New Townhouse Development

[Ryan Oelmann]

Hello everyone, first post on the site but have been watching and reading for some time. So much knowledge on the site and have learned so much! Quick about me- I have a 4 plex that I've owned for right at 2 years now and it has done very well for me and my wife. I work at a demanding job so I manage it but only when it comes to doing the marketing for vacancies/leases/ and turnover upkeep and it works great for me that way. I'm looking at branching out and growing our business this summer. I have an opportunity to buy 3 lots that can handle 4 townhouse units on each lot. The seller has built some townhouses in the development and I'm looking to build the exact same ones to keep everything conforming. I have a few questions on how to go about this for those that have done it before.

1. Being that I don't have the lots purchased yet I have not gotten plans for the buildings to get quotes on the build price of them. My question is would it be logical for me to ask for blueprints of the buildings they had previous built when I submit an offer on the land?

2. When I submit the offer on the land and if I can get blueprints as part of the purchase could I have closing on land purchase subject to the building permits being issued so i can wrap everything into one note with my lender? Or would there be a better way to go about this?

3. When a new developer that holds a property as a rental, what is a good estimate to figure for repairs each year? I don't know how long a typical new property would have before it starts requiring a large amount of repairs so any advice on that would be appreciated.

Thanks to everyone for any help you can provide.

Ryan

[Mario P.]

In terms of questions 1&2, they are both things that are negotiable with the vendor (also, it will be easier to obtain constriction financing with building permits already in place).

Typically (here in Ontario), builders purchase serviced lots by providing a cash deposit for a portion of the price, the vendor takes back a mortgage for a portion of the price, and the construction loan covers the remainder. So, you can negotiate by offering the vendor a larger cash deposit on closing (smaller vtb), vtb discharge acceleration, or a % of construction profit - be creative.