All Forum Posts by: Account Closed

Down here on the MS Gulf Coast we've got a lot of brand new infrastructure in place because of Hurricane Katrina.   Everything on the beach is new.  Even more is being developed around a new Galleria Mall development site approximately 1 mile from the Gulf on I-10 in D'Iberville.  D'Iberville has also recently approved a casino development site on Back Bay Biloxi.   I'm pretty sure D'Iberville is the fasted growing city in our state. Biloxi is building a pro-minor league baseball stadium across from the Beau Rivage and Hard Rock Casinos.  Hard Rock just completed a new hotel.  There is a lot of development occurring here.  The foreclosure market has slowed down and prices are on the rise.  Still there are some great deals to be had.  Insurance has come down and stabilized.  Good land and waterfront prices are well below 2005 prices.  Mississippi has been historically a value when it comes to waterfront property. Mardi Gras is coming up in a few weeks.  Great time to come enjoy some warm weather and explore an entertainment oriented market with great waterfront amenities.  As a coastal community we are positioning ourselves for tremendous growth.

Using a CD limits the exposure for the investor.   Why put up 100K if you only have to put up 20K?  Especially when dealing with out of state markets where you have minimal oversight of the deal.

I agree with all the "nay sayers"....Don't walk....Run from this one! 

Happy Hunting!

sorry I got distracted and missed the 1 year return of principaL.  And I forgot to say...Welcome to BP!   

Well....I think following your gut is a wise idea....however, 7.5% seems very low.  That's about 15yrs to double your money.   And there isn't any equity building, other than the friendship.  I would avoid any situation where a business decision becomes a personal decision.  If you do invest with him I think you will be better off considering it a gift.  Investment real estate can produce 7.5% plus 10 or even 20% more while simultaneously providing an appreciating asset!  The game of investment real estate is to make money along the way to the big return you get when you sell the asset.  Maybe he already knows this?

Sorry I hit the back button and then hit post again

I spoke to a local lender who told me that cd's could be collateralized for loans of 80% total ARV. With the cd as collateral they will quick cut checks for the re-hab per your own draw schedule. This was exciting to me because I am a conservative investment broker who looks for minimal risk and maximum reward along with the workability of the overall project. cd backed loans require low interest, interest only payments. My thought process is:

$50,000 cd for investor

Target properties with ARV of $100,000 to $200,000 (starter homes) - most active market

Self re-hab as I hold a general contractor's license

Re-sell and split profits 75/25 with invesor take 75%

Normal deal:  $80,000 purchase with re-sale of $140,000 and $25,000 in repairs.  3-6 month turn

Investor collateral used $21,000  

ROI for investor $19,950 (140k - 8,400 real estate fees - 105,000 total invested x .75)

I'm not giving away the farm by taking a lower split. I would also broker the real estate transaction and oversee the construction. I do renovation loans on a regular basis for FHA 203-Ks and have a full time construction team on payroll so I control costs very well. I also have full time HVAC/mechanical on staff as we do maintenance for our own and other property management companies.

Does anyone have any experience with these and have any suggestions?

I spoke to a local lender who told me that cd's could be collateralized for loans of 80% total ARV. With the cd as collateral they will quick cut checks for the re-hab per your own draw schedule. This was exciting to me because I am a conservative investment broker who looks for minimal risk and maximum reward along with the workability of the overall project. cd backed loans require low interest, interest only payments. My thought process is:

$50,000 cd for investor

Target properties with ARV of $100,000 to $200,000 (starter homes) - most active market

Self re-hab as I hold a general contractor's license

Re-sell and split profits 75/25 with invesor take 75%

Normal deal:  $80,000 purchase with re-sale of $140,000 and $25,000 in repairs.  3-6 month turn

Investor collateral used $21,000  

ROI for investor $19,950 (140k - 8,400 real estate fees - 105,000 total invested x .75)

I'm not giving away the farm by taking a lower split. I would also broker the real estate transaction and oversee the construction. I do renovation loans on a regular basis for FHA 203-Ks and have a full time construction team on payroll so I control costs very well. I also have full time HVAC/mechanical on staff as we do maintenance for our own and other property management companies.

Does anyone have any experience with these and have any suggestions?

Thanks fellas,

It seems to me like I should probably stick to the original plan of building this up myself. Aside from the 2 years I have in operating the business I spent years researching and creating my formula...On top of the on-the-job experience. I have no problem paying a fair ROI but to give away the company for any price doesn't make sense to me. I guess I'm over-invested in myself! I'm sure my wife would agree. :-)

Chasing capital one job at a time has kept us floating this long.  Maybe I should take a look at grant opportunities? 

I opened up my own company around 2 years ago after becoming frustrated with partners not performing.  Now that I own and operate my own business I have become frustrated with the never ending costs associated with continuing to build the business.  It seems like growth equals expense and expense slows growth while adding stress in the process! 

I know stress is good to some extent, as it raises the fear of failure, but I am very confident in the business and am concerned that with my lack of capital I may miss some important opportunities in my market.  I started this company with nothing, and am interested in exploring the opportunity to advance the company more quickly while stabilizing it financially as it continues to grow. 

In a nutshell.....My car is running but I could use a few new parts to run faster and more efficiently.

I didn't draw a business plan, I drew a battle plan.  However, I was unable to include many of the operating resources I needed to make an all-out-attack.   This may have been a blessing because it gave me the focus to ensure we built a strong reputation amongst our clients. 

I know how investors think, mostly.  And would be most interested in using capital to build a multi-use building so that there would be an actual cash-producing asset as a majority part of the deal.   Which I could also build at cost since I am a GC, and I could manage as a PM.  It would serve as my base of business operations and would be built to function energy independently giving us immediate marketing benefits and operating cost savings.

How does venture capital work?  Will venture capitalists settle for a fair return, or will they be expecting to buy a percentage of my company's income into perpetuity?  Any insights are greatly appreciated.