All Forum Posts by: David Jacques

just add a tab with your monthly net cash flows and enter in an IRR calc i.e. =XIRR(cash flow range, date range) The XIRR function allows you to calc your IRR on a monthly (or daily or weekly or whatever) basis.

Our division settled just under 800 homes this past year.  It's still pretty cool to see a land acq transform from woods (or whatever) to mass graded and paved to vertical construction.

Looks like a pretty straight forward proforma. Why not add an IRR calc?

I'm seeing a lot of foreclosure activity in really good parts of Baltimore County.

 That's the thing, these homes had asbestos in everything.  IMO doesn't look like the juice is worth the squeeze.

Keep in mind lead paint laws since this is obviously an older home if you choose to rent to people with young children.  That liability alone kept me from leasing my historic homes (since sold) to people with children.  

typically more density = more $$$

We did about 50M in land buys this year in MD. It's shareholder money though, not personal. 

Speaking frankly and knowing nothing about your situation, specifically regarding capital, I would try to flip the deal. In MD, you'll spend over 100k engineering the property and getting approvals. I'm inclined to think CA is more expensive. 

First mistake IMO was letting the seller come up with what they think it is worth. It will almost always be retail plus. Be ready to counter or walk. 

figure out what a comparable new home should sell for on a comparable lot

Deduct build costs

Deduct selling costs

Deduct land development costs

Deduct carry/ misc costs (overheads etc)

Deduct you're desired margin

What is left is what the land is worth to you. Value is subjective so it can vary from investor to investor. Compare your land cost with others and see where you fall in line.