How Does a Small Developer Actually Make Money?

Monte Anderson of Neighborhood Evolution and Options Real Estate in Duncanville, Texas joins me to talk about extremely practical matters: making money in real estate. That is, as a small developer, how is it actually done? What are the pros and cons of different approaches, such as buying and holding vs selling? We start this by discussing a YouTube video from The Real Estate God. Yes, that’s the real channel. Titled, “The best way to 3x your money in 2024,” the video is a good jumping off point for how to structure deals in an ideal world. And, it goes over the differences between general partners and limited partners. Monte talks about why nothing ever works as quick as he thinks it should, and the realities of development fees. We discuss the challenges, but also the joys, of working in development. Find more content on The Messy City on Kevin’s Substack page . Music notes: all songs by low standards, ca. 2010. Videos here . If you’d like a CD for low standards, message me and you can have one for only $5. Intro: “ Why Be Friends ” Outro: “ Fairweather Friend ” Episode Transcript: Kevin K (00:01.733) Welcome back to the Messy City podcast. I'm Kevin Klinkenberg. Got our returning champion, Monte Anderson in the house here today. Monte, it's always great to see you and talk to you. Where are you in Dallas? Are you roaming around the country somewhere? Monte Anderson (00:16.022) Yeah, I am in Dallas today. Glad to be here with you, but I am in Dallas. I'll be in Lafayette, Louisiana tomorrow morning and Elkhart, Indiana next week. So lot of traveling coming up, but I'm home for this afternoon. It is. It is. We've been going down there for, this is our second year. And so yeah, there's a lot of good food down there. Yeah. Kevin K (00:26.257) Cool, Lafayette's a really cool town. Kevin K (00:39.449) Yeah, was going to say amazing food, fun people, it be a great time. Monte Anderson (00:43.647) Yeah, they are fun people. lot of entrepreneurial spirit down there, know, they've had to do a lot with a lot of things against them, know, hurricanes and, you all the things that you've got in that part of the country. Kevin K (00:53.627) Yeah. Yeah. That's right. That's right. Well, guess depending on where you are, you've got something. like we don't have hurricanes, but we've got tornadoes and floods. Monte Anderson (01:06.668) Yeah, yep, that's right. There's something always out there, the unknowns. Kevin K (01:10.245) Yeah, I know. I think I texted you a couple of weeks ago, we were up in Dubuque, Iowa, where I know you're also doing some work and they were dealing with the Mississippi is flooding this year. It's been very, very high. And so they've had some flooding in different portions. So in fact, we were going to take like one of their riverboat cruises and we couldn't do it because the river is too high. Monte Anderson (01:28.705) my. Yeah. my, that's because that town is right in between the river and the bluffs. The downtown is right there in the valley, if you will, between the two hills. Yeah. Kevin K (01:37.67) Yeah. Kevin K (01:42.063) Yeah. It's really cool. had not spent a lot of, I've driven through, I'd driven through before, but I hadn't really spent any time there. And it's really a neat, neat little town with like incredible bones and, just a really pretty setting there on the river. Monte Anderson (01:52.802) Yeah. Yeah, the great thing is it doesn't have any major interstates that go through it. Kevin K (01:59.569) But they had a lot of urban renewal. I'll say that. For a small town, boy, did they have a lot of urban renewal that was done to them. anyway, Monty, I wanted to talk to you today. We were exchanging some emails. I sometimes subscribe to these just kind of random YouTube channels or blogs or whatever that touch on real estate or design or planning or whatever. Monte Anderson (02:03.544) Yes. Monte Anderson (02:07.554) Yeah. Yeah. Kevin K (02:27.953) this is one, that I shared with you that is a YouTube channel, from somebody who calls themselves the real estate God, which, of course kind of made us laugh, but it was a really interesting short video. has some pretty interesting content, especially for, newbies, in this video that, I wanted to talk about today, the email, called it the best way to three X your money in 2024. but really it was like a seven minute video that was about a basic investment strategy for real estate that I think is real, that is similar to what you teach. And I wanted to kind of walk through this and talk about it because I think it is, it's interesting. we've talked about financing before we've talked about different aspects of development. It's interesting to take it kind of step by step. and help people understand how, you know, where you put money in, how you get money out, how you make money doing some of these smaller projects. Monte Anderson (03:30.506) Yeah, that's a really big deal for people getting started, you know, in this business. I mean, h