Real Estate Development

This is the last house I built before I left the real estate industry

Jan. 17/14 –  If I remember correctly, it was in 2003 when it was announced that British Columbia had won the hosting of the Winter Olympic for 2010.  As soon as I heard that, my instinct convinced me that real estate would go up for sure.  I remember buying my first condo pre-sale in downtown for $234,000 which worked out to $330/sf and I only needed to come up with 10% until its completion which didn’t happen till 3 years later.  I wrote a cheque for $23,400.  Then the next day, I had to take cash advance out of my Visa to cover this entire amount.  Yes, my risk tolerance level was already very high indeed even at that time!   But when this condo was finished 3 years later, I was able to sell it for $650/sf (NET profit of 227K).  And this was only one of the many purchases I made of downtown condo pre-sale.  I remember I used to pay teenagers $100 to line up over night for me because I didn’t want to stand in the line myself. They pitched tents and sleeping bags outside the sales office.  People around me thought I was crazy to be doing this only to buy condos pre-sale but it wasn’t long before they did the same.  It’s just like how people line up overnight for new iphones nowadays that many others think is a crazy thing to do too.

My mom was a residential builder and I became her translator back in the 80s.  So, I grew up being familiar with the construction industry.  I built my first house in 1992, then my second one in 1995.  But since then, market went down so I stopped building and moved into mortgage brokering and became more active in property management.

In 2002,  I got back into construction with the intention of building my new dream home in a very desirable location in Vancouver east side.  Then, when the news of Olympic came out in 2003, I was determined to get full time into construction.  Then it didn’t take me long to figure out there’s way more money to be made in Vancouver west side (higher end) because the profit there was a lot more than that in the east.  The land on the west side at that time was double the price of that in east side but the end profit was 4 to 6 times more, therefore it made more sense to build in the west.  The decision aligned with my value of working smarter instead of harder.  I was the first in my family to build in the west side and  I remember them worrying about my choice because they thought it was too high of a risk but I believed in my instinct and the logic behind my math, therefore I insisted.  And I am sure glad I did!

I knew real estate market comes in waves, therefore I wanted to maximize the timing of this Olympic event and the new immigration wave that it would bring.  But I knew that I did not have enough of my own capital to expand.  At that time, I was doing private fund management for a few of my wealthy clients.  They trusted me to help them manage their funds because they witnessed how I operated as property manager or as mortgage broker.  They valued my level of integrity and honesty.  Their trust for me was so strong that they willingly signed power of attorneys for me to manage their money for them.  I used to lend it out as 2nd mortgages.  They made their 10% interest while I made my 2-5% in lender/broker fees.  But when I saw the potential in constructing premium custom homes, I started lending the money to myself and paid my clients the 10% instead.  It was simple math to me.  I just built the interest cost into the construction soft cost budget and the profit still looked very good, therefore I had no problem moving forward.  Opportunities like this don’t come by every day so I knew I should apply the “Go big or go home” concept here! Apart from this,  I also had a couple of silent partners who came up with the money while I did all the work – from purchasing the land to constructing the house then selling them.  Then we split the profit.

Now that I think about it, I need to give tribute to my little brother who is a very talented designer.  He was a young designer then and therefore as his older sister, I wanted to help brand him so he could become established.  I did that by choosing certain areas to specialize in to build that WOW effect as his brand.  I first chose an area that only had small lots so he could get used to designing under 2000sf custom homes.  Within a 20-block radius, we had 5 sites under simultaneous construction with my brother’s company sign all over the place.  Therefore it created an impact and people nearby naturally called him for designs of smaller houses because we had already established his company to be specializing in these designs.

He won a few awards and got himself established while I also made my share of the money.  Then I decided to move into constructing bigger houses in a different area and I did the same thing –  meaning put all the money into a compact area to create the impact of him being the specialized “designer” in that area.  Finally, in my last 2 years of constructing, I decided it was time to brand him in designing mansions so I moved into another area where large mansions are built and repeated the same concept of building mansions at the same time in the same area.  And as a result, history repeated itself:  he became the luxury mansion expert designer.

My brother’s design firm is now very established and the range of his design is very wide – from undersized houses to super big mansions.  He has won many awards over the last 10 years.  As much as he is giving me credit to be his very first easy-to-work with client who help established his brand, I am equally grateful that he motivated me to expand my range in the construction industry, from building small houses to building high end homes for a niche market, and from going from the east side (poor side) to the west side (expensive side).  I am very proud of having such a talented brother and we worked really well together for all those years!

I believe success consists of more than just 1 criteria.  It’s a combination of intelligence, risk tolerance, networking, luck and timing.  I consider myself very fortunate to come out winning because I have a bit of everything in this whole formula.  I am convinced that there are many out there that are better than me in each of these areas but not many have this combination.  I feel very grateful because I feel like I had won a big bet since the real estate market did bloom during those 6 years and therefore I was able to opt for early retirement or take a sabbatical at the age of 38 because I found higher value in other things outside of money and achievement such as family and bonding with my children.  As a result of my involvement in all the condo pre-sale purchases and the number of premium high end houses I built during this time frame, I had the option to stop working and go travel the world with my youngest son from 2011 to 2013.