[00:00:00] Speaker A: Welcome, listeners. You're listening to the Deeds in the Desert, where real estate investors tune in for the latest news.
[00:00:08] Speaker B: Welcome back to the Deeds in the Desert. We're here in beautiful Las Vegas. Obviously, you can see that behind us. I told my marketing staff I take advantage of that. We're going to be talking dirt to door with the chipper Pat Vassar in all his glory with his bald head.
Welcome, Pat.
[00:00:28] Speaker C: Thank you. The Chipper. I've never heard been introduced as such.
[00:00:31] Speaker B: But chipper, you're so chipper when you walked in here. So I thought I would just add that.
[00:00:35] Speaker C: Well, I'm excited to talk about something that is of the utmost importance in what we do.
[00:00:40] Speaker B: I know it's everything you do.
[00:00:42] Speaker C: It is everything we do. Yes. All right.
[00:00:44] Speaker B: Well, let's get started on this.
[00:00:45] Speaker C: Let's do it.
[00:00:46] Speaker B: This is going to be a longer segment, so we may have to break this up a little bit.
[00:00:51] Speaker C: Sure.
[00:00:52] Speaker B: But we're going to record the whole thing today. But we might have to break it up just so our listeners don't have to listen to us for, you know, an hour and a half.
[00:00:58] Speaker C: That's too long.
[00:00:58] Speaker B: I mean, we think we're a lot of fun, but they may not. So we're we're going to keep it at that. So we're going to start with kind of a bigger picture, and then we're going to drill down on that as much as we possibly can.
[00:01:08] Speaker C: Okay.
[00:01:09] Speaker B: So let's, let's first talk about the development cycle and how that typically works. We're going to take residential and then we're going to look at commercial. So let's start with residential. What does a life cycle of residential look like when they're coming to ignite funding from acquisition to fully built and selling it? What does that look like?
[00:01:32] Speaker C: Unfortunately for you and our listeners, you're going to hear me say a lot of it depends. And because it depends on so many different factors, whether that is the municipality that you're going through, the product type you're building, what season it is, if it's in the middle of the winter or middle of summer. So on average, if you kind of level everything off and have a level playing field across the United States with all different product types within residential real estate, you're looking at probably about 12 months from the acquisition of raw land to the full entitlement of the land, another six months for the development of that land, and about six to 12 more months for the vertical construction on said land. So about two, two and a half years Before a raw piece of dirt gets turned into a finished home.
[00:02:24] Speaker B: And even before that, what happens with the borrowers? They're kind of looking into the future to say where do we want to go two years from now, three years from now? When do they need to start the, the process of acquisition? Is it a two year cycle?
[00:02:40] Speaker C: Absolutely, it absolutely is. And the reason behind it is twofold. On public home builders, what they kind of look for is an 18 month supply of finished lots in their inventory. They want to know they have some Runway to go. So if entitlement slows down, if development slows down, they have product they can build and ultimately sell to consumers without that quote, unquote, dry, dry powder, they're kind of dead in the water. So they want to make sure they have a backlog of inventory to sell. So that process does take a little time and does take a little intestinal fortitude to go put a lot of dollars down that you're not going to be able to sell for multiple years in the future.
[00:03:18] Speaker B: Yeah, absolutely. But you got to plan for it and you got to hope you're getting it at a good value and you got to hope that the value goes up.
[00:03:25] Speaker C: Absolutely.
[00:03:26] Speaker B: So all of those factors are coming into play and sometimes they don't even hold onto it. Sometimes they acquire it with the intent to and then realize we're deviating, we're going in a different direction, and then it's sold to the next person, Right?
[00:03:38] Speaker C: Absolutely.
[00:03:38] Speaker B: And that cycle starts again.
[00:03:39] Speaker C: Yep. And that is not an uncommon practice, especially with some of our borrowers who specialize just in that where they will go out and entitle land, buy raw pieces of dirt, get it entitled, meaning they have paper lots, no physical development done, and sell those paper lots off to more traditional homebuilders. Other groups buy that, that entitled dirt, develop it into finished lots and then sell it off. Then they don't want to deal with home warranties and buyer buyers, awkward and weird demands from buying homes and leave that to production home builders. And then other groups want to see the full life cycle, the cradle, the grave, so to speak.
[00:04:17] Speaker B: Yep. All right, now let's talk commercial for just a second. Commercial in the sense of, you know, shopping malls and maybe industrial we can throw in there. Talk to me about the commercial cycle of real estate. How does, how does that work?
[00:04:31] Speaker C: Commercial cycle can be a more arduous and time consuming process because most of the pushback you get is nimbyism. You know, not in my backyard.
[00:04:43] Speaker B: Yeah, sure.
[00:04:43] Speaker C: There's gas stations that need to go in, in this, this city, but not right next door. My kid is. Yes, there, there is a, A.
[00:04:51] Speaker B: Let's go vote on that.
[00:04:52] Speaker C: Yeah, exactly.
We want bars and taverns and restaurants, but not next to the daycare my kid goes to. So I'm going to vote no. I'm not going to happen. So you have a lot of pushback on the commercial side of things. Much more than you do on the residential side. Because of that pushback, the municipalities listen to such pushback and will be hesitant to move forward with much of the commercial development. What it usually means, it's more of a time consuming and labor intensive process, but at the end of the day it ends up getting done because that is what the city needs.
[00:05:21] Speaker B: Yeah.
[00:05:22] Speaker C: In its most generic sense, you have kind of two buckets of properties for commercial. Okay. You have an asset that is looking for a project and you have a project that is looking for a piece of land. So in many situations you will have a industrial developer. All they do is industrial. So they'll go find land that fits their idea of what it needs to be, which is industrial, according to them. And you'll have others who are maybe third generation property owners. There used to be a family farm on it and now they're subdividing it or the patriarch of the family recently died and they're getting rid of the estate. And now you have a piece of land that is just looking for a project. What is the highest and best use? Once you have those two that marry up, then you have a deal that can be happened.
[00:06:06] Speaker B: Yeah.
[00:06:06] Speaker C: And you know, it takes some time.
[00:06:08] Speaker B: Takes time, yeah. Oh, absolutely. I know we've had to fight through some trust before to figure out, well, after a person dies and it's left to the next person, that person died. And then you're trying to find who the third person is. And it, it can be, it can be a struggle.
[00:06:20] Speaker C: Yes.
[00:06:21] Speaker B: You know, some of these acquisitions are interesting to say the least.
But let's talk about this groundbreaking. This is going to be our first kind of segment we're going to dip into here, which is the site selection and the feasibility.
So when we're looking at it and when the developer's looking at it. Because we always say we lend with the mindset of a developer. Right. We're a little different from our lending strategy because we're asset based lenders. And so how do developers decide where they want to build?
How do they determine that?
[00:06:55] Speaker C: Yeah, so it depends on how sophisticated the group is. Really More sophisticated groups will look on a macro basis and say they are. Let's take QSRs, quick serve restaurants.
And they will look at saturation of a particular market. They will say, all right, how many QSRs are there in the entire United States compared to how many commercial square footage there is in the entire United States? Let's say there's a 5% coefficient factor. Then they'll look in the market that they're in and say, what is the coefficient factor here? Well, it's only 4%. Okay. So there's a need or there's less here than there is elsewhere. So there could potentially be a need for it. Now let's look in the submarket. I want to go into what is the coefficient within this submarket, what is the radius that these QSRs currently service, and is there a hole within this submarket? If so, they'll move forward with it. That is how sophisticated developers will go about it.
[00:07:51] Speaker B: Yes.
[00:07:51] Speaker C: Less sophisticated developers will say, oh, that piece of lands for sale, I've got a tenant in tow. I can go convince Arby's, whoever it may be, to go on that piece of land. I'll put it under contract, try to figure it out, and see if I can make a deal happen. That's part of the reason transaction volume is always in and out of contract, is because you will typically have a lot of buyers that have grandiose ideas and try to make a deal happen, but to no avail on their part.
[00:08:19] Speaker B: So how do we kind of weed through that to determine whether or not it's a good project?
Well, it's the right site.
[00:08:27] Speaker C: Yeah.
[00:08:28] Speaker B: How do we do that?
[00:08:28] Speaker C: Yeah, well, unfortunately for us, there's a lot of jokers in our industry, not only from our side of the table, lenders side. You know, hard money lenders don't necessarily have the best reputation in the world because there are some shady operations.
A lot of that is also on the other side of the coin, the other side of the table, which is the developers.
In certain markets, anybody that has a hammer and a pickup truck is considered developer. You look in, you know, mostly in the southern states, we find that to get a contractor's license is very easy. And so you have a lot of contractors out there that say, oh, I've done some tenant improvement work on a building here, so I'm a general contractor, I can go do this on my own. It doesn't seem too hard.
[00:09:09] Speaker B: Yeah.
[00:09:10] Speaker C: And so we weed through it by looking at the project itself. But then most importantly, going to the borrower's History. What have they done in the past? Have they had it all under their name before or were they only a gc? Were they the superintendent on a project? Were they overseeing the entire project or one aspect of it? Did they have their own skin in the game? Did they own the asset or was it somebody else that they were doing work for and getting on a fee basis? And so we want to see that they've done in the past.
Although everyone's got to get their start somewhere. Yeah, we just don't want it to be on us.
So there are a lot of green developers out there.
Well, you know, we green developers, are.
[00:09:49] Speaker B: We talking about what kind of green are we talking.
[00:09:51] Speaker C: We're not talking about eco friendly necessarily. We're talking about young, inexperienced, the greenhorns, as it were. Okay. Little wet behind the ear, so to speak. Those developers will allow to go elsewhere to get financing and they prove themselves up and then they come back to us.
[00:10:05] Speaker B: Yeah.
[00:10:05] Speaker C: It is not uncommon for us to lend to a borrower for the first time, although we've been working with them or been talking to them for years and in some cases decades. Even before they needed to go out and prove themselves that they can, they can handle the size of project or this type of investment or this market or whatever the case may be, prove themselves in some way, shape or form before we will lend to them.
[00:10:28] Speaker B: Okay, let's say they prove themselves and they bring a deal to you and it's dirt and it's about 10 miles out of the normal market that you would see somebody building in. And there's a vision there. Right. And we just talked about the fact that it could be two years down the road, it could be three years down the road.
Do we think when we underwrite about two years from now, 10 miles from that, from there. Is this a good venture? Is that how you're thinking about it when you're analyzing this in the same way that they are?
[00:11:03] Speaker C: Absolutely. You said it before. You know, we have the mindset of a developer. That is my background. That is what we came from.
That is what is probably the most important part of this business is thinking like a developer. Because at the end of the day, we're on the debt side of things. We don't get to partake on any equity splits. We don't get to partake in any home run deals if things sell for twice as much as they are. So our business proposition is purely risk management and ultimately risk mitigation.
[00:11:32] Speaker B: Yeah.
[00:11:32] Speaker C: Although it's impossible to make it a risk free Investment if we are in it with the borrower, if we are observing the property like a developer and looking for the worst case scenario, that will usually end up to be a benefit to the investors in the long run. So yes, we do look at it from a developer and yes, we have to evaluate it, not necessarily as it sits today, but as it will sit in two years from now when the property, property is ultimately constructed and ultimately sold.
[00:12:00] Speaker B: Okay, talk to me about feasibility studies. Do we do anything along those lines? How does that start? Does it start with the borrower? They pass it on to us, we read through it, we figure it out, we're like, yeah, this makes sense. No it doesn't. Do we go to another third party? How do we make sure that what they plan to do is feasible?
[00:12:20] Speaker C: Absolutely. So from a macro standpoint, feasibility studies are normally on a property specific basis done by the borrower. But before it even gets to that, we as a company will look on it on a macro standpoint. What areas of the country are performing better? What area of the countries, what areas of the country will perform better in the future? As you talked about, it's not necessarily what's happening today, but what's going to be happening two years from now when this property is, is being sold.
So we will be moving in and out of markets as those macroeconomic factors change.
[00:12:58] Speaker B: Yeah.
[00:12:59] Speaker C: And we will be dynamic and nimble enough to move along with them. So from our macro standpoint, we will look to see what markets we want to go into and maybe more importantly which ones we want to go out of.
[00:13:10] Speaker B: Yeah.
[00:13:11] Speaker C: Once we move into a market then we will look from a top down approach, what is this area missing? We will look at those coefficients and see if it is qsr. See if it is industrial space, maybe it's medical office, maybe it's housing.
[00:13:25] Speaker B: Yeah.
[00:13:25] Speaker C: Who, whatever it may be and look for sectors that need to be built upon. Once we find that sector, then we'll go out and find borrowers that are building in that sector and in that market. Once that's obtained, then we will look on that property specific level what the borrower has already done for that particular property on a feasible fill feasibility basis.
[00:13:47] Speaker B: Yeah.
[00:13:48] Speaker C: So the feasibility starts with us.
[00:13:50] Speaker B: Yeah.
[00:13:50] Speaker C: But it really ends with the borrower because they're looking at it on a very micro or granular scale. What is it? What's the feasibility of this property? What is the highest and best use of this asset?
[00:14:01] Speaker B: Yeah.
[00:14:01] Speaker C: Whereas we are looking at it on, should we go into Colorado or out of Colorado? Should we Move to New Mexico or Texas. What's going to be the better market in two years from now?
[00:14:10] Speaker B: Yep.
[00:14:10] Speaker C: And so feasibility has multiple accords, but on a high level, usually comes from our side. And on a micro level or on a property level basis, it's usually from the borrower.
[00:14:21] Speaker B: Yeah.
[00:14:22] Speaker C: As far as the borrower, what they look at, what is feasibility there? That could be traffic studies, that could be environmental impact. That could be the coefficients we previously talked about.
It could just be what is the current demand? What are the supply and demand factors of the particular property that we're looking to to put into place?
Luckily for developers, there's usually some lead up time to building. Right. We talked about a two year general cycle from raw land to finished product.
And because you have to get permits along the way.
[00:14:58] Speaker B: Yeah.
[00:14:58] Speaker C: That's public information. So you can actually see kind of what's in the pipeline, what's going to be coming down the pipeline the next two years to see where things will be. When your project.
[00:15:07] Speaker B: Where is it trending? Yeah.
[00:15:08] Speaker C: Where's it trending? Yeah. Am I ahead of the curve, behind the curve, or am I doing the just being a lemming, doing exactly what everyone else is doing. And probably we'll have an oversaturation in the future.
[00:15:18] Speaker B: Do you think that feasibility studies outweigh in value of evaluation versus an appraisal?
[00:15:29] Speaker C: Oh, I think they, they need to be taken hand in hand. Both of the documents in of themselves don't tell the whole story.
[00:15:36] Speaker B: Yeah.
[00:15:37] Speaker C: But together we'll tell much of the story. The reason I say that is you could have a great loan to value. Let's call it a 50 loan to value. But let's say it's in a tertiary market that is reliant on one government contract.
[00:15:51] Speaker B: Yeah.
[00:15:51] Speaker C: From an aerospace group.
And that LTV is reliant on that contract being fulfilled. And we all know kind of what's going on in the federal government level. And if there's cuts to be made there, that is going to have a disproportionate effect on this great loan to value.
[00:16:10] Speaker B: Yeah.
[00:16:11] Speaker C: And so in of itself, loan to value doesn't tell the whole story, just as feasibility does. Yes. You could have a perfectly environmentally sound property with great traffic counts, low impact, neighbor support, community support and demand in the area.
But maybe values just aren't quite there. Maybe they cost too much to build, so the loan to values or loan to costs are too high. So it doesn't make sense to get involved with.
[00:16:40] Speaker B: Interesting.
All right, we're going to move on to the next segment, we are going to navigate entitlements.
[00:16:49] Speaker C: Oh, man.
[00:16:52] Speaker B: I didn't say this was going to be an easy podcast.
We have criteria. This time there's a piece of paper in front of me and I'm following it, which is even crazier.
[00:16:59] Speaker C: That is the crazy part, especially when you talk about entitlements. This is going to be interesting.
[00:17:02] Speaker B: Okay, so for many investors, entitlements is a complete mystery.
So let's first start with a definition of what an entitled property is. What is an entitled property?
[00:17:17] Speaker C: Entitled property is a legally permissible use of a particular portion of land. So you have already gone and got city approval, county approval, HOA approval, whatever it may be, whatever approvals need to.
[00:17:31] Speaker B: Take place on the corner next to the daycare center, right?
[00:17:35] Speaker C: Exactly. Yeah. So if that bar has been approved, that is part of the entitlement process. So you kind of have a few different stages of the entitlement process. You have your zoning, which is what type of use could it be? Commercial can be residential. How dense can the commercial be? What are your general setbacks? And then you get into more minutia, which is your actual site plan. What is the slope out there? What is the gradient? How much of the hillside can you actually use? Are there any endangered species that need to be protected? Is there a traffic issue that's going to be put into place? Does this sewer have enough capacity for this particular project?
And so you have kind of the high level entitlement, which is the zoning, and then the kind of the low level entitlement, although that's definitely not industry jargon, but yeah, for our purposes here, yeah.
What that really entails is site plan. Where can you build, how much can you build? And the actual construction plans of such buildings.
[00:18:37] Speaker B: And does that change?
Could that change?
[00:18:40] Speaker C: It changes all the time.
[00:18:41] Speaker B: Okay.
[00:18:41] Speaker C: And the reason I, I kind of laugh at this whole segment to begin with is you said our investors think of it as kind of a black box. What is, what is it? What. What will be required? Well, to be honest with you, our developers don't know either. I don't know either. No one really knows.
Although you have the black box. It is a black box. And unfortunately, we're not going to be able to. To give you the keys to the kingdom. There is no secret that I can say you do this one thing and you're going to get all your properties entitled because it is done on such a granular level that all it could take piece by piece, and it really could come down to one county commissioner. Yeah, that one county commissioner could be removed and new one put in. And that same site plan that you brought in that was disapproved all of a sudden gets approved. So what changed? Nothing to the code, nothing to the regulations, nothing to your site plan, nothing to the market, just something else. This one individual, that's something me, nor the developer, nor any of our investors or anybody can be able to determine prior to the entitlement work being taken place. Which is the reason why it's the riskiest area within real estate, because it is a black box. There are so many unknowns. And once you get those hurdles done and overcome, a lot of the risk has been decoupled from the investment.
And when you decouple the risk to the reward, we want to get involved on that more rewarding process, which is usually later on in the life cycle. That is the reason when we get involved on land deals, they're usually lower loan to value. Feasibility studies come back better than normal.
And as the further along you go in the life cycle, our ltvs go up because the risks associated with it have decreased.
[00:20:25] Speaker B: Yep. You've used the terminology before. Fully entitled. I've seen it on investment overviews. When you say fully entitled, what do you mean?
[00:20:35] Speaker C: Building permits in hand.
[00:20:37] Speaker B: Okay.
[00:20:37] Speaker C: There is nothing the city can do so long as you start building within a certain period of time that they can take that away from you.
[00:20:45] Speaker B: Okay.
[00:20:46] Speaker C: They've already approved your slope analysis. They already proved your density. They already pill approve the materials that you're using, the size, the slope, everything you can think of, they've already approved it and they've given you a permit that says if you build this, yeah, you're good to go. And so that is what a fully entitled property is. Some developers will consider it fully entitled once you get your site map done. To me, that's not all the way done because what if you want to build a different type of construction that is not allowed? Well, now your site plan, yes, is great, but the house that you want to build isn't permissible there. And so that will take some of that away. So until you get that building permit in hand, then in my mind it's not fully entitled.
[00:21:31] Speaker B: Do we offer investments that are not fully entitled?
[00:21:35] Speaker C: Yes, we do. And it comes with the caveat of there's additional risk to it, which means there better be a better LTV or a better story behind it.
[00:21:44] Speaker B: Yeah.
[00:21:45] Speaker C: So although it may be a raw piece of land or unentitled, unfully entitled, we will have already been in contact with the powers that be and have a fairly good understanding of what is going to transpire during that entitlement process.
While we can't be certain, nor can the borrower, we have a fairly good level of certainty that the property will be entitled to what their borrower specifications are.
[00:22:11] Speaker B: And that happens by referencing the. The probability factors of it being approved.
[00:22:19] Speaker C: Yes.
[00:22:19] Speaker B: Are we doing that or is the borrower doing that, or are both of us looking into that?
[00:22:24] Speaker C: We utilize the trust but verify method, so we will trust everything the borrower is saying, but we're going to have to verify it. We're going to have to do that work on our own, because at the end of the day, the investors are relying on us to at least do some of that diligence work to ensure what they are saying is actually accurate. So they will say, I think I can get five lots on this subdivision. Well, we need to go talk to the county commissioner or the planning department or whatever powers that be to see how likely that is. From the most part, you will have a fairly good understanding of how easy it will be done. Now, that is not to say it's a slam dunk and that it's going to happen, but we have levels of certainty in which will transpire in the future.
[00:23:07] Speaker B: Okay, talk to me a little about zoning laws since we're kind of in this entitlement area.
How and who is determining those laws? Because I've seen things flip back and forth. It was residential, then it was commercial, and we're back to residential. And so who determines that?
Why are we flip flopping? Is it value add? Is it.
What is it value need?
[00:23:36] Speaker C: Yeah, it's a lot of different things.
I'll speak specifically to Las Vegas because every municipality operates differently. So within Las Vegas, that is done every few years, usually once every 10 years, where they will put a master plan together. The county commissioners will all put their brilliant minds together and say, this area of my jurisdiction should be commercial use. This part should. Is not only commercial use, but can be industrial. This part is not only commercial industrial, but can be actual for manufacturing. This is not commercial industrial manufacturing, but actually can be chemical plants. And so they will get down to kind of minutia of what they foresee their. Their jurisdiction being during their term. During their term.
[00:24:20] Speaker B: Okay.
[00:24:21] Speaker C: And this will make sure everybody knows this actually will sometimes supersede their term. Right.
[00:24:25] Speaker B: Because it's.
[00:24:25] Speaker C: It's usually done every 10 years, at least locally, and then revisited every five.
[00:24:30] Speaker B: Okay.
[00:24:31] Speaker C: But that master plan, when put in place, is kind of a Blueprint as to what they want their community to be. Okay, so when you say who determines that? Well, it's the commissioners, but those are elected officials that whoever's in that jurisdiction elects the county commissioner. So at the end of the day it's the taxpayer that is picking it, but isn't determining necessarily what type of master plan they're going to put together.
[00:24:55] Speaker B: Yeah.
[00:24:56] Speaker C: With that said, when that master plan is done every 10 years or so, that is what is laid out for future growth within that future growth. If you come in with a change to what you were asking for, if it. It's kind of broken down in two components. One is a conforming zone change and one is a non conforming zone change. Within the conforming zone change bucket, it is a lot easier to take place and a lot more known than unknown.
Although it will be working, will take time and cost money to do. The likelihood of success and the likelihood of getting exactly what you want is pretty well determined beforehand. Whereas the other bucket, a non conforming zone zone change is more of a crapshoot.
[00:25:43] Speaker B: Yeah.
[00:25:44] Speaker C: As the, the background may depict, there's a few blackjack tables going on right now and some roulette. You might as well throw 100 down on black or 100 on red because the likelihood of your site getting what you want it to be is that much of a gamble. It's a coin flip. You really have no idea. And because of that, when we underwrite, if we are on that side of things, the loan to values need to be extremely low to take into account the likelihood of success.
[00:26:12] Speaker B: Interesting.
All right.
Municipality approvals. You know, we just talked about them, our elected officials.
How much poll do they really have when it comes to all of this?
[00:26:26] Speaker C: A lot.
Which is the reason a few have been fined, sentenced to jail for bribes. Whether that's them or the, the developers trying to bribe them or successfully bribing them, at the end of the day they get to vote and say what they want. But they are elected officials and so they have to adhere to what their constituents want if they want to get re elected.
[00:26:50] Speaker B: Exactly.
[00:26:51] Speaker C: If they don't care about reelection, then they can basically do. They're a disruptor, they can do as they want.
Unfortunately, it really comes down to that. It's one person that is an elected position that gets to determine the viability and the ultimate profitability of you and your piece of land.
Crazy to think about, right?
[00:27:12] Speaker B: It really is. So let's, let's talk about these individuals that elect them.
Let's talk about the Community's input.
How does that impact real estate? How does that impact what happens with that piece of real estate?
[00:27:26] Speaker C: Yes, because they are.
[00:27:28] Speaker B: Because they have a voice.
[00:27:28] Speaker C: They have a voice. And if you are working with a county commissioner that is up for reelection, your voice matters. Because usually it's the, the squeaky wheel is the one that gets the grease. And in the case of zoning changes, it is open in a public way for opposition or proponents to come in and express their opinions. Yeah, usually it's mostly to the negative side. No one really comes in and says, yes, you guys are doing a great job. I like everything you're doing. Let's go. Yeah, it's the people coming with pitchforks and not my backyard. Yeah, I want a gas station, but not next to me. And so you have to kind of take that with a grain of salt. But because they are elected officials and those are the squeaky wheels are the ones that are going to remember on the ballot box of who listened to them.
It matters to the commissioners if they're up for reelection. It really matters to the commissioners. So at the end of the day, do voters, do the community members have input? Absolutely.
[00:28:22] Speaker B: Yeah.
[00:28:23] Speaker C: Now how much input really depends on who the commissioner is and what their life cycle is.
[00:28:28] Speaker B: But how squeaky the wheel, how many squeaky wheels are, that's usually the biggest.
[00:28:33] Speaker C: Yeah, Biggest component. How many of them are there?
[00:28:35] Speaker B: How many showed up to that meeting?
[00:28:36] Speaker C: Right. Is there one loud voice or is there a hundred quiet voices so you can kill them softly? And that really does happen.
[00:28:45] Speaker B: Yeah. Oh, absolutely. But they do have a voice.
[00:28:47] Speaker C: They do. No doubt that's here locally. Other states.
[00:28:51] Speaker B: Oh yeah.
[00:28:51] Speaker C: May be different. Right. You know, Texas zoning laws are not nearly as stringent as they are here in Las Vegas. We think of Las Vegas, Wild Wild West, Sin City, which is all fairly accurate. But when it comes to zoning and regulations, it is the furthest from the truth.
Texas, for example, is much different. The zoning laws and regulations down there are close to non existent. And so the process of which to get a property entitled is dramatically different. The cost, time, energy and brain damage associated with it is 2% of what it is here in Las Vegas.
[00:29:26] Speaker B: Yeah.
[00:29:27] Speaker C: And we are probably 2% of what it is in Southern California.
[00:29:30] Speaker B: Yeah, exactly.
So where you lend matters.
[00:29:34] Speaker C: It does.
It absolutely does. Which is why we take that where you build matters. Yeah. Which is why we take that macro look and we try to determine what areas we want to go into the country. Not only where people moving to, but where is it easy to get done yeah. Or maybe if it's really hard to get done, that's a good thing. If it's already entitled in an area that it's impossible to get entitling in the future, that gives you a good moat of expertise and profitability that around it that you know that you're not going to have much competition in the future.
[00:30:03] Speaker B: Yeah.
[00:30:04] Speaker C: So it is a double edged sword. It could be a bad thing, but it also could be a good thing. These zoning regulations. Yeah thank you for watching part one of our three part series here at Deeds in the Desert. Dirt to Door. The next episode we'll look at it from the borrower's perspective about how to finance that dream. Make sure you like comment and subscribe down below so you don't miss a single episode.
[00:30:27] Speaker A: Thanks for joining us this week on Deeds in the Desert, where short term investments meet long term investors. We hope you enjoyed the content so much that you share it with all your friends. Who doesn't like learning about passive fixed income, right?
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