Are you ready to uncover the strategic art of turning your property into a powerful asset that can multiply wealth and impact your community?
Join us as Eugene Gershman shares invaluable insights on real estate development and sustainable investment strategies.
In this episode, Eugene Gershman, CEO of GIS Development Corp, an expert in real estate development and private equity dives deep into the unique challenges and rewarding opportunities that come with transforming properties into lasting investments. From the hidden complexities of construction to handling community concerns, he sheds light on what it really takes to build in today’s urban environments.
Eugene shares his views on how real estate owners can strategically retain and grow their assets for greater financial returns, community impact, and legacy-building. He also highlights key mistakes to avoid, such as underestimating the complexity of development and relying solely on cost-per-square-foot estimates.
Key Takeaways:
- 14:2: Handling Community Engagement: Eugene shares a transparent approach to addressing local concerns and warming up communities before big announcements.
- 16:11: Challenges in Urban Development: Eugene talks about the construction process challenges, particularly in dense urban settings, and how to educate neighbors on the long-term benefits.
- 20:06: Common Development Misconceptions: Eugene breaks down why building isn’t as straightforward as it seems, especially with fluctuating costs per square foot.
- 21:28: Avoiding Development Pitfalls: The importance of understanding true development costs and avoiding reliance on “cost per square foot” estimates alone.
- 24:45: Building a Legacy: Eugene encourages property owners to consider development as an investment rather than a sale, leveraging tax strategies to convert active assets into passive income.
Connect with Eugene@:
- Website: http://www.giscompanies.co/
- Blog: privateequity.dev
Connect with Corwyn@:
- Contact Number: 843-619-3005
- Email: corwyn@corwynmelette.com
Shoutout to our Sponsor: ROBYN COLLINS
Do you want something more? More Meaningful Moments opportunities, deeper relationships and memorable experiences? Do you want to make a difference? If you say YES, a career and real estate could be the opportunity you’re looking for guiding people to one of the most important decisions they ever made, the purchase or sale of their home can be both rewarding and lucrative.
Exit Realty has a revolutionary compensation model training and technology that provides you with the tools you need to start and build your successful real estate career. Call me today ROBYN COLLINS with REDROBYN HOMES at 843-557-5003. Again that’s 843-557-5003 or visit RedRobynhomes.com/join.exit and make your Exit today.
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Support this podcast: https://podcasters.spotify.com/pod/show/corwyn-j-melette/support
ROBYN:
Do you want something more? More meaningful moments, opportunities, deeper relationships, and memorable experiences? Do you want to make a difference? If you said yes, a career in real estate could be the opportunity you’re looking for. Guiding people through one of the most important decisions they ever made, the purchase or sale of their home can be both rewarding and lucrative. Exit Realty’s revolutionary compensation model, training, and technology that provides you with the tools you need to start and build your successful real estate career. Call me today, Robyn Collins, R – O – B – Y – N Collins with Red Robin Homes at 843-557-5003. Again, that’s 843-557-5003 or visit us at redrobinhomes.com/joinexit and make your exit today
CORWYN:
Welcome to another fabulous episode of Exit Strategies radio show. Hey, I am your host. Yes, that is me, Corwyn J. Melette, broker and owner of Exit Realty Lowcountry Group in beautiful North Charleston, South Carolina. If you are listening to this show for the first time, you, sir, or ma’am, are in for a treat because our mission is very simple. That is to empower our community through real estate education and financial literacy. We are legacy building. That is what we do. So, guys, look, I want to give a quick shout out to everyone who listens to us, again, from the coast all the way into Monkey’s Corner. Sometimes y’all lose the signal when y’all get out there past day, right? I’ve been saying Stevens and Bono, but we love you guys out there because you guys tune in faithfully and listen to us every week. I am so humbled, so honored to be able to share this content and this information with you all. For our listeners that tune in on our podcast, that’s on our website, whatever application you’re on today, guys, I want you to buckle in as well because we have a fabulous show. Now, for our local listeners, guys, look, we talk about this stuff every now and again, but I want you to know that today’s guests, I want y’all to get… Look, if you got family property, okay? Because you know we got it, right? You got family property, I want you to go right now, I want you to call your mom and them, and I want you to tell mom and them, I say, hey, turn on the radio and get a piece of paper and pencil or pen and let’s start taking notes because today we have none other than Eugene Gershman with us. Now, Eugene, look, hey, he’s the man, but I’m going to tell you why he’s the man. He’s with giscompanies.co. He is the person to talk to when you want to introduce the conversation about developing your own property. His mantra is don’t sell your land, develop it. And I’m so humbled to have him here on the show with us today. Eugene, how are you doing today?
EUGENE:
Excellent. Excellent, Corwyn. Pleasure being here. Thanks for having me. That’s an awesome intro. Love it.
CORWYN:
Thank you. Thank you. Look here, just so you know, I’m available for hire. So, Eugene, you got a heck of a resume and obviously we’ll touch on some points of it, but if you don’t mind, for our listeners, high-level overview, who you are and what it is that you do.
EUGENE:
Sure. So, I’m a real estate developer, grew up in a construction family. My dad was a builder and he wanted me to follow in his footsteps and I hated construction. I got my degree in economics and I started working at this little investment firm doing retirement plans. And I got bored, went back, got my MBA, still not wanting to do construction. And then my last year of my MBA, my dad calls me and he’s, listen, I’ve got this deal, but I don’t really know the numbers that well. You kind of know the numbers better than I do. Why don’t you take a look at the numbers? I’m like, all right, fine. Send it to me. So, I look at the numbers, call back. I’m like, yeah, it looks good. It looks interesting. He’s awesome. Awesome. Well, look, I’ve got this meeting coming up with these potential partners. And since the numbers, do you mind joining me at the meeting? So, one thing after another, he lured me into this family business. And the last thing he told me after a series of meetings with these partners, he’s like, man, only I wish I had somebody that I could trust. Fine, I got it. So, that was over 20 years ago. I joined the family business and I still didn’t want to be a builder. And so, we pivoted the company a little bit and went into development. And as we went into development, we started doing some single family projects. We started developing some multifamily projects, mostly around here, Seattle area. The market crashed in 2008, 2009. And so, we’ve been trying to pivot, figure out how to do things. We were scared buying new properties, buying new land. And the first deal that my dad lured me into the business with was a partnership with folks that had the property and they wanted to develop it. So, from there, this business model evolved. And we said, look, we could keep buying properties and developing them ourselves. And we could do so much because we’re still a fairly small family business. Or we could partner with folks that have the land and make that the business model. So, that’s exactly what happened. This way, it allows us to help folks go through the entitlement process, figure out the development path. And we focus on residential, multifamily, or single family. So, we’ve done high-end homes, we’ve done townhouses, we’ve done apartments, we’ve done condominiums. That’s what we know. Not that I wouldn’t be able to develop an office building. Nobody wants to develop office buildings anymore. But in theory, I could probably figure it out. But our focus has been on residential. So, every time we talk to folks, a lot of times our phone rings because somebody went down the path of development and couldn’t get the financing. They had enough money to hire the architect and a couple of engineers, and then they are getting close to getting their permit. And they call the bank, and the bank says, you need more equity, or you don’t have any experience, or what the hell are you doing trying to develop a property if you’ve never done it before? So, these are a lot of phone calls that we get. Once in a while, we actually start developing the project from a complete clean slate. Those are the most fun projects. I love that because we get to figure out, we get to do the research, we get to do everything the right way, as I like to describe. But yeah, that’s been the evolution of the business. Recently, over the last several months, we started this educational, promotional thing where we have so many conversations with our potential clients or partners, if you will. We do form partnerships about what development is that we decided, why don’t we just put all of this information out there on the internet for folks to learn from? And if somebody wants to do it themselves, great. I’d love to share the knowledge that I’ve collated over the last 20 years. And by no means, I know everything. I know a little bit more than folks that haven’t done it before. Sometimes it seems easy. And I hear this question or comment a lot. Well, why can’t I just hire an architect and hire a contractor, and they’ll build me what’s been designed, and what’s the big deal? There’s a little bit more to it. But so, here we are, hoping to teach, educate, provide as much value as possible. And if somebody wants to partner with us, we’re happy to work together.
CORWYN:
So, you guys started from, and for our listeners, guys, let’s for a moment place this in context, and let’s get around to quote unquote, if you will, that meat. Look here, so we’re going to push the mashed potatoes, we’re going to push the peas to the side, and we’re going to get this steak out here on this table and have this conversation. But just so you understand how juicy this steak is, I don’t know how you like it. Some of y’all like them a little done. Some of us like them a little bit wet in the middle. But short version is you started with a two-person team, if you will. You’ve grown this company now to where you guys are doing 30 or more million dollars annually in volume as far as the projects and stuff that you guys are completing.
EUGENE:
That’s right. Yeah. In the beginning, it was just me. Back in 2003, when I started in 04, so we set up the company in 03, in 04, we started building more stuff into it. And then right around that time, I’m trying to remember, 04, 05, my sister joined the company. So it’s a true family business. She got her degree in marketing and also not a builder. That was just us. For the first couple of years, it was just us sitting, sharing the office. It was one room with a view of our next project. That’s how it grew. That’s how it grew.
CORWYN:
So obviously, that is in his feelings because neither one of y’all decided to go into construction. So hopefully, maybe a grand or something to come along and be like, look, that’s what I want to do. What’s also interesting that you mentioned up there without saying it, you guys started basically shortly before the recession. I mean, I got into the business and the industry in 2004. So this is year 20, if you will. When I tell people, I tell them I’m too stupid to leave it. I love what we do over here, but you guys started and weathered that storm as well. So kudos to you because look, we know what some people are going through during that time period and the end result or the way out, if you will, that some people took during that time period. Kudos for you guys for weathering the storm and still pushing along. So I’m going to plug a question in here. Your expansion is now more of a focus on educating others as far as the opportunities they may have. So if someone has maybe, if you will, a potential project or something that they, okay, well, look, I really would like to do this, but I have no idea how to get it done. You guys are now a resource to help people to understand one, if it’s even a viable project and then also the legwork or otherwise giving them insights in what they can do in order to make that potential development into a reality. Does that sound about right?
EUGENE:
That’s right. And going back to the origins and to how we got to doing this and why I think it’s important for folks to realize that there’s a lot more to it than just hiring an architect is I thought this way myself at first. With our first project, we hired an architect and we, as natural to most people, got somebody who was not very expensive. We shopped around and we were happy about it. The guy seemed like he knew what he was doing. Small firm. We’re like, perfect. We don’t need to work with a large firm. This is excellent. We met with the city. The city told us their process, which is a pain in the butt. It’s a multi-layered process. You first have to go through design review approval. Once you get the design review approved, then you can apply for building permits and it’s a multi-permit process. Okay. Not a problem to learn. Anybody can figure that out. The very first thing that happens and that happened to me on that first project, on the first lesson that I learned is a part of the design review process is a public notice. So the city sends out an email to the neighbors saying, hey, by the way, there’s this project happening. I’m like, okay, well, whatever. No big deal. Everybody’s going to be excited about this new project happening. And then the city schedules a public hearing. We’re like, okay, we’re happy to come in and answer questions. I was super relaxed. I wasn’t even planning on talking. The architect was taking the lead on that. We show up there and there’s a mob of 50 people and there happened to be a retirement community a block away and every single grandma and grandpa who had nothing else to do showed up and they were screaming and yelling and stomping and they had nothing positive to say about what we’re proposing. I’m like, what’s happening here? That was my first, you know, somebody took my head and just put me in dirt. Here you go. Here’s your first experience.
CORWYN:
Like look here, somebody just took a dirt pod and just rubbed it in your face. Yeah. And it’s interesting. So for our listeners, guys, I want you all to understand this is very normal. I work with a lot of developers locally and they have these experience. One of them had the experience several months ago on a project they were putting forward that the community came out and was just completely up in arms against it, against creating housing that would essentially be workforce housing to help people that live, work, otherwise serve the community to be able to afford to live there. People literally don’t want this NIMBYs, not in my backyard. I don’t want this in my backyard. So they show up and they protest, they all up in arms about it. So as a developer and as someone who may be thinking about developing their own property, how do you approach that so you can hopefully work to avoid that kind of issue in the future?
EUGENE:
Well, the main thing I think is to release the information early and release it slowly and let people warm up to the idea that something’s happening. The challenge people usually get really scared when something big happens to them very unexpectedly. People don’t like change. It’s the first reaction. Oh my god, what’s happening? No, we got to stop that. And they don’t even realize that it’s actually going to be good. We were dying laughing afterwards. It wasn’t funny at the moment, but a couple of people said, your development is going to drop our property values. We’re all going to lose value because of your construction here. And a couple of days later, we’re like, what are they talking about? Their building is old. Our building is new. We’re going to be selling these new luxury condos for probably triple the price of what they’re going for. Anything that’s going to raise their values. Basic economics doesn’t make sense. That’s how people think. That’s how they react. The main thing is don’t shock them with this big splash, this big announcement. And what usually happens is you apply for a land use permit and typically local newspapers, they monitor that stuff and they pick it up and they write an article. And then inexperienced developers get a phone call from the reporter saying, hey, we just saw the permit application. Would you comment on it? And everybody’s very excited to talk about it because most people who haven’t developed in the past and don’t have experience talking to media, they’re happy to share information and they talk to them. And sometimes press misuses the quotes or takes them out of context and because they like the sensations. Every newspaper, they want that big splash. So they embellish, they make the story more juicy than it really is. And people get scared. So our approach is, listen, first trickle information. Social media is great these days because you can start releasing information. You can start warming people up before it hits the press, before it hits the big announcement. And then a lot of times we do one-on-one meetings with neighbors. We do small group meetings with neighbors. We try to warm them up. It once blew up on my face too. We scheduled a unveiling for the neighbors and booked out this restaurant across the street and invited them and served food and drinks and showed the project. And they were super nice. They ate our food and drank our wine and asked questions. And next day they started writing letters. God, people. So there’s push and pull, but you got to be careful with this. But yeah, the point I’m trying to make is there’s a lot of work that goes in behind the scenes.
CORWYN:
Average consumer, Eugene, doesn’t know that and doesn’t understand that. So oftentimes I’ve heard this often. And so a question as to how do you respond to this? But I’ve heard this a number of times where people say, well, such and such did it. Why can’t I do it? Or what have you? I mean, they have this, maybe in the area where they are, there was another subdivision that was put in, but there’s all kinds of implications on the backend. Density, traffic concerns and all that stuff. So yeah, another vellet might’ve gotten approved and got completed. Now you’re proposing one of similar, greater perhaps size or what have you. What will that to the community? So how do you respond to people with that particular question?
EUGENE:
The main thing is to find out what’s important to these folks. And a lot of times people really don’t mind the finished product so much. What they really don’t like is ongoing construction. That’s really what a lot of folks are upset about because it is a pain in the butt. It’s going to take two years. We’re going to have to close streets. There is going to be an army of construction workers that’s going to need, especially if you’re in the city, they need to park somewhere. There’s not enough parking. So they’re going to take up a lot of street parking and there’s going to be dust and there’s going to be noise and it’s just unpleasant. So you have to warm them up to the idea of, look, it’s inevitable. If we don’t develop this, somebody else will. If we don’t do this now, somebody is going to come in. So if you’re better off, just rip the band-aid and deal with it for the next couple of years. Whatever is coming is going to make this neighborhood better. It’s especially prevalent in the urban environments where a lot of our apartment buildings are in an urban environment. I’ve never seen people come back after the fact and say, this is the most hideous building I’ve ever seen. It’s made the worst impact on this neighborhood. And the people who live there are complete assholes. And we wish it would never happen.I’ve never heard that before. What people usually complain about is the construction process itself. So a lot of education is important. And then bottom line is the values are going to go up. And that’s the biggest selling point is the values are going to go up. Every time we develop a building, we’re looking for ways to improve the neighborhood, to make something. Either the building would stand out, or it would have some public amenities, or it would have, at the city, most municipalities encourage that as well, but have some nice curb appeal, maybe a water feature, maybe new landscaping, things that would improve the neighborhood and would make a difference for not only the local climate, but the environment overall and create something better. So educating the neighbors, educating even the city officials sometimes.
CORWYN:
So what I also heard in there is about getting an understanding about what is going to fit best in the area. Whether you’re, again, if you’re in the city, if you have a lot or a couple of lots, what is going to fit in? I’ve had this conversation recently with a client with a property they own looking to redevelop it, what’s going to fit in, what’s around, what matches the aesthetics of the neighborhood, and what doesn’t. So having that is very important as well. So Eugene, if you don’t mind, give us, like, it sounds, I don’t know how, to me, it sounds a little bit, you know, crass, if you will, but like, what is that like that do not do? You’re thinking about developing a site. What is it that you definitely just initially just you should not be doing on the front end? We’ve talked about going out and hiring people and just thinking you can do stuff, but what really is like that? Definitely don’t do this, because if you do this, then it’s never going to work.
EUGENE:
I would say the main thing is do not assume that it’s going to be easy. It is never easy. That’s the mistake that a lot of people make is even very smart people. I’ve talked to doctors, engineers, like literal rocket scientists, very smart people. They’ve figured out how to launch a space shuttle. That’s how smart people are. And so they’re like, how hard is it to build a freaking building, get a set of plans, and then you hire a guy that knows how to, like, that’s the attitude. And so that’s my first thing is do not assume that it’s easy, because there’s a lot of nuances. There’s a lot of these little things that you just forget to think about. And then number two is never trust your contractor buddy who gives you a price per square foot. That is the most dangerous fear you can make a multi-million dollar bet on. Even if we’re only talking about a couple hundred thousand dollars, it is still the most dangerous figure to make a bet on because cost per square foot, they could range so wildly. And there’s so many things that impact it and multiple different things that people think of when they quote that cost per square foot. For example, your contractor, when they think of the cost per square foot, they might think of the gross cost per square foot. So they take the entire square footage of the building, including your parking, including your hallways, corridors, sometimes the roof deck, if you have a roof deck, sometimes the lobby, things that are typically excluded when you calculate cost per square foot of a house. For example, common house, when we quote square footage, we exclude the size of the garage. One of the projects we built a few years ago was a very nice villa. It had two garages, one was detached, one was attached, total for eight cars. And the client kept talking about the cost per square foot of that house. Well, if you exclude, I forget, 5,000 square feet of the garage space, the house was large enough. But you see how that could skew your per square foot number. And a lot of times that gets missed. So that’s another thing that I would say, just don’t do that. If you want to ballpark the cost of the building, talk to a contractor, give them some information, any information that they could use to ballpark on a high level the cost of construction. Just don’t rely on the cost per square foot. It’s very dangerous.
CORWYN:
So that is very interesting. And that’s a whole nother animal. So Eugene, we definitely going to need to get you back on the show because I got some other questions here that I definitely am poised to ask. But as we wrap up today’s show, if you don’t mind, I want you to do two things. One, I want you to tell our listeners where they can reach you. Let’s start with that. Where can people reach you? What questions? Get in contact with you and your team. So let’s start with that.
EUGENE:
Absolutely. giscompanies.co. That’s our web address. So there’s a form to get in touch with us. There’s a form to sign up for newsletters. Please visit the website. I also have a personal blog, which is privateequity.dev, privateequity.dev. And that’s my blog where I talk about investing in real estate, investing in private equity and everything that has to do with development and construction and investments.
CORWYN:
Awesome. That’s awesome. Awesome. So the next thing I’m going to ask you, I call this kind of like that mic drop. The hindsight, if I could do this thing all over again, what would I have done differently? Question. So to that point, Eugene, if you could, looking back over the years that you invested into this arena, this space, if you had to look back, what would you have done differently that would have you believed substantially further along than what you are now?
EUGENE:
Personally, I think recognizing that experience is built over times and recognizing early on what I don’t know so that I could learn those things. And one of the things that I personally haven’t done very much for the first 15 years of my professional career is building my marketing campaign, if you will, a marketing strategy, contributing to the world of social media, of information and making sure that what I do now or what I do generally is out there and known so that not only it could benefit my business, but so that it could benefit the people that are in my community and educate them. Because what I do is easy to replicate my business model. I’m not building a space shuttle. I’m not building a satellite system. I’m not building. I was just listening to a podcast about Neuralink. Nothing like that. It’s nothing crazy. But what I do could be done by anybody. And what is important for folks to realize is that when they have a piece of property, even if they decide to just exit, sell it, get rid of it, there’s still going to be a pot of cash left over that needs to be invested somewhere. And so what I’m trying to educate people is that you could have your property invested just the same way you could have your cash invested and let it multiply at a better rate. And so that’s what I’m on a mission to do. And that’s why I’m saying don’t sell your land, develop it. It’s just an investment. You can convert your active investment into a passive investment. And there’s multiple tax strategies to be dealt with, but that’s also a conversation for a different show.
CORWYN:
Yeah, definitely. That is awesome. Eugene, I appreciate you taking time out of your business schedule to be on with us today. For our listeners, guys, look, y’all got some great information today. I want you to want to check out the website because, Eugene, I’ve been all over your website. I love it. I love some of the projects and the stuff that you guys have done and are doing. So for our listeners, guys, please take a look because this is how you, quote unquote, change the narrative, how you impact not only you, but your family, quote unquote. This is your legacy piece. So please do not miss the opportunity to strategize, formulate, create, and then manage a different legacy than that what you have thus far. So, Eugene, I want to thank you again from the bottom of my heart, man, for being on the show with us today, for being a part of the Exit Strategies Radio Show family. I really appreciate your time. Thank you very much.
EUGENE:
Thank you for being a great host.
CORWYN:
Awesome. Our listeners, guys, y’all know how I feel. Y’all know what I say. Y’all know I always put the two of those things together and I give it to you this way, which is to tell you I love you. I love you. And we’re going to see you guys out there in those streets.
