A young founder describes starting a real estate development company with their first deal: a former Movie Gallery in Clinton, Iowa around 2010. They raised capital from private Midwest investors at 18% interest and turned the property around in six months using vendor payment terms to manage cash flow.
Chapters
What did the journey look like when you decided, I'm going to start a development company? I started by myself. My mom would come in a couple days a week and she'd be like, hey Josh, I'll help you, but raising money. So like my theory is if you have a good deal, money always shows up. Like it's just not going to be hard. Like if a deal is good. And so my first deal was a deal in Clinton, Iowa and it was a former movie gallery store. I mean it was such a small deal, six or seven hundred thousand dollars deal and 2010, nothing going on. Who's going to lend to a 24 year old kid that. So I went out and there was a group of like private individuals out of the Midwest and I think I paid like 18%. I turned it around in six months. And on that deal though, going back to where I started, like vendors were willing to work with you because of the time period. Like everyone gave me terms on payments so like I didn't have to pay them till closing. Like I bought myself like 90, 120 days to be able to basically 100% finance it at closing and not have to come out of pocket. I put up the earnest money.