Timing the Market: How Exiting Texas Early Gave This Developer an Edge

Written by:

Rudi Davis

Date:

11 Feb 2026

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Real estate CEO Daniel Kaufman argues that following institutional capital into hot markets is a recipe for underperformance. His firm’s early exits from now-oversupplied markets illustrate how moving against the herd can yield better results.

Conventional real estate wisdom advises following institutional money. When large investors enter a market, their presence is seen as a stamp of approval. But Daniel Kaufman, CEO of DanReDev LLC, has spent three decades taking the opposite approach and says most in the industry have their timing wrong.

“Unlike a lot of other folks, we stay away from where institutional investors are,” Kaufman says. “They’re always late to the party. By the time they show up, the market’s already peaked.”

Two years ago, Kaufman’s firm exited the Texas market, halting new construction despite headlines promoting it as one of the fastest-growing real estate markets in the country. Today, Texas faces declining absorption, increased concessions, and an oversupply of inventory. Kaufman describes a similar pattern in Florida, where his company halted new development after making significant pre-pandemic investments.

How Institutional Capital Misses the Peak

Kaufman contends that institutional investors are structurally slow to respond to market changes. Significant funds require lengthy due diligence, multiple layers of approval, and a track record of performance before committing capital. By the time they invest, the initial opportunity has often passed.

He points to Raleigh, North Carolina, as a recent example. “You see, absorption is declining. You see rents declining. You see more concessions, because it’s peaked, and now the institutional investors are very interested in that market,” Kaufman notes.

This cycle, he says, is predictable: developers identify markets early, build for several years while fundamentals are strong, then exit as institutional money arrives and drives prices to unsustainable levels. Kaufman argues that most developers struggle to resist the allure of validation from institutional interest.

“We’re not going to go where everyone else is going,” he says. “I’m not building in Texas or Florida because those markets are oversupplied. We’re looking elsewhere.”

Betting on Overlooked Markets

While Texas and Florida attracted national attention, Kaufman’s firm focused on cities such as Indianapolis and Kansas City, which other developers often dismissed. Today, he says, those markets are outperforming national averages while institutional favorites face headwinds.

“We’re in markets that, if you look at the data, are outperforming the rest of the country,” Kaufman says, specifically naming Kansas City and Indianapolis. “Five years ago, people asked why we’d want to go there.”

Kaufman is now bullish on cities with negative national reputations but strong local fundamentals. He cites Chicago as an example, where negative headlines have kept institutional investors away despite solid demand and affordable land. “There’s high demand for product, and land is relatively inexpensive,” he explains. “We feel like that’s a market we’ll be in for the next five years.”

His firm is also targeting smaller markets that rarely attract institutional capital, such as Portland, Maine; Burlington, Vermont; Philadelphia; and Pittsburgh. In these cities, demand outpaces supply, but they lack the scale or brand recognition to attract large investors.

Why Most Developers Can’t Replicate This Approach

Kaufman acknowledges that his strategy depends on financial flexibility, which most developers lack. DanReDev does not syndicate deals or raise outside capital for individual projects. Instead, the firm operates from portfolio cash flow and an extensive line of credit backed by debt-free assets.

“We don’t take on investors or borrow money for projects,” Kaufman says. “Our capital comes from our portfolio. That changes the whole model. We don’t do traditional construction loans.”

This structure enables a firm to enter new markets quickly and without needing third-party validation. It also eliminates the pressure to sell assets for quick returns, freeing Kaufman’s team to focus on long-term cash flow rather than one-time gains.

“Most developers care about the exit—they want to sell to someone else,” Kaufman says. “That’s not our thesis. We want perpetual cash flow.”

What This Means for the Broader Market

If Kaufman is right, institutional investors systematically arrive late to the best opportunities because their processes are slow and risk-averse. As a result, developers who don’t depend on outside capital or institutional buyers may have a lasting edge.

However, few firms have the capital reserves, discipline, or patience to execute this approach. It requires a willingness to invest in markets that don’t make headlines, resist the urge to follow peers, and trust data over sentiment.

“Our focus is to look for hidden gems, avoid the noise, and not follow everyone else,” Kaufman says. “That’s really our secret.”

Whether more developers will adopt this strategy may depend on their ability to ignore institutional validation and enter markets before they become crowded. For now, Kaufman’s experience suggests that being early—and willing to go where others won’t—remains a rare advantage in real estate development.