How to Turn Raw Land Into Cash-Flowing Industrial Real Estate

Aleksander Pedersen (00:00)

In a tough market, you just need more deal flow because it’s harder to close the deals. And in many instances, sellers are tougher to work with. In some instances, they have they have problems, right? That you can go in and solve. And that’s really what our business is, right? So land is a very illiquid asset. That means that one of the the main

problems that we solve in terms of land is to make it liquid, right? It means that we can either sell it on the market or we can develop it, make it into a building that cash flows. So we really need to transform the land from sort of a a dead asset or perhaps not even an asset and and into something that generates a substantial cash flow.

Freddie Steen (02:16)

Hey everyone, welcome to Real Estate Pros Investor Fuel Podcast. I’m your host, Freddie, and today I’m joined by someone I’ve been looking forward to chatting with. Aleksander Pedersen, DFW’s finest who’s been making serious moves in the land contract niche kind of space. Aleksander, glad to have you here. Can I call you Aleks? Very.

Aleksander Pedersen (02:39)

Absolutely. Absolutely. Thank you for

Freddie Steen (02:41)

Well, great, great. I think our listeners are really going to take something away from how you’re approaching land contracts, land development, and how you’re scaling, building teams and scaling as well. So let’s dive in. So first off, for people who may not be familiar with your world, give us the short version. What’s your main focus these days, Aleks? And what markets are you operating in?

Aleksander Pedersen (03:06)

So my main focus is industrial development. I find the land, structure the capital, and put together the land and basically develop it so it’s ready as a product, right? So then we bring in equity partners and start developing. And we focus mainly on DFW. I work at a brokerage firm called Paladin Partners. we also do development.

It’s a boot boutique firm here in DFW, and we’re really you know we’re really enjoying it. We’re doing some pretty big deals right now. We have about 2.2 million square feet in our pipeline, building build building building footage, and we see the market moving and it’s it’s it’s pretty good here. I mean, some of the

Some of the challenges we’ve had here recently has basically been, you know, market sentiment. So people are ⁓ let’s say psychologically, the market psychology is not ideal, at least from the majority’s perspective. And that’s usually where my opportunity lies, right? So I enjoy a market where you can get a great deal and you can do that when the market is tough, right?

So so that’s that’s what I’m working on right now. And

Yeah.

Freddie Steen (04:23)

I love I I love it. I love it. I you know, Aleks, what caught my attention about you was definitely the way that you’ve been able to handle this land as an asset, transforming these land developments, you know, turning them from night to day and getting them ready to be profitable in multiple markets while still keeping your margin strong. That’s not easy, especially in this climate, or as you say, this sentiment.

regarding real estate. Aleks, what’s been the key to keeping that machine running smoothly?

Aleksander Pedersen (04:58)

it it’s been deal flow. It’s really been creating a great deal flow. So

in a tough market, you just need more deal flow because it’s harder to close the deals. And in many instances, sellers are tougher to work with. In some instances, they have they have problems, right? That you can go in and solve. And that’s really what our business is, right? So land is a very illiquid asset. That means that one of the the main

problems that we solve in terms of land is to make it liquid, right? It means that we can either sell it on the market or we can develop it, make it into a building that cash flows. So we really need to transform the land from sort of a a dead asset or perhaps not even an asset and and into something that generates a substantial cash flow.

That’s ⁓ that’s really what we’re in the business of.

Freddie Steen (06:37)

Aleks, you just said something that was key. Can you dig in for our audience right now about making land liquid?

Aleksander Pedersen (06:46)

Yeah, so there’s many, many ways to do it. And you could say, in a sense, land is already liquid. Let’s say a farmer owns it, he harvests his crops and sells it every year. There is a cash flow there, right? But to the broader market, to bigger capital ⁓ stakeholders, that is not considered an interesting liquidity. That’s not it considered an interesting cash flow, right? It’s just not big enough and the cash is not flowing through fast enough, right?

So you would rather have a faster and bigger cash flow, almost like a funnel or ⁓ a pipe where water flows through, right? And because that’s essentially what makes money valuable. Money is only valuable when it changes hands, right? So we want more money to change hands as much as possible and as often as possible. And so there’s several ways to make land liquid. One way is

I know some people they go out, they find smaller pieces of land, rural land, and ⁓ they either buy it through seller finance, right? Where basically the owner keeps ownership of it, but they have almost like an option to buy it within a certain time period at a certain price, and they pay a yearly fee for that. Right. Already there you have a cash flow that’s better than what was there, let’s say it was a forest or some kind of desolate.

⁓ area ⁓ already there you you have a a pretty decent cash flow especially for the owner so the next step would be what we’re working with is on an institutional scale we find the land we make sure the zoning the entitlement and everything is ready we do all the pre-development usually there’s a pursuit cost in that right so we put down some money to make sure the land can be developed we can put a building on it

And we can start renting out that building to a tenant, a big, maybe a manufacturing firm, a distribution firm, logistics, right? So so that’s what we do. We do the pre-development, we get equity partners in to take some of the cost and some of the risk, and then we start building a building. And ⁓ industrial buildings are great for for cash flow. So essentially we’ve expanded the pipe and we make sure there’s

money flowing through it as rent comes in every ⁓ month or every year, right? So so we we create a more frequent cash flow and a bigger cash flow.

Freddie Steen (09:55)

Aleks, now every operator that I know has a moment where things got real. Maybe a deal that went sideways or a time that had that you had to pivot fast. You mind sharing just one of those for you?

Aleksander Pedersen (10:09)

Yeah. that was when I worked in Norway. So I came to DFW about a year ago, almost a year ago, did my graduate degree here. And before that, I did commercial land development for six years, mainly focusing on industrial. But the way I came sort of stumbled into industrial was through the process you’re mentioning. So I was doing everything I could. I said yes to everything, everything that had anything to do.

with buildings or land, ⁓ or real estate really, right? and that was a mistake. I mean, in hindsight, it was a mistake, right? So during the process, obviously I learned a lot. I tried a lot of things, but I just stretched myself too thin and I couldn’t really provide my clients and my partners the expertise that deep down I actually had, but also what they needed, right?

So I tried to do everything at once, tried to make everything work and make everybody happy. And th that that makes everybody equally sad, I would say. So I started focusing on land and specifically land for industrial development. And that’s where I really could leverage all the expertise I had as an architect through 15 years, urban designer and urban planner, and and sort of use

All this all this experience and knowledge that I had built up over the years, especially as I became older, where I worked with Soning and entitlement and more of the sort of legal framework and negotiations with the city, right? Because those are really tough in Norway. nothing I don’t want to say anything bad, but that’s just the truth, okay?

Freddie Steen (11:55)

Well, look, Aleks, that’s the kind of stuff that people don’t talk about enough. As far as honestly, it’s what separates the folks who just dabble from the ones who stay in the game long term. Let me ask you this. What are you most focused on solving or scaling next? What’s the next real goal for Aleks?

Aleksander Pedersen (12:17)

I think the next real goal is to make sure that I tie myself into a a group and a team and a broader sort of a broader network where where we get more and bigger buildings off the ground, right? Exactly. So I’ve I’ve I’ve been working

Freddie Steen (12:33)

Explain that.

More

and bigger. Explain that.

Aleksander Pedersen (12:37)

Well, everything is more and bigger here in Texas, right? That’s one of the sort of beauties that of of Texas and of the state of the United States, right? And so I worked a lot with, as I mentioned in Norway, I worked a lot with cama commercial land development. And it became a niche and a specialized service I would provide. And I think to put that into a context where the market is open.

for the ideas I have, the skills I have, and where I can really put those into reality. That that is ⁓ that is my goal. And that requires other people, right? So here I’m working at Paladin Partners where I can do that. This is a great platform to to make that seed grow. And it’s a great market to make it happen. And ⁓ and and on a larger scale, right? So it’s a bit it’s about 10x over here, I would say.

the building size, land size, and the speed is one tenth, right? I mean it’s or the other way around, right? It’s ten times faster here.

Freddie Steen (13:43)

Aleks, that’s big. I mean, especially one as a kid who spent his summers off South Denley Drive in Dallas, ⁓ many, many eons ago. I I went to Dallas every summer as a kid. But at DFW, I’m very familiar with that in Oak Cliff. And especially as far as you’re concerned, when you’ve already got this great traction with your land contracts and how you’re turning lands into liquid, that next move can either compound things or create chaos.

depending on how you play it. Now, I know a lot of people listening are either earlier in their journey or looking to level up. And I think they benefit from hearing this. When it comes to building relationships and growing your network, what’s made the biggest difference for you?

Aleksander Pedersen (15:10)

it’s just been being excited about what what I do. I mean, people people can tell. Like the I I changed my framework from you know everybody says you have to build your network, you have to do networking, right? And I said, Yeah, but what is networking? I mean, you’re actually making friends here, right? So go out, make friends and

Start playing. It’s just like in the kindergarten, right? You go out, you find friends, and you start a game. Fundamentally, that’s what we do, but we do it on a larger scale with bigger consequences, and we’re all adults, right? So that just changes sort of the mindset from I have to go out and network. I have to find people that I can get something from. And instead find a friend who you enjoy spending time with and give them all the value you can give them, right? Have a great time.

Have fun and make you know, make friends.

Freddie Steen (16:02)

Yeah. Yeah, you can’t fake that. relationships are everything in this space. All right. Before we wrap, Aleks, if someone wanted to reach out, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

Aleksander Pedersen (16:20)

They can find me on LinkedIn. So LinkedIn, they can search up Aleksander Borg. Borg is my middle name. Aleksander with K-S. A-L-E-K-S-A-N-D-E-R. So we’ll see, we’ll see how that goes. Everybody struggles with spelling my name, but we’ll see how it goes. And they can go to paladin-partners.com.

Freddie Steen (16:40)

Perfect. Well, listen, I appreciate your time, your story, and your perspective. We need more people in this space who are doing it the right way. Thanks again for being here. And for those of you turn tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming with operators just like Aleks, who are out there building real businesses. We’ll see you on the next episode.