Issue #31: The Pioneer's Paradox

Welcome back, everyone! This week finds me teetering on the edge of my expertise, advising on the exit strategy for newly constructed luxury infill townhouses – definitely not my usual playground. I'm carefully walking the tightrope, helping my client with exit strategy while bringing in sales and marketing experts to validate our assumptions.

This balancing act reminds me of a challenge many experienced professionals face: knowing the boundaries of our expertise.

After decades in integrated developer/homebuilder operations, I've developed deep knowledge in land development and picked up plenty about sales, marketing, and construction along the way.

Even seasoned professionals need to recognize when they're crossing from mastery into areas where they have just enough knowledge to be dangerous 😰.

On Tuesday, I found myself in the unfinished basement of a nearly complete townhome with Dan (my client) and Jim (the general contractor).

As we discussed pricing strategy for these ~$1M units, I casually mentioned that a 2,200 square foot townhouse at that price point really should have three proper bedrooms instead of the two-plus-questionable-den they'd designed.

"That little office space barely qualifies as a bedroom," I said, pointing to the floor plans. "Buyers at this price point expect three legitimate bedrooms. We should convert this lower level space into two more bedrooms and a full bath, it's already plumbing ready."

Dan nodded thoughtfully while Jim's face transformed into a mask of barely-contained panic. I could practically see the modified schedules and budget overruns flashing before his eyes.

"There's no time in the schedule," Jim said, his voice tight. "And definitely no money in the contingency for additional framing, drywall, electrical..."

"The $25,000 in extra construction will be worth 4x that in the end selling price," I countered, running quick numbers in my head.

But folks, I'm not here to talk about value creation – that was Issue #28: The $200k Side Door . We'll save the rest of that story for another day.

What I want to focus on today is that feeling of walking the tightrope between expertise and overconfidence – when the unfamiliar feels too familiar. It's a sensation I've experienced many times, but never more vividly than back in 2007...

Calgary 2007

SCENE: An unfinished basement in the farthest northwest corner of the city. I'm hunched over a folding card table — my "executive desk" — surrounded by moving boxes, while a heavily pregnant Kirsten tries to organize our new life in a strange city.

"How's the empire-building going today?" Kirsten asks, one hand on her seven-month belly as she navigates around a precarious tower of boxes.

I gesture at the sprawl of papers covering my wobbly card table. "Great! I've drafted our entire land acquisition strategy. We're going to dominate this market in six months."

Kirsten eyes my enthusiastic sketches with that look — the one that says she loves me but questions my grip on reality. "Don't you think you should talk to some local planners first? Alberta's approval process might be different from Ontario."

"Planning is planning," I say dismissively, tapping my pen against a map of northwest Calgary. "I've been doing this for years. Different province, same game."

"Is it, though?" She picks up an approval timeline I've drafted. "You've scheduled site plan approval in three weeks. Did you check if that's even possible here?"

I wave away her concern. "I know what I'm doing, honey. Trust me, I'm the expert."

Three weeks later, I'm back at that same card table, staring at a rejection letter. As it turns out, Calgary's approval process wasn't "planning is planning" after all. The differences might as well have been between Earth and Mars.

Epiphany

"So about that expertise..." Kirsten says, trying not to look smug.

"I may have been... slightly overconfident," I admit.

"Slightly?"

"Okay, I was absolutely certain I knew what I was doing, right up until the moment I discovered I had no idea what I was doing."

She sits down across from me. "Know what that sounds like?"

"Please don't say Dunning-Kruger."

"The Dunning-Kruger effect," she says with the smile of someone who just won an argument without having to argue.

⁉️ [I learned about Dunning-Kruger in MBA school; how did she about this effect!?!!]

"When you know just enough to be dangerous but not enough to know you're dangerous."

The irony wasn't lost on me. I'd been sent as the pioneer — the expert tasked with conquering new territory for our national homebuilder.

But my Ontario expertise had created a dangerous blind spot. While I was genuinely qualified in development principles, I failed to recognize how provincial differences would transform the application of those principles.

I was operating in what experts call the "danger zone" of the Dunning-Kruger effect – where substantial knowledge in one domain gives false confidence when that knowledge needs significant adaptation to work in a new context.

I'd climbed to what psychologists call the "Peak of Mount Stupid" — that point on the Dunning-Kruger curve where substantial expertise in a related field creates maximum confidence about a new domain — and was now tumbling down the other side into what experts call the "Valley of Despair."

A New Day

That night, working late at my card table in the cold basement, I did something that changed everything: I threw out my original plans and started with a blank page. I wrote down everything I didn't know about Alberta's development process, then spent the next two weeks finding local experts who could fill those gaps.

Six months later, we weren't dominating the market as I'd initially boasted, but we had secured our second and third land position using a hybridized approach — combining my development experience with local expertise, I never would have sought if my initial plans had magically worked.

The Lesson

Even genuine expertise has boundaries and often doesn't transfer seamlessly across contexts. Development principles in Ontario and Alberta might share 80% of their DNA, but that 20% difference can lead to complete failure if not respected. The more you know in one domain, the more vigilant you should be about identifying where your expertise needs supplementation when the context changes.

It's a paradox that plagues pioneers of all kinds — from corporate trailblazers to tech founders. We're chosen for missions precisely because of our expertise, then undone by the overconfidence that same expertise creates.

The real skill isn't knowing everything; it's knowing what you don't know — and being humble enough to ask for help.

Back To The Present

And that brings me back to Tuesday's basement meeting with Dan and Jim. As I watched Jim's panic about adding two bedrooms and a bath, I realized I was potentially making the same mistake I'd made 20 years earlier. While I had good instincts about what buyers want at that price point, I needed to verify before potentially leading Dan into a $100k mistake.

"Let me introduce you to some sales and marketing experts to prove out my thoughts before we make any major changes," I told Dan, already pulling out my phone. "I know exactly who to call."

Some lessons you only need to learn once.

🧠 The AI Proforma Hack: Teach It Once, Use It Forever

Continuing my series on simple AI hacks for real estate developers.

I use ChatGPT—to run early-stage financial models for land development projects. I trained it by uploading a detailed proforma from a completed project, with real numbers across categories like Earthworks, Internal Servicing, Roadworks, and Soft Costs.

Now, whenever I’m evaluating a new site, I can give ChatGPT a short list of 10 core project inputs—things like lot count, soil conditions, road length, and servicing type—and it generates a back-of-the-napkin proforma that’s directionally accurate. Fast enough for site screening. Sharp enough to catch red flags.

I asked GPT what the 10 most important questions were (unfortunately. Project Name was an important one 🙁 . Here was the list:

• Project Name / Location
  (So I don’t call it Project X forever)

• Net Developable Area (acres)
  (Not gross. What you can actually build on)

• Estimated Lot Count
  (Single number or rough mix if you have it)

• Product Type
  (SF, TH, MF? Serviced lots only? Mix?)

• General Soil Conditions

  • Flat & easy

  • Moderate cuts & fills

  • Nightmare (rock, fill, groundwater)

• Topsoil Export or Import Needed?
  (Yes / No / Not sure)

• Blasting Required?
  (Yes / No / Maybe)

• Internal Road Length (linear meters)
  (Rough guess is fine—think in city blocks if needed)

• Full Urban Servicing?

  • Yes (curbs, storm, water, sanitary)

  • Partial (e.g. septic or rural cross-section)

  • Unsure

• Any Known Off-Site Costs or Contributions?
  (e.g., lift station, storm pond, road widening, etc.)

Hey, at least 3 of the questions had to do with soils…very important!

Here’s the key lesson: AI is only as smart as the information you give it. The more local costs, revenue assumptions, and project learnings you feed into ChatGPT, the better its output becomes.

Add 5–10 more inputs—like absorption timelines, unit mix, or pricing—and it can model a full DCF with IRR.

It’s like training a junior analyst who works 24/7 and never forgets what you taught them. You just have to invest the time to teach it once.

AI won’t replace developers. But developers who use AI to move faster? They’ll replace the ones who don’t.

Definitely a work in progress.

Reply with “proforma” if you are interested in learning more.

🤔 Stuff From The Week

More Tariffs: Colliers Canada’s head of research outlines 5 key tariff impacts on commercial real estate.

I Love Me Some Certainty: Three-year fixed rate provides some certainty for the remaining Trump years, at least.

Kirsten Has Still Never Visited Edmonton: New study ranks Edmonton as most builder-friendly in Canada.

🔀 Trends From GROK (weekly summary so you don’t have to)

These points capture the dynamic landscape of Canadian real estate development as of early April 2025, offering your newsletter subscribers actionable insights into current trends (← Thanks Grok 😉)

• Surge in Multi-Unit Residential Projects: Developers are increasingly focusing on multi-unit housing, such as fourplexes and mid-rise apartments, driven by government policies like British Columbia’s density mandates. Annotation: This shift reflects a response to the housing affordability crisis, aiming to maximize land use in urban areas, though some experts warn of a looming “demolition crisis” as single-family homes are razed.

• Distressed Asset Opportunities Gain Traction: Private investors, including family offices, are eyeing distressed real estate—properties facing financing gaps—for potential bargains. Annotation: With tighter lending conditions persisting into 2025, this trend highlights a strategic pivot toward riskier but potentially high-reward investments, especially in the condo sector where smaller firms are struggling.

• Push for Sustainable Infrastructure Integration: There’s growing interest in blending real estate with sustainable energy projects, like data centers and renewable-powered buildings. Annotation: This aligns with rising investor demand for stable cash flows and diversification, reflecting broader economic shifts toward tech-driven and eco-conscious development.

• Policy Impacts on Construction Pace: New federal initiatives, such as GST exemptions for first-time buyers and rental construction incentives, are sparking optimism, though trade tensions with the U.S. threaten to slow progress. Annotation: While these policies aim to boost supply, developers caution that bureaucratic bottlenecks and potential tariffs could delay housing starts, a critical issue for your readers tracking timelines.

• Regional Market Differentiation Widens: Performance varies sharply by region, with cities like Calgary seeing price gains while Toronto’s condo market faces pressure. Annotation: This divergence underscores the need for localized strategies, as rapid population growth supports recovery in some areas but not others, influenced by recent immigration curbs.

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👉 Facing development challenges that keep you up at night? Whether it's navigating byzantine zoning codes, optimizing your pro forma, or finding that perfect strategic positioning in a crowded market, I've seen it all in 30 years of development trenches.

Here's how I can help:

• Strategy Sessions: One conversation could save you six figures in avoidable mistakes

• Deal Analysis: Get a second set of experienced eyes on your numbers before you commit

• Development Roadmapping: Clear, actionable plans that anticipate the potholes ahead

• Stakeholder Navigation: Learn how to speak the language of planners, politicians, and partners

Don't waste time reinventing the wheel. Every month you spend figuring things out on your own is another month of carrying costs eating into your returns.

Hit reply with "DEVELOPMENT 911" and we'll set up a quick call to discuss your specific challenges. No obligation, no sales pitch – just straight talk about your project and how I might be able to help.

Alternatively, reply with your biggest current development headache and I'll send you my quick-take perspective at no charge.

See you next Friday.

Cheers,

- Greg