**Inside Goodin Development’s Model: A Calculated Approach to Ground-Up Development**
While many investors are sitting on the sidelines in today’s uncertain market, Justin Goodin, founder and CEO of Goodin Development, sees opportunity—particularly in ground-up multifamily development. With a background in underwriting and finance, Goodin brings a structured approach to real estate development that’s designed to balance risk, drive returns, and create long-term passive income for investors. Through Goodin Development, he’s focused on building luxury, mixed-use communities while maintaining disciplined deal structures. In the following Q&A, Goodin shares how this model works—and why 2025 could be a prime time for new investment.
**Q: What risks should investors understand before investing in a development project, and how does your firm mitigate them?**
**A:** All investing involves risk, no doubt. But there are effective ways to mitigate risk, especially in ground-up development. At Goodin Development, we use a structured, disciplined approach to reduce unknowns and protect investor capital.
First, we require a guaranteed maximum price (GMP) contract with our general contractor. While a GMP isn’t foolproof—costs such as approved change orders or unforeseen conditions can still fall on the developer—it remains one of the best tools to manage construction risks. Additionally, we build in strong contingencies for possible unforeseen costs, maintain reserves for lease-up, and leave the majority of our developer fees in the project as added protection. This way, we’re well-capitalized to handle challenges if they arise.
We also emphasize consistency. We use the same contractors, architects, and engineers across many of our projects. These long-standing relationships with teams that know our standards offer greater control and reduce variability throughout the process. In short, we work to eliminate as much guesswork as possible.
**Q: What financial metrics do you review to understand if a development project will be profitable?**
**A:** We closely monitor financial metrics such as debt service coverage ratio (DSCR), profit margin, and untrended yield on cost. The untrended yield on cost, in particular, helps us determine our return relative to total project costs. It’s our baseline for determining whether we’re truly creating value. We then compare this yield to the market cap rate for stabilized properties.
In addition, we analyze projected operating expenses and stress test them with local market rents and income levels. Household income in the area, for instance, helps gauge whether prospective residents can afford the rents we plan to charge—which is critical for leasing speed. On the exit side, we use a conservative cap rate assumption and underwrite separate exit cap rates for both the residential and commercial portions of a project. This helps us plan for a realistic and stable sale valuation.
Beyond the numbers, location is the most important factor. We focus exclusively on the best locations within the best markets. We look for supply-constrained areas experiencing job growth and population increases. Without the right location, even the smartest financial modeling can’t save a deal.
**Q: In a higher interest rate environment, how do you continue to pencil new deals profitably?**
**A:** Higher interest rates certainly make it more difficult to pencil deals. What differentiates Goodin Development is our focus on public-private partnerships. We collaborate with municipalities to develop extraordinary mixed-use projects that might not otherwise be financially viable.
These partnerships create win-win outcomes. They enable us to reduce our cost basis to build, while municipalities benefit from the economic development, housing supply, and job creation our projects provide. When many developers pull back due to economic conditions, we’ve been able to stay active by working directly with municipalities. It’s an essential part of our business model and a big reason why we continue to progress while others pause.
**Q: Is 2025 a good time to be investing in development?**
**A:** Absolutely. I believe 2025 presents a great opportunity for ground-up development. The supply of new multifamily units coming online is expected to decline sharply—a trend I call the “supply cliff.” By 2027, national forecasts suggest that multifamily deliveries could hit levels not seen since 2013. If that happens, and demand remains consistent, we could see meaningful upward pressure on rents.
This dynamic creates a compelling window for breaking ground. Projects that begin development in 2025 will likely reach completion in 2027 or 2028, aligning perfectly with a period of limited new supply and potentially strong rental growth.
Additionally, the investment landscape is shifting. Institutional and private investors are increasingly moving away from older, value-add assets—many of which were built in the 1970s and 1980s—and toward newer-quality properties. New construction offers fewer maintenance issues, attracts stronger tenants, and is more resilient in today’s market. As demand for vintage assets declines, new developments will be extremely competitive—especially when it’s time to sell.
In summary, between diminishing new supply, shifting investor preferences, and long-term demand for high-quality rentals, I believe that now is a strategically advantageous time to invest in new development.
