Blog Article 

 Lessons on Real Estate (Draft) 

Michael Santos

Michael Santos

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Course:  Self-Directed, Self-Help with Journaling 101

URL: https://www.youtube.com/watch?v=h1Jx5ZFOzrI

Title: Igor Real Estate Lesson draft mode

Blurb:

  • Igor is an immigrant who became a successful real estate developer and general contractor. He shares his knowledge of the industry in the second segment of a two-part dialogue. The video gives an overview of the business operations of each field and describes the types of personality traits needed to succeed in either career.

Objective:

  • Students should learn basic concepts related to real estate development and general contracting. The lesson outlines how sharp skills in communication, math, and critical thinking are needed to succeed in these fields. The audience should also recognize the importance of positive character traits, such as hard work, intellectual curiosity, and delayed gratification.

Lesson Requirements:

  • Watch the video that accompanies the lesson
  • Write a definition of each word highlighted in bold and written in italics
  • Use ten of the vocabulary words in a sentence
  • Respond to a minimum of three open-ended questions by following instructions at the end of the lesson.

Lesson Outcome:

  • Participants will increase their vocabulary by at least ten words.
  • Participants will improve writing skills and their ability to contemplate how their responses to open-ended questions relate to their prospects for success upon release.
  • Participants will add to their journal, demonstrating a self-directed, self-improvement pathway to prepare for success upon release.

Our team at Prison Professors thanks Igor for sharing his business success stories with us in the second segment of our two-part interview. Igor has worked as a real estate developer and general contractor since 1998. He estimates that the businesses he has created have generated more than $130,000,000 in revenue since he became a builder, allowing him to amass a significant fortune.

Background:

At the beginning of the interview, Igor describes a real estate developer’s responsibility. Real estate developers acquire raw land that they can improve upon. They build or renovate residential or commercial properties to increase value. They strive to create jobs, build communities, and earn a profit from their work.

Igor taught us that after developers purchase property, they collaborate with subject-matter experts such as civil engineers or architects. Those professionals help them plan the project, showing how the developer can get the highest return on the project. Developers also work with real estate agents to forecast how much revenue the new homes or businesses will generate. The developers then oversee the construction and ultimately sell the project.

In contrast, general contractors oversee the day-to-day operations on the construction site. As a general contractor, Igor is responsible for personnel management, setting business hours, and maintenance of insurance and sanitation. He also interacts with people living in the vicinity of the site. By opening good lines of communication with those neighbors, his team may lessen a person’s proclivity to complain about noise or other construction-related issues.

General contractors bear the responsibility of delivering a turn-key product that is immediately ready for use upon the project’s completion.

Solid communication and team-building skills have played a central role in Igor’s success. We learn in the interview that Igor collaborates extensively with others to complete projects:

  • He hires civil engineers to conduct a zoning analysis that will determine the highest and best use of the property.
  • He hires architects to draw plans. From the plans, he creates an estimate of how much it will const to build the structure in compliance government regulations.
  • He works with real estate agents to identify what amenities or features the building should offer, and to gauge the appropriate selling price.

Effective leaders communicate well and uphold a professional demeanor. Igor must clearly express himself to negotiate with other professionals and ensure his team completes work as intended. We can infer that if Igor failed to communicate effectively, his projects would not succeed and he would lose revenue.

We also learn the need to be proficient in math. Igor routinely uses basic arithmetic to understand financial transactions, budgets, the dimensions of a building, and the amount of material needed for a project. Igor provides an example of how basic math can help him ascertain how many two-by-four studs he would need, or boxes of nails that would be necessary to complete a project. Without those skills, he would not be as efficient at completing projects within the budget he established at the start.

As I served my 45-year sentence, uplifting stories like Igor’s strengthened my resolve. People that work through our lessons can find inspiration from leaders like Igor. They show us the pathway on how they built lucrative careers, even though they sometimes begin with challenges that are different from ours. In Igor’s case, he immigrated this country and he had to learn a new language and a new way of life. Like many people leaving prison or jail, Igor found himself in unfamiliar surroundings upon arriving in the U.S. He overcame these challenges by investing in himself and maintaining a strong work ethic. Since his arrival, Igor has contributed to our society by providing people with meaningful work, paying taxes, and building communities.

Few people, even those born in the United States, attain the same level of achievement or contribute to their community as much as Igor. I recall Igor’s sense of purpose in helping others reach “the American Dream.” Anyone in our audience can apply the same success principles to thrive and help others upon their release from incarceration.

Takeaway:

Successful people like Igor go beyond passively talking about their plans. High-achievers adopt an action-oriented mindset and hold themselves accountable for their success. Likewise, we teach our students to take incremental steps and celebrate small victories as they come closer to reaching their goals. A person leaving prison or jail can adopt self-directed exercises, such as improving their vocabulary or honing their math skills, as a first step in attaining career success ahead of their release.  

Our students should recognize the need to develop strong communication skills. Leaders like Igor convey clear messages to fulfill a project’s requirements and instill confidence in others. While I served my sentence in prison, from leaders like Igor, I came to appreciate the value I could create by becoming more articulate. Since I wanted to succeed, I strove to develop and polish my communication skills. This investment in personal development can help anyone. In my case, I wanted to make sure lessen the likelihood of being discriminated against because of my previous imprisonment. I believed that if returning citizens polished their communication skills, they would have a better chance of persuading others, finding employment, and securing housing.

  • In what ways do you believe that developing communication skills would influence a person’s prospects for success?

Formerly incarcerated people with a basic grasp of math are more likely to succeed on the job. Virtually every profession requires math skills. Igor relies on math to understand various concepts related to his work ranging from budgets or the dimensions of a construction site. A returning citizen must master the same skill set to become more competitive in the workplace. Aside from Igor, members of his staff like construction workers or painters likely use their math skills to understand the area of a building or determine how much money they will need to purchase materials.

We can also infer that Igor relies on his critical thinking abilities. He must have the proper discernment to determine the right people to hire, the most effective way to complete a project, and how to manage a team. We see Igor use his critical thinking skills when he explains why he decided to forego buying an extra supply of nails for a project. In this example, an associate tried to persuade Igor to buy more of the product than he needed. Igor determined that he had an adequate supply of nails for a project and avoided extra costs.

  • How do you think Igor’s communication skills enable him to be an effective leader?
  • How do you think good leaders use strong critical thinking skills?
  • How can being inquisitive and willing to learn from others enhance your chances of success in the workplace?
  • How do you think members of Igor’s team, such as construction workers and painters, use basic math on the job?
  • What difficulties do you think Igor faced as a newly arrived immigrant to the U.S.?

Business Models and Success Stories

Real estate development is a multifaceted field with ample opportunities for hard-working, open-minded professionals. Throughout the interview, Igor shared how development projects could involve employing different types of workers, involve a wide range of costs, and require different levels of investment and oversight. We could see examples of the same dynamics as Igor told us about his career path: He began his career by building single-family homes and later invested in larger properties, including a private school.

In our dialogue, we learned that:

  • Developers like Igor prefer starting a project from scratch on a vacant land plot (referred to as “dirt” in the lesson).
  • Other developers prefer to renovate already existing properties.
  • Smaller projects, such as single-family homes, involve different fee structures than larger projects like apartment buildings or large businesses. For large projects, the architectural fee fluctuates based on the construction cost. In contrast, small projects typically have fixed fees.
  • Real estate developers like Igor can increase efficiencies by simultaneously taking on the responsibilities of being the general contractor. Other developers choose to hire a general contractor for purposes of efficiency.
  • Development projects may include a performance bond, which financial institutions issue to guarantee the satisfactory completion of work. A performance bond is a type of surety that guarantees the developer will deliver the finished building, in accordance with the contract.
  • The developer generally requires a line of credit or enough funds for collateral to secure a loan from a bank.
  • Some projects require working with a large team. While some projects will only involve hiring a general contractor, others may require hiring a surveyor, electrician, framer, and other technicians.
  • Property management differs from property development.

Real estate developers must follow a methodical budget to ensure the project’s success. During Igor’s lesson, he offered a hypothetical example of a single-family home worth $500,000 and showed how the budget should break down into the percentages listed below:

  • Up to 20 percent for the land a property is built on. In this example, the developer should spend no more than $100,000 for the land plot
  • Between 30 and 35 percent for building materials (between $150,000 and $175,000)
  • Between 30 and 35 percent for labor (again between $150,000 and $175,000)

Using basic arithmetic, we see that the profit margin from this example would hover between 10 and 20 percent, for a total gain of $50,000 to $100,000.

To make a profit, developers can sell or rent a property. Igor once sold two homes for $300,000 several years ago; their value has now appreciated to $600,000 each, meaning that he could have made a $600,000 profit had he kept and sold the properties later. In contrast, a developer could instead rent property; Igor estimates that the two homes would each rent for $2,500 per month for a total gain of $60,000 per year. As highlighted in the table below, each option has pros and cons:

 Selling:Renting:
  Pro:The seller is not responsible for repairs or maintenance of the property once the sale is finalized.The property can indefinitely generate revenue for the owner. If the building meets standards, the owner can rent the facility to tenants.
  Con:Once the sale is made, the owner loses the right to generate revenue from the sold property. Becomes homes can appreciate, the owner loses the potential to make a profit from that appreciation in the future.The owner is responsible for the home’s upkeep and repairs, as well as compliance with local and state laws. The owners must also ensure that taxes and bills are current.

Igor offers invaluable advice for those interested in real estate development. He advises novices to start on small projects and work with a general contractor and possibly other experienced professionals. After gaining rudimentary knowledge, the developer can then move on to larger jobs that can generate stronger profit margins.

We also learn several caveats about the field. Igor tells us that real estate developers must practice delayed gratification.Developers are the first to invest money into a project and the last to earn a profit. Some projects also take longer than others to complete. To develop a single-family residence, a developer should expect to spend about nine months from start to completion.

Takeaway:

Our students should recognize the character traits inherent in leaders like Igor. He teaches us the importance of diligence by sharing his experience. He did not hesitate to perform what others would call the grunt work of manual labor, including digging holes and driving nails at various points in his career. His willingness to “get his hands dirty” provides examples of one of the core tenants in our coursework—being authentic.

Our team consistently shows how the most effective leaders are always eager to perform their work with competence and commitment, with the same tenacity that they would expect from the people they hire.

We should learn from others. Igor mentions being very inquisitive at the beginning of his career, often asking people that had more experience than him how he could become more efficient. He wanted to understand his line of work, and he did not hesitate to find mentors, but also to work.

When formerly incarcerated people rejoin society, they should demonstrate the same inclination to learn on the job and invest in their long-term career success. By seeking guidance and asking questions, a person earns a reputation as a dedicated and productive worker.

Lastly, we learn that real estate development can be a viable career path for our audience members. In the lesson he taught, Igor outlined the high-level steps a person should consider if he or she wanted to get started as a property developer:

  • Locate a business owner who is a tenant renting a commercial space.
  • Offer to complete a construction project for the business
  • Request the business owner sign a lease.
  • Obtain capital from a private lender or bank to guarantee funding for the project.

Our team believes that industrious, goal-oriented people can adopt the same principles as Igor to thrive in this career. Many of the character traits needed for success as a developer, such as long-term commitment and discipline, align with our lesson modules. Given the prolonged nature of the work, we deduce that developers define success, remain aware of opportunities, take incremental steps to achieve goals, and hold themselves accountable. 

  • How do you define “leading by example”?
  • How do you define “delayed gratification”?
  • What character traits are needed to follow a budget?
  • How do you think Igor uses his critical thinking skills to create and follow a budget?
  • Why is it important to show a willingness to learn and ask appropriate questions on the job?

Conclusion:

Igor is an inspirational individual who embodies the concepts that we teach in our coursework. He faced a myriad of challenges as an immigrant, but overcame those obstacles through persistence, a positive mindset, and a goal-oriented outlook.

Igor teaches us that communication, critical thinking, and math skills are at the crux of his success. As a leader, he must express himself clearly to ensure projects are completed as intended and to instill confidence in others. He thinks critically to make sound business decisions, including selecting the best hires, following a budget to earn a profit, and choosing the tenants or buyers of a property. Lastly, he relies on math for financial transactions, budgets, and construction-related assessments (e.g., the building’s dimensions and specifications).

Real estate development offers promise to industrious, hard-working people. Igor shows us that individuals who uphold a professional demeanor and long-term commitment to goals can thrive in this career. The field is also very dynamic as it entails different options for business operations:

  • Developers may choose to invest in commercial or residential properties.
  • The developer can work alone, hire a general contractor, or work with a team of professionals
  • Once a project is finished, the developer may rent or sell the property to make a profit

The lessons offered in Igor’s story align with the principles in our coursework. Like people leaving prison or jail, Igor found himself in an unfamiliar environment when he first arrived in this country. Yet Igor became successful by remaining committed to goals, defining success, being authentic, and making incremental progress to fulfill his plans. We urge our audience to embrace these same principles as they work to earn their freedom.

Critical Thinking Questions:

Choose any of three questions below. Write a response for each of the three questions you choose. In your response, please write at least three paragraphs, with a minimum of three sentences each.

This exercise in personal development will help you develop better critical-thinking skills, and better writing skills. There are no right or wrong answers to these questions. We’re striving to learn how to think differently, and how to communicate more efficiently. Try to use some of the vocabulary words from this lesson in your responses.

  1. How do you think Igor’s strong work ethic and commitment to success enabled him to overcome the challenges of being an immigrant?
  2. What leadership traits do you believe Igor exhibits?
  3. Why do good leaders like Igor need strong interpersonal and communication skills?
  4. How do you think having a professional demeanor enables Igor to build relationships with members of his team?
  5. Why is it important to lead by example to inspire others like Igor?
  6. How does Igor show resilience based on the details he shared during the interview?
  7. How can you use critical thinking skills to select the right friends and identify job opportunities?
  8. What types of questions could you ask on the job to show your boss that you’re willing to learn about the business’ operations?
  9. How can developing strong interpersonal and communication skills help you persuade others as you look for work and housing?
  10. How can real estate development or general contracting be compelling career fields for those leaving prison or jail?

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