Building Wealth With Value-Add Entitlement Deals With Adam Gilbert
Adam Gilbert is a third-generation resident of Palm Springs and an entrepreneur involved in various fields related to real estate. Adam began his career as a civil litigation attorney and quickly found his passion for real estate focusing his skills on Sales and Development. As a principal and President of The Firm Commercial, Adam leads a team of dedicated agents with offices in Palm Springs & Palm Desert, CA, specializing in commercial real estate sales, leasing, land acquisition, development, government relations, and value-added entitlement deals.
As a principal of Gilbert Avriette Vacation Rentals, Inc., Adam managed 35+ vacation rentals throughout the Coachella Valley. Gilbert Avriette Vacation Rentals was acquired by Turnkey Vacation Rentals in June 2018. Adam also works as a real estate development consultant advising on development projects from land acquisition, entitlement, and build-out throughout the Coachella Valley.
Watch the episode here
Brett:
I’m excited about our next guest. He’s a third-generation resident of Palm Springs and an entrepreneur involved in various fields related to real estate. He began his career as a civil litigation attorney and quickly found his passion for real estate focusing his skills on sales and development. As a principal of Gilbert Avriette Vacation Rentals, he managed 35+ vacation rentals throughout the Coachella Valley. Gilbert is lots of different names here. He was in the turnkey rental business and let him talk about that since June of 2018. He is now a commercial real estate broker and president of the firm called The Firm Commercial. And he leads a team of dedicated agents with offices in Palm Springs and Palm Desert specializing in commercial real estate sales, leasing, land acquisition, development, and government relations. And our topic today is value-add entitlement deals. Please welcome the show me album Adam Gilbert. Adam, how are you, Sir?
Adam:
I’m doing very well today. Thank you so much for having me.
Brett:
Lots of tongue twisters there. And I’m excited to talk about building wealth with value add entitlement deals, kind of an interesting kind of niche topic, which a lot of folks don’t have expertise in. But I’m glad we have you on to kind of shed some secrets on that. But before we go there, would you give our listeners and me a little bit more about your background and your current focus?
Adam:
Definitely. So born, as you mentioned, born and raised in Palm Springs, which is really where I’ve created my market and done most of my deals. And Palm Springs is mainly the Coachella Valley, which is about 400,000 full-time visitors or live residents. And then it gets up to about a million people during the season when people come from all over the world to enjoy our beautiful weather during the winter. And so basically, how I got here is I was a civil litigation attorney who was always planning to do that, took my test to be a broker, and started doing some deals on the side. And I was this is exciting, I get to get out of the office. And I’ve quickly used my background, and kind of my knowledge of how cities and how entitlement works, to start doing a number of deals that not a lot of people can really figure out. And so I took courses, and I learned and I tried to figure out this process that people have used to make land and buildings even more valuable, and really used it to have a lot of good projects go forward and create some wealth.
Brett:
Amazing run, dive into those secrets here in a minute. By the way, you can learn more about Adam Gilbert at thefirmcommercial.com. Adam, I believe you are being given certain gifts in this life. And some people believe these are strengths and superpowers You know, I think their God-given gifts, and I think they’ve been given to us to be a blessing and help to others. So I’m curious, I want you to go back to high school days, maybe college, maybe early law school days, and I want you to think about maybe one or two gifts that you believe you have ever given? And how do those help how you help and bless people today?
Adam:
I’d say the number one is just being able to think outside the box. A lot of you know, everyone has that piece of dirt or that building in their town, you’re just sitting there, and no one’s doing anything with it. And everyone’s asked why you know what, what’s wrong with it. And usually, it’s zoned incorrectly or there’s something wrong, that doesn’t allow the proper use to go into that building or piece of land. And so if you can think outside of the box and get creative, and convince people of your ideas, you can definitely take something that has little to no value, and then change the underlying zoning to create a lot of value. So I’d say thinking outside the box is a really important factor that’s led to my success.
Brett:
Perfect. So what’s the number one secret to thinking outside the box to add value to the land in places that maybe people aren’t seeing or hearing about until you’re finding it and seeing it or doing that? What’s that secret? How do you think outside the box name is a better way to think about when you’re looking at land?
Adam:
When I’m looking at land, the zoning and the general plan usually dictate what can go there. And so what I tried to do is I tried to look at the land and say what should go there? And that’s a completely different question. And so if you know the process, if you figure out what should go there, and it fits a number of factors one, will the neighborhood allow it? Will the city be behind it? Will I be able to sell it? Can I then sell it to someone else? You can think about what should be going into place or even predict the future. And really try to help cities and help the community that you live in to put the projects that should be in the proper places.
Brett:
It seems like these city folks would be able to see and map out and do that. I mean, I live in a great city, Roseville. And there I think they’re very proactive, very business-oriented. And they masterplan this community, amazingly, but what’s the biggest obstacle, let’s say, for the city folks, that when you’re coming to them presenting the things to help them overcome, why aren’t they seeing it.
Adam:
So the number one thing that I’ll say about people who work in cities is they tend not to think outside the box, they are very much rule followers, and say, hey, this is the zoning, this is the plan, this is what you can do within the confines of the rules that we have, it sometimes takes the developer type to come in and convince them and go through the process. And it is not just something that you can do in 60 to 90 days, this is a year to 18 months of going through all the right channels to do of getting there and a lot of cities, their general plans and their zoning is outdated 10 20 30 years. And so there’s been, I mean, the Sacramento area, there’s tons of changes and growth, new people coming in. And so maybe that industrial park should actually be a school, or it should be a multifamily or retail shopping center. And so if you see those types of changes happening, and you could predict what it’s going to look like in the next two to three years, you can start your process and then create some value.
Brett:
Excellent, absolutely love it, it makes perfect sense. We all have different gifts, different strengths. And by the way, we need these real followers, we don’t want to beat up on you guys, right, and gals, like because otherwise, Adam and I and others like us be running amok? The soil contamination, the environment, the all the other things that keep these. The wheels on the bus, from falling off. So, it is definitely a working relationship with both sides, for sure. So he calls so that’s great. So you see the vision, you help to see the vision, you help to see how can we benefit the community that to the future, of course, tax revenue as well. And then you step two is what?
Adam:
Step two is to start writing checks. So you got to start the actual process of drafting a plan. So whatever that is, the first one of the projects I did was rezoning a city block, to put it to a higher industrial use from the low edge industrial use, so that it could actually be used for cannabis use. Another project I’m doing right now is taking an industrial use, and making it low-density residential. So you know, probably less of an impact on the environment and that. So you know, the first thing that I do is I sit down with my architect, engineer designer, and say, hey look, this is what I want to do. Let’s look at the code. And let’s draw out a plan to see what this change could look like. Because if I change something to residential, and then even if that’s the case, you can only build one house per five acres, it’s not going to do you any good. It’s not going to be a successful project. So you got to draw it out, and then take it to the city and see what they say.
Brett:
Perfect. Okay, so now let’s get practical. Give us a maybe your best deal that within the past year or two, from the kind of give us the ABC of the deal. What was it? What was the vision or the challenges? How did you work with the city? What happened?
Adam:
So to make a very long story short, I took a 15,000 square foot warehouse. And what I did is I put an option on it for a year to be able to control the asset so that I can go and get these entitlements. The goal was to get the entitlement, get the zoning change and get a conditional use permit to allow for cannabis use at this building, and then be able to sell it to a cannabis investor. Before closing escrow, so I didn’t have to, I didn’t have to come up with the capital to close it. So went through the whole process. First thing at planning committee after you know, months of going through all of the Native American tribal leaders and making sure that they cleared the project. I went to the planning commission and they approved my zone change for all uses, except cannabis. So they knew exactly what I was trying to do. You know, and you know, they had some thoughts on it. And it was kind of it was three or four years ago. So it was kind of an interesting time when cannabis in California wasn’t as you know, it was even before prop 64 I believe. And so then what we had to do is take the planning commission decision to go to the city council, but appeal the portion related to cannabis so that it required some lobbying. And then, you know, ultimately were able to be successful in getting that zone change. And we went and again did plans for how it’s going to look like a cannabis facility, getting all the grooms approved, and all the parking and all those aspects. And so now we have this great package of fully approved buildings. But we don’t have any more time. And so what we ended up having to do was, you know, something that we were in the project, I think, for 2.1 purchase price, the fair market value was probably like 3.2 is what we could have gotten for it. But we sold it for 2.6. Because we needed to close it in like 30 days, you know, and they had to trust us that we had gotten all these entitlements and done. So it was still I think we’d probably invested $100,000 in it. So it was like a 5x return. And you know, we were very happy with that. Based on that project.
READ AND LISTEN TO OUR FULL EPISODE
Comments