Why I Decided to Develop a 13-Story, 84-Unit, 95,522-Square Foot High Rise
This may be unorthodox, but this is just something that works for me.
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About one-third of my work goes towards networking, simply having a three-to-five coffees or lunches with someone high up on the ladder than myself.
So in one of these outings, I was sitting in an office of a big developer (he’s currently doing a massive skyscraper), discussing deals and things of that nature.
We were looking across the Hudson River from the 47th floor of a big building around corner from Broadway. Over in Jersey City, they’re currently building crazy amounts of high rises and skyscrapers.
Altogether, more than 37,000 units new units have been approved.
“Do you do Jersey?”
“No, but I’d love to.”
“I’m telling you, it’s nice over there,” I said.
We were in his office in Lower Manhattan. From the room, we could see these little ferries ride across between New York City’s Financial District and Jersey City’s Waterfront.
“They’re running every 10 minutes,” he said.
“Yeah, most of my stuff is over there,” I said. “I don’t even touch Brooklyn.”
What Piqued My Interest in High Rise Developments
We then started talking deals, the economy of high rise developments, and what it takes to structure these deals—the promotes, the margins, what numbers to hit, what a profitable deal looks like.
The main takeaway was that when you’re doing these deals, the economy of scale applies. “It’s really all the same,” another high rise developer told me.
On a personal note, I strongly believe in patience. In accumulating small wins, constantly growing bit by bit with each endeavor and deal. You can’t build a skyscraper without a solid foundation.
The reason why I approach it this way is because as an entrepreneur, your mind is always racing with what you think are great ideas, angles, strategies. One of biggest challenges is to dim these and stay focused.
I’m doing a deal, the first full smart home development in that neighborhood (across from a 16-story high rise under construction), which I thought was big for our firm.
At first it was just a basic renovation, conversion to four 1-bedroom apartments—$1.5M ARV.
Due to unforeseen serendipitous circumstances (read: approvals), that changed to a brand new construction, with $4.5M in estimated asset value, once complete.
Nevertheless, after hearing about the formula for bigger deals, I left the meeting thinking about if I should.
“What if… Should I?”
“Dude, leave that alone…”
“No, why can’t you?”
At this point, I’m having a full-blown conversation with myself.
“Let’s just plant a seed in universe,” I remember thinking, “and we’ll leave it. Whatever happens happens.”
So just to plant a seed, I shot a text to a broker. This is verbatim, for the record. (Forgive errors and typos.)
“Yo!” I wrote. “Can you find find me JC corner lot I can build 100k sf on?”
I also have a very eager wholesaler friend who desperately wants to syndicate high rises in NYC—always texting me wild deals that never come close to coming through. (I keep telling her she’s crazy.)
So I said the same thing.
“If you see any lots in JC, I’m down to build. 100k sf.”
13 Stories, 84 Units, 95,522 Square Feet
So I recently came across a deal. Corner lot, full block, but oddly shaped. A bit overpriced, but definitely doable.
I immediately shot it over to my architect. “Dude, what can you do with this?”
“What do you have in mind?”
Related: How to Take the BRRRR Strategy to the Next Level with a 198-Unit Apartment Building
“No idea. I don’t know,” I said. “Just go crazy with it. I like this building, but that’s about it. Oh, and I want to do the first minority-owned high rise over there.”
I didn’t tell him the 100k square foot size, anything like that.
About a week later, he sent me this: Thirteen stories, 84 units, 95,522 square feet.
In part II of this piece, I break down how I took over the land (no cash down), structured the deal, our plans for building—and why I want to give tenants free Uber rides.
Think I’m crazy for tackling something of this magnitude?
Weigh in below!