All Forum Posts by: Devin James

I’m underwriting some infill projects in Central Florida, and im running into an issue.

I'm trying to calculate the ARV of a townhome with a detached ADU, but there are no direct comps.

How would you approach this?

Im using stand-alone townhome comps for the main unit then calculating a separate value for the ADU based on its rental income.

Curious to hear how other investors and appraisers would evauate these?

 Lots of good info in that article, thanks for sharing! What do you suspect to happen with the imbalance? A slow rebalance of the scales?

 Haha! Need to wear size 12+ to be able to forecast

1) Inventory is drying up

- Build-to-Rent developers stopped starting new developments when rates spiked, and that slowdown in starts will hit the market soon, resulting in less inventory.

2) The rent vs. own equation is upside down

- Usually its cheaper monthly to own than to rent, but today that’s not the case in many markets. Because of this, I expect home values to stay steady or drop in some areas, but rents will rise to rebalance the spread.

Im looking for ways to get ahold of some rentals in preperation of this

For the past 4 years, from November through March, the questions start:

- “Why aren’t these homes selling?”

- “What can we do to move them?”

- “Is something wrong with the market?”

Then like clockwork, April hits, and the floodgates open:

- More showings

- Multiple offers

- High buyer activity

It's a roller coaster of emotions. But I've learned this cycle is normal. Seasonality is real, plan for it financially and mentally.

Unsolicited advice to any young professionals just starting their career.

Don’t be afraid to take risks and make mistakes. That’s how you learn.

Most good leaders would rather see you take initiative and mess up than play it safe and stay quiet.

“I’m not a sophisticated investor.” Is what a Seller told me a few weeks ago during a call negotiating his property. 

He wants $1.8M and I told him its worth $1M, but I pitched a JV structure that would be able to get him is $1.8M.

Should he have said that?

I liked the honesty, it was a reminder to slow down, explain more, and prioritize clarity.

If you were the seller, would you have said it?
How would you have responded as the Buyer?

Was he just playing mind games?

Yes, all things to consider, but I would disagree in some aspects. 

I would not consider it more than 5 times the work. If you have a GC you trust, then it shouldnt be much of anymore work on your end. Im not the one calling the trades and making sure they show up to the job-site. But I can see your argument if you take a more hands on approach.

Yes, market risk is always a factor. With leverage, you have less room for failure, but that same principle also works if the market increases significantly.

 Hey Jonathan how many units are you looking to build?

Theres A&D lenders out there who will fund 80% LTC. 

So in your case $170K+$200K = $370K

$370K X 80% = $296K Loan Amount ($74K equity needed)

But they will need to see that you have avaliability to carry the loan, in other words, that you are able to pay the interest payments on the loan throughout the build.

There's tons of variables, but I would start by contacting lenders. Specifically A&D Lenders. Most people are happy to help.

Let’s say you skip staging or hold off on reducing price to meet the market. Now the home sits for 3 extra months.

Here’s what that really costs you:

· $8,250 in added interest (on a $300K loan at 11%)

· 3 more months of trapped capital (can't reinvest)

· 3 more months of market risk (rates rise, values drop)

What you saved on staging or strategy, you’re now paying in carry cost and missed momentum.