Seth: Hey, how's it going? Seth Williams here. You're listening to the REtipster podcast. This is episode 228. And in this episode, I'm talking with three of my friends: David Hansen, Arturo Paturzo, and Emanuel Wijkhuisen. David and Arturo have both been on the podcast before. You can hear David's episodes at retipster.com/176 and retipster.com/211. Those are two separate and totally fascinating conversations I had with him. You can also listen to my previous conversation with Arturo at retipster.com/164.

Emanuel, I've not had on the podcast before, but I did get to have dinner with him in Italy this past October, where I learned more about his business and a little bit more of his backstory. He's a fascinating guy, has a lot of experience in real estate, and he's helped a lot of people in this business. And the reason I'm talking with all three of these guys today is because the three of them partnered together to do a platted subdivision, and it went through lots of different twists and turns. They learned a ton of lessons, and it's just kind of a fascinating story. And we're going to talk all about that right here in this episode. There's a lot to learn about this world of entitlements and the different challenges that can come up along the way, and we discussed all of that right here. So stick around. I think you're going to love this. Let's get into it.

Let's just start from the very beginning. This is a piece of land, and you guys decided to turn this into a platted subdivision. Is that right?

Arturo: Yeah, that's correct. It came out from a mailing campaign. I have a company with Emanuel. Each of us has his own company, plus we have a company together. At that time, we just sent out a mailer. It was supposed to be a flip and was born like a normal flip. But then we decided to investigate the possibility of entitling it because you don't need to be a genius to understand that it's like near a body of water. The road is there. The shape is regular, it's flat. So maybe there is something there. And so we started and we decided to develop it, to entitle it. It's the first entitlement deal with all the feelings of two guys that make this for the first time, which has been like long, tough and profitable, but it's been also long and tough.

Seth: Okay. And just to understand the story. So Emanuel and Art, you guys both live in Italy, right?

Emanuel: Yeah.

Seth: Is that how and why you ever found each other and decided to form this company together?

Arturo: You introduced me to land. And I would be always thankful for that. But I would be always thankful to Emanuel because if I met you, it's because Emanuel opened my eyes on the possibility of real estate investment market in the U.S. Other than land, he's a real estate investor in the U.S. in Florida. Did you know Emanuel before you knew me? Is that kind of how you got into it?

Seth: Yeah. And so I started with him, tax lien, tax deeds, and after I pivoted toward land.

Emanuel: I have a community, Seth, in Italy, and I'm promoting through the community on this investment, real estate investment in the United States, mainly through tax liens, tax deeds, land flipping. And so that's how I met Art. And he was one of my students in the tax lien course that I set up in Italy. And that's how we met. And then we obviously became friends. And now we have a company together and do those entitlement deals.

Seth: I'll put a link to his community in the show notes for this episode if anyone wants to check it out. retipster.com/228 is where you can find the show notes with a link to that. So you guys, it sounds like you worked together. I don't know how many deals you had done together if this is the first big one, but how did David come into the mix? Like what made you think, David, we got to work with him?

Emanuel: Well, actually we put the land on the contract on the 6th of February, 2023. And like Art said, it was like a regular direct mail campaign. The property came up, we put it on a contract and we put it on a contract for $15,000 per acre, not exceeding the $950,000. So roughly $945,000 was the purchase price of the property. And we thought to flip it for a little bit of profit made on the property. So we listed with the local real estate agent. And that was right after we put it on the contract, because yeah, we thought to flip the land. In May... Art introduced me to David, and David was, "Hey, this is a nice property to entitle because it has all the right things. It's on a major road. It has road frontage. I think this is a great project for an entitlement deal." And so it was something that scared us a little bit, but also excited us. And so we thought, well, with David on the team, I think we can accomplish it and make it a great project. So that's what we did back in May. And so we decided to onboard David, and he took it from there.

Arturo: Problem was... Challenge. There's no problems, Emanuel. There's just challenges.

Emanuel: Exactly. Exactly. The challenge was that we had it on a contract with an agent, and that agent has an exclusive contract to sell the property. So this was the first challenge that we had. And we had to terminate a contract with him, but he told us that he wanted his 6% commission instead. And so we had some back and forth going on with this property and with the agent. And finally, we decided to pay him part of the commission. So we paid him $18,900 from our own pocket to terminate the contract with him and go with David.

David: Honest to God, the agent was unscrupulous. What he had done, he had got these guys locked into this absolute exclusive contract where he had the exclusive right to sell. And then what he was bringing them were offers that were less than what they had it under contract for, trying to force them either to back out of their contract so he could move it to someone else for less or force them into closing and paying him a commission and then basically losing money. It was insane. I actually had pretty good words with the guy. Told him he was useless. Yeah. I might have said some other things.

Emanuel: One thing that I want to add, and this is for the people listening, and we learned on that occasion, is when you use an agent because you want to put the property on the MLS. Don't assume that because you have an agent, your property is on the MLS, because that was what happened to us. We were looking for the property and the property was not in the MLS even if we had an agent, actually a land agent who works for a land broker. And then I asked why it's not the MLS. I said we don't use the MLS. And that was the first big surprise. So that was the first one of a long series of challenges as they said.

Seth: On that note, if you could go back to when this whole thing started, what could you have done to fix that? Like is there a different way you could word the contract or like a red flag you could have seen in this agent? Or how would you avoid this today?

Arturo: In my opinion, the contract is the first thing. This is how I think. I mean, the contract that we had was a contract made for a flip, not for an entitlement. So there were a lot of things that were missing there. And we kept that contract throughout all the duration of the deal, which didn't protect us, essentially. Fortunately, we, especially Emanuel, was keeping close contacts with the seller. So that saved us, despite the fact that we were... they wanted to be paid for every extension and everything. But still, we were able to take this to the finish line. But one of the main reasons why the things were so challenging throughout all the deal is because of the initial contract.

Seth: When we say contract here, are we talking about the contract you signed with the seller or the contract you signed with the agent?

Arturo: Contract with the seller. Of course, that included also the exclusive agreement with the agent. So we were not supposed to have an agent for this deal came to the contract that we had with the seller. But the contract with the seller was the one that I think triggered most of the things that didn't go well.

Seth: Doesn't the contract with the agent expire after six months? Couldn't you have just waited until that was done and not paid him 18 grand?

Emanuel: It was signed up for 12 months. So we had one year contract with the agent. And it was inextricably linked to the purchase contract. They had to exercise it out of the purchase contract.

Seth: Interesting. Is that normal?

David: No, it was ridiculous. I hate to think that these good old boy Alabamians were taken advantage of to Italians. Realistically looking at it, I don't believe anything other than that.

Arturo: Yeah. And probably he's looking at the podcast now. I just want to tell him that I like you. It just, you know, didn't work.

Seth: It's likely that he will see the podcast.

Arturo: Yeah.

Seth: Let's talk about what each of you brought to the table in this project. So if people have not heard David's background and his expertise, you can check out episodes 176 and 211, where I had separate conversations with him. He can do a whole lot of stuff. It's kind of like the mastermind for subdivisions, entitlements and all kinds of things. So I'm assuming that's what you did, right, David? Did you bring any cash to the deal? Or was it just your expertise in knowing how to make this thing worth a whole lot more?

David: Sweat equity.

Seth: Okay. Yeah, it's my background. Okay. And then Art and Emanuel, you two were the ones who were making these monthly earnest money deposit payments to the seller to keep this contract active. Is that right?

Emanuel: Yeah, that's correct. Yeah. We had an option contract with the seller for 12 months and we agreed to pay $1,400 per month as a option consideration. That's what we put into and all the entitlement costs. So that's what we funded to keep this project going.

Seth: Yeah. As I was reading your summary of this, Arturo, that you sent me just the details on how this worked, it looks like this thing, it was put under contract in February of 2023, but you actually crossed the finish line and sold the deal in the end in January, 2025. So this went way past 12 months, right? How did that work?

David: Welcome to the real world.

Arturo: Yeah. And this is a thing that we learn. You know the theory. And actually, I was also listening to a podcast from Chris Duff talking about this point. And he was saying the same thing. So essentially, according to my very limited experience, because this was my first and only entitlement so far, we have another one I'm going with David, but I don't have a lot of experience with entitlement, of course. But according to the only experience that I had, entitlements are super, super time and capital intensive. So as Chris says, once that you have defined a budget and you are as conservative as you can on your budget, it doesn't matter. Increase 25 percent because it's always going to happen something that forces you to put more money into the deal, forces you to extend the contract. You always have to consider at least 25% more capital-wise and time-wise. It's been long.

Seth: Yeah. On that whole thing of the capital you had to put into it, how much money did you have to put in this? When you factor in all of those monthly payments, whatever costs were involved with getting the drawings put together and approvals from the municipality, all the stuff, what was the total amount of money you had to sink into this thing? And then what was the risk that you could do that and it would still fall apart?

Emanuel: We've put in roughly around $250,000 in this deal.

Seth: And this is for something that you never took title to?

Emanuel: Yeah, exactly.

Seth: Wow. You guys took title, didn't you? You took title for an afternoon.

Arturo: Yeah. Yeah, exactly. That's true.

David: They held title for a little bit. But the possibility that it would fall apart is less than 5%. It was a by-right application. The jurisdiction had to approve it. The purchaser didn't necessarily have to close, but all things being equal, there was no way they were walking away from the deal. It's too good of a deal for them and for the builder as well because of the location and what's going on there. While the risk throughout all, I thought Emanuel and I were going to have to talk Art off the catwalk a couple of times with his bottle of wine tottering, especially at the end where things just kept happening and Art was out of his mind. And I don't think he slept for a few months, but the reality is the possibility of it not happening was very remote.

Seth: Yeah, you could probably speak more to this, David, but in the entitlement projects I've been involved with, I found a similar thing where it's like you are putting a lot of money into it, but like the risk of it just blowing up is actually pretty low. Like if it was going to happen, you'd see all kinds of warning signs before you sink all that money in. If you're just like paying attention and doing the work, it's not that risky, really.

David: Right. I say one of the things that I always try and do with anybody I'm working with this deal, like any other, I like the builders with us from the beginning. Because without builder interest, then there's no deal. You know, the reality is you can go to any small town anywhere and find 100 acres and get it entitled. But if there's nobody there to buy it, what do you have? That's the thing. Where this one was, we had five interested builders. I mean, at the bitter end, I had two builders calling me almost weekly going, "If they back out, we're in." It was great to have the idea that, well, if the one builder decides it's not his deal, to have two other builders going, "We're in. Just let us know what we need to do." That added a bit of comfort.

Seth: Yeah. I don't know if you guys did this on the front end, Art and Emanuel, or if you've done it recently, but it makes you wonder, this was in Baldwin County, Alabama? Is that right?

Emanuel: Yeah, that's correct.

Seth: So like when you look at the typical market research stuff that land investors look at, like the sell-through rate or the days on market and all this stuff, does this fit the profile of like, yes, there's tons of demand in this county? Or is it kind of just like, eh, whatever? Or is it a slow county? In hindsight, would you have made this decision again, or did it just end up working out?

Emanuel: Yeah, yeah, absolutely. We did some research in the beginning, obviously. We saw that there were a number of builders building in the area, actually. So that's a very important thing for us. So we checked that out. Other subdivisions in the area, big national developers developing in the area. So there was demand for it. We also showed, obviously, to David, we did the research together. Yeah, the numbers look good. So we were pretty confident that the project will be sold to a national developer along the road.

David: We had a number of issues, actually not issues, but challenges.

Arturo: Yeah, now you're learning.

David: Exactly. We had two engineers. So the first engineer, for some reason, after four months, didn't reply to any email that David sent him.

David: Yeah, they actually did our pre-application. They did the original sketch off of my sketch, did the computing, submitted to the town, took it through the preliminary. You go through a preliminary hearing in Alabama counties with the planning commission, got the comments. We engaged them with a contract, signed a proposal to start engineering. And then I was sending emails like every two days going, "Hey, have you guys started? What do you need? How's the survey?" Nothing. And finally, I was like, okay, I got to make another move. So I had to reach out to other friends that I had in the market, get the names of a couple of other engineers. And the hard thing is, in most jurisdictions that are that busy, there's not that many available warm bodies of engineers. So it took us probably another month beyond the four to find an engineer who had bandwidth, who could step in and start the project. We ended up with EDG, Engineering Design Group of Alabama, great guys, but they stepped in and dragged this thing over the finish line and, in my opinion, did an amazingly good job. The plans look great. The subdivision grading, it's going to really be a great project.

Seth: Yeah. So on that note, that particular challenge of the engineer that ghosted you, in hindsight, were there any red flags that would have told you on the front end, like, yeah, this person's not great?

David: No. They were the most referred firm in the area. And I think they just were too busy. I mean, I ended up on the phone with the company owner going, "If you couldn't get to it, just tell me. But here's three months worth of non-returned emails. And I'm at wit's end. I've got to move on." And they probably ended up eating a lot of engineering time because I told them I wasn't paying them.

Emanuel: The thing that we learned, and this is always connected to the original contract with the seller, because the big problem was that we had a deadline with our seller to buy the property. That was probably the biggest issue. So every delay to us meant, will the seller extend the contract? Meanwhile, we were already exposed with money that we have put into entitlement and other things. So we had this kind of bandwidth of uncertainty that we didn't really like. Now the contract that we use that David is providing to us, the deal that we have ongoing and the other deals that we are going to do essentially, and I think should be always this way, protect us in the sense that settlement date with the seller is set within 30 days after...

Arturo: The final plan.

Emanuel: Yeah, final plan approval.

Arturo: Yeah, from the county.

Emanuel: So in this way, we don't have a date that is written in the contract. And that is value.

Seth: Yeah. And one thing I'll note, if people are listening to the audio-only version of this, check out the show notes. I'll include a couple pictures of what this parent parcel looked like and then what the platted subdivision looked like after David and the civil engineers had done all their work. It's kind of helpful just to understand what we're even talking about, the before and after.

But on that whole note of looking at the parent parcel and figuring out how do we plat out this thing? How many parcels should go here? How big should each parcel be? How should it be laid out? How much of that work was you, David? And how much of that was the civil engineer? Like, did you basically do it all and then they just made it official? Or did you kind of collaborate a lot on it?

David: I want to say mostly me and then collaboration to refine it on anything I'm working on. I've been doing it long enough. I know what I want. And so I make sure that, A, I'm getting the yield. B, I'm accommodating those jurisdictional requirements, whether it's the stormwater or, you know, sewer and water connections, things of that nature. This project, a couple of interesting things happened. So it was actually supposed to be 166 duplex pads. But when we had the challenge with the first engineer, we had one builder that was signed up. He had brought a local developer in. We were negotiating with that developer. So the lots are 15,000 square feet. So we were going to split them in half to a duplex on each. And the contractor slash developer that the builder brought in three or four months into the process got cold feet. He was concerned about water and sewer, even though we had all of the provision letters, everything. So he was like, "I'm backing out." So then I had to rush out and find another builder. The other builder didn't want to do duplexes. He just wanted big single family lots. So that's how we ended up with the 83 singles. But the interesting thing was the price differential – it was very close between, I think we were at $10,000 a lot for the duplexes, and we ended up at $19,500 on the singles.

Seth: $18,500. $83,000, I think. That's what the retail price would be just to sell each individual lot to the end buyer?

David: Entitled, yeah.

Seth: Okay. We sold it for $19,000.

David: $19,000 a lot. The offer that we had on the duplex pads were $10,000 a pad, which would have been $20,000 a lot.

Seth: So this brings up several other questions. So looking at the final platted plan here, I'm seeing roads going in there. I'm assuming electricity and plumbing has got to be brought to every single lot. Do you do any of that or you just sell it to the developer and they just follow the plans that you put together?

David: Well, yeah, they'll take the completed plans and construct them. The end of the day sale on this one, it was the LDP, the land disturbance permit. Once you were issued the land disturbance permit, that's when settlement was scheduled. And so what they're purchasing is basically an assignment of all the engineering contracts and the assignment of the land disturbance permit and whatever other entrance permits that we were granted and the purchase of the ground.

Seth: So you're literally not touching this land. You're not even setting foot on it. This is just paper. But then they get to do everything because they've gotten everybody...

David: I hate that. It's so much more than just paper.

Seth: Just trying to make it sound simple but yeah, no it is but you're right it's essentially a transaction of all of the necessary paper to basically go out – I mean the reality was the developer that ended up purchasing in the end, which is part of the funny story, they basically had the tree clearing group start two days later.

Seth: It does make me wonder why. Is there any risk for them that like we might buy this thing and maybe we still can't do something or like, no, everything is clear, like they can just move on it?

David: OK. And that's one of the big key value propositions of doing entitlements like this. Those who are listening, if you're not familiar with this is, you know, when you go out and buy a piece of land with the idea of building something on it, like you might not be able to build on it. You got to kind of get everybody's permission at the municipality to make sure your plans are OK and all this. And there's a lot of uncertainty there. But if that seller sells it to you with the entitled plans, that uncertainty is gone. There's no gambling now. We're good to go. And that certainty is worth a lot, depending on what you're trying to develop and build.

David: It is. I know you guys all use transactional funding and things like that. But if the guys have gone to closing with transactional funding for whatever the timeframe would have been, everything was in place. So the transactional funder has zero risk. I mean, if there is a default somewhere, he actually owns a fully developable piece of ground.

Seth: Yeah. Now, David, I hear you talking about the contractor and the developer. I understand the difference between the two, kind of. But what is the difference? Where does the developer's work stop and where does the contractor's work start? Or do they overlap in any way?

David: They do. And interestingly enough, I'll use this project as an example. The developer is the contractor. He'll act as the developer, which means he owns the ground. He will hire his construction company and subs to construct all of the infrastructure and finish the lots. And then as the developer, he will sell individually approved lots to the builder. Now, the developer takes on tasks that the contractor wouldn't take on. So when you do a large subdivision like this, you'll have an area with mailbox kiosks. The contractor could care less about that. The contractor is building roads, putting in curb and gutter, installing water and sewer, stubbing it out to the house. He's grading the pads so they're ready to build on. The developer, on the other hand, is responsible for perimeter landscaping, an entrance feature, the mailbox kiosk. And so he's got someone on his staff who's taking care of the process to make sure that once he sells this finished lot to the builder, that the builder can pull his building permit, that the mailboxes are in place, that the entry feature is there, that perimeter landscaping is in, any kind of internal landscaping, street trees go in. And the developer manages his budget that he has secured through debt and equity. So he's using the land and the approval to borrow money either from a private lender or from a bank. And so the developer is then paying the contractor. He's paying the landscaper. He's paying the contractor that builds the entry feature. That's kind of the difference between the two. Now, they can be one and the same. In the case of this project, it's Rob Wilkes, Wilkes Construction, and he is functioning as the developer and the general contractor.

Seth: Mm-hmm. It's interesting. So when you said earlier, I think you said each lot was 19,000 and some change a pop. So that's what you sold it to the developer for. And then the developer does something and then sells it for more.

David: Oh, God. Yeah. So the developer then will finish the lots. And in this case, he's probably selling finish lots to the builder somewhere between 85 and 90,000.

Seth: Okay. And then the builder, they actually put the house on it and then they sell it for whatever astronomical price that's going to be to the end person that's going to live in it, right?

David: Yep, that's correct.

Seth: So when I drive past a subdivision that's being built and I see, "Hey, lots for sale," and it says I can buy a lot. So does that mean I'm skipping over the contractor because I'm buying the lot and then I'm working with that contractor to build it? I don't know how to comment on that.

David: I suppose there are subdivisions out there where an individual buyer could come in with his own home builder. I think that would be kind of a rare occurrence. I think some of those would say, "Yeah, you can buy the lot. The builder is selling you the lot." And then he's building you the house. I think that probably just allows the builder to get in your pocket a little bit earlier. So he's going to sell you the lot for $100,000, but you have to build with him.

Seth: Yeah. Yeah. Yeah. I think just in my area, I feel like at least 80% of the time, that's what's going on. Like they might make it look like you can do whatever you want, but really like by buying the lot, you're agreeing to use that builder.

David: Yeah. And you're agreeing to whatever covenants and restrictions have already been previously placed on the property. I would think in something like that, the covenants and restrictions are probably pretty staggering with regard to exterior building treatment, architectural styles, and things like that.

Seth: Yeah. Gotcha. And remind me, how many child parcels did you create from this parent parcel?

David: 83.

Seth: Looking at this drawing, it looks like the back quarter, maybe, of the parcel, the parent parcel is just left empty. Why is that?

David: 15 acres of wetlands. And that was a shocker.

Seth: You didn't know there were wetlands?

David: I knew there were wetlands, clearly, but I thought the limits were dramatically smaller. But every jurisdiction in the United States, the Corps of Engineers, has a different philosophy on what qualifies as a wetland and how they adjudicate them. I'll use Virginia as an example. In Virginia, in order for a piece to be delineated and confirmed as a wetland, all three elements of a wetland have to be in place. But in coastal regions, either the jurisdiction or the Corps office that serves those areas can determine if two elements are there, they'll qualify it as a wetland. In parts of Florida, with the water management districts, the water management districts can go with if one element is there and it's strongly enough rated, that can determine the wetland. In the case there, it was soils-based. The soils were of such a hydraulic nature that the jurisdiction determines them to be wetlands, regardless of whether there was actual water sitting or qualifying plant life.

Seth: Makes me curious when you pull this up on Land ID or the Land Portal or something like that. Look at the wetlands filter.

David: Nothing. In my opinion, it's probably one of the most deceiving tools available. It's just not very accurate. A better tool might be the soils layer, you know, whether it's MapRight or one of the other. I don't know what anybody uses. In this case, I don't even think the soils in MapRight were that accurate. It was the county soils that actually showed the boundary limit of that particular soil type, almost exactly where wetland scientists flagged it. With the exception of that little island in the middle.

Emanuel: One thing that we didn't do, and actually I'm curious and I will do probably later, I didn't check on the USGS, the official wetland mapper, the website. I think that you also described it in one of your videos at some point. I generally use it, but for this deal, I didn't check that. I don't know if it correctly represented the wetland there, actually. We looked it up on LandID, for example, or similar software, and it was substantially different than what actually came out from the wetland report. So like David said, it's not reliable and it can change substantially when you're having an engineer on field that's going to you know, assess the wetland.

David: Yeah. I think I said this, Seth, when you and I spoke about wetlands, one of the greatest tools available is the wetland scientists in any particular area. When they go out in the field to actually flag, because they go out in the field and they take a tool bag with them to help them further identify. But before they go out in the field, they know where they're going. They don't walk out on 60 acres and stand at the beginning, you know, with a divining rod or something and go, "Okay, I hope I find it." They know where to go look. So one of the greatest tools that I think is available to anybody looking to do this is I call it a desktop survey. You can call a wetland scientist or an environmental scientist and go, "What I need before I take my decision on this is where you think the wetlands are, the map that you create before you go out in the field." And, you know, for several hundred dollars, you know, $250, $500. They'll sit down and do a desktop and plot roughly where they think they are before they actually go out in the field. I find that is probably the greatest tool available if you're working in a coastal area, if you're working next to a body of water, a river, or are just brought up the USGS maps, any blue line stream.

Seth: When you say blue line stream, what do you mean by that?

David: Just that. Look on the maps. It shows as a blue line. That means that USGS has determined that that is either a perennial or ephemeral stream. It has running water in it at certain times of the year at a bare minimum. That's a great indicator that at least at that location and adjacent to it, there's a potential for wetlands.

Seth: You think those wetland maps, I don't know what percentage of the time they're wrong, what you've seen in your life, David, but is it even worth looking at them or are they just going to mislead you more often than not?

David: It depends on what they use to create them. If they're using soils maps and soils typing to create their wetland boundary, then they can be very accurate. The counties that have their own GIS systems, I find the counties' GIS with regard to wetlands and hydric soils to be extremely accurate because the counties know what their soils are. I've found looking at whether it's Map ID or any of those, I don't know what they're pulling as a source for the wetlands, but they're mostly unreliable.

Seth: Yeah. So it was interesting what you said about the soil type being indicative of wetlands. What are some soil types that should tell you, "Hey, this is probably wetlands"?

David: The soil types are all different depending on where you are and what the complex is from eons of soil migration. It's a hydric soil. So in order to do it to any level of accuracy, you would actually have to not only know the soil boundary, the soil type, you'd actually have to go in and read the description of the soils. Again, the USGS years ago did probably most of the United States, different offices, and they have these guides to local soils. And they did them for farmers. And, you know, I say this a lot, too. If you're looking at a piece of property, right, and it's cleared and it's all row crop and planted, yet there's a pocket in the middle that's all trees. Farmers are not stupid. There's a reason they didn't grade that or plant it. There's just a reason. And it's either that the soils are awful, it's a sinkhole, it's rock, because they're not going to risk damaging their equipment, losing a tractor, having to take multiple hours off to re-weld something. So those kind of things are really very obvious when you're looking at a piece of property. In this case, like I said, if you're working coastal, it's best just to call a local soil scientist or a wetland scientist and say, "Hey, I just need a quick overview before I take a decision." Because, again, in the coastal regions, it doesn't take much for standing water over a century or two to create a hydric soil. The hydric soils are created by the standing water leaching out or washing away fines that take it from an upland to hydric.

Seth: Yeah, fascinating. If anybody wants to learn more about how to use these soil maps, there's a number of different places you can go to get them. Some are free, some are paid. I'll include a couple of tutorials in the show notes. Again, retipster.com/228.

So regarding the national builders that you talked to, David, sounds like there were multiple that were interested. How do you decide, "Okay, we're going to work with this one because of blank"? Like what makes you decide one versus the other?

David: Market share a lot of times. So if you're looking in an area where I'll use D.R. Horton is there and they have 15 projects. And then you notice that in the case of this project, the builder we contracted with was Maronda Homes. Maronda was relatively new to the area. They had one or two small projects. Maronda is a little bit different than a lot of the big nationals because Maronda will come into an area and buy individual lots in another subdivision in order to build up their backlog of homes and product. So I reached out to a friend of mine who is the division president for Maronda in Northern Virginia, and he hooked me up with the Maronda division president who has now since gone to Meritage. And I'm actually doing a deal with Meritage. That's really what I look at is to see who's aggressive. Because we talked to the guys at Horton on this project and they were at 15 a lot. Yeah, 15. I really thought the deal was worth 20. They're big lots. I realized it was going to be a little more expensive to finish them because of the frontage. We were talking with the group from Adams Homes. That was the original buyer. They were going to do the duplexes. Generally, when I'm looking in an area, I'm trying to find out who has projects, but not a lot, who's looking for product and a position and more likely to pay a little bit more to lock up a project early.

Seth: Yeah. Did you have to change the zoning of this property in addition to getting these entitlements or was it good to go?

David: No. Actually, it was great zoning. It actually allowed for multifamily. It was the same zoning all the way across. The minimum lot size was 15,000 square feet. I could do that with townhouses. You just put a stick of eight townhouses on more than 15,000 square feet. And you could do it, again, with duplexes, a 15,000 square foot lot split down the center. It was actually very attractive zoning. I'm not a big fan of going through the rezoning process, especially not now. Areas are tired and wary of zoning applications, especially in areas that grew really fast. And they feel as if the new developments that came in didn't provide enough community benefit, whether it's transportation based or other things. If you appear before a planning commission or a board of supervisors, a lot of people show up to the hearings to scream and push back. So I generally try and focus on solid by-right zoning. And for this case, these guys landed on a great piece.

Seth: Yeah. So when you had to get the approvals for this entitlement project, I assume you had to go in front of like a board or something where there are other people in the area that showed up to protest. Are we worried about that or is that not how it works for this type of project?

David: It's kind of funny. That's a great question. Yes, it did have to go before the planning commission and the county council. And yes, it was a public hearing. And yes, people showed up and voiced their opposition. It is in accordance with the zoning ordinance. So while both the planning commission and the city council actually had to sit there and listen to people complain about what was going on, at the end of public comment, they had to say, "We've noted everything you said. This project is zoned and we have to approve it."

Seth: Does it ever happen where, like I've heard in court cases, there will be times when the judge will go against the law? Somebody is like legally in the right, but the judge, like they are the law. They can just kind of disagree with that. And there you go. That's the new law. Could that ever happen here? Where like maybe the board is like, "Oh, people are too mad just because of that. We're going to say no."

David: Yeah, of course they can. But then you end up in court. And again, I think it would roll back to whatever the jurisdiction is. My belief is the winner on this project was it could have been 166 duplexes. My God, it could have been 350 townhomes. It could have been a thousand multifamily. And I think at the end of the day, what kind of drove the pushback to any opposition was this is the least impact that this project could be. And I think that probably was part of what those commissions and councils fell back on to say, you know, they could have come in with a much higher density.

Seth: Yeah. Looking at the parcel map, I don't know if that came from Land ID or what, but am I seeing that right? It looks like there's like a mobile home park or something near the front of this.

David: That's the guy that built the road in.

Seth: Interesting. The development that this was, these aren't mobile homes, right?

David: No. They'll range between 2,300 and 2,800 square feet, most likely.

Seth: Like nice houses. So people don't want nice houses near them? Or like, what was the big problem people had with it?

David: Nothing, just development. We're in a stage in America post-COVID where a lot of relocation was done, a lot of quick action during that timeframe, you know, from 2018 to probably 2023, people were just relocating. And these jurisdictions were trying to figure out a way to keep up. And the way to do that, I mean, if you track what happened in 2008, up until like 2018. There was no real product generated during that time, almost anywhere in the country. Everybody was working through backlog projects that had been approved late in 2008. And so everybody was working through stuff. And what happened was in 2018, everybody hit like, "Oh my God, there's nothing available any longer." That's when prices started to rise dramatically. And these applications started coming back in for rezoning and upzoning and change. I mean, I look around where I live here in Northeast Florida and just massive projects I'd worked on in Northern Virginia, 3,000 acres with 8,000 homes. There's massive projects here. But right now, the projects that have come in of late, the people are upset. They're out there protesting. They're speaking at the public hearings. The county commissioners and councils are being much more wary of what they're passing. And if there's not a lot of public benefit improvements proposed, they're turning stuff down. So ours didn't come without, you know, the county trying to push back. We did a traffic impact analysis and the traffic impact analysis, it showed that we needed, well, we provided them. We didn't necessarily need them based on the traffic impact analysis. Right turn lanes into the property, no left turn lanes. However, there's an intersection almost a mile away from the property and they made us analyze it the city did because they knew it was failing. So they put it in our scoping and it functions at a level of service D and. Before our application, we added one turning movement, one right turn at peak hour, and it kept it at level of service D. The county screamed, "We made the intersection fail." It was a fight. And what ended up happening is our builder has a rezoning just to the north of this property that they closed on. And they agreed through that rezoning application to take care of the intersection. They wanted us to do probably a million dollars worth of improvements to a failing intersection and they knew it but they were trying to lump it on 83 lots. And in a meeting I told them I'll see you in court.

Seth: Yeah man what a benefit though to have somebody like you who like just has the confidence and experience to like know when to call people's bluffs and that kind of thing like you can't fake that like you just have to know what you're doing.

David: Absolutely. I don't know Art was scared to death.

Seth: Did you show up there in person, David? Or was this like a Zoom call?

David: Zoom calls. Yeah. Zoom and...

Seth: Gotcha. So just recap of all the different hiccups. So we've got the original purchase agreement that wasn't really worded right. You didn't know where this thing was going to go. You get the real estate agent. You've got the civil engineer that ghosted you. Wetlands. Wetlands. We've got, was it one of the national builders or developers that backed out at some point? And then you switched to a new one.

David: That one gets better too.

Emanuel: Versus the end of the project when we have an LDP already issued, we had a problem with the assignee of the contract from Maronda Homes, which was Wilkes Construction, which didn't agree with the original quote that was sent from the Baldwin County Sewer Service Department. And it was quoted back in May. David actually sent an email to them for a quote for $450,000, I think.

David: To extend sewer. Yeah, for to extend sewer.

Emanuel: In December. He got another quote. He got a quote from around $600,000. And he didn't agree with that. He was very upset. And I don't know if he wanted to back out, but he wanted some kind of discount on it. We agreed to have like a negotiation with them and we discounted another, I think, $50,000. Yeah.

David: Yeah. $50,000 we discounted. Here's the interesting thing. In Alabama, and not everywhere, some jurisdictions actually do their own utilities, but in this part of Alabama, it's all privately owned. This project has two different utility providers. The sewer is provided by Baldwin County Sewer. Now, the interesting thing is Baldwin County Sewer is not owned by Baldwin County. It's privately owned.

Seth: All the sewer system in all of Baldwin County?

David: Yes and no. Some of the cities have their own water and sewer service, but for this service district where this is, the service area is owned by Baldwin County Sewer. So they had to extend sewer 15,000 feet to the property. Now, they agreed to do it. It was a price of $450,000 to do the extension. And that was baked into all the agreements and everybody knew about it. And they required payment up front of that. So who ended up being the assignee who was actually going to be the first developer for Adams Homes who bailed out because he didn't like the project or he couldn't get comfortable with the project. Full circle, Maronda has it under contract with Emanuel and Art, and they bring in Wilkes as their developer contract. At that point, I sent him the bill, essentially, the proposal for $450,000, and he conveniently ignored it, even though there were multiple contacts, even though Maronda told him, "We'll reimburse it as part of our deal, but you need to pay it." He neglected to pay it. And when the time came to get the final approval, the cost had gone up 150 grand. And he was bemoaning that. But it was at a point where I told them. I'm like, you guys should fight back. And Art was like, "Just give him the 50 grand. Let's get it done."

Arturo: I mean, Seth, imagine you are like in the last five yards, okay? And there is this guy that says, "I back out." And you have the clock ticking because in the meantime, the seller is pushing you because he says, "Hey, in 10 days, in 15 days, in 20 days," I don't remember how long we had left within, "it's going to expire. I'm not going to extend further because we already had two extensions." So even if you fight, and just keep in mind, you don't fight with Seth Williams or with David. You fight with Maronda Homes, a big builder that has a team of lawyers. But even if you decide to fight this fight, fight this battle, how long is it going to take? So, of course, you can only settle at whatever they want to. And also in this case, the contract that we had with our buyer was all but perfect. So we could have done better. And also when Wilkes received the contract, so with the sign of the contract, with the assignee of the contract from Maronda. He had to borrow some money. So there was another layer of due diligence that took further time. It was like a problem after the others, and it took really forever. So it was my first entitlement. And let's say at least it built the character for sure. And at this point, Art wasn't sleeping for at least two months.

Emanuel: Yeah, at some point we were not. But everything ended well. And as you can imagine, and all the people that are listening can imagine, we wouldn't be here and smiling and laughing if it was not for David. Because David has been a great asset in all the technical part. When you flip land, normal land flipping, everybody can do it, even if you don't have like a strong educational base. You know, you go on YouTube, you go on REtipster, you spend your time, you start slow, you can make it work. Entitlements... No way. You need to go with someone who knows how to do the stuff. Even if you become familiar after two, three, four, five deals, and you feel like, "Okay, I can do it," don't do it. Because there are many technical paths, many things that are out of your control. And you need a person like David, who has the knowledge, technical knowledge, the network. And from my point of view, it's at least for me, it's impossible thinking to do it all by myself.

Seth: Yeah. How much money did you guys make from this? Like, what was the actual net profit takeaway after all these months and dollars you sunk into it?

Emanuel: At the end, we made $599,000, which we have obviously to reimburse also investors, which helped us in funding the entitlement cost and change. So we end up with the net profits split for $140,000, $150,000 each between me and Art.

David: But a million dollars worth of education.

Emanuel: Oh, yeah, even more. And we end up with a mentor and with a dear friend.

David: Ah, you're making me cry.

Seth: So like, do you want to do more of these? Yeah, yeah. Did this kind of scare you away or is like, "Hey, now we know how to do it. Let's do a lot more." What did I say when we finished this?

Arturo: I said, "Never, never, never anymore. I'm done." And after two months, now we have another one with David, still in Alabama. So yeah, it's a kind of love-hate relation with entitlements.

David: I asked Art if he bought a barrel of wine for the next one.

Emanuel: You get kind of addicted from it. It's a wild ride, but it's fun. And actually, we have another two projects with David, big projects. One is a 250-lot project in South Carolina. Another one is a 300-lot project in South Carolina also.

Seth: How early do you have to bring David into this process? Is it like before you even make the offers? "Hey, David, should we even pursue this or not?" Or is it more like after you've got the contract and you're just looking at other options?

David: I help him. I'll give anything a quick look and let somebody know if it makes sense. This is the fun part.

Arturo: But as I met David, so when we were looking at this piece of land with Emanuel, that still we were not sure it could be an entitlement deal, you know. So the first person that we went to with another big name, and I don't name it, but people can imagine, that works in the entitlement space. We went on a call with him and he said, you know what, "The first thing is to show like a first sketch doesn't need to be an engineer to the county. So look for someone that makes this sketch." So what I did, I put on Facebook this request for help, "Mayday, Mayday." And David answered and said, "I can help." And after 10 minutes, I received this thing. I don't even know if it was on a napkin, but it was so accurate, so nice. And it was immediately clear, because after we talked for a while on Facebook, that he had the knowledge that we needed, the experience to make it work. So we decided to partner. Emanuel was in the U.S., went to meet David after a while. So I didn't meet David in person yet. He comes to Florida and he goes, "Oh, I just can't make it to the East Coast."

Seth: In July, I am in Florida. I will come to visit you. I'll meet you halfway, somewhere on I-10.

David: No problem. So I can come there.

Seth: I was trying to get David to come to the land conference or something.

David: Not out of the question yet, Seth.

Emanuel: Man, we can go there together. I will pick you up, David, and we will go together.

Seth: So as we wrap this up, if somebody is listening to this conversation and they're wondering, "Huh, maybe this is something I should do or maybe not." What kind of person do you think should not be doing entitlement deals like this?

David: One with an ulcer.

Seth: Okay. Gotcha.

Arturo: You must be capable to live some uncomfortable moments. There was some night that I didn't sleep, especially when there are investors involved. I mean, we were always pretty safe on that side. So we do it very meticulously. And when we borrow money, we are sure that we are going to get back. But to get back the money, if something doesn't go well, it means give it out of our pocket. And we're not talking about like $2,000 or $10,000 or $15,000.

Seth: With my first self-storage facility, a lot of similar things in terms of just like wasted time, wasted money. Like you just don't know what you don't know until you get through it and you look back and you're like, "Oh, yeah, I could have easily sidestepped that problem and this problem." Next time, it'll be way easier because I know what to look out for. Makes me wonder, like, David, if you had been involved from day one, it sounds like there are certain problems you could have sidestepped, but not all of them.

David: Honest to God, Seth, can you imagine that in between us doing an ALTA survey and closing, so they did the ALTA survey end of April, early May in 2024, between then and January 2025. A neighbor had built a road and paved it from the adjoining property into this property. And I get a call from my surveyor. He goes, "I got some bad news." I'm like, "What the hell bad news could you have? You're recertifying an ALTA." He goes, "There's a road on the property." And I went, "You've got to be freaking kidding me. You guys just did the survey six months ago." He goes, "I'm telling you, there's a road on the property. Paved." Well, you're looking at it from the west into the property from that trailer park. The guy that owned the trailer park had built the road. Now, the interesting thing is the money guy for the developer knows the guy that owns the trailer park. Called him. We're trying to figure out what do you do to fix this? I'm on the phone with three land use attorneys going, "Hey, can I just hire someone to go saw cut it, move it off the property?" And they're like, "No, you have to give 30 days notice. You have to let them know that you encroached." I'm freaking out. I don't want to call Art and Emanuel and go, "You're not going to believe this. I'm finding this now. I didn't know that until now." So honestly, Seth, I'm on the phone when I found out it was late in the evening here. And I already started calling people that I knew there. And I started first thing in the morning because I still don't want to let them know, like, "I can't believe this. How do we fix this?" And in the end, luckily, the money guy, land banker for the developer knew the guy that owned, they went to high school together in Fairhope of all freaking places. The guy picks up the phone and calls his friend from high school and says, "Hey, I'm trying to close on this property. You built a road?" And the guy that built the road said, "Oh man, I probably should have had a survey or let me know where to stop." But he gave us permission to saw cut it a foot off the property and scoop it back on to his property, redo the survey. And I was able to get that taken care of in like two days. It basically pushed the closing to the following Thursday or Friday, right?

Emanuel: Yeah.

David: But I mean, you can't anticipate that. I will say one of the things that I'd never been involved in a transaction where the builder that I was under contract with assigned the contract right before settlement. And so now I've already baked this into what I'm doing going forward. Two things happened. The builder didn't provide us with written notification that they were going to do that. That was something else that these guys could have pushed back on. But again, that underlying contract was an issue. But now every builder I'm working with, I'm like, "If you plan on assigning this, I need to know to whom because I need to start today with their checklist of deliverables." So the interesting thing on this one was the land banker required the ALTA survey to be certified to him. So that was why they were out doing the re-certification. If I had known that in advance, two months ahead of time, I would have had that re-certification done. We would have had the new title report reflecting that, and we would have found the road. I would have had months to solve it, not two days. They also required that all of the letters, even the serviceability letter from the water and sewer group, had to be in their name. So I had to go through getting all that converted over. And that was in December leading up to Christmas. So I'm on the phone trying to catch people before their Christmas break. "Can you redo this letter with this name on it?" I learned to be more proactive once I found out about the assignment or if I'd have known about the assignment back in October or November, we could have addressed a lot of this stuff that would have maybe saved these guys a month or two, might've saved them 50, 75 or a hundred grand.

Seth: Yeah, totally. Awesome conversation, guys. I learned a bunch. I'm sure a lot of people out there are getting some great ideas and just insights on how to navigate through this entitlement process, if they should even be doing it, what they can expect, that kind of thing. If people want to get ahold of any of you three, what's the best way to do that?

Arturo: You can find me on Facebook. Easy way.

Emanuel: Cool. Yeah, me too.

David: Me too. Facebook, Messenger, my email.

Seth: You're all in the REtipster Facebook community, right?

Emanuel: Yeah, correct.

David: Unless you kick me off.

Seth: No, not you. I'd never do that to you. Cool. Well, guys, thanks again. It was awesome. To the listeners out there, if you want to see the show notes, I'll have links to all kinds of stuff, images of what we're talking about here. Just go to retipster.com/228. Thanks again, guys. Great to talk to you. Hopefully we'll talk again soon.

David: All right, Seth. Always good.

Emanuel: Thank you, Seth.

Arturo: Thank you, man. See you guys soon. Bye.