How to Put Together Real Estate Development Projects: Lessons from 7,000+ Units with Al Marshall

Introduction

In this episode of the Affordable Housing & Real Estate Investing Podcast, host Kent Fai He speaks with Al Marshall, a developer with experience across more than 7,000 housing units, including major affordable housing projects. Al’s story spans decades, from the oil boom years in Houston to affordable housing developments in California, giving listeners an inside look at how real estate deals really come together.

If you have ever wondered what “putting a deal together” actually means, this episode delivers practical insights that every investor, developer, or advocate can apply.

What Does It Mean to Put a Real Estate Deal Together?

When people hear about development, they often hear the phrase “putting a deal together.” According to Al, this means creating it from the ground up.

• Identifying sites with development potential.
  
  

• Handling entitlement work and zoning approvals.
  
  

• Running feasibility studies, including financial modeling, market analysis, and risk assessments.
  
  

• Determining whether the project has a chance of winning tax credits or attracting investors.
  
  

For Al, putting a deal together was not about working alone. He often partnered with companies like Kauffman & Broad or Related, handling the upfront work and then bringing larger developers on board when projects were ready to move forward.

How Did Al Marshall Get Into Development?

Al’s journey started at just 15 years old when he designed and built a model home for a science fair project. His path was not straightforward—his high school lost accreditation, forcing him into a nontraditional education path that eventually led to architecture and urban design.

After college, Al worked on major office towers and corporate headquarters in Houston before pursuing his dream of becoming a developer. He bought, renovated, and repositioned properties, starting small with cottages and townhomes before scaling to larger projects.

His first big lesson came during the Texas crash of 1986. Overleveraged developers were wiped out overnight when oil prices, tax laws, and currency shifts all hit at once. Al lost everything, but the experience gave him a deep appreciation for risk management, inflation, and exit strategies.

What Lessons Can New Developers Learn from Al’s Early Career?

Al emphasizes that development is not just about vision. It is about fundamentals:

• Understand your market. Even great designs will fail if demand is not there.
  
  

• Plan multiple exit strategies. Always know if you can sell land, build smaller, or pivot based on market conditions.
  
  

• Respect inflation and cycles. Overconfidence in rising markets can be devastating when downturns hit.
  
  

• Vet your partners. The right partners bring stability, trust, and alignment. The wrong ones bring risk.
  
  

His early struggles also showed that learning “on the job” without a business background is expensive. Al often advises younger developers to get some business education before jumping into projects.

How Do Developers Manage Risk in Entitlements and Financing?

Entitlements can take years. During that time, developers risk hundreds of thousands of dollars in architecture, engineering, and consulting fees with no guarantee of success.

Key risk strategies Al highlights:

• Land options instead of purchases. This avoids debt until approvals are secured.
  
  

• Equity from strategic partners. Working with family offices or builder-investors creates alignment and reduces cost overruns.
  
  

• Creative financing. Some developers partner with contractors, subs, and engineers who defer part of their fees as equity until projects cash flow.
  
  

In affordable housing specifically, risk is heightened because only one in three to one in five tax credit applications are awarded. This means significant pursuit capital can be lost if a project does not win credits.

What Role Do Politics and Regulation Play?

California and Texas could not be more different in Al’s experience.

• Houston: Market-driven with few zoning laws, allowing creativity but requiring strict financial discipline since personal liability is high.
  
  

• California: Highly regulated, with inclusionary zoning requirements, affordable set-asides, high fees ($35,000 to $75,000 per unit), and prevailing wage rules. These regulations can triple development costs compared to other states.
  
  

Propositions like California’s Prop 33, which threatens statewide rent control, create uncertainty that can freeze development. Al warns that developers will not build when future margins are capped by regulation.

Key Insights from Al Marshall

• Development requires more than design skills; it demands deep financial and market knowledge.
  
  

• Multiple exit strategies protect projects when markets shift.
  
  

• Entitlement risk is one of the most expensive and dangerous parts of development.
  
  

• Partnerships are built on trust, but large corporations require strict contracts and legal precision.
  
  

• Regulation is the single largest factor making affordable housing difficult to deliver in California.
  
  

Memorable Quotes from Al Marshall

“Putting a deal together means creating it. You find the site, do the upfront work, and make sure it can pencil before bringing in partners.”

“I lost everything in Houston, but it taught me lessons about inflation, exit strategies, and understanding the market.”

“Developers are hardcore businesspeople. If the margins are gone, they will not build.”

“Affordable housing costs three times as much in California because of regulations. It is not materials or labor—it is the rules.”

Common Questions Answered in This Episode

What does ‘putting a deal together’ mean in real estate development?
It means identifying land, handling entitlements, running financial feasibility, and structuring financing to make a project viable.

Why did many developers fail in Houston during the 1980s?
Oil price shocks, new tax laws, and currency devaluation caused a collapse that wiped out overleveraged projects.

Why is affordable housing so costly in California?
High regulatory costs, long entitlement timelines, and requirements like prevailing wage add $200,000 or more per unit compared to other states.

What advice does Al give to new developers?
Get business education, partner with experienced developers, and always plan for multiple exit strategies.

How do large homebuilders manage land differently today?
Instead of sitting on thousands of acres, they now prefer to buy entitled land in small tranches, reducing balance sheet risk.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. Through interviews with leaders like Al Marshall, Kent provides investors, developers, and advocates with insights that shape the future of affordable housing.

DM me @kentfaiheon IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.