Mastering Build-to-Rent Land Deals: The 5-Step Formula to Success

In this episode of the Raise Capital Legally podcast, Daniil Kleyman, a real estate developer from Richmond, Virginia, shared his expertise on build-to-rent projects. Daniil discussed his journey from renovating houses to developing ground-up projects since 2008. He emphasized the importance of geographic concentration, managing properties within a 10-minute drive from his office, and maintaining in-house property management. Daniil detailed the five essential steps for evaluating land for development, including zoning analysis, site constraint assessment, density studies, financial feasibility analysis, and construction financing strategies. He also shared insights on construction financing, project management challenges, and the importance of building local relationships with regulators, contractors, and brokers. The discussion highlighted the current market challenges, including rising interest rates and construction costs, while emphasizing the long-term potential of real estate development.

Introduction and Background of Daniil Kleyman (00:01:55)
Daniil Kleyman introduced himself as a real estate developer based in Richmond, Virginia, with experience since 2006. He transitioned from renovating houses to development in 2014, specializing in building apartments, mixed-use projects, and maintaining a rental portfolio through in-house property management.

Geographic Concentration and Property Management Strategy (00:04:02)
Daniil discussed his strategy of maintaining tight geographic concentration, operating within three neighborhoods and keeping all properties within a 10-minute drive from his office. He emphasized the benefits of in-house property management for maintaining quality and efficiency.

Land Acquisition and Financing Strategies (00:12:04)
Daniil explained his approach to land acquisition, using cash for small residential lots and contract agreements for larger parcels. He detailed how he leverages land value in construction financing, allowing for greater leverage than purchasing existing assets.

Development Process and Team Requirements (00:08:53)
Daniil outlined the key professionals involved in development projects, including architects, surveyors, engineers, and land use attorneys. He emphasized the importance of having local experts who understand specific zoning and building codes.

Financial Analysis and Market Considerations (00:24:11)
Daniil discussed the importance of conducting thorough financial feasibility studies, using current market rents for projections, and maintaining realistic operating expense ratios. He emphasized the significance of long-term market analysis and rent growth potential.

Construction Management and Project Challenges (00:37:41)
Daniil shared insights on construction management challenges, including dealing with project delays, unforeseen site conditions, and the importance of thorough plan reviews. He discussed implementing penalty clauses in contracts to mitigate delays.

 
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