Table of Contents
Podcast Transcription
Georges El Masri [00:00:01] Welcome to the War podcast, where the goal is to motivate, inspire and share success principles. I’m your host Georges El Masri. On this episode, I interviewed my cousin, Andrew L. Debs, who is a land developer, and we talked about a recent project that he got into, which was in Danville, Ontario. It was actually a piece of land that had a former train track on it. So he talks about the process of converting this piece of land into developer developable land, where they have several homes that are going to be built there in the near future. We talked about bottlenecks in land development in general. Why does it take so long to break ground and to move forward? And we also talked about how he finds opportunities in addition to the due diligence that’s required once he has a property under contract. And finally, we touched on some creative solutions creative ways to make deals work because it’s a competitive industry just like Real Estate is in general. So I think if you’re interested in land development, you’re going to get a lot out of this episode. And if you do like it, I ask you to share it with a friend or family member and then also make sure to leave us a review. And again, if you want to connected me, there are multiple ways to do that. You can just go to well off dossier and then you can book a call or feel free to reach out to me by email. I hope you’ll enjoy the episode. I’m here with Andrew L. Debs Andrews, actually my cousin, but also a land developer. And yeah, today we are going to talk a bit about some recent projects that he’s had. We also, for the first time, I poured a shot because this is Andrew’s first podcast, so he’s a little bit nervous. So I think we’re going to start off by taking a shot and maybe loosen up a little bit. So here you go. Cheers.
Andrew Eldebs [00:01:48] Thanks, Georges. Cheers.
Georges El Masri [00:01:52] OK. That was grappa. I haven’t had grappa in a while. I was pretty good.
Andrew Eldebs [00:01:57] Feels like I’m on the Joe Rogan podcast.
Georges El Masri [00:01:59] Yeah, so and you’re welcome. It’s nice having you here. Why don’t we just dove? Actually, you know what? I’m going to ask you what I normally ask guests, which is tell me a little bit about your childhood where you grew up and maybe one or two things you remember.
Andrew Eldebs [00:02:14] Yeah, sure. Good question. Childhood. I was born in Toronto. I think when I was about a year or two years old, my parents moved back to Lebanon. My dad’s got a recycling company in Lebanon with his siblings, so moved to Lebanon for about a year. The economic situation wasn’t very good there. So I came back to Mississauga at the time. We lived in the same apartment building there. And then most of my life, I grew up in Brampton. But yeah, a lot of good memories with, you know, we got a big family, as you know, so a lot of good memories.
Georges El Masri [00:02:49] I forgot that you guys moved. I remember I was really sad as a kid when I knew you guys were moving away because we were all so close to staying out all the time. OK, so let’s dove in. I know you also invest in real estate like you have had rentals and things like that, but your focus has been on land development. So you graduated from the University of Guelph. I’m kind of telling your story here a little bit because I know it. And then you started working for a company. What was it again? Which company
Andrew Eldebs [00:03:17] was it? Yeah, at a at a university, I worked for a construction company called Mm-Mmm Group or it’s an engineering company,
Georges El Masri [00:03:24] actually, not that the land developer.
Andrew Eldebs [00:03:25] Now and then, I moved over to anatomy.
Georges El Masri [00:03:28] There you go. Matt, Amy Holmes is what I was thinking about. So you started off there, so you gained some experience doing that. And then I know that you started looking for at some point you also started looking for deals yourself. And then we looked at something a few years ago in Danville, and that was, I believe, like a former. It was a piece of land that had a train track on it in the past. So you want to tell us a little bit about that project. When did you buy it and what is what’s happening with it now?
Andrew Eldebs [00:04:02] Yeah. So after that, I mean, I moved over. I wasn’t mad at me for a little while
Georges El Masri [00:04:06] to get a little moved over
Andrew Eldebs [00:04:08] to Brant Haven. And in 2019, like you said, we found a parcel. It was on the market at the time and Danville, it’s about just over an acre, 1.1 acres. It’s an irregular parcel, was owned by the county in the past, and historically there is a railroad that that ran through it. But we, we put it under contract, did our due diligence on it. Determined, you know what, the expected remediation costs were for the cleanup of that historical railway, just the contaminants that resulted as of that as adult use. And we purchased the property. And currently, you know, going through the development application process nearing draft plan approval, hopefully should be over the next few months. We should get draft planning and rezoning approval and hoping to commence construction on that site either late this year or early next year.
Georges El Masri [00:05:05] OK, so what are some of the things you had to go through because I don’t think you were able to build on it when you first bought it like it wasn’t. It wasn’t ready immediately to be sent for construction. So what are some of the things you’ve had to do to prepare the land for construction?
Andrew Eldebs [00:05:22] Yeah. So the site, you know, was the zoning of the site. When we bought it, it was zoned just to allow basically large, single detached lots and very large like in terms of frontage, semi-detached lots. So we had a certain amount of yield that we needed to get onto the site in order to make it, you know, in order to make the project feasible. Mm-Hmm. So we had we went in for a rezoning application to reason the property to allow still singles and semis and townhouses now, essentially to allow a higher density form of development that would allow us to achieve that yield that we needed to make the project worthwhile. So we filed the development application. I actually went through the process a lot of the process myself with the county, which in hindsight, you know, perhaps we should have just filed the development application right away, but we filed a development application, rezoning and draft plan of subdivision and the process with, you know, municipal approvals. Typically, when you file or first before you file, you go through what’s called a formal consultation. So you submit a development concept to the county and you provide your proposal to them, you provide your proposal to them and they provide feedback on that with all you know, the county’s departments are at that meeting and they provide feedback and you take that feedback. You are just the application and then at that point, you file the application formally with all of the required studies geotechnical, environmental environment, tree protection plans, functional servicing reports, all that stuff. So. And then once you file, it goes through a public process whereby, you know, the neighbors within a certain radius of the area of the development application, they have the opportunity to provide commentary on the application and to voice their concerns. And through that process, we work with, you know, with the municipality and with the neighbors to find solutions to address their concerns, where we’re able to and where warranted, and adjust our application accordingly. And we’re just in the process now of submitting the application, and we’ve had very detailed discussions with the county about, you know, servicing requirements for the site. We’ve kind of had a lot of obstacles and to face, but we’ve worked it out with the county, come to kind of an agreement in principle with respect to what the final approvable draft plan of subdivision looks like. So I expect to refile the application, you know, next week and hopefully get approval. It goes to council after that. So staff, if they’re in support of the application, their manager of planning their rights, a report either supporting application or denying it. In this case, we’re expecting them to support it just based on our discussions. And then it goes to the municipal council for a vote. And at that point, if it’s if it’s approved, we’re provided with conditions of draft plan approval and of zoning approval. We have to go through a detailed engineering design process to kind of detail the design of the of the subdivision and ensure that everything works kind of at a finite at a very detailed level. And once you’ve got your engineering approvals in your subdivision agreement, you can start grading the site. You can start servicing the site,
Georges El Masri [00:09:09] basically break ground.
Andrew Eldebs [00:09:10] That’s right. You can break
Georges El Masri [00:09:11] down. Yeah. So what? What have been some of the bottlenecks because you bought this piece of property a couple of years ago, do you remember what year it was that you bought it?
Andrew Eldebs [00:09:20] Yeah, we bought it in 2019, 2019.
Georges El Masri [00:09:22] So that’s basically around three years now. Yeah. What’s been some of the things that have held you back from moving forward? Because, you know, sometimes people may not understand how long it takes to develop a site. And that’s also part of the reason that we have such a shortage in housing now. Just how long it takes to break ground and to start construction?
Andrew Eldebs [00:09:44] Yeah, so great question. So at the time that I bought the property, I was, you know, I was employed full time. I did with the land developer. So it was really, you know, the challenge. There is a challenge there just to balance the, you know, the obligations which, you know, land development is a very, very busy industry. And so there’s always fires to put out and things like that. So obviously that that played a role in kind of how long it’s taken now that, you know, I’ve gone out on my own and I can really focus more on my on our projects. Things have things have gone a lot quicker. Yeah. So that that’s one of the points. But in hindsight, you know, with larger development projects, this development project is only nine units, which, based on the scale that I’m used to doing with these larger developers, is pretty small. But with these smaller development projects, the soft costs of the project, so your consulting fees and your, you know, fees for, you know, creating your reports and things like that, those soft costs are very significant on the project. So what I what I tried to do, whereas typically on the large projects we really push right away once we buy the property, we proceed with filing development applications and just hit the ground running right away. What I what I try to do is really steer that, steer that myself and get to a point with the municipality where we have an agreement in principle with respect to the to the to the proposal. But I found that that process in doing that, although it might have saved us some soft costs, it really extended the timeline for this development. And there’s, you know, municipalities have legislative timelines once you file an application formally to approve it or. Or make a decision on it. And again, in hindsight, I would have I would have filed the application right away and kind of went through the process rather than trying to spearhead it, spearhead it myself.
Georges El Masri [00:12:02] Got it. OK, so I know also at one point, you were looking at putting more units on this piece of land, like you had this design. I forget how many, but it was more than nine. I know that for sure. What was the reason that you were forced to reduce it down to just nine units?
Andrew Eldebs [00:12:19] Yeah, good question. So, you know, we went through so many, so many different development proposals like the site’s very irregular. You know, you represented us on the purchase, so you remember that you remember how it looks, but it’s a very regular sight. So we’ve gone through many different variations with respect to the concept plan, and our original, very original proposal was essentially a condo, a condo laneway with parcels of tied land. So a common element condominium. At that point, we had 14 units proposed on the property. The challenge with that was just, you know, it’s hard to kind of explain it because we don’t have a picture in front of us. But the challenge with it was with respect to access and the laneway was essentially dead ended. Municipality needed to turn around. And so we ended up finding that that we could still make the project work comfortably with proposing a subdivision rather than a condominium.
Georges El Masri [00:13:28] Sorry, just to clarify. So what they needed was, I think, from what I remember, they needed a fire truck to be able to go through and turn around comfortably and with the way the design was, that that wasn’t possible.
Andrew Eldebs [00:13:40] Yeah, that’s right. That’s right. So they needed a fire truck to go into to be able to turn around within the condo laneway and with the design. Although, you know, we kind of accommodated their requests and this was all part of the process that we were talking about why it took so long. You know, we went down that path in a lot of detail and we felt that the county was starting to warm up to it. We showed them, you know, based on the OBC guidelines based on engineering standards that a fire truck can comfortably circulate. But at the end of the day, they chose not to support that plan. So we had to us had to revise it.
Georges El Masri [00:14:19] OK, well, so that’s the Danville project. Good luck with that. Hopefully, you get your approval this year and you can break ground and whatever. I’m interested to see how that ends up. What are you normally looking for? Because you I know, like your specialty, is finding these opportunities, finding pieces of land that you can develop. What is it that you look for and how do you evaluate these opportunities?
Andrew Eldebs [00:14:42] Um yeah. So you know, there’s a lot of a lot that goes into evaluating a land opportunity. So first and foremost, obviously, as is does it make sense in terms of the purchase price when you’re buying the property? Once you get, you know, once you’re you, you’ve been working in land acquisitions and you’ve acquired a certain amount of land the same as, you know, when you’re dealing with buying a house, you can really tell, right, kind of right away what whether something is worth looking into or not. So just the purchase price
Georges El Masri [00:15:17] is that like per acre price per acre, is that something that you would normally look at? Or is there something else that would tell you whether right off the bat, whether it’s good or not?
Andrew Eldebs [00:15:25] Yeah, exactly. So price per developable acre because you got gross acreage, which includes all of your environmental areas, that the areas that are protected, we call them protected, we call them natural heritage. They’re protected by conservation authorities and municipalities. So you can’t develop on those areas. And in fact, you need to protect them, which is fine. But we look at really price per developable acre or another metric that we use as price per foot per foot of frontage. And in the case where you’re talking about low density developments like single detached and townhouse homes where you got frontage on a street. So what is the cost per foot in terms of your Rob land cost? How much yield do I expect I’m going to get out of this? How many feet of frontage do I expect I’m going to get when I run all this roadster and things like that? How much is it going to cost me to service? And you can kind of work backwards from your construction costs down to a land cost and figure out what is a feasible land price? But yeah, like just in short, you can pretty quickly tell whether or not a project is worth looking into based on the purchase price, the price per net, the price per net developable acre specifically. And then also once you do, you know, I do always do due diligence on a property before we submit an offer. So I’ll look into, for example, the salt. Accessible information look into the official plan designation, the current zoning, figure out what’s around the property. Just looking at aerials, determine whether or not the proposal that you know we would put onto the property is likely to be supported by council. And what’s the risk associated with that? Because there’s planning risks when you were undergoing a development application and a big piece of the puzzle is the engineering, which is really, you know, whether or not you have a satisfactory storm water outlet. These developments need to be serviced by storm water. So when it rains, you know you’re paving all these roads. Currently, it’s an it’s a farm field, for example. And so the water infiltrates into the ground, depending on your soil type. But when you have it all and you’ve got a lot less ground, you’ve got a lot less grass and soil. You’re not talking about pavement, so the water runs off. So you need to control that, that that additional water that your development is, is causing. So you do that by managing, you know, you can create a stormwater management pond. And so we evaluate whether or not there’s a stormwater outlet somewhere where for the stormwater management pond to outlet to and we look at just in the pre due diligence stage and in detail, we look at also whether or not there’s a there’s an outlet for Sanitari and whether or not the water supply is sufficient to accommodate up to accommodate the development. Sure.
Georges El Masri [00:18:25] So, OK, so you have to do like quite a bit of due diligence. Are you doing all that yourself when you’re looking at these properties? Like, how do you know this sounds like an engineering question or like, I don’t know, like some sort of geo technical question, how do you know all these things?
Andrew Eldebs [00:18:40] Well, just having worked in it in the industry for a long. I mean, I’m an engineer by trade, so I think it definitely, you know, buy in school. As you mentioned before, I did environmental engineering. So just through my schooling, I think it helps me to be able to understand certain facets of the industry and to wrap my head around things, perhaps a little quicker. And so I had that that background, which definitely helped out. I was I was blessed to have very good mentors in the past and still mentors that I that I talked to today that have allowed me to develop technically my technical skills. So. So that definitely plays a role. But what was your question again, I think, is that
Georges El Masri [00:19:28] I was feeling it a little bit too. I’ll be honest. OK, I guess my question is like, do most developers have somebody special that specializes in identifying these things like the storm water stuff and whatever? Or is that usually the land acquisition specialist?
Andrew Eldebs [00:19:41] Yeah. So as a as a developer, we have a good knowledge of kind of, you know, we know a bit about everything, I guess you can say right now, whereas we seek consultants who can provide more detailed studies when it comes to actually doing, for example, the geotechnical studies, the environmental studies that when you really drill down into the engineering due diligence we will contract, will retain consultants to do that work for us. But the pre due diligence really, you know, I do myself. Typically, a developer will have a land acquisition manager who should you know enough to be able to identify whether a property is worth looking at because through the due diligence process, there’s you know, if you want to do due diligence properly, you need you need to. It’s an investment. It’s a significant investment. Like once you tie up a property, you usually have a do. We asked for due diligence period with the vendor. So typically 90 days to get everything we need to get done. And in that 90 days, you know, we’ll invest into doing the phase one environmental phase two environmental if we need to. A geotechnical studies important to know that the soil is sufficient to support the structures that you intend to build on the property. And so those costs can amount is, you know, easily to 15 to $20000. So it’s important to just be able to identify, like I said, that that the properties worth that investment just from the get-go.
Georges El Masri [00:21:21] So are you the one who’s taking on that risk or is there a way for you to mitigate that risk a little bit by putting some of that cost onto the seller or, like, you know, creative ways to do that kind of thing?
Andrew Eldebs [00:21:33] Yeah. Good point. Like we, we certainly if it’s beneficial to the seller in some ways to take on that cost. So typically, you know, I’ll to ask the seller if they are willing to pay for the phase one environmental. And in an if they are, you know, hype, you know, if we in the event that we walk away from the property, they’ll have that phase one environmental report in hand. You know, if they need to, you know, sell it to somebody else so they can just provide that right from the get-go. So it’s beneficial to them. And certainly we would we would seek that from the seller. Typically, the seller will require you, at least in my experience, the seller bears no cost burden as it relates to the to the due diligence. But I’ve done it in the past whereby either we shared the cost of the of the work with the seller or they’ve taken on the full cost cap.
Georges El Masri [00:22:31] What are some creative ways that you’ve been able to get these properties under contract? Because obviously, like land development, there is more room for creativity, typically because there aren’t as many people looking for land. So can you give us examples of creative ways that you’ve been able to get properties under contract or certain clauses that have that help you as a developer?
Andrew Eldebs [00:22:51] Yeah. So when you put a land under contract like you do with a with a home, right, you’ll typically I mean, probably not in this market anymore or not. Not if you want to buy a good amount of houses anyways, but you’ll typically when you buy a house, you’ll put a five day financing condition, for example. But when you when you buy land, you put our condition is typically 90 days to get done what we need to get done, all that due diligence that we talked about. So. So we put it under contract, we provide a deposit, whatever that might be. And we have 90 days to do the due diligence at our sole and absolute discretion. We can walk away from the property if we don’t deem it to be feasible for our purposes and for what we propose on it. And if we do walk away at the end of the 90 days like you do with a house, if you don’t waive your financing condition, we walk away and take, you know, get our deposit back. So it’s I guess, little risk, I think, when it comes to purchasing land. And yeah, I think really that’s I mean, there’s not much I wouldn’t say there’s much of a secret to it.
Georges El Masri [00:24:14] Well, there is like an option to buy, for example. Yeah, like things like that. You’ve mentioned this to me in the past. So do you want to talk a little bit about that?
Andrew Eldebs [00:24:22] Yeah, good point. So you know, what I’ve done in the past is in certain deals, you need to get a bit more creative there, a little bit less straightforward. So for example, we’re working on a property right now where we were. There’s only about 12 for the property and told us about 120 acres. It’s only about 12 acres of it in the urban boundary, so only about 12 acres of it is slated for development. And in Ontario, you can’t you can’t legally sell a piece of your property without severing it first. Mm-Hmm. So what we’ve what we’ve done with the vendor is we’ve put together essentially an option agreement and that option agreement. What it says is we have a certain period of time to purchase, purchase the property, the 12 acres that we intend to cover at an agreed upon purchase price. And in that in that period of time, we pursue development applications. We pursue the severance application at our cost. And once the severance application is approved in the property severed it, it’ll be it to us and we close, we close on the property. So if we don’t hypothetically, if we don’t succeed to sever off the property it, if we don’t succeed to sever off the property, it would essentially we would just walk away from the deal. And we’re protected just because we’ve registered the option agreement on title to the lands. So we’ve protected ourselves in that regard. So anybody who purchased the property would know that that agreement is on title and that we have an interest secured in the 12 acres or so in the property.
Georges El Masri [00:26:18] OK, cool. So basically an option to purchase means that you have the property in your contract. You can do certain things during that period of time. And then at the end of it, you have the right to buy the property at a predetermined price.
Andrew Eldebs [00:26:34] That’s right.
Georges El Masri [00:26:34] Yeah. So it’s almost it’s similar to like our rent to own type of thing. Not exactly, but like kind of similar to that. Mm-Hmm. OK. So any anything you’re excited about any projects coming up that you’re excited to? Work on anything, anything of that sort.
Andrew Eldebs [00:26:53] Yeah, I mean, I’ve got I’m working on the lot, I’ve been very busy just really trying to source land opportunities. And as you know, as you know, I started my business and in May, my company. So it’s been things have. I’ve established some systems since then. And, you know, I’ve been blessed to be able to be busy. You know, there’s never a dull moment. But really, what it might focus on is right now to source land development opportunities and to figure out, you know, how we can acquire them. So, so yeah, just been working on that.
Georges El Masri [00:27:36] Can you tell us a little bit about film maps?
Andrew Eldebs [00:27:39] Yeah. OK, so film ops film ops is a software that I co-founded with my partner who I did and, you know, I did engineering with at University of Guelph. And, you know, I came up with a concept. It’s essentially a trait, a soil exchange platform, an online soil exchange platform. And the idea behind it is like in development and construction. Typically, you run into when you’re grading lands, when you get to the we’re breaking ground. A lot of the time you run into the situation where either you need to take soil off of your site, you need to export it from your site or you need to bring soil into your site. So presently, or at least until film ops was brought to the market, the process of finding sites to exchange soil with was not transparent. So really, you had to know somebody or know somebody who knows somebody who needs the soil that you have or who has the soil that you need. And it’s also like to kind of add to the equation. The province has become very stringent. They’ve released very stringent standards. There’s an old regulation called Orig for 06 19, which was just enacted earlier this year, or part of it was just enacted earlier this year. But essentially the standards that you have to abide by in order to get rid of soil from your property or to bring soil into your property have become very strict. And you need to do a lot of testing whenever you get rid of soil or bring it in. So we found the need in the market for a more transparent way to find sites to exchange soil. So, for example, if you know if you’re currently if you were a developer in the past, I should say if you are a developer and you need to get rid of 50000 cubic meters of soil, which is 5000 truckloads, you need to you need to get rid of it fast. Well, the only way to find a place to get rid of that soil is just by knowing somebody or knowing somebody who knows somebody. So and then a lot also kind of plays into it as your contractor will give you a flat rate to get rid of that soil. But your contractor could have possibly worked in kind of like a fee to broker that transaction. Yeah. So with film maps, you could you could log on to this platform. The online platform, create an account and for free, you can post a listing. We call it just you create a listing so you can post a site. If you have if you have soil, for example, you can post what type of soil you have the sort, the quality of that soil. Because these are it’s a very regulated industry soil. It’s just soil to a lot of people, but it’s very precise and in the construction industry. So it puts the soil quality what type of soil you have. And it’s basically like, I just I describe it as a real turkey for soil. And so it’s just made the process of exchanging soil that much more transparent. Anyone can log on; any contractor developer can log on and figure out where they’re going to take their soil. And ultimately, the goal of it is to reduce costs for the for the industry.
Georges El Masri [00:31:12] Yeah, cool. That’s pretty cool because I know you started this from nothing like it was just the concept that you thought of. And then now it’s become something that’s active and lives. So it’s interesting to see that, I guess, to finish things off. Do you want to just share what services you provide and how people can reach you?
Andrew Eldebs [00:31:34] Yeah. So, you know, if anybody ever has a development project, for example, that’s of a scale that you know, I’m looking for. I’m I kind of try to be picky about the. Projects that I work with and I try to, you know, from my project in Danville, for example, I’m trying to work on projects of a bit more skill. So if anyone has a project of a certain scale, I could say five acres development. Let’s put a minimum there and feel free if you need help to reach out to me. You know, I’m happy to consult on it. If you would need that service. Or alternatively, you know, we can we can work on it together in some way, shape or form. And if you wanted to contact me, feel free to log on. You can go on to my website w WW Dot Land, Scout Investments, dot com and just fill out the contact form there. And it’ll go. It’ll go to me.
Georges El Masri [00:32:36] Awesome. Andrew, thanks for coming by today and for sharing a little bit about land development and taking a shot of grappa. Thanks, Jeff. Yeah, I look forward to seeing you again soon. Good luck with all of your projects.
Andrew Eldebs [00:32:46] Thanks, George. Appreciate it.
Georges El Masri [00:32:49] Thanks for listening to this episode. Your support is truly appreciated, and if you can share this with a friend or family member, that might benefit from the information. Remember, our goal is to motivate and inspire others to take action and to build wealth and to become well-off. Enjoy the rest of your day.