All Forum Posts by: Ryan Arth

Quote from @Gerrell King:

@Robert Ellis I'm a new developer with a background in working for home builders and I'd like to focus on new construction of 2-4 units for rent.  At the moment, I'm limited on cash and am not in a position to cover all of the costs to start however I can cover some.  

Any advice on how to navigate this challenge of funding deposits, construction loan draws, permits, etc?

2 sellers I speaking with are open to owner financing and I'm considering offering them a fixed or preferred return and full payment when I refi. 

 That sounds like its worth a shot. Or find a straight capital partner to come along on the deal. Or find clients and build for them with their bank loan to fund the construction. 

Quote from @Jay Hinrichs:

Quote from @James Hamling:

Quote from @Paul Azad:

SUPPLY 

"About 2.6 million Baby Boomers die each year, but that number is expected to increase to nearly 4 million by 2037." And a total of about 3.3 million Americans in total die each year. Likely most are over 40 and more likely to be homeowners than younger people percentage wise. Boomers are largest demographic co-hort in US history. Also a buddy of mine lives in a mythical city called Austin, where he swears while sober, said he saw guys 3-D printing houses, well foundation/walls etc. I have not looked into this but, if process ramps up, could cut construction costs, time to market and massively increase supply, too. 

DEMAND

America is decreasing it's previously Laissez-faire approach to immigration.  

So population decline either with Celestial deportation or with a more southerly route may not be good long term for housing market?

3-D printing for homes has LOOOOng been around and being fiddled with. Literally decades now. Have you seen any huge impact from 3-D home printing yet? No. It's an interesting idea that still hasn't landed any significant changes. 

SW is about the only place we can do it so that's where all the R&D is located by the daisy-chain of those trying to evolve the tech to something of viability. 

For now it's still a novelty more than anything. 

The recent leaps in pre-fab builds is the spear head of things. BOXABL is a standout leader in this segment. That is where your most likely to see any significant disruptions come from for any radical shift in how housing is built. 

been following boxabl  but I have yet to see them in the wild.. they are located in Vegas ( factory) and its a very limited product mainly an ADU from what I see.

 I also followed Boxabl and 3D printing for housing, but settled on SIP panels and modular as more effective solutions at this time.

Quote from @Joe S.:

I can think of several things. The first one that hopped to mind is finding a general contractor that will do the job at a price that will still lead meat on the bones for the Investor.  The second one is finding a general contractor that’s reliable and not going to pull a fast one on the investor and leave them holding the bag. There are other things that come to mind, but that’s a good start. :-)

I was on a call with a family office doing a development on Vancouver Island. They structured the deal such that everyone from the developer to the trades working on the project were partners in the project. Everyone's books were open with their costs and profit margins, to make it such that everyone wasn't gunning for themselves. The idea was fixed margins and a proportionate split of the excess profit later, aligning everyone's interests to control costs. 

An interesting concept for larger projects. 

Quote from @Jeremy England:

Quote from @Ryan Arth:

Quote from @Jeremy England:

Equity partners, from a builder perspective how would you structure that.  in short, I only have so much cash.  I can build one and sell 1.  What if i want to build 5?

 The same as any other investment you raise for. You can pay a fixed return, or get more complicated with a preferred return and waterfall structure on profits. Or anything in between. 

On the one spec we are building on a client's land they are putting up all the money and we are doing a backend profit split. Nothing complicated. 

 Can you explain waterfall structure on profits?  I haven't partnered with any investors on specs and am looking for ways I might do that.  

 Profit is split differently at different return hurdles. For example, the investors get an 8% preferred return, then 80% of profit to 12%, then 60% to 15%, 50% to 18% and 20% beyond that. This multi-tier structure is more applicable to an apartment building or other large project, but it is a tool that can be simplified for a smaller project. 

Quote from @Susan Swanson:

Anyone use the advantage of putting new construction builds in an SDIRA? Grows your retirement savings tax free. Easy way to put down 20-25% on a new build, residential SFH, Duplex or Quad, turnkey PM'd, long term rental with Build 2 Rent model.

 @Susan Swanson Can you get financing with a SDIRA as the owner? We have SDIRAs invest in projects, but they aren't on the hook for the debt. 

Quote from @Jeremy England:

Quote from @Ryan Arth:

Quote from @Jeremy England:

Equity partners, from a builder perspective how would you structure that.  in short, I only have so much cash.  I can build one and sell 1.  What if i want to build 5?

 The same as any other investment you raise for. You can pay a fixed return, or get more complicated with a preferred return and waterfall structure on profits. Or anything in between. 

On the one spec we are building on a client's land they are putting up all the money and we are doing a backend profit split. Nothing complicated. 

 Whats the split?  I50/50?  Are you getting a fee or waiving any builder fee?

 This spec is 60/40 to us. We know our cost and the market, so we are confident in the arrangement.

@Adam Varone You shouldn't have any problems with lending on a modular home, as they are built to code. Manufactured housing is a different story. People who aren't in the industry don't know the difference between the two, but it is important to point out that you are building modular. 

We are looking at both modular and panelized options for projects right now. 

Quote from @Jeremy England:

Equity partners, from a builder perspective how would you structure that.  in short, I only have so much cash.  I can build one and sell 1.  What if i want to build 5?

 The same as any other investment you raise for. You can pay a fixed return, or get more complicated with a preferred return and waterfall structure on profits. Or anything in between. 

On the one spec we are building on a client's land they are putting up all the money and we are doing a backend profit split. Nothing complicated. 

We made the leap to building, and stood up the construction company to self perform our builds along the way (along with GCing for others). Currently working on multiple asset types at once, which is drinking from a firehose, but it is better to capitalize on opportunities than to be comfortable. 

For context, these are examples of what we are working on:

Spec homes in a new development, to attract other build clients for the vacant lots. (outlying suburban)

Build to rent duplexes ~74 doors on one site (outlying suburban)

Garden Apartments or townhomes on .38 acres ( urban adjacent infill, key location)

@Paula Reavlin There are lots of local investors on here and in all of the local FB investing groups. I would recommend following topics on here and interacting, and joining the FB groups as well to get in the mix.