How to Invest in Real Estate Through Development w/Justin Goodin
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Episode Description
Welcome to the Freedom Point Real Estate podcast! Today's guest, Justin Goodin, shares about his transition from multifamily to development, common challenges he faces in ground-up development, the power of honest communication with investors, and more.
Justin was born and raised in Indianapolis, Indiana. He graduated from the Kelley School or Business majoring in finance and supply chain management with a minor in economics. Justin spent years working in the commercial banking industry, but made the calculated decision to leave his traditional W2 job and pursue real estate full-time. Today, Justin lives in Indianapolis with his wife and two dogs. He has served as a mentor for the Big Brother and Big Sisters of America and volunteered at a local hospice in his spare time. Justin founded Goodin Development, a company dedicated to helping busy professionals passively invest in real estate development so that they can live a life by design now, instead of waiting until they retire.
CONNECT WITH JUSTIN GOODIN!
Website: https://goodindevelopment.com/
LinkedIn: https://www.linkedin.com/in/justingoodin/
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Transparency Builds Trust with Investors
"I’m a huge fan of just always telling investors The Good, the Bad, the Ugly… If I were investing, I’d want to know the significant things—what’s going well, what’s not, and what’s being done to fix it."
Investors value honesty over sugar-coated updates. Providing clear, detailed reports on both wins and challenges fosters long-term trust and loyalty. The more transparent an operator is, the more secure investors feel, even in uncertain market conditions.
Tip #2: Know What Type of Investor You Are
"For a ground-up development, an investor should be someone who doesn’t need cash flow right away but is looking for a short-term hold with the potential for higher equity multiplication."
Different real estate investments serve different financial goals. Development projects might offer higher returns but require patience, whereas stabilized multifamily properties provide more predictable cash flow. Understanding your own investment objectives is key to choosing the right opportunities.
Tip #3: Watch Out for Market Headwinds
"The biggest challenge right now is for projects bought in previous years with floating-rate debt. Interest rates have risen, valuations have dropped, and rent growth has slowed."
Investors should be cautious about how shifting economic conditions affect their portfolios. Floating interest rates can be a major risk, making fixed-rate debt a safer option for long-term stability. Understanding the broader market trends ensures you don’t overpay or invest in a deal that won’t perform.
Tip #4: Focus on Long-Term Financing Strategies
"Every property I’ve invested in has a fixed interest rate. This protects us from rate hikes and market volatility."
Real estate investors should prioritize stability by securing long-term, fixed-rate debt. This approach reduces risk, especially when rates are unpredictable. Short-term market conditions might fluctuate, but smart financing keeps your investment secure.
Tip #5: Don’t Rush into a Deal—Do Your Homework
"There will always be another deal. Take your time to vet the sponsor, check their track record, and ask detailed questions."
The excitement of passive investing can lead to rushed decisions, but due diligence is essential. Reviewing a sponsor’s history, verifying performance metrics, and researching market conditions prevent costly mistakes. A well-informed investor is a successful investor.
Tip #6: Vet the Sponsor’s Track Record—Not Just Their Marketing
"It’s great if a sponsor has 5,000 units, but how are those properties actually performing today? Are they making capital calls? Are they hitting their projections?"
A sponsor’s past performance is a key indicator of their credibility. Don’t be swayed by impressive-looking websites or social media presence—ask for real data on their existing projects. If a sponsor avoids sharing details on past deals, it could be a red flag.
Tip #7: Consider Running a Background Check on Sponsors
"If a sponsor is willing to lie about something minor, like a degree, you don’t know what they’ll do with your money."
A simple background check can reveal red flags before you invest. Transparency and integrity are non-negotiable qualities in an operator. If something feels off, it’s better to walk away than risk your capital.
Tip #8: Ask Open-Ended Questions in Investor Calls
"How a sponsor answers open-ended questions can reveal a lot—are they brushing you off, or do they take the time to explain things?"
Investor calls are your opportunity to gauge a sponsor’s expertise and honesty. A good sponsor will welcome tough questions and offer clear, thoughtful responses. If someone seems evasive, they may be hiding key details.
Tip #9: Pay Attention to How a Sponsor Handles 2021-2022 Deals
"If a sponsor avoids putting their 2021-2022 deals on their track record, that’s a cause for concern."
Many investors made deals in 2021-2022 under favorable conditions, but only strong operators successfully navigated the market shifts that followed. If a sponsor isn’t transparent about how those deals performed, it’s a sign they may not be as experienced as they claim.
Tip #10: Stay Focused on a Proven Investment Strategy
"I’m not looking to expand to Ohio, Florida, or Texas—I’m focused on building Class A multifamily in Indiana because I know that market inside and out."
The best investors don’t chase trends; they refine and perfect their strategy. Mastery in a specific niche leads to better deals and lower risks. Sticking to a proven investment philosophy is often the smartest long-term strategy.
