A 26-year-old developer whose firm owns 40 acres of land in Richmond explains why he’s betting on the capital of Virginia — and why he would personally invest in real estate there

In 2019, Harsh Thakker quit his tech start-up job and co-founded Dorado Capital, a real-estate development firm. 

Dorado specializes in residential real-estate development in the DC and Richmond metro areas. Thakker and his partners chose to focus on residential, rather than commercial or industrial, after analyzing the overall real estate market in the US.

“We saw the demand for housing and the underbuilt status of the housing market that’s existed since 2008,” the 26 year old told Insider. “So we chose residential on that basis, seeing the demand and lack of supply, and we figured that we could help alleviate that issue.”

Dorado’s first project was a six-unit condominium deal in Brookland, a neighborhood in northeast Washington, DC.

“Initially, we had planned on starting in Richmond but at that time we were not able to find any projects that penciled out,” said Thakker. Meanwhile, “the DC market was considerably faster-moving, especially the condominium market.”

He knows both areas well, having grown up in Richmond and attended Georgetown University in DC. 

While Richmond didn’t necessarily make sense from a business perspective in 2019, Dorado’s most recent acquisitions have all been in the state capital, he said: “We have noticed a trend towards more affordable cities, which is why all of our acquisitions in the past two years have been in Richmond.”

Thakker personally bought land in Richmond in 2020 shortly after the pandemic hit.

“I bought a few small lots throughout the city back when the market had tanked immediately when the restrictions hit and no one was buying anything,” he said. “I saw a few land deals I thought were really cheap and I had the capital saved up myself to purchase those. So I developed single-family homes on those myself and it turned out pretty successful.”

As for how a developer measures success, for Thakker and Dorado, it’s all based on return on invested capital.

“Eight to 15% is our target for profitability on the revenue, after not only all direct costs have been removed but also overheads, financial costs, and others that would be added back in when determining gross margin,” he explained. 

The three homes he developed himself sold within 30 days of listing and “were able to exceed those targets,” he said.

That win gave him the idea of taking Dorado’s capital to Richmond. Currently, the firm is working on three projects in the area, including a 12-unit luxury townhome community and a land development project for other builders that spans 30 acres.

“We picked up a 30-acre parcel that is eligible to be constructed for 47 single-family home lots,” said Thakker. “We don’t necessarily have the capacity to build out 47 homes or take on a project of that size, so we’ve decided to partner up with other builders who don’t want to get into land development and want to focus on the home building side.”

Across their three major projects in Richmond, Dorado has acquired 40 acres of land, which is equivalent to over 40 football fields.  

While Dorado’s projects are still underway, Thakker is confident that, just like his single-family homes, each project will exceed profitability targets.

Why Richmond is a good place to invest

Thakker believes in the Richmond real estate market. If he were to personally invest in the near future, it’s  “definitely a market I would be looking at,” he said. 

There are a couple of indicators that point to Richmond being a hot market.

On average, homes in Richmond sell after 11 days on the market. That’s a lot faster than the nationwide average of 44 days, according to Redfin data. 

Redfin also noted that, in Richmond, “many homes get multiple offers, some with waived contingencies. The average homes sell for about 2% above list price and go pending in around 11 days. Hot homes can sell for about 6% above list price and go pending in around 4 days.”

Plus, “it’s a top market for job creation,” said Thakker. “They just broke ground on a $1 billion Lego factory, which will add about 1,500 jobs, Coca-Cola has a bottling plant there which is expanding as well, CoStar recently expanded there with their new headquarters, and Capital One is obviously a major employer there that’s always adding jobs. Overall, we think that the economy there is resilient and that there’s still much more housing that needs to be produced to meet the demand.”

As a developer, Richmond is extremely attractive.

“There’s a noticeable lack of some of the largest players in multi-family and development space in the Richmond area,” Thakker explained. “The Greystars or the Blackstones are not as active in Richmond as they are in markets like Phoenix, Atlanta, or others where you might be facing competition from investors with much bigger pockets.”

Plus, it’s more affordable to develop in a city like Richmond than it would be in bigger cities.

For example, “the construction cost differential between Richmond and DC is 15% to 20% in some instances,” said Thakker. “We just don’t feel that there’s a 20% premium now to be living in DC versus Richmond with the advance of remote work and with the developments of local downtowns to become more amenitized and have better restaurants, better attractions, and things like that.”

For now, Thakker doesn’t see Dorado expanding elsewhere: “We’re really focusing on Richmond. We definitely see the local economy there continuing to improve and remaining unaffected from these broader trends. And the general cost of living, cost of land, and cost of construction are all still very reasonable.”