All Forum Posts by: Kenneth Bell

@Account Closed 

Just because you have a realtors license does not make you a pro. It is a few weekend courses its not getting into MIT. I know good realtors and I know ones that suck. Everyone does not come to gain information the same way. To suggest that realtors have some secret book of knowledge is silly. To suggest that if you don't consult a realtor on all facets of real estate is silly as well. I always use the good ones to sell, but I never use them to buy because I alread know how to write my own contracts and negotiate my own deals and I gain 3% of leverage over the guy using one. They are useful but not superhero's. In fact one called me yesterday looking for information in an area where I am building. 

@Karen Margrave Thermador  is made by Bosch. I have Thermador and my girlfriend has Dacor. It is a toss up for me I love cooking on both. Get a good hood for either, they put out a lot of BTU's.

I have Microwave and wall oven combo with a warming drawer. I am tall and I hate bending down for most ovens

@Account Closed  something about the numbers does not seem right. You are risking $800k in tuition on a job that pays $45k

@Karen Margrave 

 I had this same dilema on a few recent builds. I liked induction when it first came out and did it in 2 homes with mixed reviews and recently many have had trouble with the electronic control units. I have gone back to the classic alway a winner thermodor or dacor 6 burner cooktop. Everyone loves it and it sells. I love to ccok and it is what I have in my own kitchen as well. As far as microwaves I am doing drawers as an option on builds but at the minimum built in island. 

Barton,

Are you looking to just buy and divide to sell lots or are you looking to build?

@Account Closed 

The first thing I would do is look at the rolls and value of each equity partner. Just from a pure business standpoint, I am not sure why a developer and a builder would bring you in unless they needed you. 

1. 1. first assumption they need you or the deal does not happen because if they didnt need you then the would just build and split on their own.
2. 2. Unless you are doing multiple homes what is the roll of the developer? As a developer I assemble property to gain the highest and best use. If you are building 1 house I am not sure what he is doing.
3. 3. You are essentially hiring the contractor and then cutting him in on half the profit. Think of it this way if you bought the lot yourself and hired a contractor you would make a lot more and shoulder no more risk.
4. 4 Some of the numbers dont make sense to me. Your build cost..a good conrtactor makes at minimum 20% on the what he charges.  So at 3500 ft * $125 per foot you are at $437,500 cost plus 20% of $87500= @$525,000+ land $325,00+ $40,000 closing+$30,000 debt service comes to $920,000 for your project if you did it yourself $80,000??? someting is not smelling right. That brings me back too what I said about the 20% rule you are either paying too much for the land or build cost per foot has some fluffiness to it.... I hope you got all that. Have you seen the settlement from when the land was purchased? I would hold the checkbook and be on top of all cost.

My plan would be this. I would ask for at a minimum of 50% of proceeds and I an still not sure I would do it. I am not tryng to be a downer because I love creative deals but the numbers never lie. Maybe someone else has better insight on the deal.

@Account Closed If you are  yielding $165000/835000=19% on $835k of exposure.You could do a flip or a spec yourself and get 19% return and end up with $31,350 for yourself. I dont know why you would take on the exposure for that type of return. I have built million plus homes and I have built $250k homes as my exposure goes up the reward should. I dont discount that you know the area very well. I am just sharing my opinion about the deal.

• I would verify the recourse
• A basic way developers put valuation on land. Land is worth 20-25% of the value of what you can put on it. I would pay 200-250k for land that I could put a 1 million for. Some may go a bit higher but 20% is my rule.
• In the previous deals with the builder and developer who provided the leverage?
• Your total cost with the dirt is $217 per foot. That is expensive even for a million dollar home. As you risk goes up so should your return. If you are building at cost 20% would be a minimum profit. I personally think you could do a flip or build a spec with the 165k you are going to risk and make 45k pretty easily.

@Account Closed 

Sean, 

I have some questions about your deal structure. Are you or your group going to guarantee the loan personally?  Second as a rule I don't put more than 20% of the gross value into the land. Even more aggresive investors may go to 25% but 32.5% just in the land is a bit much. Secondly how many sqaure feet are you building? What is the build cost per foot. Is the cotractor building at true cost? Are you controlling the checkbook to be sure what is being paid for what? How did you come up with the equity position for each partner. I think for 165k you could take on a lot less exsposure and make $45k. You being on the hook for 600k to make 45k??If you were at 25% for your land cost 250k, there would be a lot more meat on the bone.

Sorry for the delay in updates. I have had to figure out how to add photos and video. 

https://www.dropbox.com/s/rqbka0wmx2sn1c4/AUTO_AWE...

This is the video of our basement install a little less than 4 hours and it was complete. Pre insulated and guaranteed not to leak. We have also now finished the basement slab, water and sewer rough in. We had a few days of rain that delayed framing but we have also completed basment framing, and the first floor , floor system. We have started on first floor walls as well. The plans for the second house will be submitted to plan review this week and we will begin the raise for our third house within a week or two.