Real Estate Investing School Podcast

Episode 152 – REAL DEAL: The Guide to Urban Redevelopment with Katie Neason

Date: April 25, 2024
Host: Brody Fawcett
Guest: Katie Neason (@katiedevelops)
Main Topic: Redevelopment in Urban Real Estate – Process, Lessons, and Real-World Example

Overview

This episode of the Real Estate Investing School Podcast features urban redevelopment expert Katie Neason. Katie and her mother are renowned developers in downtown Bryan, Texas. The discussion focuses on a recent redevelopment project—an 18-unit boutique apartment building—and unpacks the intricate, creative, and strategic approaches that drive successful urban revitalization. Listeners gain actionable insights on zoning, vision development, financing, city collaboration, and tailoring deals to unique neighborhood environments.

Key Discussion Points & Insights

1. Redevelopment Defined & Project Introduction

• Redevelopment means working with land/infrastructure that has already been developed to some capacity (02:25).
  • “Redevelopment. That means this is not virgin land. This is land that has utilities, infrastructure brought to it and previously developed to some capacity.” – Katie [02:25]
• Project focus: 18-unit boutique apartments in downtown Bryan, Texas. Two-thirds of the units are studio lofts; the rest are “urban two bedrooms,” designed for modern, flexible living [02:59].
  • “We had this idea to make it look like all the apartments had front porches…” – Katie [09:36]

2. Unique Approach & Strategic Vision

• Katie and her mom/business partner are the largest developers in downtown Bryan (05:54).
• The redevelopment was sparked by a failed restaurant project. Katie and her mom negotiated to buy most of the block from the original entrepreneur—showing the power of building relationships and having a long-term community vision [05:54–07:00].
• The guiding question for urban revitalization: "How many heads and beds can we put into downtown so the retail shops and restaurants can survive?" [07:22]
  • “For any revitalizing downtown to survive, they need lots of heads and beds. That’s our goal.” – Katie [07:30]
• Design focus: Creating buildings that will be loved for decades, aiming for long-term community value rather than temporary trends [09:00].

3. The City Process: Zoning, Vision, and Winning Approval

• Zoning & rezoning: The land’s old zoning did not match their vision; Katie took the risk only after serious research and city engagement:
  • Start by reading the city’s Comprehensive Plan.
  • Meet with city staff to confirm support for your vision—don’t just ask what’s allowed but “sell” the city on your vision [11:43].
  • Confirm the rezoning process: city staff support isn’t enough—approval goes to Planning & Zoning, and then City Council [12:22].
  • Quote: “The most important thing is that you have a vision, you understand what the city wants and then you go and present that vision to them. Don't ask them what you can do with the property, sell them on your vision and you'll have the most success that way.” – Katie [13:22]

Tips for Zoning Success

• Never assume rezoning is guaranteed—have a Plan B [12:38].
• Use city plans and vision to demonstrate alignment.
• Present professional renderings and well-developed concepts to city officials—tools like Fiverr can help [19:57].
• Know that approval depends on both property location and political support [19:49].
  • “Not only is it my vision, but I share with them how my vision aligns with their vision.” – Katie [19:53]

4. Market Knowledge Drives Project Feasibility

• Deep market knowledge—knowing when leases typically turn over, community needs, and local policies—gives an inside edge [31:53].
  • Timing new apartments with student housing demand cycles avoids costly vacancies.
  • “The main thing is: just know your market and know your product.” – Katie [34:14]
• Working in your backyard has unique advantages: you can see improvements daily and understand hyperlocal details.

5. Financing & Deal Structure

• Land purchased with cash for one parcel and seller-financed for the second (keeping upfront cost low) [24:02].
• Construction cost: ~$1.7–1.8M, raised ~$700K in equity with 75% LTV construction loan. The bank required an extra 5% cash as collateral.
  • When debt coverage ratios improve, the cash collateral is released, adding flexibility [26:14].
• Balanced risk with fixed construction loan interest rate (secured before rates climbed) and permanent long-term financing lined up before breaking ground [28:29–31:11].
• Use a commercial bank that can handle both construction and permanent loans; avoid hard money lenders for development holds.
  • “You can always refinance later. But you cannot always put a loan in place.” – Katie [28:55]

Practical Build Details

• When replatting, give each building its own lot, for future flexibility (easier sales/divestment) [25:05].
• Salvage historic materials (hardware, flooring, doors) when tearing down older homes—adds value and preserves character [22:17].

6. Value of Vision and Creative Borrowing

• Vision doesn’t mean inventing from scratch—Katie draws inspiration from travels, online research, and observing other cities [14:51].
  • “Almost all of my ideas and vision come from recreating something else I’ve seen somewhere else.” – Katie [15:07]
• Tools like Pinterest are helpful for design inspiration and planning [16:46–17:22].

7. Lessons Learned, Challenges & Advice

• Know your market’s lease patterns (in college towns: leases renew in summer).
• Lease strategically—offer custom-length leases (e.g., 14 or 18 months) to align turnovers with market demand [31:53–34:59].
• Main redevelopment challenges:
  • More complex than standard investing; fewer people to learn from.
  • Recommend: find mentors, apprenticeships, and network with doers [35:23].
  • “Get close to the person who makes the next step feel easy.” – Katie [35:23]

Notable Quotes & Memorable Moments

• On city strategy:
  “Don’t ask them what you can do with the property. Sell them on your vision.” – Katie [00:00, 13:22]

• On community-focused design:
  “Our goal is: when the next generation of investors comes in and gets so lucky to get their hands on our real estate, they’re happy. Not because they get to scrape that piece of junk and build something new.” – Katie [09:00]

• On challenges of redevelopment:
  “The only thing that’s super scary and risky about development is not knowing what you’re doing. Once you know, you can minimize your risk.” – Katie [33:46]

• On market timing:
  “Better to come on early than to come on late.” – Katie [32:41]

• On vision and copying/borrowing:
  “I spend lots of time going to cool little old downtowns and seeing what they have in bigger downtowns … and just observing my surroundings and going, how can we recreate this where we live?” – Katie [15:07]

• Host's summary:
  “That’s real estate investing in a nutshell: I see it as this hidden potential. You see it as this. So you’re not asking for the same value that I see it as.” – Brody [23:38]

Important Timestamps

• [02:25] Redevelopment defined
• [02:59] Project summary—18-unit boutique apartments
• [04:04] Location & downtown Bryan context
• [05:54] Deal origin: buying from local entrepreneur
• [07:00] Negotiations, vision, and land assembly
• [09:00] Design philosophy—front porch concept
• [11:43] Zoning conversations, comprehensive plan research, city relationship strategy
• [14:51] Finding and developing vision
• [19:49] Social media haters and place-specific zoning realities
• [22:17] Dealing with historic homes and hidden value in structures
• [24:02] Financing structure—cash and seller finance
• [26:14] Bank loan terms, construction risk mitigation
• [28:55] Locking in construction/perm financing before building
• [31:53] Lease-up timing and knowing your market
• [33:46] Managing project turnover and product risk
• [35:23] Final advice: mentorship, networking, and resources

Final Advice & Resources

• If you want to get into redevelopment:

  • Seek mentors, network, apprentice with experienced developers.
  • Start by meeting city staff and understanding their vision.
  • Don’t jump into complex projects without support and knowledge.
  • Surround yourself with people who make the next step feel easy [35:23].

• Follow Katie on Instagram:

  • @katiedevelops (one “i”)
  • Watch out for imposters (no cryptocurrency sales, no blue check = NOT Katie) [36:33].

Summary Notes by Real Estate Investing School Podcast
This episode is ideal for investors wanting to up-level from single-family or flippers to higher-impact, long-term redevelopment work. Katie’s practical, candid breakdown offers inspiration and step-by-step know-how for making a lasting community difference while minimizing risk and maximizing value.