Why Developers Who Don’t Rely On Debt Are Buying Land As Other Projects Stall
By: KeyCrew Media
Across many U.S. markets, development deals that made sense a few years ago no longer work. Construction costs, insurance, labor, and the cost of borrowing have all risen, and many projects simply do not pencil anymore. For developers who depend on bank loans and outside investors, that often means pausing, selling, or walking away.
Daniel Kaufman, founder of Kaufman & Company, sees the same conditions as an opening. His Los Angeles-based holding company does not borrow from banks or raise money from outside investors, and he says that lets his team buy when others are forced to sell. “Right now we’re finding this is a great time,” he said. “We’re buying again because of distress in markets.”
Why So Many Projects Are Stalling
Kaufman points to a combination of pressures. Higher construction and labor costs raise the price of building. Insurance has become a major expense in some states. And the cost to borrow makes every month of delay more expensive for leveraged developers.
When those costs climb at once, a project that looked profitable on paper can turn negative before it breaks ground. Developers carrying debt cannot always wait for conditions to improve, because the interest keeps running whether the project moves forward or not.
That pressure is what creates opportunities for buyers who are not on the same clock.
How Not Borrowing Changes the Timeline
Kaufman says the biggest advantage of his model is time. Without lenders or investors waiting on returns, his team can buy a site and hold it until the numbers make sense.
“We can buy your project, sit on the land, and wait for something to change,” he said. Much of what the company is developing today is land it bought in 2019 and 2020. One project now kicking off began planning work almost seven years ago. Kaufman says the company currently has more than 11,000 units in active planning and construction, much of it on land acquired years earlier.
That patience also shapes how the team prepares a site before building. Kaufman & Company’s Greenview Residences case study describes a planning phase built around feasibility studies, zoning assessments, and risk evaluations, the kind of groundwork that is easier to do well when there is no lender pushing for a quick start.
“To be successful in this business, you have to be patient,” Kaufman said.
Flexibility Matters as Much as Capital
Holding land is only useful if you can eventually find the right use for it. Kaufman says his team does not commit a site to one product type. A parcel that no longer works as market-rate housing might work as affordable housing, storage, industrial space, commercial, or energy infrastructure.
“We can unlock value in the land by looking at it as something else,” he said. For a developer locked into a single asset type, a shift in the market can kill a project. For a developer willing to rethink the site, the same shift can create a better one.
Knowing When to Hold and When to Sell
Kaufman describes his company as a long-term holder. The team does not underwrite deals around a planned exit, because he believes no model can reliably predict where a market will be in three or five years.
That does not mean the company never sells. Kaufman says two situations lead to a sale: an offer that is too good to turn down, or data showing that a market’s perception has moved ahead of its fundamentals. Florida is his example. The company sold out of South Florida as the data turned, while many buyers were still paying prices based on the market’s reputation. Proceeds from sales are typically distributed or reinvested in other projects and acquisitions.
Now he expects the opposite trade. With land and asset values declining in parts of Florida, Kaufman believes the next 24 months will be a time to buy, not sell. For other developers and investors, his point is that the best opportunities often appear when financing is hardest to get, and the advantage goes to whoever can afford to wait.
Kaufman & Company is a Los Angeles-based permanent-capital holding company founded by Daniel Kaufman. The platform spans residential development, workforce housing, AI infrastructure, and venture capital across ten operating companies.
Disclaimer: This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
