All Forum Posts by: Gary Cungu

@Ryland Taniguchi

Thank you for sharing this value with everybody.  I couldn't have come across this post at a better time.  I was recently talking to a builder that offered to sell me a property because he spread himself a bit thin by investing in a second property.  I don't blame him because he got a good deal, but not he's not able to fund both projects.  I have the capital as well as a capital source that I can bring to the table, but I don't know how to secure the deal with the builder.  Now because the owner is a builder,  he will be responsible for building it and I want to come in with a partner that will be happy with a 30% return on their investment, and split the remaining profit with the builder.  This is a single family property that we will rebuild into a luxury home.  With that said I have a few questions:

1.  Should I buy out the seller/builder and pay him to build it

2. Should I  just fund the construction and split the profits with the builder and my partner?

3. Do you happen to have a JV agreement that you can share with me? :)

I was recently approached by a builder regarding a development project that requires an equity investor partner - at the end of the day it is 10 years and 1.65 billion. Hotel, residential, retirement, retail/commercial, etc. - basically, a small community.

The have been engaged in this for almost 2 years, have done a significant amount of preliminary work and attained much of the approvals. As it stands right now they are looking for an equity partner.

What it is now is acquiring the land for $25M plus $2M if further site work to get building permit and ready for construction for Phase 1. So immediately we would look at roughly $10M in equity ($8,000,000 as part of the $25M) and the $2M for anticipated costs.

There are numerous exit options - there are 5 or more phases/parcels for development so the group could sell some of the parcels for a quick capital return and develop others, advance some to certain more valuable levels of approval and flip, build and sell some or all, build/own/operate some or all. The builder is open to all options.  My question is, what would be my best option to raise the capital?

fadf

@Wayne Brooks you're right.  This project is starting to look like a bad investment indeed.  The cost for the build is quite expensive and the taxes on a comp in the are are about $25,000 - $30,000.  I spoke to a student housing owner that owns 400 units in the area and he said that his taxes we're $56,000 this year for one his 40 unit properties.  Going to speak to a civil engineer today to determine exactly what we can build on the property so I can get an accurate calculation of the cost of the build.

@Darren Lenick thank you for the feedback. You're right about Toronto having conditioned my mind to think a certain way, such as building a basement in Florida which is a disaster waiting to happen. 

The alternative is to construct 14 units with 3 bed 3 bath at 1500 sq feet per house.  

The estimated project cost would be 21,000 sq ft at $160/ sq ft which is $3,360,000. if the rooms are rented out at $500/month the rental income is $21,000 a month. If we we're to take the gross annual NOI of 252,000 the cap rate is 7.5%.

The problem is that at the estimated project cost, it places the home above market value in respect to the comps.  Based on the numbers, this is starting to look like a rebuild and hold for the cash flow, which is not the route I wan't to go down.  

Do you know any body interested in this project?

Hi team,

I am currently doing the due diligence on a property near a major Florida university on a buy and rebuild project.  The builder has already gone by to inspect the property to determine what could be possibly built on the lot.  We are thinking of building 6 purpose built town homes with 3 bed / 3 bath each and a driveway.  The return is $9000 per month if all are rented out to students or they can be sold at $230,000 according to comps in the area.  We can also build two additional rooms in the basement with their own walkout for an additional $1000 per month per house which brings the total to $15,000 a month in rental income. I am wondering if building town homes is the best route to take, or should I build a mid rise to accommodate more students?