In September 2021 Nexus answered a call from a new voice behind a big vision. It was a rookie chasing a 100-acre land deal for hundreds of homes in “Rural”, TX, population 24,000. With the help of Nexus, what started as an absurd request for financing became the talk of the town.
There’s no substitute for being a student of your business.
When twenty-five-year-old Nathan called Cort Chalfant, principal of Nexus Private Capital on September 28, 2021 to pitch financing for his land deal, it was obvious he wouldn’t be able to check all of the boxes.
For starters, he was proposing hundreds of residential lots for a small town that builds maybe two dozen in any given year.
He was grossly undercapitalized and seeking nearly 100% financing.
As if that wasn’t enough, he had never flipped a house or built a custom home much less cut his teeth on the notoriously difficult process of ushering a sizeable land development project through a maze of municipal regulations.
But he is smart (a practicing attorney), not easily offended and a good listener – all attributes that would pay dividends culminating in a $3,295,000 loan from Nexus three years later.
Instead of turning Nathan away flatly, Cort shared lessons learned from his prior experience as a master-planned community developer credited with developing more than 5,000 lots in Arizona, Texas and beyond. Cort advised Nathan on what it would take to de-risk his deal to the point where some lender might listen.
Cort’s list included fundamentals like all entitlements in hand, builders in tow, a sizeable equity infusion and some grey hair added to the development team. So off Nathan went, armed with good intentions and not entirely dispirited.
Nathan surfaced again on March 21, 2022, to announce that he had successfully put the property under contract and had added grey hair to his team. Cort congratulated him on the early achievements content solely to listen and sent him on his way.
One year later, on March 10, 2023, the pattern repeated itself. Only, this time Nathan announced that rezoning was complete, a. tentative plat was approved and demonstrated traction was happening as Wyldewood Homes agreed to purchase half of the 87 lots in the newly minted first phase of the project.
That was significant progress but, one regional builder was hardly sufficient for Nexus to pull the trigger on a micro-market and critical entitlement work remained incomplete.
Another year passed and then on June 25, 2024, Nathan rang again. This time, he announced that he had two builders in tow. Wyldewood had stuck with him and now DR Horton was added to the mix.
Combined, Nathan now had 87 lots under contract for more than $4 million. Moreover, both builders were non-refundable with a combined $465,000 of earnest money of which they had already released $194,000 to Nathan for his use to fund engineering and entitlements.
Hat’s off to Nathan for his persistence. Now we have something to talk about!
A week later, Cort pulled an all-nighter driving from Austin to “Rural” arriving at the break of dawn. That day he toured the site – and for that matter the entire town. He conducted interviews with the borrower, the interim City Manager, the City Engineer, marketing experts familiar with the local market, officials from the Chamber of Commerce as well as random local residents and business owners. For all, Cort’s goal was the same – to flush out the feasibility of Nathan’s vision for “Rural”.
From these interviews, it was evident that the City of “Rural” and its major stakeholder groups were enthusiastically supporting Nathan and his project. Moreover, we could draw a direct line between the motivations of city officials and our budding developer since this project represents the town’s one best hope for putting a dent in what had been identified by economic development officials as a major need for new housing.
Since Cort’s first day of boots-on-the ground came up all roses, it was off to Dallas the next day for round #2. There he would quiz the engineering firm with two years invested in the project and tasked with delivering all of the technical plans and permits required before Nathan could thrust a shovel into the ground.
Next up, Cort interviewed the DR Horton Land Acquisition & Development Manager, who made the decision to go into “Rural” (and who had been in that job for 30-years) as well as the CEO of Wyldewood Homes. As a developer who had witnessed big builders walk from large deposits in the past, Cort wanted to judge for himself what these guys were thinking going into such a small market as well as their current level of committed to Nathan’s deal.
In hindsight, it’s amazing to unlock the mystery of how a small Texas town of 24,000 people with next to nothing in new home permits can make sense as an emerging market for calculated risk takers large and small. Nathan saw it early and his persistence to follow through is a humble reminder that we’re all learning on the job.
Enjoyably, of the many groundbreakings Cort has seen in his more than 40 years in real estate, he hasn’t seen another with so many participants holding shovels and smiling.
For Cort and our small team at Nexus, it’s extremely gratifying to know that we play a small but critical role in delivering hope and opportunity that touches so many lives.