How Investor Trust Builds Long-Term Commercial Real Estate Wealth | Tim Galvin

Tim Galvin (00:00)

Relationships are everything, it takes years to build trust with someone and seconds to blow it up and then decades to rebuild it. So trust is everything and you have to be honest, transparent, and forthright. And

Basically development is managing risk. Everything we do is risk. And some people are a lot more risk averse than others. So communication is key and transparency is key.

Joseph Crooms (02:07)

Everyone, welcome to Investor Fuel Real Estate Pros Podcast. And I’m your host, Joseph Crooms and today I’m joined by someone I’ve been looking forward to chatting with. His name is Tim Galvin. He is an investor. He’ll tell you his market that he’s in. He’ll talk about his his risk, what is he gonna level down on.

Tim, glad to have you. Say hello to everyone.

Tim Galvin (02:33)

Hello everybody, and thank you, Joseph. I’m really really happy to be here today.

Joseph Crooms (02:37)

Great. I think our listeners are really going to get take away something from how you’re approaching business. You’re in the the real estate market, you’ve been talking about investors. So let’s dive right into it. So first of all, for people who are not familiar with your world, give us the short version. What’s your main focus these days and what markets are you operating in?

Tim Galvin (03:00)

Right now, our markets are pretty much the Midwest, although we have worked all over the country. Right now we’re focused on the Midwest and basically our office is in Central Ohio, so we’re really focused on that market. But we have two projects we’re winding up in Kentucky right now as well.

Joseph Crooms (03:21)

Tim, exactly what is those projects and let’s and and and explain your niche to everybody.

Tim Galvin (03:25)

Sure. So we are commercial real estate developers and builders. So we do third-party construction and the the two projects in Kentucky were large cross-dock industrial facilities, both for one client, $35 million project on twenty-five acres and a forty-five million dollar project on forty acres, both in Kentucky.

Joseph Crooms (03:54)

Are these from the ground up or was there some construction there? Or tell us about that?

Tim Galvin (04:00)

So these were ground-up construction that we we did for this client. And then, but we also do development. So we also develop and own real estate where we invest, we get investors to invest with us and do all sorts of commercial development. Some multifamily with mixed use, you know, which is really popular. So the multifamily three to five stories with retail on the ground floor.

We’re working on our second one of those this year right now. And then we also have some multifamily in in this market, Central Ohio, there’s a huge demand for multifamily product right now.

Joseph Crooms (04:43)

How recent have you been dealing with the multifamily? You know, is it the last year, last two years?

Tim Galvin (05:39)

So last six years, and we actually have a project right now in process. So we just got our zoning completed the end of June. Zoning was finalized, which we started in November of last year. So it takes a lot of time. You have to be patient. And then we just got our phase one environmental done, which then required a phase two environmental.

Because it was the property is an infill project that at one time was a gas station years and years ago. So it required a phase two, which just got completed last Thursday. And in one of the borings they had some suspected contaminated soil, it’s been sent to the lab. So we’re waiting for the results on that. We may have to do some remediation on the site. So that project is in design.

So we we have the architect and engineering firm are going in design. That process is moving. At the same time we want to don’t want to get too far ahead. If there’s a serious contamination problem, we’ll have to decide whether we can get that dealt with or whether we need to let it go now and not take the risk.

Joseph Crooms (06:56)

Before we tackle that question, about how do you make that decision, what is your volume on I guess is it’s because they’re multifamily dwellings, is do you consider that sorta commercial as well for you guys?

Tim Galvin (07:13)

It is definitely commercial. It falls under the commercial code because of the size of the project.

Joseph Crooms (07:18)

Mhm. And how and what is your volume in the last six years? Where did you where did you start and where are you at now?

Tim Galvin (07:24)

So our yeah, our average volume and it varies year to year because the project sizes can be so large, like the two large projects in Kentucky, but our volume ranges between thirty to fifty million annually.

Joseph Crooms (07:40)

And and and in comparison to build up from the land up, what what is your volume there? You know, how how is that businessman doing?

Tim Galvin (07:49)

That—well, the business has been it’s been steady in Central Ohio, you know, COVID created many issues for us. We had a couple of projects going through COVID, which slowed down. With getting materials was an issue, pricing was an issue, and it’s amazing. The cost of projects from twenty twenty to now is extremely up. Costs are up thirty to forty percent depending on what it is you’re you’re pricing and what what it is that’s happening in the market.

Joseph Crooms (08:24)

What did you learn from COVID?

Tim Galvin (08:28)

One thing we learned from COVID is we could use Zoom and Teams to communicate a lot better. And that really it’s something we moved into a new office in January of 2018. And my daughter was getting ready to buy my company and she said, doggone it, we’re gonna learn how to use these new technology programs. You know, Microsoft Teams had just come out.

And she said, we’re gonna start using that. And we really barely scratched the surface of it in 2018 and 19. But when 2020 hit, we were all fast learners.

Joseph Crooms (09:09)

How is AI affecting your business now?

Tim Galvin (09:12)

AI is gonna affect our business very well, I believe. Our management team uses—we use Claude, we use ChatGPT, and we use Copilot and Google’s Gemini. So our management team’s using all four of those. Our other staff are all using Claude and ChatGPT, but I think it’s gonna affect our business like electricity affected business in the nineteen twenties, nineteen thirties. I think it’s gonna really propel most companies who are willing to embrace it and adopt it. I think it’s gonna propel those companies well into be more efficient into the future.

Joseph Crooms (10:31)

Thank you for sharing that. Love it. What caught my attention by the way you were making decisions on what ’cause you have to deal with the EPA and all those things. What what would make you say yes or no on that project that you were speaking to me about?

Tim Galvin (10:46)

So what’s gonna happen is we’re gonna we’re gonna find out how contaminated the soil is, and we’re probably gonna decide to spend more money to do some investigation. But you know, projects have a limit. We’re gonna offer a return to our investors, and I’m gonna be one of those investors. I am one of those investors now. We’re gonna offer returns to those investors between somewhere between, I don’t know,

20 and 30% total all-in internal rate of return on those investments. And as costs escalate and those numbers start to drop, it’s you have to make the decision that, you know, would would I invest and do this project or should we just lick our wounds, spend what we’ve spent, and move on to the next one where we know we can make that work?

Joseph Crooms (11:41)

How do you satisfy your investors? Do they lose money too? Or when you was talking about the, you know, how you have to relate to them, can you sort of put that in layman terms for me?

Tim Galvin (11:51)

Sure.

So right now I am the only investor. And and until we get this further and where we know we can make the project go, so that this I feel like is the last hurdle for us. If if this environmental thing can be overcome, and there are other ways to overcome it too. Both the City of Columbus, which is where our office is, and the State of Ohio.

They both have EPA funds for these type of infill sites that are available to help clean that up. So if it’s not a catastrophic number, we know there are funds available that will help clean that up. So it won’t affect the returns to our investor. Now it’s going to slow down. It’s going to take time to to get that approved and do that work. So it may slow the project down by two or three months, but it will be worth that time investment to protect the investment.

Joseph Crooms (12:48)

What are you planning on building on that property?

Tim Galvin (12:51)

So on on that property, this is a a neighborhood that is extremely desirable. And we’re gonna build four floors of condos on top of a parking structure, podium construction. And it has one ground floor retail space of about 1800 square feet. So one retail space, which is gonna be actually gonna be a European cafe.

with a small lobby for the condo units. And then there’ll be four floors of condo units above that. And there’s only fifteen residential units and the one commercial unit. So it’s only a sixteen unit project. But the average sales price of those units will all be over a million dollars.

Joseph Crooms (13:40)

Wow. How long would you do you plan on keeping that investment? Forever or

Tim Galvin (13:45)

So this this’ll be a quick turn. So this’ll be three years in and out.

Joseph Crooms (13:52)

Love it. So here’s a good question I think that you may enjoy. What you just shared is not easy waiting, especially for investors. You know, they some investors like to get in and get out. Am I correct in saying that? So but what’s been the key to keeping your machine running smoothly?

Tim Galvin (14:13)

That’s a great question. And and I I think the answer to that is consistency and workflow, right? So not getting distracted by the shiny object, right? So we get often get calls to look at projects that we just we know aren’t up our alley, too either too small or too far away and too small, that we really wouldn’t be financially competitive on and to not get distracted by those things.

So staying focused on our markets, on the projects we know we can do. That’s how we keep things going.

Joseph Crooms (14:51)

I know every operator I know has a moment when things just get real. Maybe a deal that was going well and all of a sudden goes sideways. Or you had to pivot fast? Do you mind sharing one or two of those moments as you can think of

Tim Galvin (15:47)

Sure. So I mean, yeah, I mean it’s development, right? So things things happen that you can’t control. And in that process, there’s actually very little that you can control. So you team with a contractor you can trust, which is actually is us. And part of what makes us unique is because we’re a builder-developer, we’re a builder thinking like an owner.

So we sit in the owner’s seat, we understand how critical the schedule is, right? Time is money, particularly to the owner who’s making, you know, payments on that loan for interest carry and builder’s risk insurance and all the other soft costs that go along with developing a project. If your if your builder falls behind, it’s gonna cost you money.

And it cost the construction company money too. They’ve got a staff of people assigned to the project. Time is money. So when the when the building inspectors hold you up for issues, that time is money. It’s real. Even in the planning process and approvals, when you go through the approval process, that time is money and critical to a deal. So an example of that would be we recently did a self-storage project, which we’ve we’ve done almost two million square feet of self-storage, 6,000 units, 15, 17 projects across the country. We closed on the ground in November of 22 and started our final site planning. We got the zoning approved and closed in November of 22, started our final site plan.

It took thirteen months to get that site plan approved with the county. And in that thirteen months, interest rates went from four and a half percent to eight percent. So by the time we got the site plan approved and we were negotiating with lenders to get the loan, interest rates had gone up three and a half points. Holy cow, the numbers weren’t the same numbers as we started to go into the deal with. And then our construction number was from

Joseph Crooms (17:59)

Yeah.

Tim Galvin (18:09)

2022, which we were holding and planning on. We had a contingency, so we had a little bit of money to cover that. But as that time went on and we got our final approvals, the lending all changed. We had to go out and raise more capital, which we did. And then we finally ended up breaking ground on the project in August of 24. And

Later than we wanted to. We wanted to really break ground in May, so we were out of the weather for concrete by the end of the year. Well, we didn’t start until August, which put us right into one of the worst winters we’ve had here in ten years. So we ended up spending about three hundred thousand dollars more to get the concrete done. Right? Which nobody counted on, no, it was in nobody’s budget. So anyway, so we we went back to the lender to try to work that out with them and and of course they did work it out with us. There was some room in the appraisal. But those are the kind of issues in development that you can’t possibly predict as it’s a it’s a moving, it’s a fluid process and there’s a million puzzle pieces and you’re shifting things around to make them fit.

Joseph Crooms (19:26)

As a a developer, and and let’s stay on that piece of property, how did that affect affect your return on investment? How long or did it take?

Tim Galvin (19:38)

It doesn’t really affect it because that this one will be a little longer term hold and our investors knew that going in. And in fact, it’s a it’s a project where we will either refinance and return the capital to all the investors, including me, or we will sell it to probably a third-party real estate investment trust that manages storage facilities.

Joseph Crooms (20:07)

Thank you for sharing that. So that’s the kind of stuff people don’t talk about too much, Tim. Thank you for sharing that story. And honestly, it’s what separates the folks who are just dabbling from the ones who stayed in the game long term and you are a long term player. Let me ask you this. What do you focus on solving or scaling next? What’s your next real goal?

Tim Galvin (20:30)

So our our next real goal is there there’s again Central Ohio has drawn some of the largest companies in the world to come here and build move their offices, build you know, we have the big Intel chip plant here. And then there’s probably a couple dozen suppliers to Intel that are now filtering into the market building facilities. All those facilities have employees that need housing. So all of a sudden

We’re about twenty to thirty thousand units a year short in housing units in Central Ohio. And I think our population now is about two point three million people in the in the in the market, Central Ohio. And by twenty thirty it’s gonna be three million. So someone’s got to provide a place for all those people to live. And so a lot of developers are focusing more on multifamily and we are as well.

Joseph Crooms (21:33)

What type of are you gonna build more condos? What do you think would be more advantageous to serve that population rush?

Tim Galvin (21:41)

Yeah, so condos are are less of what we desire to build. I mean, they are quick in and out. And we’ve actually, you know, everybody has different investment goals, right? Some people want to invest and turn their money in two to three years. Some people want to put their money in and turn it in one to two years. And then there are other families, I’ll say, and other people who want to put it in and they want mailbox money. They don’t ever necessarily want it back right away, right? They want the long-term hold and the potential future way upside, right? So as the rents increase and the value increases, they may be looking for a 10, 15, or 20-year return. So it really does depend on your individual goal. So and for us, the development process is so complicated and hard that.

When we look at doing a condo project, the the only reason we’re doing this one is because as I said, it it’s it’s one of the hottest corners in Central Ohio. It’s at the corner of Grandview Avenue and Third Avenue. And those units will all sell for well over a million dollars. So the upside there is good enough to do a condo project, but the effort to get the development done is so difficult that you hate to spend three or four years creating a valuable asset and then selling it. Right? So we’re focused more on the multifamily longer holds, which investors, you know, will have to to understand that that that’s what we’re doing. And we’ll explain that in our private placement memorandum, right? They’ll know they’ll know all of that. So it just depends on what the the individual investors’ goals are, whether or not that that’s a fit for them because those apartment projects we’re hoping to be longer holds.

Joseph Crooms (23:45)

Appreciate that, Tim. Tim Tim, can you ’cause we we’re coming down to the why, but I think this is a important question. What are what’s been the biggest difference in relationship building and can you tell me what relationships are priority for you? And you’re in

Tim Galvin (24:03)

Yeah. So and and that that’s a great question too, because for me, relationships are everything, right? It it takes years to build trust with someone and seconds to blow it up and then decades to rebuild it. So trust is everything and you have to be honest, transparent, and forthright. And

Basically development is managing risk. Everything we do is risk. And some people are a lot more risk averse than others. So communication is key and transparency is key.

Joseph Crooms (24:45)

And and and tell me some of those what are those priority relationships that you make sure to to to you know to manage and to keep?

Tim Galvin (24:57)

So, well, we have relationships with clients who are owners of real estate, right, that we build for. And staying in touch with those people, asking for feedback from those people we do often. And then our investors too. In fact, we we just closed on a medical building that we developed in twenty twenty and we sold that because of the interest rate adjustment after our five years dried up the cash flow. I mean it was cash flowing great. The interest rate adjusted three and a half points and all of a sudden the cash flow stopped. And I reached out to a handful of the investors and said, hey, we can hold on to this building or we could probably sell it and and return your capital in a little bit or because right now that money’s not working for you. It’s just sitting idle. And

So we agreed that it was better to sell that asset. It wasn’t better for my company because we managed it. So we were getting income from it. But but looking at it, with a fiduciary responsibility to our investors, it made more sense to me to sell the asset, return their capital in a little bit, and let them take that money, put it somewhere else and let it work for them. And I think some of those people may invest in this condo project that we’re doing.

Joseph Crooms (26:22)

Yeah, so that transparent and honest relationship bridges into where, Tim. When you say they may invest into this. What what what kind of bridge does that build?

Tim Galvin (26:40)

It’s an incredible bridge of trust, right?

Joseph Crooms (26:46)

You can go back to them any time because you did the front work and the honest work. Is that your mindset when you

Tim Galvin (26:50)

Correct.

That’s the mindset. Absolutely.

Joseph Crooms (26:57)

Right. So you know relationships are everything in this space. All right, before we wrap up, if someone wanted to reach out to you, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way to reach you? You can repeat it twice.

Tim Galvin (27:13)

Sure. The best way to reach me is probably through my email, just because on the phone, I don’t answer my phone unless I know the contact. Because I get probably 30 marketing calls a day. So I just don’t answer my phone unless the contact is in my phone. Email is best because again I have AI help me manage that to respond to emails that need a response too.

And my email address is simple. It’s my first name and my last name, tim.galvin@brextonllc.com. So that’s our company’s name, Brexton. And yeah, that’s the easiest way to get a hold of me.

Joseph Crooms (28:00)

And somebody’s probably fumbling a pen and looking for something, say, Man, I gotta get this guy. Give it to him one more time, boys.

Tim Galvin (28:06)

Sure. It’s Tim, T-I-M, dot Galvin, G-A-L-V-I-N, at Brexton, B-R-E-X-T-O-N-L-L-C, dot com.

Joseph Crooms (28:21)

Thank you so much. Perfect. Well listen, I appreciate your time, your story, your philosophy, your honesty, and we need more people in in in in this space who are doing it right, doing it the right way. And thanks again for being here, Tim. I really mean that. And for those of you tuning in to I know you got value from hearing Tim speak today. Make sure you subscribe. We got more conversations coming from speakers just like Tim. So who are out there building real business but are trying to help communities in the future, but also helping investors even today. So we’ll see you on the next episode of Investor Fuel Real Estate Pros Podcast.