All Forum Posts by: Craig Grella

As a previous development engineer, I've been partial to the following books:

Real estate development principles and process
by Mike Miles for the Urban Land Institute

Land Development
By Daisy Linda Kone (also goes by Linda Kone)

They each touch on the overall land development process, calculating potential costs and profits, zoning laws, construction, and also sales and marketing.

They're written for the serious residential land developer, but all the principles can, and should, be applied to those developing just one or plots as well.

Anyone planning to get serious about purchasing land you can check out the urban land institute's website. They're the largest non-profit real estate organization in the world and they're focused on land use and development.

Also, search for an article on this site that I wrote about pricing land for profit. You can also click http://www.biggerpockets.com/renewsblog/2009/10/02/developing-real-estate-price-land-profit/ to access it. It can help you set the price for land to make sure you build in your profit.

Hope that helps.

Another transaction completed this week:

We arranged a two loans totaling $180,000 for the purchase loan of a single family property in Central Islip, New York and a refinance of another property all by one investor.

No appraisal was required on the purchase, just a short BPO, which resulted in a 60% Loan to value property. To get additional funds at close and effectively raise the LTV on this purchase, the borrower provided an additional property for cross collateral and was able to purchase the investment property with none of his own cash.

Additionally, he received cash-out on the property refinance for other investment purposes.

The money's out there for creative deals and they're getting done every day.

Try to get the contractor to come down for a visit. They can usually give you a quick estimate after seeing the property.

If they won't do it, call another contractor, there are thousands of them out there, and most of them aren't as busy as they were two years ago.

If you can't find a contractor to do it, strike up a conversation with an architect, you'll need that relationship anyway. They may be able to give you a quick quote, or if you're really nice, you might convince the architect to call one of his/her contractors to check the place out.

the optionee (buyer) does not have to exercise the option. They can simply walk away.

Don's right on this one. If you, or someone on your team, doesn't have rehab or in this case, hard core construction experience you might be biting off more than you could chew. Essentially you're just taking over payments on a problem property.

Undeveloped land "Comps" are highly unreliable. Best way to value land is using the land residual method, which estimates the selling price of the property as completed, subtracts out your building cost and desired profit and all closing costs, and what you're left with is the maximum amount of money you should pay for the land. If you negotiate down from there your profit goes up...hopefully.

Here's an article I wrote on this blog that should give you the basics: http://www.biggerpockets.com/renewsblog/2009/10/02/developing-real-estate-price-land-profit/

We're excited about our most recent closing, a $460,000 loan on four duplexes. Client was able to cash out after rehabbing these properties.

Transaction details:

Sol,

a hard money lender is going to make you a loan based solely on the value of the asset being pledged as collateral for the loan. You'll find them willing to lend somewhere in the range of 50-65% loan to value.

Credit shouldn't be an issue, and for some lenders cash flow isn't really an issue either. Again, they're lending purely on the asset value. You'll need to have a good exit strategy lined up because a HML will term out between 1 and 3 years.

Generally you're looking at somewhere between 10 and 15%, with 2 to 4 points to the lender. These are great options for construction and rehab deals where you're into the property for a few months and then working on stabilization or a sale, but you'll always want to take a HML out with a more conventional type loan.

Hope that helps.

Finding those 100% LTV lenders are nearly impossible in this market. There are still a few private lenders who will fund 100% of the purchase price...if you're buying at 50% value of course.

With that said, I completely agree with Jon and tell the same to my clients all the time. Sometimes its easier, quicker, and cheaper to find a money partner than it is to shop an impossible deal to all corners of the country for a lender that doesn't exist.

I'm in Nashville as well.

When i first starting buying i was using sites like loopnet and a few commercial brokers sites to find and analyze properties. Without fail, everyone I made an offer on to see the property or financials ended up exactly like you describe. I requested more docs on each and they were only delivered by the hack agent on the last day before the offer expired. Bad business.

Now i deal with a few commercial brokers with whom I've developed great relationships and a few bankers I trust. They're all CCIM certified and know how to put together a true financial report on MF buildings. I end up wasting so much less time.