5 Updates From Summer '23
Starting a construction business, closing on new development opportunities, and marching forward with current projects.
Hey — Jonah here. This is Brick + Mortar where I talk about the acquisition, financing, design, construction, and operations of small-scale real estate development projects.
Phew, it’s been a minute.
Hectic summer and yada yada.
BUT...
A lot of exciting updates.
Here are some things happening in my world.
#1: 501 Main is stabilized and occupied
501 Main welcomed eight tenants in May. For the most part it’s been smooth sailing with a few ongoing pain points (e.g. USPS still doesn’t have locks installed on the mailboxes, meter reading company for water submetering still hasn’t installed technology that works).
I also dragged my feet on getting a landscaping plan together for the entrance in the back. Design is not my forte, and I end up kicking the can down the road as long as possible.
We finally have a plan, though, that includes a garden, a tree, and a paver walkway. Install is happening over the next few weeks.
#2: We closed on a vacant gas station
After 1.5 years under contract, we closed on this gem a few months ago.
Why’d it take so long?
Environmental risk.
As a buyer, you want to your due diligence for sites like these to protect against contamination liability.
We did Phase 1 and 2 ESAs, then enrolled in the state BRELLA program that will indemnify us against future liability if we complete some remediation activities:
Phase 1 cost: $2,500
Phase 2 cost: $20,000
Remediation cost: $20,000
Thankfully, we were able to access some state funding to support these costs. Else, there is very little likelihood that the sale would have gone through.
We’re currently tackling some much needed renovations as we convert this from a dormant gas station to a vibrant retail space.
#3: We bought four apartment buildings
All in the same vicinity, these are four buildings across three properties. Ten units total.
They’re not pretty, but that’s kind of the point.
If there’s anything I love about development, it’s a good infill project. The apartments are occupied so there’s some finessing to be done here.
The long-term goal is to gut renovate the buildings—the units are in dire need of upgrades and are barely livable as is. Given we don’t want to displace anyone, the horizon on this is likely a year or two.
An option I’m exploring is adding a few new buildings to the properties (while restoring the existing ones) as a way to increase density. There’s enough land to realistically add another ten units across the three parcels.
For now, though, we’re focused on addressing some much needed deferred maintenance while we hatch a plan.
#4: Our 6-unit affordable housing project is underway
We’re running full tilt on 61 N Pleasant.
We first had a pile of earth and tree work done to open the space up. Now, we’re focused on getting the barn (left-hand structure above) buttoned up for two tenants to move in prior to winter. That will then free us up to move onto the main house.
This is a full gut renovation.
Everything gets stripped down to the studs. The only areas being salvaged are the foundation, framing, and some siding.
We’re putting $1.1m into re-doing the majority of the building and bringing it up to modern building practices. New insulation, roof, windows, electrical, mechanicals, etc. A fresh start.
The goal is to have the remainder of the building completed by early 2024.
#5: A business partner and I started a construction company
Perhaps the most exciting update (in my mind).
After two years of working together, my lead carpenter and I joined forces.
He was running a small contracting company and has 30+ years as a carpenter running crews. And I had my general contracting business for my own projects.
We have complimentary skills (technical/construction vs project management/business) and, after several months of planning, we launched Réal Hazen Construction this summer.
Together, we’re able to offer full general contracting services to customers and retain an in-house crew of five carpenters. We plan to grow by three employees next year.
It’s been a wild two months so far, but we’ve hit the ground running. We’re already booked out until spring between my own development projects and several customer jobs.
You don’t see many people going from development to construction, but my rationale was three-fold:
I simply love construction and enjoy the ins and outs of building. Don’t get me wrong, I still like development. But there’s something about playing a role in the actual construction of a project that brings me a ton of fulfillment
I wanted to have better control over labor for my development projects. A good carpentry crew is extremely versatile and can handle non-traditional activities in a pinch (e.g. concrete, roofing, drywall, paint). Growing that team internally eliminates some of the uncertainties with the subcontractor labor market
It is difficult to generate steady cashflow as a developer when first getting started. Development fees are far and few between, whereas a construction business produces cashflow on Day 1. It’s a lot easier to keep food on the table when you have work that invoices weekly vs every couple months
I’m very excited to see where this new venture takes us.
Until next time.
— Jonah 🧱
P.S. Want to connect? Find me on LinkedIn.
Great update and such a productive summer! Congrats and good luck with Real Hazen 🚀
You’ve been busy, Jonah. Congrats on all of it. I’m especially excited about your purchase of the rundown residential properties and your plans to improve them.