Steven Gage

I asked an investor (who’s built $1,000,000,000 worth of real estate in his career) the common denominator amongst the best developers. 

His answer may surprise you. His answer: 
↳failure.

In his experience, failure is the best teacher. 
Meaning the best developers often have failed. 
The trick is being able to mitigate the failure. 
• When they fail to catch an issue in due diligence.  
• When they fail to coordinate material on time.
• When they fail to identify a new law change.
• When they fail to manage their team well. 
• When they fail to stay below budget. 
↳How do they respond?

The best developers respond well to failure. 
They accept failure. They identify a solution. 
They move on.

Here’s 3 questions to ask every developer to understand their relationship with failure.

1) When’s the last time your team failed? 
2) Have you ever lost money on a deal? 
3) What’s a recent SOP you installed? 
↳Why’d you add the SOP?

Listen for their response & how they respond. 
Do they dodge the question? Or own it? 
What’s their tone?

How you “feel” after their answers will tell you a lot.

P.S. Was this helpful? If so, share why!
What other questions would you add?

My wife and I have 2 kids.

And if there’s one thing I hope I’ve taught them, it’s this:

Character is everything.

• In business.
• In relationships.
• In how you show up when no one’s watching.

I tell them:

→ Keep your word. Every time.
→ Aim for win-win deals. Always.
→ Choose the work you love. Life’s too short not to.

But no matter what?

Faith and family come first.

That’s the foundation I want them to build on.

What values do you try to pass on to your kids?

I knew a developer who built a $5,000,000 strip mall.

Brand new. & it still flopped.

- Vacant units. 
- Poor traction. 
- Sold at a loss.

Why did it flop?

In my opinion?

The developer didn’t do the proper due diligence.

Development is tricky. It’s nuanced.

You have to “read the room.”

You’ve got to know the site. 
You’ve got to know the city. 
You’ve got to know what each of them need.

As a limited partner, it’s hard to know what the city needs. 
As a limited partner, it’s hard to know what the site needs.

Here’s 3 questions to ask every developer before investing:

1. How’d you conclude this asset-type for this project? 
2. How’d you identify this tract of land for this project? 
3. How’d you pick this level of finish for this project?

You want to see market research. 
You want to see local surveys. 
You want to be overwhelmed.

If you aren’t overwhelmed by the research?

PASS.

P.S. What’s your fear of investing in a development?

We’ve developed $300,000,000 worth of real estate.

Here’s a capital structure we used for several deals:

• Investors receive 100% of invested capital. 
• Then, receive an 8% preferred return on investment. 
• 20% of profits until 14% return on capital. 
• After the 14% return is reached, 
• A 10%/90% split on the remaining profit.

Otherwise known as a waterfall split.

We received some questions about the structure when I last posted about this, & I wanted to speak a bit about it today.

1. “The structure seems to favor the developer.”

- I can understand the perception, but here’s the reasoning: 
- Our investors understand the inherent risk of developing.
- The structure is meant to create downside protection. 
↳ BEFORE the GP participates in any upside returns, 
↳ 100% of invested capital is returned to investors, 
↳ & LP’s receive an 8% preferred return.

This structure prioritizes investor capital and stable returns first. We only participated meaningfully once we’ve delivered both your principal and a strong preferred return.

After that, we earn our upside through performance.

Not fees.

Curious to hear your thoughts on the capital structure.

Comment below with other structures you’ve seen.

$5,000,000,000+.

That’s how much “flex warehouse” inventory is being built right now.

Yet, so many investors haven’t heard of the asset-class.

Here’s what you need to know:

1) The niche is filling a massive need.

- These spaces are small-bay industrial properties. 
- Think warehouse/showroom/office space…
- All in one. 
- With industrial & manufacturing skyrocketing. 
- These “warehouse condos” fill the size gap.

2) The opportunity.

- There’s a large need for warehouse space, BUT
- The typical industrial warehouse is too big. 
- So smaller warehouse condos fill it. 
- Some as little as 1,250 SF.

These assets provide real opportunities for the growing small business sector to be in a warehouse unit.

Pictured is our most recent warehouse condo development.

18-units. 12 of which were sold before we were done.

Have you heard of warehouse flex spaces?

We bought 80 acres in Franktown, CO for $7,000,000. 
Our original plan was to build 200 production homes. 
Then we did a little more digging…

Original Plan: Build 200 production homes. 
• 6-8 different design models, 3-4 different colors.
• 18-32 different types of homes to sell.

Final Plan: 19 luxury, custom homes.

Here were the top 3 reasons we made the shift: 
1. The median income for a resident in Franktown: 
↳$250,000+

2. The median new home sale price in Franktown: 
↳$1,600,000 to $1,800,000.

3. The 80 acres we bought has incredible views. 
• We felt the lot was best utilized with more open space. 
• People moved to this town to be away from the city. 
↳to be in nature
• We kept 50%+ of the land open space. 
• This showcased the fantastic views.
• & preserved the trees of the area.

We ended up selling all 19 luxury homes for over $42,000,000 in total.

Distributing over $3,000,000 back to investors.

Cuban owned 33% of broadcast.com.
Zuckerberg owns 13% of Meta.
Bezos owns 9% of Amazon.
Musk owns 17% of Tesla.

These billionaires understand what most don’t.

You don’t need to own 100% of something to make money.

You just need to choose the right vehicle.

For me, that vehicle is real estate.

For my investors?

Same thing.

I operate. They provide capital.

We need each other to grow wealth.

P.S. If you learned something. Comment below!

If you already knew,

Comment when you had the realization!

I’ve built & sold $300,000,000+ worth of real estate.

I did all that without:

- Without cold plunging every morning.
- Without giving up having some fun.
- Without journaling every morning.
- Without reading a book a week.
- Without 1000s of connections.
- Without waiting to have kids.
- Without giving up alcohol.
- Without waiting to marry.
- Without social media.
- Without giving up TV.

Here’s what you need:

- A business that provides value to people. 
- A system to provide that value at scale. 
- Sell that value for more than it costs.

That’s what builds wealth.

Curious to learn more about how we partner with investors to build real estate?

DM “Vision” to schedule an introduction call.

I’ve invested in a $48,000,000 retail center.

I’ve invested in a $21,600,000 warehouse.

I’ve invested in a $18mm mixed-use build.

We’ve invested in these assets with our own capital, investor private equity, and local banking relationships.

Here’s 2 tips I recommend every LP follow:

1) Don’t take risks you don’t know.

- Jon Gray of Blackstone has an amazing quote for this: 
- “You don’t get outsized returns without taking risk,” 
- “but we take risk we understand.”

LESSON:

As an LP, your job is to understand the risk you’re taking. 
Then make a decision based on what you know. 
Getting the process right is your goal. 
Not the outcome right.

2) Don’t invest in products not needed.

- Invest in projects with a proven need in the community. 
- What do I mean by this? 
- The GP should prove to you the asset is in demand.

LESSON:

As an LP, have the GP prove to you their asset is needed. 
So if you’re investing in an apartment development. 
What research shows this asset is needed? 
Don’t invest if you’re not convinced.

P.S. What would you add to the list?

I’ve developed $350,000,000 worth of real estate. Throughout my career, I’ve used different capital structures for our investments. 
Here’s the evolutions of capital structures I’ve used:

1) This was the structure that started it all: 50/50 Equity Split

• Capital Investors: Bring all the funds. 
• Me: Find deals, execute the plan.

This is how I started my career. 
Every deal. Every time.

2) This was the structure for my first syndication: Waterfall Split.

• Investors receive 100% of invested capital. 
• Then, receive an 8% return on investment. 
• 20% of profits until 14% return on capital. 
• After the 14% return is reached, 
• A 10%/90% split on the remaining profit.

3) This is the structure we use most often now: 2nd Position Loan

• This is our more recent capital structure we’ve used. 
↳In fact, a deal we’re raising for now is like this. 
• We secure a construction loan w/ a lending partner. 
• Then investors fund a subordinate 2nd position. 
• Typically receiving 12% on their investment.

Here’s why we’ve made the transition:

• With higher risks in development these days,
↳More costs, insurance, taxes, etc. 
• The second position loan creates a safer investment. 

I am curious to hear your experience with investment structures.

Anything unique?

I recently spoke with an investor (who’s invested $10,000,000 into real estate in 2025) about our retail projects.

Here’s why they liked retail real estate in today’s market:

For investors, retail offers stability.

Here’s the 2 specific factors they mentioned that really stuck out:

1. Retail’s resilience in a Post-COVID world

• Retail has evolved.
• It’s no longer “big box or bust.”
• Consumers want experiences. 
• Food. Fitness. Service-based businesses. 
• Those tenants aren’t easily replaced by e-commerce.
• The result?
• Steady, in-person demand from businesses that thrive on foot traffic and convenience.

2.Income Diversity & Stability

• A well-built retail center has multiple tenants.
• Each with staggered lease terms.
• This creates diversified income streams.
• And when combined with built-in rental escalators?
• Investors gain consistent cash flow insulated from short-term market swings.

I’m curious, what’s your take on retail in 2025?

Are you looking at it?

If not, what asset type has your attention?

We bought a 2 acre parcel of land for $2,000,000. 
2 years later, 
We sold 8 flex warehouse spaces so far for $6,000,000. 
Here’s 4 lessons to takeaway from this build:

1) Regulations change often, are your sponsors paying attention?

• In this case, we got caught. Between the project’s initial approval under the previous owner and my purchase, the Town of Parker had updated its regulations.

• This oversight added some time and complexity to the deal. This taught us the value of staying ahead of local policy.

• & we’ve improved our SOPs because of this specific incident.

2) Upon acquisition, the land still needed to be worked on in a few specific areas before we could start.

• Although it was nearly ready, this highlighted the importance of due diligence in the acquisition process.

• & we’ve improved our SOPs because of this specific incident.

3) Despite the 2 hiccups, we completed our project on time & on budget, with each of the 8 condos sold within 90 days of completion.

• We’d done our research into flex-warehouse space, & identified Parker, CO as a location with a major need for this asset.

• Research backed decision making on what asset to choose is a necessity!

4) We acquired this property from a developer that had largely completed the planning & permitting process.

• This allowed us to avoid holding the asset an additional year, & expedited the disposition of the asset.

My last development sold for $34,200,000.

Here’s 7 lessons I learned along the way:

(That can hopefully help you invest too)

1) Understand what the land needs to be most valuable BEFORE choosing the type of asset-type to build on the land.

2) Marry someone who believes in you. Marriage is the single greatest variable of success you will make.

3) Know the inputs & outputs of your business. This will help you scale while maintaining your margins.

4) Prioritize the skill of making money before prioritizing the skill of preserving your money.

5) If you want to get bigger, get better. Better leads to growth. Bigger leads to bloat.

6) Focus your energy on a singular focus, then expand as you grow in expertise.

7) Invest in appreciating assets until you are set financially. Then buy the Ferrari.

Which lesson stuck out the most to you?

I invested in a $42,000,000 19-home luxury community.

I invested in a $21,600,000 flex-warehouse space.

I invested in a $48,000,000 retail center.

With each of these assets we invested alongside our passive investors, lending relationships & our own capital.

Some feedback we received from investors 5 years back completely shifted how we raise capital.

Like most operators, we used to raise equity. 
However, 
As construction prices increased across the board. 
Development became more expensive. 
Investors wanted more consistency. 
So we made a change.

Here’s the typical capital structure we deploy today:

• Investors invest in our deals as in a second position loan.
• The bank brings the first position loan. 
• Our company brings equity. 
• & investors collect a 12% return on their investment.

This straightforward approach ensures investors know exactly what they’ll earn based on their investment.

Keeping the process smooth and transparent for all involved.

What are your thoughts on the capital structure we use?

P.S. We’re nearly under contract on our next project. 
If you’d be interested in learn more about the deal, 
DM “Interested” & we’ll schedule an intro call.

I’ve developed $350,000,000 worth of real estate.

I can boil my strategy down into 2 key points: 
1. Find the right land. 
2. Build what fits. 
Here’s a breakdown of those 2 points:

1. Find the right land. 
• Real estate’s value can be summed up in 3 words. 
• Location. Location. Location. 
• You hear it all the time, but here’s what this means: 
• When the local market inevitably hits a correction, 
• People still need real estate, 
• But they often buy only in the best locations. 
• This is why we concentrate our efforts in 1 state, 
• Colorado. 
• Because we know where the best land is, 
• & cater our focus to those areas.

2. Build what fits. 
• Next, just because we may buy the right land. 
• Doesn’t mean we can build anything there. 
• We have to cater the build to the community. 
• This is critical. You must get this right. 
• Even with a new build, 
• If the community doesn't want it or need it? 
• The investment won’t do well.

P.S. We’re currently raising capital for a luxury home build.
If you’re curious to learn more about our investment. 
Comment or DM “Invest” to schedule a call.

Our last flex-warehouse project sold for $6,000,000.

Here’s 7 lessons I’ve learned from building this asset class, and scaling Vision Development along the way:

1. The best projects start with the market in mind. You can’t just build and hope it leases. You have to know the unmet demand of the community & build according to the demand.

2. As an LP, the alignment of your risk tolerance with the capital structure & business plan is almost as important as the track record of the GP. 

3. A flex-warehouse is proof that you don’t need complexity to create value. Simplicity is a profitable business model.

4. As an LP, you must understand the development you invest in is only as good as the team you invest with.

5. The business is the tenant. As an LP, invest with GPs who understand what business they are in.

6. Family & faith come first. What you work for is more important than what you work on.

7. The profit is in the small details.

Which lesson stands out most to you?

I’ve invested in a $48,000,000 retail center.

I’ve invested in a $21,600,000 warehouse.

I’ve invested in a $18mm mixed-use build.

We’ve invested in these assets with our own capital, investor private equity, and local banking relationships.

Here’s 2 tips I recommend every LP follow:

1) Understand why you trust the sponsor you invest with. 
• Warren Buffett puts it this way: 
• “Risk comes from not knowing what you’re doing.”
• In the context of investing with a sponsor, 
• It means knowing why you trust them. 
• Is it their track record? 
• Is it their team? 
• Is it them? 
• Knowing why you’ve made a decision is an underrated reason to determine if you are making the right decisions with your investing.

2) Understand why a sponsor is building an investment. 
• Just because a building is new & shiny, 
• Doesn’t mean it will succeed as an investment. 
• The main reason investments fail: 
• the area doesn’t need what the building provides. 
• Ask the sponsor: 
• “Why are you building this asset in this location?”
• They need to have an educated answer for you. 
• Be overwhelmed by their research. 
• It’s the foundation for all great investments.

P.S. Was this helpful? Which tip was the most helpful?