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Real Estate Investing Unscripted - Evan Holladay, LDG Development

“I wanted to do big developments ... where a development can really change the outcome or the future of a neighborhood.”

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Evan Holladay HeadshotThis episode of Real Estate Investing Unscripted we speak with Evan Holladay of LDG Development in Nashville, TN, where he leads a team responsible for $146 million in new construction development of mixed-income housing, and mixed-use communities. Evan reveals the root of his passion for real estate, how he entered the industry at 19, and what continues to drive him every day.

Evan's secret to success? "I basically figured out that this is what I wanted to do and devoted a lot of my free time to working, figuring out the business and putting every ounce of energy I had into to helping out." Listen to the interview below!

 

Matt Rodak:

Welcome everyone to this episode of Real Estate Investing Unscripted. I'm your host, Matt Rodak, founder and CEO of Fund That Flip. I'm super excited today about our guest, Evan Holladay. Evan is a real estate developer with LDG Development down in Nashville, Tennessee. Evan is also a fellow podcaster, and I had the privilege of being on his podcast, Monumental, a very cool show, a couple of weeks back. I’m sure we’ll be talking about that here soon, but first let’s welcome Evan. Evan, welcome to the show.

 

Evan Holladay:

Yeah. Thank you for having me, Matt.


Matt Rodak:

As I always do, I was internet stalking you -- and obviously we talked before -- but I came across your website and I was super interested to have you tell us firsthand how you got into real estate investing. I understand you were more on a path to being a doctor or pre-med, and then somehow pivoted into real estate. We would love to get the full story of how that came to be.

 

Evan Holladay:

Yeah, definitely. It's crazy how it all happens. I was in college and realized very quickly after about two years of science and chemistry classes that it was not for me. I wanted to figure out how to help people and impact other people's lives, but not through medicine. I saw this announcement for a huge, $55-million-dollar student housing mixed-use, retail on the first floor -- they even had a historic component on the backside. I thought, "That is me. This is what I need to be doing." So, I figured out who the developer was for the project, and before they even got it out of the ground, I was calling him nonstop. I need to figure out a way to get myself a job, learn from this guy, and learn what the heck this whole real estate thing is all about. After probably way too many phone calls--

 

Matt Rodak:

Was he taking your phone calls or were you just leaving this guy voicemails?

 

Evan Holladay:

Mainly voicemails. I don't think I actually talked to him until he finally said, "Alright, you need to prove yourself before we'll just hire you. Bring some people out to the groundbreaking and then we'll talk." I ended up rallying some friends, got them all pizza, and in return they helped me pass out flyers to get everybody out to the groundbreaking. We ended up getting a few hundred people out there and that's when he's like, "Okay, this guy is the real deal. He really wants to work for me." So, I ended up getting a job with him and saw that project from construction, working with the commercial tenants and helping get them on board. Helping sign over 350 leases, working with the construction team, and making sure everything was done right. Doing the final walkthroughs and just learning development - and even management - from up to down.

 

That was a huge, changing experience for me that opened my eyes to what I really wanted to do. I wanted to do big developments like these that are going to completely make a difference for -- in this case it was a campus -- but in other cases it will be a community or a neighborhood where a development can really change the outcome or the future of a neighborhood.

 

Matt Rodak:

That's cool. Were you still in school while you were working on this project or was it where you were getting ready to graduate and this was your first post-college job?

 

Evan Holladay:

No, I think I was 19 when I got hired there.

 

Matt Rodak:

So you were in school and doing this in whatever time you had in between school and classes.

 

Evan Holladay:

Yeah, I basically figured out that this is what I wanted to do and devoted a lot of my free time to working there, figuring out the business and putting every ounce of energy I had into to helping out. That in itself lead to -- in our school we had a program for entrepreneurship. So, I got involved in that program and through that, along with a couple other teammates, we all started a real estate development company. It was great because I could take my tangible experience that I'm getting working for this company and then turning it into a startup.

 

We worked with University of Kentucky and their students that were studying architecture were designing these layouts for houseboats. It was basically like a houseboat that they would turn into modular housing. There are all these houseboat manufacturing plants in southeastern Kentucky. It's like the Mecca of houseboat manufacturing. They had lost over 1,100 skilled workers when the housing market crashed. Nobody could buy a houseboat, let alone a house. So, they were looking at ways to put those skilled workers back to work and also provide quality, affordable, and energy efficient housing.

 

So, we worked with those students and were able to get the rights to the plans and say, "Okay, let's take this and let's take it to scale." We had built a few of the single family units and then were like, "Okay, let's do multifamily. Let's really take this up a notch and do urban multifamily development." That's when we entered some business planning competitions and actually won a few of them and thought that maybe we're onto something. We were just doing it for more-or-less a school project at the beginning, and then, "You know what, this could really be a business. This could really be something." So, that's when I started looking for partners, looking for investors, and looking for guys with experience in real estate. That's when I connected with LDG. I've been with LDG for five years now and have been doing sourcing and managing new developments for them for the past five years.

 

Matt Rodak:

That's an awesome story. I love this particular story because I do some mentoring for different startup founders here in New York and elsewhere. I think a big part of being successful and for myself personally -- I'm sure you've seen it too -- is finding other mentors and advisors and just getting people enrolled in your vision. A lot of people always come to me and ask, "How do I get people to help me build what I'm trying to build, do what I'm trying to do, or get into what I'm trying to do?" My response back to them is, "You gotta find a way to give first before you can ask." A lot of times what entrepreneurs say is, "Well, I don't really have anything to give. I'm, new to this industry or I'm new to figuring this out." My response back to them is, "Everybody has something to give."

 

This is a great example of you figuring that out. You're a college kid who probably had very little to offer this real estate developer, but you figured out what he wanted. He wanted people to show up to his groundbreaking. You made it happen and it turned into a full career. So, that's a super cool story of hustling. That's awesome.

 

So you ended up with LDG. What happened to the houseboat thing? Did it grow legs or was it a tough time in the market -- I would imagine -- to get something like that off the ground. Whatever ended up happening to them? I'm curious.

 

Evan Holladay:

We ended up building a few of the single family houses, but when we went to go to the multifamily scale, that's when -- I was leading the team and leading the effort -- and then I saw this opportunity with LDG to learn from guys that, combined with their leadership, had over 100 years of experience in real estate. I thought, "Well, you know what, that may be a little bit better for my growth and really taking my growth to the next level as far as real estate and development." So, it was put on hold. It may make a return at some point. So everybody listening, it may happen soon.

 

 

Matt Rodak:

Modular is hot right now, especially the tiny home and modular combination. You might be onto something there. Now might be the time.

 

Evan Holladay:

Honestly, I've been really interested in following a lot of the groups like Blockable and a few of the other groups out on the west coast that have been really doubling down on that. You mentioned venture capital and startups that they're getting a lot of venture capital money, which is interesting. It's starting to creep its way into real estate.

 

Matt Rodak:

Yeah, for sure. Talk to us a little bit about LDG. What do you guys do? What are you doing down in Nashville? What are you working on right now?

 

Evan Holladay:

LDG is based in Louisville, Kentucky. We were founded in 1994 and we were actually just named -- our specialty is in workforce and affordable housing for families that are earning a living but yet just can't really afford to make ends meet on the current rents that are skyrocketing right now. Our goal and what we strive to do is provide the same quality housing that a family at market rate levels can afford to pay and afford to enjoy, and be able to provide that to families that are working really hard, but aren't making nearly as much money.

 

We do all new construction development. In a lot of our developments we do tax credits or different kinds of creative financing to get it done. I work a lot with cities and states to fill that affordable workforce housing need that they typically always have. So, I've been sourcing deals for them for the past five years. Mainly, my markets that I've been working in are Nashville and surrounding areas, and all of southern Louisiana. So, New Orleans, Baton Rouge, Lafayette, and Lake Charles. We'll come into communities, work with their leadership, work with the mayor's office, work with community development, and find sites for new developments. We typically do 200 plus units, partner with the city and try to figure out a way where we can partner with them on the financing side as well. Then they can either contribute funds or contribute a tax abatement or some other unique financing mechanism that they have a to help make that happen.

 

Matt Rodak:

Got it, that's really cool. It's one part doing good and one part doing cool real estate projects. So, 200 units; that's some larger scale projects. I'm sure you guys have seen some crazy stuff come up as you're working through these developments. As the theme of the show is Real Estate Investing Unscripted, do you have a good example of something that has happened to you that was outside of the scope of what you could have ever hoped to plan for? What was it, what ended up happening? How does that inform your planning and strategy on a go-forward basis?

 

Evan Holladay:

Definitely quite a few stories. Probably the first one that would come to mind is: I'd say it was coming up on five years ago, right near when I started at LDG. We started working in Nashville. Now I'm moved to Nashville and really doubling down on the market here, but at the time this was our first development. It was a new market for us. We were still trying to learn the ropes of that city, the local government and how things work in Tennessee. So, one of the things that's unique about Tennessee is that for tax credit developments -- whenever you're taking on federal tax credits -- the state assessor's office has told all of the city county assessor's offices to tax those tax credits as if their income. Standard is usually your taxes are based on your NOI or your market value, and in this case you're getting that normal tax, but then on top of that, you're also getting taxed on your tax credits. It's a really unique, odd situation where they--

 

Matt Rodak:

That seems to take the point away from the tax credits.

 

Evan Holladay:

Exactly, and it's odd that they considered income when really it's just a tax write-off. The point of giving that is so that we agreed to keep our rents lower and serve a certain part of the market that isn't typically served. So yeah, it's really odd, a little backwards situation. We didn't realize that going into it. So, we had lined up all of our funding, we had been working on permits, we had gotten this whole deal lined up, and probably spend a few hundred thousand dollars on pre-development. Then, our attorneys are like, "Well, your taxes are a little low there in your proforma." That's when we were educated on this whole double taxation. We thought, "Oh, well, that's not going to work."

 

At this point we had the mayor's office on board, we had the housing authority, we had the community development on board. Everybody was wanting to get this project done, but we hit a roadblock. We're like, "What can we do? There's no possible way we can pay double the taxes on an affordable deal." That's when, with the mayor's help and with -- actually they ended up getting State Senators and State Representatives for Nashville-Davidson County-Metro and got them at the state level. So the reason, or I guess the tool, that was created out of all this was Nashville created an affordable housing tax credit PILOT program. So PILOT is Payment In Lieu Of Tax.

 

It's like a form of tax abatement or similar to a TIF if anybody's heard of that. So, we'll pay a portion of the taxes, we just won't pay the full taxes. In return, we're developing affordable housing for the community. But, they had this odd thing at the state level where they said, “Any city-county-metro government greater than 500,000 people wasn't allowed to do a PILOT.”. The only city-county-metro government that fit that criteria was Nashville. It was just some odd, one-line ordinance at the state legislative level that was put in there 20 years ago. We had to go to the State Senate and the State House Representatives and get them to remove that line. So that took us a whole -- it took us almost two years in total to go through the whole legislative process.

 

That was something that never would we have imagined that. We see our taxes and were like, "Oh, those are a bit low, we need to figure out how to address that. We can't pay those higher taxes." All of a sudden, one thing turns into another and we're working with the mayor's office, and the state reps, and state legislators to get this ordinance completely changed at the state level. It took this whole team effort of everybody working together, and everybody realizing there's a need. What you had mentioned before, you're having to sell people on your vision, get them on board with the vision of the project, and how to move that forward. It wouldn't have happened without that, because there's no way I or our team at LDG could move a piece of state legislation forward and get it passed. It took powers way beyond us to get that done. That ended up being the first PILOT that was ever created in Nashville.

 

Matt Rodak:

That's wild. Part of what I would imagine your strategy on a go-forward basis is -- and I'm sure you had this -- is good local representation that understands the ins and outs of these tricky tax laws and other legal things. Had your attorneys not seen that on the proforma and shovels were in the ground, that would have been a problem I would have imagined.

 

Evan Holladay:

Yeah, exactly. It's one of those things where you're glad you catch it beforehand because even if it delayed us two years, it saved us from a potentially financially disastrous project. It ended up being a great project because we were able to get this PILOT. Now, we're also able to do PILOTs on a going-forward basis. So, we created a program for future development.

 

Matt Rodak:

Yeah, that's really cool. The other thing that I love about this is you guys are creating projects that are in the best interest of everybody. It's in the best interest of you guys as real estate developers, but also the local communities and state communities. That's evidenced by the fact that they're willing to work with you in order for this project to become a real thing. I think that's really cool. We talk about win-wins a lot, but it has to be real to get something like this.

 

Evan Holladay:

Right. I would say as much as -- and this situation was so unique for us and where you're getting everybody really tied into the success of the project -- but I will say we do deal with a little bit of this negative light that people put on affordable housing, or this negative connotation that they have with affordable housing. They instantly think “ghetto.” They think that's where all the crime is and so that's something that we constantly have to work with. But you're right, like you said, this was an opportunity where people are like, "Well, we see they're building great communities and we want to rally behind that." I think they have 30,000 units of affordable housing that they need in Nashville-Davidson County. We're just doing 240 of that.

 

Matt Rodak:

Nashville is booming. I was down there a couple months ago. It's crazy to see how many cranes are in the air. That's cool, man. Thank you for sharing that. I'd like to shift this a little bit. I think part of our theme here is being able to improvise, learn on the fly, and be comfortable with -- I don’t want to say winging it -- but thinking creatively on how to get out of life what you want. I think you did a pretty cool improvisation. Again, when I was internet stalking you, and I want to talk a little bit about your podcast, Monumental. How that came to be, how you got your first guest on, and how you got that going. Ultimately, what are you trying to accomplish with that, or what's the theme of your show?

 

Evan Holladay:

The way Monumental got started is, I had always been a huge fan of podcasts. I guess in the back of my mind I thought I'd wanted to start one eventually. It was never really a top goal of mine, or it wasn't in front of my mind all the time until I met somebody, and he ended up being my first guest, Bob Manaseer. Bob is a venture capitalist from New York. I met him for five minutes in Louisville. He was here for an event, and we just hit it off. I was like, "You know what, I need to go, but I really want to keep talking to this guy. How can I think of a way, or what can be my excuse to reach out to him?"

 

Then I remembered about the podcast. I winged it and just said, "Hey, I have a podcast. I interview guests just like you, and I'd love to have you on." Kind of a white lie, but we ran with it and he's like, "Yeah, sure, I'd love to be on. Let's circle back in a few weeks and make it happen." So I actually used him -- once he said yes, I thought, I really need to make this happen. I guess I need to learn how to podcast now. I ended up buying all the equipment and watching all the YouTube videos. Then, about a month later, did an interview with him. I was very nervous to begin with, but now I love it. I think we're up to 19 episodes and I've really had a blast with it and got a lot of great feedback. The goal behind Monumental is to talk to people like you, Matt, that are leading a great cause and making massive change in their industry and in the world. Also, just to help people realize their full potential and take that next step into doing meaningful work and loving what they do.

 

Matt Rodak:

Dude, I love it. I love your story. I love your hustle. I think it started earlier with you in college: "This what I want to do and I'm going to put myself out there and see what happens." And it's worked. It seems like it's worked great for you. Everything from getting into the industry that you wanted to be into, and now even stretching into more than that with the podcast. If you're listening out there and you're thinking, "How do I get started?", what I've been saying is, just do it. As cliché as it sounds, just figure it out.

 

Evan Holladay:

Yeah, and honestly, don't be afraid to call people. They can call me, reach out to whoever you see as a potential mentor, somebody you want to learn from and just reach out to them. 9 times out of 10 they're going to help you as long as you're nice and friendly. Like Matt said, as long as you have something to offer or something to help them with, they'd be more than happy to return the favor.

 

Matt Rodak:

Awesome, man. This has been great. I appreciate your insights into all this. Checkout Evan's podcast, Monumental. Evan, how else can people get ahold of you if they've got questions or want to learn more about what you're up to? What's the best way for them to find more?

 

Evan Holladay:

I would say, they can email me. It's evan@evanholladay.com, or Instagram. I get a lot of direct messages on there as well, and I'll answer those.

 

Matt Rodak:

Awesome, www.EvanHolladay.com. Check out his podcast, Monumental, for more inspiration on how to make big impacts in the world. This was awesome. Thank you so much for spending time with us. I really appreciate you coming on.

 

Evan Holladay:

Thanks for having me. I loved it.

 

Matt Rodak:

Thank you all out there for listening to this episode of Real Estate Investing Unscripted. For more resources or to get funding for your next project, head on over to www.FundThatFlip.com. Otherwise, I look forward to next time. I'm your host, Matt Rodak, signing off.

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Thank you for listening to this episode of Real Estate Investing Unscripted. For more resources or to fund your next project, head on over to FundThatFlip.com

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