The $500k Profit Real Estate Deal that Investors Need to Know About with Brandon Cobb

Welcome to the Smart Real Estate Coach Podcast, your source for actionable, real-life, practical investing advice. Each week we help you make a quantum leap somewhere in your business, your finances, and/or your life. Subscribe, leave a rating and review, and learn more at smartrealestatecoachpodcast.com. Okay, smart listeners, it's Chris Prefontaine, your host again with another Smart Masters Class. Today I'm joined by Brandon Carr. Brandon's the owner of HBG Capital. It's a real estate firm. They provide investors with superior risk-adjusted returns and downside principal protection backed by real assets. So pretty standard as far as that, uh, this type of model. However, he's got some really cool experience. He's in Nashville, Tennessee, and HBG's capital construction arm HBG Construction, they execute ground-up new developments, they execute land developments, residential property rehabs, and their acquisition arm, HBG Holdings, sources some off-market land for redevelopment by working with local communities. So they— so in the local communities, they identify, they rezone and entitle land to bring the community's vision to life. I've chatted with Brandon about this in past episodes, and I think it's really cool to just get an update given today's market. where he is with things. Okay, Brandon, with that as a background, welcome to the show, buddy. Good to see you.

Hi, good to see you. Thanks for having me.

Yeah, you know what? It just dawned on me in the intro, I didn't mention your podcast. Could you bring that up please for the folks to make sure they subscribe and then we'll dive in here?

Yeah, our podcast is the Recession Resistant Real Estate Radio. You know, we talk everything business, real estate investing, creative passive income, all that fun stuff.

That's a writer down, guys. Go ahead and subscribe to that so you can keep up with Brandon's progress there. Brandon, do this. You were on episode, I think it was 498, and that was back a year ago. So they can go back there and get all the background on what you were doing then. But just for maybe bridge the gap for those that might be new smart listeners and say, okay, you went from medical device salesperson into this world. Just How did that transition take place mentally? Where were you? And then I'll kind of bring them up to date with some cool things you're working on.

Yeah. So, you know, I, I, I was not a natural entrepreneur. I'm what you call an accidental entrepreneur. I was actually living my dream job, which was medical device sales. Took me years to break into that. Loved what I did. Got to wear scrubs every single day, rub shoulders with orthopedic surgeons. Like, that was my career path. I had the coolest boss in the world. Guy that I considered like a father figure. He finally was the one that allowed me the opportunity to break into the industry and get in. And then one sunny Friday afternoon, I met him at the Starbucks over in West End, and I was having a fantastic day. It was sunny. Spring was like knocking on the door. You could smell the coffee. And I'm walking up, and before I can tell him how much money I made him and how excited I was, he fires me. And, uh, it took me probably 4 or 5 hours for just the shock to wear off. Of course, when you get fired, the first thing like you think is like, what did I do wrong? That was what kept ringing in my head. What did I do wrong? What did I do? I just, I could not figure it out. Like, I slaved for this company. I, I put my all into it and like, this was my dream, you know? And all of a sudden, poof, you know, it, it was kind of gone.

Yeah.

So, Um, you know, I learned a very valuable lesson that day, which was nobody was gonna look out for my financial wellbeing but me. And if anybody's ever lost like a dream job before, not just a job, but like your career, it's not just losing that job. I had my entire identity, uh, wrapped up in that job. And when that was taken from me, like, I kind of sort of didn't really know who I was. I was like, oh my gosh, am I not cut out for medical sales? Like, Mm-hmm. this was it. Like, that was the whole, that whole future that I'd imagined and painted for myself. All of a sudden was gone. Um, and so it, it taught me that nobody was gonna look out for my financial wellbeing but me. And so this is what started me on the whole entrepreneur journey. You know, I started a, a how to break into medical device sales business, failed. I started a motivational blog because I was into that, failed. I was like, you know, I'm gonna, I wanna be the next Tony Robbins. I love his stuff. Like, I wanna do what he does. And, uh, Chris, you're not gonna believe this, but not many people wanna take life advice from a 26-year-old.

Yeah.

So that failed too. Then I discovered this magic vehicle, as you know, called real estate. And like, as soon as I saw the opportunity to make some money, I cut out all those other businesses. I just focused on real estate, and that's how I ended up getting my first start. Of course, fast forward today, we're blessed to be able to invent new housing communities and, you know, work with big national home builders like Lennar and D.R. Horton doing land development stuff.

It's really cool. And I want to dig into how we ended our chat. I think it was on your show when we were off air about a new mastermind group you have. But I wanted to emphasize first, you just went through that journey of yours in the past. And I've said, as recent as our most recent event in October in Boston, I've been screaming saying, your job is your biggest risk. It's not real estate. Just that one statement. What are your thoughts on that? Because I've been screaming about that and I get calls from people going, oh, you remember you said that? Yeah, I lost my job. Remember you said that? Yeah, a lot. Like, I get it all the time. So why not move now? Like, what are your thoughts on this? And then we'll, then we'll pivot.

It's not if, then, but when. It's not if, but when. Very few people, it's not like way back when where you got outta high school, you picked the company and you worked with them until you retired. You got a pension, you were set. Pensions are gone. Those days are gone. You know, the world is a lot more competitive. The econ— the economic, uh, conditions can fluctuate. Like, You're not going to go through this economy, through life, and not work for a business that won't at some point in time be severely affected. Like, you know, look at '08. You had companies that had been around 100 years that were, that were unbreakable just disappear literally overnight, uh, in a span of nothing. So you're going to get let go eventually. Your department's going to, um, It's gonna go, something's gonna happen eventually. So it's not a matter of if, it's a matter of when. And so to your point, you're right, that is the biggest risk.

Yeah, thank you for that. And that's without me telling you I was gonna ask you, that's exactly what I wanted to hear. So guys, listen, I gave you, I'll give you the links at the end for all our free stuff. Grab it and let's run with this and make a dent in anywhere you're going. All right, let's do this, Brandon. Let's go back to, we got off your show, I think it was, I'm pretty sure it was your show. And we started talking about one of your new things you're working on with respect to a mastermind. So talk about what that is and then let's break it down a little bit.

Yeah, so we saw a gap in the marketplace and it, the whole thing unfolded because we were really ramping up our land development business. We started getting bought out by all of our land positions from these big national home builders, right? We had originally wanted to scale the new construction business, which was building and selling houses. And then all of a sudden, these big, large Wall Street-owned publicly traded firms, like, you know 'em, you know, Pulte, Lennar, DR, all those guys, they started knocking on our door offering us crazy amounts of money for the land. And we're like, dude, why, why build the houses right now? Market's been kind of crappy for building and selling houses, if I'm being honest with you, last 2 and a half years.

Yeah.

But man, they've just been buying land up in droves from us, right? These are Wall Street firms. They have to make the stock price go up. There's only one way to make the stock price go up. Build more houses by buying more land. So they have an unlimited checkbook and they can write an unlimited amount of checks to us. And we're like, wow, this is a phenomenal opportunity. Not that many people are out there teaching it. We tried to find a community to learn from, and as a result of not being able to find it, we had to go figure it out ourselves. And we said, man, you know, we've lost money on deals. We've made big mistakes. There's a real opportunity to help other people get into this phenomenal, I think it's the fastest growing, you know, secret in real estate, this niche, and learn how to take land, get it approved for new neighborhoods, and, you know, sell the paper or you can develop it. And if you wanna build the houses too, you can do that too. So it became because we did not see somebody else out there doing it. We wanted to join a community, it didn't exist.

You know, it doesn't matter if you're brand new to real estate or if you've been doing this for several years or a whole bunch of years, I learned the hard way, back during the crash that doing creative deals is much better. It's a much better path in real estate in general than, let's call it, the old way— getting paid once, using banks, signing personally. 3 paydays, getting paid 3 times on a deal, it's better. 3 ways, not one. Money now, money over time, and money long-term. And I don't care if you're in an up-down sideways market, it doesn't matter. You can and should operate with the utmost confidence. There's literally nothing I love more. than helping people create systems and simple systems and processes to become massively successful with our 3 Payday System, and doing so in literally any market and doing it geographically literally anywhere. So if you've been learning and learning and listening and studying and not taking action, I'm telling you, after going through it myself, it's costing you tens of thousands, if not hundreds of thousands of dollars, by not taking action on the 3 paydays the way you should be getting paid. Many of the people that were brand new, just like you, that joined our community have fast-tracked their startup. Now, I mean, wouldn't that be ideal? If you said, okay, should I go fast or slow? Should I take action now or later? It's costing you too much money to wait. Each one of you are at a point in your life, I'm sure, where you want things to be easier. You want things to be better for you and your family. You probably realize that you not only want more, but you deserve more in this life. So, to be able to give your family everything they want, build a legacy, For you personally too, and to have time freedom to start enjoying life. Frankly, whatever else you're seeking. And for some of you, now's the time, for example, to just focus on security. Maybe it's building a big solid bank account for retirement. We take these things super, super seriously, and it's my life's biggest reward to help you achieve them. I want to give you a free discovery session with our team. It's free. It's 15 or 20 minutes. You have zero to lose and everything to gain. And to understand how you might fit into the 3 Payday System that we've done now in over 80 markets as of this filming, go to smartrealestatecoachpodcast.com/discovery for a free call with our team. smartrealestatecoachpodcast.com/discovery. Because it's not whether or not you can do it or whether or not you fit, you can do it. It's whether or not you'll take action and do what it takes, and we can guide you through that process.

smartrealestatecoachpodcast.com/discovery.

We'll see you soon. So how big, I'm gonna get a sense for the 10,000-foot view first and then the actual process. How big a lane you talking about? Or does it vary?

It varies. And there's many different ways that you can do this. Like what we teach, and it doesn't matter, you don't have to do this. The beautiful thing about land is it works for every real estate niche. We just happen to do single-family residential housing for national home builders. So the land that we're going after is for them. They typically wanna see a minimum of 50 units, maybe even a little bit more than that. So that's like kind of the minimum size that they'll buy here in this market cuz they, you know, they need to deploy a whole team to do it. So the question then becomes, well, how many units? Well, if it's townhomes, you might be able to get 15 units an acre. So you only need 4 acres, you know, 5, 6 acres to do something like that. So it depends on the density of the land. And, you know, the zoning stuff like that. But it works for all real estate. The process to take a piece of land and get it approved for a 50-home community, 100-home community is the same process to take a piece of land and get it approved for a storage unit or an industrial building. It's the same process and that's called the entitlement process.

So I'm a brand new student. Let's talk to the smart listeners. To your point earlier, I remember in the '90s, me teaching land to, when I owned a brokerage, like it just doesn't get taught. Period. So you're talking to a bunch of 3rd graders, let's say, right? Uh, what is, what can they expect? What's their process? What does it look like for the teaching? And then bring 'em through that a little bit.

Yeah, as far as like the community goes, we have a 3-step process. Step 1 is build your understanding of what you're going after and start marketing or making phone calls. Build your target list of land to go after. That's the first thing is you need to understand How to target the right land. You know, uh, one of the first things we have people do is go meet with the planning director, right? Like, this is some big scary thing for a lot of people that, that are like, oh my God. Like, the planning director wants to meet with you. The city has a vision for the community. They need developers to make it happen. And developers need the city to approve process. So there's a symbiotic relationship. And when you go speak with the planning director, or it might be the local council person, you know, if it's a little bit bigger city, they have council members that manage certain districts. All of a sudden it becomes less scary. And when you pull up a chair on the same side of the table with them and say, hey, look, I don't have anything, but I really want to understand what's important to you, Mr. Councilperson or Mr. Director. You know, what's important to the, you know, the Planning Commission and Council? Like, what are they approving? What are some things developers that have done to create win-wins in the community? When you go meet with them first and you build that understanding, you're like, oh, wow! Now you can bring them something that they want. So that's step 1 is Go meet with the players and figure out what they want and identify land. Phase 2, once you have something under contract, we keep it very easy. This is how to reduce the risk on a lot of deals. Some of the biggest mistakes I see people make is they buy the land thinking that after they've had a good conversation with a planning director or a council member, like, oh, this is a done deal. It is not a done deal until you get the approval until it is voted and accepted. So we put everything under contract contingent on that result. We never buy anything. That's rule number one. Do not buy it until all the approvals are in place.

Well, how much would you tie it up for? I know this is broad too, 'cause it depends, right? But how typically, what is your deposit in it? And I'm assuming it doesn't go hard until it's approved.

Correct. We don't have any hard money on the line until everything is approved. It is contingent on the outcome because I'm not calling and lowballing people. We are reaching out saying, hey, I want to pay you 2, 3, 4, 5 times what your farmland is worth. Are you interested in having a conversation with me? What? Yeah. How are you going to pay that? Well, here's how. I'm going to get it approved for a community. I'm going to force appreciate it because it's worth a lot more money now. And then once that's done, I can pay you a lot more. So we have a very compelling value proposition, which is I'm just going to pay you a ton of money for it. And people perk up and they like that. They want to listen. So that's what we do. We get under contract and then we get something, what's called a concept plan done. You take that concept plan back to your council or director member that you met with or spoke with and say, hey, do you want this? And they go, yeah, we're excited about this. This sounds awesome. Like we will, yes, yes, we want this.

Great.

You take that concept plan to your list of buyers. In our case, it's National Home Builders. And they go, yes, heck yes, we want this. This is amazing. Or they might say, hey, look, let's put this housing product on there instead. And then you bring that back and they say, is this still good? Perfect. That is what you do to move forward with the deal. You're not spending tons of money on engineering. You're lining up your approval department, your, your counsel, your planning commission, and your end buyer. And that's kind of the, the, the step to move forward with the entitlement. So that's phase 2 that we help them navigate. And then Phase 3 is just how to negotiate the best possible deal with your end buyer. 'Cause of course we know what they're really gonna pay for things and, you know, people who just start out don't. So that's the 3 phases that we help walk people through.

So question on phase 2, time from when you get all approvals to when you're supposed to close in, is it regardless of whether or not you have your buyer in there? 'Cause it's only contingent upon approvals, not the buyer, right?

Correct. Yeah, it's contingent on the approval, not the buyer. And when you're having the conversation with your planning director, your council person, you know, that's another question that we tell them to ask is, hey, what's your typical approval process look like? What's the time? Because it's market dependent. You know, there's markets you want to be in and there's markets you don't be in. If you're in California, God bless your heart, you're looking at a 3, 4, maybe 5-year approval process. I would never do a deal in California. Here takes us about 15 months. So it is a little bit longer approval process, but our typical profit on the end of these is, is minimum half million bucks. And we're typically aiming for 7-figure-plus entitlement deals.

And the owner makes out great. So it's an, it's a nice—

And the owner makes out fantastic. Yep. That's right.

Yeah. How much will you typically spend on engineering, Brandon, to get just the concept plan?

So the typical concept plan, if you were to pay a civil engineer, is gonna cost you, you know, on the low side, you know, $2,000, $3,000, high side, maybe $5,000 to even $10,000 depending on the size of it. Of course, in our community, we've negotiated that down significantly where, you know, it's pennies on the dollar because we give people volume and, and we've got a relationship with them.

Yeah.

But if you're doing it on your own, you can expect to pay somewhere around those amounts.

Sweet. So you've already put some economies of scale in place. If I'm gonna look at, Uh, I love LANs. These are, these are, this is a cool conversation. If I'm looking at your mastermind program, tell me how that works. Um, timeframes, uh, uh, touches per week, whatever else you wanna share.

Yeah. No, I mean, what we do is it's a, we use the school community. So there's the community section where you go make a post, you can read other people's posts, and typically that's good for when you need something. Hey, um, I'm training a sales rep. I need an onboarding guide.

Boom.

Somebody else has that or we have it. Hey, I've got this deal, Brandon. Can you look at it? I'm, I've got questions about this. Like what, you know, what do I need to look at here? So we help people walk through the deals that they have and they post it in the community. So the next section is the actual learning. So this is like to get you up to speed so we're not teaching the same thing over and over again. So there's 3 different sections in the training section. The first is the Land Development Blueprint. That's the course on how to find, target, do due diligence, everything you need to take a piece of land and get it approved for a new community. And it comes with all of our resources. So you don't have to, you don't need contracts, you don't need JV agreements, you don't need literally everything that you could possibly need in land development business there. So that's, I've got that set up. The next section in it is called the Capital Raising Machine, because at some point in your real estate career, you're gonna have to learn how to raise private money. In it is all the systems and processes that we use, that I've used to raise over $15 million of equity from investors. So we give them that. So, like, I don't wanna hear that money is an excuse because we teach you how to go and raise the money for the deals that you need to. And then the third is the group coaching calls. We do those once a week. People hop on, and the whole goal of those calls is to get direct access and whatever obstacle you're experiencing, get that obstacle removed as fast as humanly possible. Um, so we do that and we do some in-person stuff where they get to walk local projects, you know, here, get to see our stuff, get some hands-on experience and ask questions.

I love it. So super supportive. It's, it, it's a lot like our community as you and I talked about, just a different niche, which is pretty cool. Um, what didn't I ask you about that that you want to share? Because I think this is really neat for— well, I was going to say for, and I'll stop because I want you to tell me who it's great for. And then what else I didn't ask you?

Yeah. And so this is a little bit different. Like, we do not take first-time real estate investors. If you've never done a real estate deal before, this is not a good fit for you, right? If you are, uh, struggling, uh, if you don't have, you know, $20,000, $30,000 liquid to invest in your business, you know, cuz there's some costs associated with this, right? Like I said, you know, you got the concept plans. You might have to get some studies done. Like, this is not a no money down, do your first real estate. This is for experienced investors. They typically have done multiple types of real estate deals. It's really good for full-time entrepreneurs. W-2 people can do it, but you really need a flexible W-2 job. And like, we're very picky about allowing W-2 people into the community. Like, it's mostly entrepreneurs that have some sort of business that's already built and like, they're just wanting to do bigger deals. Like, they're ready for development. So it's definitely a different type of clientele than your average mastermind community. So it's not entry-level, like it is experienced investors in the group.

Love it. Glad I asked. Glad I asked. And then what else didn't I ask you relative to this? Because it's so new, I want to make sure I don't leave anything unturned. And then I want you to tell everybody how to reach you too. So what didn't I hit you with so far?

I mean, I think you covered it really, right? Everything's short, sweet, to the point. If they want to learn more, if you're somebody who's interested in how to take land and get it converted into new neighborhoods. And by the way, there's multiple exit strategies here. Like, what I love about this business is phase 1, you can just get the land approved and sell it. No construction necessary, no development, none of that. When I say the word development, a lot of people attach different meanings to that. They think like, oh, I need to go build the neighborhood. No, you can literally Just go get a, you know, 3 or 4 acre piece of land approved for 40, 50 houses, make $10,000 per house. So that would be like a half million dollar deal and sell the paper to your end buyer as soon as it's approved, right? That's it. So that, and that's what a lot of people start out with. That's called the entitlement phase, right? Entitlement's just a fancy word for all the different government departments Making the community safe. That's it. That, you know, the fire department wants to make sure that the fire hydrants are there, right? And you wanna make sure that the stormwater approves it and it's not gonna flood. So that's the entitlement process. Phase 2, once you have a community that's approved, if you want to develop the land, and we've got multiple projects that we're doing like this, you can put the roads, the sewer, the infrastructure, and you can sell each individual lot that you create to a builder. So this is great. Like you can make a lot of money doing this, obviously more money than, you know, if you're just entitling it and you have pre-sold contracts with these big builders in place and they give you free money to do it because they really want it. So that's kind of cool. So that, so that's the second phase and there's a second layer of forced appreciation that happens when you do that. So every step of the way you're adding value to the property. And then the third phase, like we've got students that are building houses, right? You know, part of development is actually building the homes if you want to do that. Um, we've got students who are actually building the homes. So those are like the 3 phases. You, you can do just one of those if you want. There's some students that come in and they just wanna build, they're, they're trying to build more houses and they're tired of going after the individual little lots and tear down and build 1 or 2. Like they, they wanna have a pipeline built for the next 3, 4 years. Like it's great for that. Some people just wanna come in, control and sell the land. And, uh, some people want to develop and sell the lots to builders. So we cover all 3 of those.

Love it. Love it. And a lot of people that you, in each category you just said, there's probably people that hate each one of those for the listeners. Brandon, how do these guys reach you? I think it's really cool. That's why I wanted you on. Um, how do these guys reach you? Any, any and all information you want to share, please do.

Yeah. So we've got a free course. I think that is where most people who join the community, they get so much value from the free course that they're like, wow, okay, if this is the free stuff, what's the paid stuff look like? So you can go to learn. LandDevelopment.com. There's a free course below the video called Land Development 101. In that course, there's over 3 hours of content on land due diligence. I mean, everything you need to get started. There's over 3 hours of capital raising content on how to get started raising money. And we have interviews with national home builders like, you know, I think we had a VP of land from Ryan Homes. We had a land developer interview on there, an interview with a civil engineer and how that works working with a civil engineer. So really all the tools that you need to really feel comfortable is on that website. You can find the entitlement process on there, kind of just everything. And if you wanna book a call, there's another button on that website. You can watch the video that talks about the community and it says request invitation. You can click that button and you can schedule with me.

Sweet. So learnlanddevelopment.com is the best access for everybody listening.

That's it.

Sweet. Brandon, thanks for being on, buddy. I love it. I love this stuff. I want to continue to keep in touch with you on it and see where it leads and maybe do some dabbling with it together with our community. So, thanks for being on, buddy. I appreciate you.

Thanks.

Okay, guys, that does wrap up our masterclass with Mr. Brandon Cobb. Hey, if you enjoyed the episode, guys, make sure you share it, rate and review it, and by all means, subscribe to the podcast so you don't miss future episodes. For those of you that might be brand new listeners, make sure you get a hold of our free books, or if you've been listening and just haven't done it for for whatever reason, go to 3paydaysbooks.com/podcast. That's just the number 3, numeric 3, paydaysbooks.com/podcast. We're big about free, guys. If you go to our YouTube channel, if you're not watching this there and you're just listening, and you look at the Motivation Mondays, the Q&A Thursdays, and the Deal Structure Sundays, gosh, I think there's over 500 deals in there now. That's free. You are bombarded in social media by companies in our space that want you to buy their product and then good luck. Buy their product and get rich quick tomorrow. I hate to say it, but it gets very frustrating. And so we are big on free. Get a hold of free books, get a hold of the, the information on our YouTube channel. And if it's something you want to pursue further, then fantastic. You can look at our apprentice program. For more information on that, go to 3paydaysapprentice.com. That's the number 3 again, 3paydaysapprentice.com. And use the Coupon code podcast. Okay, make it an awesome week. We'll see you on the next Smart Masters Class. Are you tired of the headaches that come with hunting down sufficient and affordable investment property insurance? I know I have for years and years. Say goodbye to the endless calls and stress with National Real Estate Insurance Group. With NREIG, you can actually customize your coverage and keep every property you own regardless of the occupant. Vacancy status protected on one monthly schedule and bill. No fuss, just flexible, reliable coverage that adapts to your portfolio. Visit smartrealestatecoach.com/NREIG to learn how effective insurance can be with National Real Estate Insurance Group. smartrealestatecoach.com/NREIG to request a proposal today. All right. Thanks for tuning in to the Smart Real Estate Coach Podcast. If you got value from today's episode, guys, be sure to subscribe so you never miss a future episode. It literally takes one nugget to access some of the things we're doing. And when you're talking the amount of the size rather than the paydays, it's an opportunity cost that you can't let go. So don't miss an episode. And for goodness' sake, share it with someone who needs to hear it. If you're ready to find your best path For getting started on your real estate investing journey in general, head over to smartrealestatecoach.com/getstarted. We're going to help you take the guesswork out of your next steps. See you in the next episode.