How a French Developer Rebuilt Miami's Luxury Market - One Spec Home at a Time with Pascal Nicolai

How a French Developer Rebuilt Miami's Luxury Market - One Spec Home at a Time with Pascal Nicolai

Pascal shows up in Miami in 2008 with some cash from selling assets in France, right when everything's melting down. Most people would think that's terrible timing, but he saw it differently.

 "I said to my wife at the time, look, I think there is one opportunity to go there, it is now. I don't think we're going to see this kind of opportunity in our lives. The market was crashed, very accessible if you have some money." 

He didn't even know he'd end up in construction. His specialty was buying, fixing, and renting or selling.

He starts doing what any smart real estate guy would do during a crisis: buying distressed properties at courthouse auctions, fixing them up, and flipping them. But Pascal gets curious about what happens before the auction. He starts buying non-performing notes from banks, basically becoming the one who forecloses on people. By 2012, the foreclosure business is drying up as the market recovers, and he's sitting on some properties thinking, maybe I should actually build something here.

That first house in Miami Beach goes well. Really well. 

"I got decent price for the land. I got decent price for construction because at that time, nobody's building and I received a very good price. I said, oh my God, this is good business now." 

Good enough that he decides this is the direction.

But here's where it gets interesting. Pascal isn't just another spec builder throwing up McMansions. He's a realtor and developer from France, and he brings a completely different perspective on how houses should actually work.

The conversation gets into the differences between European and American construction, and it's eye-opening. 

"In France, the architect is the GC. The architect follows the project and is the one who takes responsibility if there is something wrong inside. In Florida, the architect finishes his job when you get a permit, then you give the plan to the owner and the owner manages with the GC. If there is something wrong, he says, guys, this is wrong, you need to correct, and then he provides change order."

Pascal saw that gap and figured out how to fix it by essentially becoming his own GC and internalizing construction. He talks about importing European designers, bringing in construction techniques that Florida hadn't seen, using materials and equipment that made local contractors come by just to watch. 

"I remember one day, we imported this tile with this cutting machine, and they started cutting and all the contractors approached and came in the house to see, oh, what is it? We've never seen this."

The focus isn't on making everything white and shiny for snowbirds visiting three months a year. It's about creating homes people actually want to live in full-time. 

"When you live in New York or in Canada and you want a second house, you want something white, shiny. But when you want to live all year long, you want something more warm, cozy. Design changes, architectural changes, everything changes."

The quality control thing becomes almost obsessive after one early client, a Belgian guy in the clothing business, walks through a house and points out imperfections. 

"He started to look at things that even my eyes didn't see. There was a micro touch of painting that was not perfect. I realized that I was far away from the perfection. It made me understand that I need to work more, I need to get more competencies."

That changes everything. Now there's a quality control manager who has to sign off before any payment goes through. Subcontractors have to sign process documents. They do sample installations before getting the contract. 

"We don't make a payment if the quality control doesn't validate the work. And for the finishes, I'm going there. And sometimes I'm redoing things completely. I went there and said to my team, no, this is not acceptable. And I'm changing and redoing this job with no problem because I want the perfect product."

But the really smart part is how he handles risk. Every project has 50 percent equity minimum. When a house finishes, it goes into high-end rental configuration, fully furnished down to the towels and coffee machine. 

"When our house is finished, we put it in rental configuration. We rent the house with high price, we select the renter, and we give them a discount on the rent, but you have 60 days to leave when we sell. We have an income covering the carrying cost because we have low leverage."

This means he never has to sell at a discount just because he needs the cash. 

"I don't want to jeopardize five years of work, hard work, and have to sell at a discount because you need to sell because you need the cash. I don't want to sell