 20 foot along the side, which let us build seven town homes and turns out five town homes for break even all the profit was in the last two. So had they not given us that land and we just built our five, we totally would have just broken even on the project. So it all worked in our favor. That's when we learned. build what the city wants when you're both aligned, you can get a lot done. and so yeah, was pure ignorance as we stumbled our way through it. Wow. So when you said you built seven town homes and five, broke even, did you end up selling all seven on that first one? Okay. Yeah. So here's the deal because we were flipping, we were generating that income, right? Well, once we decided, we're not going to flip anymore. Guess what? There's no more freaking income. And we didn't have other jobs. And my mom's a realtor. That's always been her income. But my income was running the flipping business. And once we weren't running the flipping business, we still needed income. So now what we do is anything that can be deeded single family. So town homes, single family houses, we sell those one, because you're selling to the end user. And two, you can get the highest price per square foot because it's not an investor trying to cash flow. Then we take that money for income. and to build up a pot of money that we can then invest in anything that's multi-tenant. And we keep all of our multi-tenant stuff and own as big of a piece of it as possible so that we can use those as cash flowing assets, but actually live off the income that's generated from the development flips now to sell townhomes. anything that's single family, you sell, anything that's multi-family, you keep. And I assume some of those multi-families may have Especially if in a downtown district storefronts at the bottoms apartments on top. Yeah. Our favorite is to do retail on bottom and then lofts above. What we learned in our studies is for a downtown to be successful in its revitalization, it needs heads and beds. And if you think about like real estate development patterns, how it works right now is all the new subdivisions pop up on the edge of town. Then once they hit a certain number of rooftops, all the clock strip centers go in. Yes. When you're revitalizing a downtown, it's just the opposite. All the commercial buildings are there, even though they're vacant, they're all there, but the housing has been demoed blighted. Isn't what anyone wants in today's market. So what happens is the little shops start going in downtown, but there's no daily foot traffic to keep them in business. Cause not enough people live down there. So once we had that aha moment, sometimes I don't even think the city realizes that. But we realize we need heads and beds as fast as possible. So we always prioritize residential, but we don't want to do it at the expense of downtown. Cause we know 10 years from now, there'll be plenty of people living down here and we don't want the major traffic streets to have residential loss on the first floor. So if we get a building that it makes sense for either foot or drive by traffic, we're definitely going to do retail on the first floor. And then up above, we'll do as much residential as we can. And it's all mixed use. All the zoning is allowed. So it has flexibility within the building. If at some point retail doesn't make it, we can convert those to residential lofts. If we need studio space or office space, we can convert the lofts on the second floor to office and studio space. So I just love like the diversity and flexibility you get within just one building. How do you go about getting the non-residential units rented out? Like, do you have like a secret? You have the secret recipe that will make you billions. No, there's a secret recipe, but we have, we've built our brand around and we call it life in downtown. And basically we're the biggest developers in downtown. We have a website that's called life in downtown. If people are looking for residential commercial, whatever space in downtown, they're going to find us and they reach out to us and say, do you have anything for rent? and we'll give them anything in downtown. Obviously, if we have something available, we're going to propose that to them. But then the other thing is, is we think, and the hardest part is with all this, like when you're passionate about what you do, you know, we build a building and we're like, we know exactly what we want there. We want this coffee shop with the little bookstore and a little boutique behind it, but we have to remember we just want to be landlords. So ultimately the best tenant is the one who can pay rent with the successful business. So we do try and target and market towards certain types of tenants, but most of our tenants are going to be mom and pop. don't want franchises and franchises don't want downtown. doesn't have the density of the people yet, even for them that want to be there. And we don't want that. We want a unique culture. But the problem is a lot of those are people who are either expanding or they worked for someone now they want to go out on their own or they're just a startup and they're not very sophisticated. So a lot of what we do. is educating them and making sure they have a path to success. Cause a lot of them are like, I'm retired. I have my retirement and I don't want to open up a boutique. Like the last thing you want to do is use up all your retirement on this and realize your is actually a nightmare. we may put together projections. We'll get sent them to the small business association to get, you know, some knowledge to know how to do it. But so much of what we do is helping them be educated enough to make sure there's a path for success. It doesn't mean they'll be successful. But at least they realize what they're getting into and they've thought through cash needs and rent needs and if they're going to have to buy inventory, where's that money coming from? You know, all of that, but a lot of times they don't think of. So a lot of it is word of mouth and to us seeking. So if we see someone or we hear about someone wanting to open a business, we just call them up and say, what are you looking for? Do we have something that'll work? do you, do you focus on getting the residential field first and then that helps sell the lower units for retail? Usually because the majority is residential. We'll focus on getting those leased up as fast as possible because it's the easiest to lease. and then the commercial space will white box. won't finish it all the way out, but we don't leave it. Just studs like a lot of the commercial builders do because they're, they have a much more sophisticated in user. A lot of ours, they can't see it. They're like, where are the walls going to go? Why isn't it done yet? You know, and they can't make a decision. So we'll at least white box it focus on getting the residential, but what we have seen. is that our commercial actually gets leased much faster than we ever think. And the main reason is because we're building new construction, we can make really small affordable commercial spaces where if you think of all the old historic buildings, they're narrow and long. So to get a space that's less than 2000 square foot or even more is almost impossible. And they're usually dark because they're in the middle of a whole bunch of other buildings. So we're able to actually design them and cut them up into little bitty pieces that makes them super attractive for small kind of startup mom and pop type places. So we haven't had any issue with the commercial, but we always try and get the residential first just cause it's easy to do. But rarely do we have a tenant that says, as soon as you have the residence in place, I'll build below because it's such a small compact area. They just need space. And so we have something available at a size and a price that they can afford. They're not as worried about the residents in that building actually making them successful. Got it. So you're focused all on one area of one downtown and that we didn't even say where is this? I am in Brian College Station. So Brian College Station is the home of Texas A University. Texas A is the largest university in the country and it is the big behemoth. College Station because it was just a college town that grew. doesn't have a downtown. So downtown Brian serves as the downtown for both Brian and college station. And a fun fact is professors don't want to live near students and professors who come from the Northeast don't want to live in a cul-de-sac subdivision. So our primary, renter or buyer is a staff associated with the university. Cause it also turns out. There are no beach volleyball and lazy rivers in downtown Brian. So college kids don't want to live down here either. So it's kind of like this beautiful self isolating way for us to be able to really hone in on the, the university professionals and faculty researchers. And that really is our, our target market. And you can't tell when you leave Brian and inter college station. We. are dysfunctional enough to operate like two very different cities but from anyone on the outside you don't even know that it's two separate cities. Wow so but and so you're you're 100 % focused there are you looking at other markets other downtowns? Yeah so this is what's tricky we have focused here because I'm fourth generation I know this market better than anybody. I know when we get a lot we know who owns all the stuff in downtown we know what we could do with each of those lots so I mean, in our market, we're basically the smart money, right? So when you go into a new market that you don't really understand and you buy something, there's a good chance you're probably the dumb money. And so once the opportunities aren't here, it totally makes sense for us to really focus on another market. But right now we, we are our own GC and we have all the infrastructure in place. have great relationships with the city. So it just makes sense to finish building this out. Now, with that said, We don't want, you know, all of our portfolio stuck in one city, cause then that's not financially responsible either. So the plan is to finish building out our main portfolio, then take the cashflow from that portfolio and reinvest in other markets. So I can envision like one day, you know, we're the feet, the work, the sweat of all of our investors, right? We do the hard work. They get the benefit of the investment. Once we build out our portfolio, we want to kind of shift roles and we want to find those really hard workers who are doing amazing things in their downtown, in the town they love and they know and invest in those projects so that we can diversify that way. That seems to make more sense than jumping off in another market that we don't really even know. So for someone that's wanting to take something like this on, In their own back, you, definitely recommend that they do it their own backyard, right? Not this long distance investing and in other markets, right? Yeah. The reason I want you to do it in the market that you know, in love is cause I truly believe that a better city that we all love to visit and live in is one that's run by the residents there and not by an institutional broker who will probably never step foot in your town. Isn't it crazy when you think of all your favorite places to visit? They're all these really cool old walkable towns, very few in America, a lot in Europe. Yes. When we build a town, nobody builds it like that. It's like, that's what we want, but we're not going to build that. We're going to build a place that we all hate with a lot of garage doors to walk by. And so we, we believe better cities will be built by people who are actually invested where they invest. And so, yes, I definitely believe do it in your own backyard, but it's really more cause that's just where my heart is. You could totally do this long distance. could set this, you know, the steps up like, you know, I'm not against long distance. just think that if we're to build better towns and, you're like building really cool stuff with mom and pop places in that community, you need to be part of that community. So you can find the mom and pops and really leverage being in that niche. Yeah. There's an area of town here, that lots of older homes, a hundred years old. They're all mixed use, every single one. At some point they were, you know, a doctor's office, whatever. You know, over the years it's changed. There's some cute little restaurants that are literally inside a hundred year old home. And this area is growing rapidly and I'd love to tackle it, but I don't even know like where to start. So tell me what I should do or give me some advice of what I should do if I wanted to tackle something like this. Yes, I love that. Your question is the number one I get. Can I do what I want and what you do where I live? And basically I have a four step framework that I use to help determine that. And I call it the safe framework just to make it easy to remember. So the S is strong fundamentals. want to, and it doesn't matter if you're doing redevelopment or long-term what you're doing. You need a market that the population is growing. There is diversity and employment. Jobs are growing. The market is affordable. And you have a good absorption rate, which is basically they can absorb the new stuff you're bringing online. Cause it's different than fixing up a house that already existed, right? You're going to bring new product online. You need to make sure that there's buyers or renters for that. So number one, strong market factors. Number two, an action oriented government, because here's the reality. We're in a housing shortage. No one disagrees with that. Every single government jurisdiction will tell you we need more housing. We have a housing shortage, but just as they say it. doesn't mean they'll allow for it. So what you wanna do is look for actual evidence. And two ways to do that is one, are they improving the infrastructure in the area you're wanting to build? So you mentioned where all these hundred year old houses are. Are they, you know, taking all those one way streets and turn them into two way streets, making them pedestrian friendly, planning great landscaping, increasing the infrastructure underneath? Cause if so, they're spending taxpayer dollars to do that. So that means they're invested in that area. And then number two, are they offering grants for developers to come in and renovate old buildings? And you can tell that by just Googling like city of Bryan, city of Colorado Springs, development grants, because if they've earmarked the money, they want you to use it, right? They're not trying to hide it. It'll be right there on the website. Then if you have them spending their own money and earmarking money set aside, if we don't go in and develop that infrastructure, it looks like they're bad stewards with the taxpayer money. So they are incentivized to help you be successful. And then, that's the action oriented. Then the next one is first movers. So rarely are real estate investors, the first mover, the lowest risk real estate. And it's the one that the SBA lends on is the owner occupied real estate. So think the florist shop who owns the building and operates out of it or the lawyer who has his law firm in there, but he rinse out some extra space. want. those guys to go in first, because one, they're proving demand there that businesses actually want to be there and they're taking the least amount of risk. Once they're in there, now they've proven, okay, investors can come in and just help bolster what they've already started. So you don't want to be a first mover. It's not that you can't, it just increase your risk. And I want asymmetric bets, right? Low risk, high reward, not high risk, high reward. And then the last one is you want Envisioned Enlightenment. And this is where most people Go wrong is you need to build what the city wants, where they want it, or it's not going to happen. Like it is hard enough to build when you and the city are on the same team. You will just hate yourself if you're trying to build something they don't want. So how do you know what your city wants? Every jurisdiction puts together a comprehensive plan. So you can do city of Colorado Springs comprehensive plan. It'll be like a 90 page document. all you're looking for is the area you want to build in. They will tell you what they want over the next 20 years for that area. And if they say, we want this to be a pedestrian friendly area of town and provide missing middle housing between the commercial downtown and the neighborhoods, and you propose a 400 unit apartment building, your visions are not aligned. And they're going to tell you no. And what I get feedback on for my Instagram all the time from all the haters, gotta, I love the haters, is, Yeah, sure. You're in Texas. They'll let you build anything. But the truth is if I take my skinny town homes and I try and build them five blocks over, my city won't let me do it either. They let me build where I'm building because that's what they want. So if you have all four of those boxes checked, you're in what I call the honeymoon phase with the city. And it's, it just means you have a really long trajectory. So every building I build the next one makes the last one more valuable, right? Cause I'm forcing appreciation, not only in what I'm building, but in everything I previously built. So if you can get in on that level, then you can exponentially grow your appreciation in that market. So not every market is going to be at the beginning. Some will be super saturated. We're seeing that with our building, even though we have the reputation, we have the experience and we have the relationship. It feels like every project gets a little harder because the city is seeing more and more growth and they're trying to figure out how to manage it. So at first when nobody wanted to develop and they're like, we'll give you free land. Well, now they're like, wait, why are we giving you land again? You know, and like, just gets very, they have growing pains too. It doesn't mean it's not a great opportunity, but the honeymoon phase is really the sweet spot. If you can find a town you're in or you're within driving distance of, and that's where they are. Like that's the best way to set yourself up for long-term growth and appreciation that dude will create massive generational wealth. let's really quick talk about. the financing on these projects and because it sounds like you're, you are raising money, right? You're, getting other investors involved. Correct? Yes. So for us, want to own a hundred percent of everything, but life's too short by the time it takes us to raise a hundred percent of the equity needed. Like we can't build nearly at the pace. Now a nightmare sounds like owning 5 % of a thousand doors. Cause I got to work just as hard for those thousand doors that I own 5 % of as I do a hundred percent. So it's like, how do we optimize? So we want to be between 40 and we want to be a hundred, but realistically between 40 and 60 % owner of all our deals, which is why we sell the town home. So we can get enough cash to plop as much down. we, raise money and we always are part of that money as well. And usually how we split it is like a 70, 30 split where we get 30 % cause we put the deal together. The money folks get 70 % and we are one of the money folks. So we get some percentage of that 70%. And then we use small or regional commercial banks to do the debt financing. Now, the one thing that's super important to us, cause safety girl, been through the bankruptcy in the eighties. we, when we start our construction loan on day one, we make sure the long-term financing is automatically set up. So what will happen is we'll do interest only for 24 months at the end of the 24 months. the note will automatically convert to a long-term amortizing loan. Now it won't be the best rate and it won't be the best amortization, but I know if for whatever reason, worst case scenario, market's gone crazy, the bank can't choose not to give me the long-term loan. And because they're commercial banks, there's no prepayment penalty. At most they may give you a one year. You have to keep it in place for a year, but there's no prepayment penalty. So I can always finance and get better terms. But that means we don't do hard money for one development is just there's too many unknowns. It's just dangerous. I know some people do it and if that's all you can do, just know the risk you're taking. But for us, we always want to know the long-term financing is in place the day we break ground. And if it underwrites that not so great financing, then we know it's a good deal and it'll only get better if we can refinance with better terms later. I believe you've created a blueprint for this, right? That others can follow. for someone that's just starting out because I mean, you threw out a lot of different things, right? You know, working with us, a small bank, bringing investors, doing all these things, all the pieces, you've actually boxed it and put it together, correct? Yeah. Yes. And I want to know about that. How can people find out more about you and learn from you? Because I know you're doing coaching as well. please share that with us. Thanks for asking. Hey, if you just are like, that girl's crazy. What's she doing? Follow me on Instagram at Katie develops. No commitment there. If you're thinking this development sounds interesting and I might be interested in it, we will do a, I have a PDF. That's just like things to ask yourself. So you don't end up in a nightmare when you thought it was going to be a dream to see if it really makes sense for you. It'll be a free download, Katie Neeson.com slash better life. You can put that in the show notes. It's free. Download it. Think through, this make sense for you? And if you decide that it does, I have two different things. One is just a self pace, low price point build to sell. So if you're like, I want to build and sell townhomes that super easy to do. It's pretty concise. We know how it starts. We know the middle. know how it ends easily to do in like a video series. You can totally get that, get your toe wet, see if you like it. But if you're like, no, I need community and I need to say, Hey, stuff's going wrong. These people crazy. The city keeps telling me no. What am I supposed to tell them when I go? You keep saying call the city. Who the hell is the city? have like 40,000 employees in the city. Who am I calling? If you want that kind of help, I do small group coaching and it's basically what I wish I had when I started. So I wouldn't have bought a lot and found out it's not buildable. can't build townhouse, all the nightmare of the things that we learned. It's just so you can have enough information to lower that friction and do better projects. I can't tell you how to build a house in downtown Colorado Springs. I don't know anything about your jurisdiction, but I can tell you how to find out. whether or not it makes sense for you to do it. And we do that in my coaching program. You can learn about it at katineason.com and it's closed right now, but we'll reopen it in January. And if that's, if you're looking for the community, like, don't know of many out there that are doing development and we're here for you. Nice. Thank you so much. This has been great. I really enjoyed it. and I know my listeners are going to definitely be looking you up and I'll put all the links on this podcast as well. Katie, thank you so much. it was a lot of fun talking to you and hearing your story and, man, I'm, I'm excited. I'm to, just drive down my area of town that I see some stuff happening and I'd definitely like to put my name on a few things. So that's, that's exciting. I love it. Once you see it, you can't unsee it. You're going to become one of those crazy people who just can't ever look at it the same again. And I love those crazy people. Yes. Well thank you everyone for listening today, God bless and see you on the next episode.