The Ins and Outs of Ground-Up Development with Andrew Brewer


Real estate development projects can offer lucrative investment opportunities, but they also come with unique challenges and risks. In a recent episode of the Passive Investing from Left Field podcast, host Jim Pfeifer interviewed Andrew Brewer, founder and managing partner of Iron Gall Investments and Distance 3 Development, to gain valuable insights into investing in ground-up real estate development deals as a passive investor or limited partner (LP). With his extensive experience in development projects across various asset classes, Andrew shared practical advice on vetting operators, evaluating deals, and structuring investments for successful outcomes.

Vetting the Operator: Experience and Aligned Incentives

One of the most critical aspects of investing in development deals is thoroughly vetting the operator or sponsor. Andrew emphasizes the importance of examining the operator’s track record by inquiring about their past projects, both those they have sponsored themselves and those they have been involved with in other capacities. Investors should also consider the operator’s educational background and professional experience, as these factors can shed light on their qualifications and preparedness for undertaking development projects.

In addition to assessing the operator’s experience, Andrew recommends understanding how they are compensated. He prefers a compensation model where the operator doesn’t receive substantial fees upfront; instead, their payment is tied to the project’s success. This approach ensures that the operator’s interests are aligned with those of the passive investors, as they only get paid if the project generates returns.

Andrew’s preference is to structure deals where he doesn’t take any development fees during the project. Instead, he receives a share of the profits once the project is completed and the investors have received their preferred return and capital back. This model incentivizes the operator to work diligently to ensure the project’s success, as their compensation depends on delivering positive outcomes for the investors.

Evaluating Partners and Subcontractors

In development deals, the operator typically works with various partners and subcontractors, such as architects, engineers, contractors, and consultants. Andrew advises investors to inquire about the qualifications and reputations of these partners, as their performance can significantly impact the project’s outcome.

He recommends working with larger, well-established firms with sufficient resources and backup personnel, as opposed to smaller, one-person operations. Larger firms can provide continuity and mitigate the risk of delays or setbacks due to unforeseen circumstances affecting individual subcontractors. For instance, if a key engineer or architect faces an unexpected situation, a larger firm can seamlessly transition the project to another qualified professional, ensuring minimal disruption.

Andrew cites examples of reputable firms he has worked with, such as WGI and Pape Dawson, which investors can easily research online to validate their reputations and business standing.

Analyzing the Deal and Project Timeline

When evaluating a specific development deal, investors should thoroughly understand the status of the land, including zoning, entitlements, and access to utilities. Andrew emphasizes the importance of a realistic project timeline that accounts for potential delays and includes contingency buffers.

He explains that every project he has worked on has experienced delays, often due to factors beyond the operator’s control, such as city approval processes, council meetings, or additional rounds of comments from regulatory bodies. To mitigate this risk, Andrew recommends building a substantial contingency timeline, typically doubling the estimated timeline under ideal conditions.

For example, if a multifamily development project in Texas is expected to take 12-14 months for entitlements under perfect circumstances, Andrew would set a two-year timeline to account for potential delays. This approach ensures that the investor returns are calculated based on the contingency timeline, providing a more realistic and conservative estimate.

In addition to the timeline, Andrew also recommends including contingency buffers in the project budget. Unforeseen expenses are common in development projects, and having a financial cushion helps mitigate the impact of cost overruns on investor returns.

Higher Return Potential, Higher Risk 

Due to the increased risks associated with development deals, Andrew typically targets a higher internal rate of return (IRR) for these projects compared to value-add cash flow deals. For development deals, he aims for an IRR of 20-23% for passive investors, while for cash flow deals, he targets an IRR of 16-20%.

The higher potential returns compensate for the additional risks involved, such as entitlement challenges, construction delays, and market fluctuations that can impact the viability of the completed project. By setting appropriate return expectations, investors can make informed decisions about whether the risk-return profile aligns with their investment goals and risk tolerance.

Exiting in Phases: Mitigating Risk and Providing Liquidity

Andrew suggests structuring development deals in phases, with planned exit points for investors. This approach allows investors to realize returns and potentially reinvest in subsequent phases or exit the deal altogether if desired. It also incentivizes the operator to perform well in each phase to secure capital for the next phase.

By breaking down a larger development project into smaller phases, such as land acquisition and entitlement, construction, and stabilization, investors can mitigate risk and gain liquidity at predetermined intervals. For example, after the land acquisition and entitlement phase, investors may have the opportunity to receive a portion of their investment back or reinvest in the construction phase.

This phased approach addresses several challenges associated with development deals. First, it provides investors with pre-planned exit points, allowing them to align their investment horizons with their personal goals and circumstances. If an investor’s financial situation changes or they become uncomfortable with the development risk, they can exit the deal at the end of a phase without being locked in for the entire project duration.

Additionally, phased exits incentivize the operator to perform well in each phase, as they need to secure capital from existing or new investors for subsequent phases. This alignment of interests further mitigates risk for passive investors.

Investing in real estate development deals can offer attractive returns but also involves unique risks compared to cash flow investments. Andrew Brewer’s insights from his extensive experience as a developer and operator provide valuable guidance for passive investors navigating the complexities of these deals.

By thoroughly vetting the operator’s track record, experience, and compensation structure, evaluating the qualifications of partners and subcontractors, conducting thorough due diligence on the project timeline and budget, and structuring investments with appropriate exit strategies, investors can make informed decisions and potentially diversify their real estate portfolios with development opportunities.

Ultimately, successful development investing requires a deep understanding of the risks involved and a partnership with an experienced, well-aligned operator who prioritizes investor interests and transparently communicates the project’s challenges and milestones.

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This article is for educational purposes only and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision. All investments involve the risk of loss, including the loss of principal. Past performance, and any performance results reflected in this article, is not an indication of future results.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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