Donovan

Developing infill for-sale housing | 40+ exits as GP | Missing middle housing in CA, MN & TX | Acquired (small) cleaning business

[Donovan @DonovanBuilds]

Very long re-introduction for the new followers!

- grew up to working class parents who each made no more than $25/hr (still some of the most incredibly hard working people though)
- my two brothers (I’m the middle) and I all shared a room until we went to college
- went to Univ of Tulsa for petroleum engineering (hated that we lived paycheck to paycheck growing up so googled the highest paying major and did that)
- graduated 2019, accepted FT role in Houston at large o&g company (w/ $30k in student loans)
- within a few months realize no way I can do that for 40 years (commuting, traffic, too tired when you get home to do much else)
- search YouTube for “something” else (looked at dropshipping, tutoring, Uber, real estate)
- no friends or family that own businesses or RE so began consuming large amounts of Biggerpockets content and set my sights on house hacking
- April 2020 (23 at the time) close on a new construction duplex with 0% down loan (didn’t have any money)
- Covid has hit, very tough to get it rented but got it done (rented it by the room instead)
- Immediately realize there is not enough duplexes in Houston for the amount of the demand (took me 6 months of looking to close on one)
- Put together a sh*tty presentation and began pitching investors in FB groups to invest w/ me
- 40+ people tell me some version of “no” (rightfully so)
- a 66 yr old doctor in NJ agrees to get on board (give him 85% of upside, no fees, give visibility into bank account)
- close on first piece of land August 2020
- get two more investors from FB groups
- (no idea what Im doing just winging everything)
- only thing I felt confident in was the 25% margins (w/o leverage)
- get up to 12 land parcels with 3 investors by early 2021
- first duplexes take about 50% longer than I estimated (why the he*l do I need a driveway permit before I can order my electric meters??)
- mid construction on my first few is when I get more active on ReTwit
- share what I’m working on and get a few more investors from here plus going to @REconveneLA
- this is all on the side of my engineering job
- leave engineering job to join an amazing start up (Jan 2022) in the resi lending space @build_Upright (currently raising $20MM debt fund w/ $14MM raised)
- through 2022 and 2023 continue to rinse and repeat building mostly the same floorplans
- currently finishing up duplexes 24 and 25 soon with 19 more in permitting + 3 townhomes under construction
- closing on a small $140k revenue cleaning biz this month with @651Michael (follow him to keep up with that)

I turned 27 in September my goal is to continue learning as much as I can over the next few years where building relationships > money at this point

I’m hoping this pays off over the next 27 years as I sit here probably with less liquid cash then you reading this 🙂

[Donovan @DonovanBuilds]

@GDCAndrew Utility companies in other states that do even more volume have figured how to do it timely

For some reason they can’t in California

(i.e. we’re not asking them to solve time travel, they can literally just copy what is working elsewhere)

[Donovan @DonovanBuilds]

The frustrating part is that this is an already solved problem

PG&E energizes 15,000 units per year

SDGE energizes about 5,000 units per year

Centerpoint in Texas energizes 52,000/year

Why is it taking 20-24 months to get energized in San Diego vs 3-5 in TX?

[John Otter @otter401]

Important for California. (And a request for readers to repost in order to provide the greatest exposure.)

Everyone who develops in California is well aware that California utility companies have abdicated their responsibility to provide electrical power to new housing projects and commercial projects in a timely fashion.

California utility companies are no longer in the category of dysfunctional. They have become non-functional.

Project openings have been delayed 2-3 years in many cases with completed units but no power. ADU's in Los Angeles wait 18 mos for electrical power. And things are getting worse, not better

Much needed housing is delayed. Commercial projects that provide employment are delayed

Worse still is the fact that investors are now well aware of the problem, have seen its impact on recent projects they invested in and have therefore made the astute but unfortunate decision to not invest.

A working group has been assembled to address the problem with the goal of passing state legislation in 2027. Legislators in Sacramento are well aware of the issue, are beyond frustrated and understand the need for a legislative fix with real teeth.

In this regard we are looking to amass a data base of utility company "horror stories" where projects suffered delays and additional costs as the result.

This link is to the Housing Action Coalition website and a short survey. I'd ask that developers and general contractors who have projects that have been negatively impacted by utility company performance to fill it out. The information will be assembled into a database so that legislators in Sacramento can all understand the true magnitude of the problem. Thank you.

https://t.co/Yg5UVfdtTe

[Donovan @DonovanBuilds]

@JMGregorchuk Maybe more bias towards getting things done with the new mayor?

(Eternal optimism)

[Donovan @DonovanBuilds]

@LA_Multi_Fam @DRand2024 It’s been pretty slow for us

We’re at entry level price point in San Diego and the markets down a bit since we started 2 years ago

City fees + holding costs (due to city delays) have made it a very difficult project

The learning to me is to go upmarket plus budget 24+ months

[Donovan @DonovanBuilds]

@LA_Multi_Fam @DRand2024 Ours is technically under SB684 (i.e. multifamily)

I imagine the very first projects in single family zones are probably just getting out of permitting and beginning construction

[Donovan @DonovanBuilds]

@scolyke @JulieChangRE They look great!

[Donovan @DonovanBuilds]

@donkeyDdevelops All roads lead to being a Bay Area GC

[Donovan @DonovanBuilds]

@bobbyfijan Sounds like a great guy sorry to hear this. Very cool he got to spend time with the grandkids it looks like

[Donovan @DonovanBuilds]

@CSElmendorf This law wouldn’t even be necessary if you could just demo formerly tenant occupied homes which is where I would direct the pushback when it inevitably comes

[Donovan @DonovanBuilds]

@jasonc_nc Absolutely

[Donovan @DonovanBuilds]

@mattbaran @AnthonyRedmond_ Since we had the existing home under the same loan as the new construction ones, it was treated as a partial release

All the proceeds from that sale went to paying down outstanding balance

We could’ve negotiated to get some of the proceeds to us but wasn’t worth it

[Donovan @DonovanBuilds]

@mattbaran @AnthonyRedmond_ You only need the final map recorded before you can sell / finance the lot

APN take forever to get so you tell the lender to use the legal description instead of

Just did this on the first 684 project where we sold off the existing house in March (still don’t have an APN yet)

[Donovan @DonovanBuilds]

@SunShakSunday Beast 💪🏽

[Donovan @DonovanBuilds]

@DanielKuney @immad @mercury Also love Mercury and second this request

[Donovan @DonovanBuilds]

@donkeyDdevelops Tale as old as time

Mind you they have paid almost none of the required fees so far and want to sell the land at 30% of what the final unit would be worth

[Donovan @DonovanBuilds]

@AccountantMurph Incredible

[Donovan @DonovanBuilds]

@RadDadKlub In the Grant Hill area

[Donovan @DonovanBuilds]

Prop 37 passed in CA which is a 17%
second mortgage for owner occupants

- 3% down
- new construction only
- <200% AMI

I have the perfect housing type available at this very moment in

2 person household - 165% AMI
3 person household - 150% AMI

[Donovan @DonovanBuilds]

@Sanjay3324 Oakland is super tough

Have to basically give it away before it’s worth looking at

[Donovan @DonovanBuilds]

@DevaniAlkarim @JMGregorchuk @mottsmith @benjamintink Coming from Minnesota I don’t need much of a reason to escape to warmer weather

Happy to come down for a day or two if the wife approves!

[Donovan @DonovanBuilds]

@NetanYolo FHA has PMI for the life of the loan