Where do you think the real risk in development actually is?

Question

I was walking a job the other day while it was getting framed like this.

And it got me thinking…

Most people assume the risk in development is during construction.

It’s not.

By the time a project looks like this, the deal is already either solid… or already broken.

The real risk happens way earlier.

Before you ever pour a slab.

Things like:

• Lot configuration
• Zoning layers
• Overlay restrictions
• Utility capacity

That’s where deals actually go wrong.

San Antonio especially isn’t just “check the zoning and go.”

It’s layered.

You might have:

• Base zoning that says you can build
• But an overlay that changes what that actually looks like
• And a lot configuration that limits what you can physically do

I see people make the same mistake over and over:

They buy something that looks buildable…

Then later realize:

• The lot won’t split
• The duplex layout doesn’t fit
• Setbacks kill the design
• Or utilities turn into a surprise cost

At that point, it’s too late.

What you’re looking at in this photo isn’t just framing.

It’s the result of a deal that was already solved upfront.

Curious how others here approach this:

Are you digging into overlays / lot history when you analyze deals…

Or mostly relying on zoning + comps?

If anyone’s working on infill deals in San Antonio and wants a second set of eyes, I’m always open to taking a look.

Joseph Neri · Answer

Marcus — spot on. As a fellow Texan with 100+ real estate transactions in Houston (flips, wholesale, rentals, lending), I can confirm the risk is almost always in the due diligence, not the build.

The other risk nobody talks about: capital access during the unexpected. You can nail every overlay, zoning check, and utility study — then a surprise cost hits mid-project and you're scrambling for bridge money at 12-14% with 5 points.

One thing that changed my approach: building a personal capital reserve using whole life insurance cash value. When a surprise $30-50K cost hits, I borrow against my policy in 3-5 days. No bank, no hard money lender, no 12% interest. My cash value keeps growing even with the loan out. It's not a replacement for proper due diligence — but it's the safety net that lets you survive the surprises that even perfect planning can't prevent.

Great post — the people who learn this lesson early save themselves a lot of pain.

Marcus Bledsoe · Answer

Joseph — appreciate that, especially coming from someone with that kind of volume.

You’re 100% right on capital too. That’s the piece a lot of people don’t plan for because they assume if the deal is “good,” the money will be there when they need it.

Where I see a lot of those surprises come from on my side is upstream — lot issues, overlays, or utility constraints that weren’t fully understood going in. That’s usually what creates the unexpected cost in the first place.

But even when you get that part right, having access to capital when something shifts mid-project is what keeps the deal alive.

That’s a solid system you’ve built on your end

Dominic Magallanez · Answer

Thanks for the info!

Will surely give you a shout if anything

Bo Smith · Answer

Marcus is exactly right. The deal is won or lost in the due diligence phase, not in the framing phase. I've walked job sites that looked beautiful -- no problems visible -- and the deal was already broken before anyone poured concrete.

The zoning and lot issues are where people trip up because they're invisible until it's too late. You might have base zoning that says "yes, duplex" but then there's a height restriction, setback requirement, or lot split restriction that kills the actual design. And utilities? That can swing a project by 15-30% in cost overnight. I did a development deal where the water pressure on the property required upgrading the lateral before I could build -- 2k surprise.

Here's my process: Before I even make an offer, I pull the full zoning code, check overlays, run utilities against the lot layout, and talk to the city planning department. Takes a day of work upfront, but it costs me nothing except time. After I'm under contract, I hire an engineer to do the real due diligence. If there's a red flag during that phase, I renegotiate or walk. But I never go to permitting thinking I know what the lot can do.

What's your experience been with permitting timelines in San Antonio? Are cities there moving on permit approvals, or is that another 3-6 month surprise?

Marcus Bledsoe · Answer

Bo — that’s a solid process. Especially pulling zoning + overlays before even making the offer. Most people don’t get that far until they’re already under contract.And you’re spot on about utilities — that’s one of the biggest swing factors I see. It’s rarely obvious upfront, but it’s usually what blows up budgets if it’s missed.On San Antonio permitting — it’s actually been relatively efficient on straightforward infill deals. If zoning and overlays are clean and you’re not asking for anything outside the code, I’ve seen permits come back in a couple weeks.Where it slows down is when:– You’re dealing with overlays that require additional review– There’s ambiguity around lot status– Or anything that pushes you into exceptions / variancesThat’s usually where timelines stretch and uncertainty creeps in.If everything lines up upfront, the city’s been pretty predictable. What's your experience been on permitting timelines in your market?

Where do you think the real risk in development actually is?

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