All Forum Posts by: James Siller

Thanks Matt, I just got off the phone with my attorney and we were basically discussing a similar idea.  I gotta find out what's in it for them, but you said it a lot better!  That and it's quite rural, so I'm going to poke around and see if somebody knows somebody that can me get this thru...

Do you have a passion for something vs. the other?  There are a few different directions you can go (knowing nothing about the location), multifamily, industrial, storage, single family, agricultural.... Find people that have knowledge or experience in what you want to do, and ask them about it!  Try not to get that shiny object syndrome, or paralysis analysis.  Easier said than done!  

Not knowing any information about your financial situation or the land, it's very hard to give you any feedback.  Fair warning, development is not as easy as it seems.. so find a mentor and ask lots of questions!  Next, I would develop a criteria for what returns look like to make the project worthwhile.  Then ask yourself what is the worst case situation - and can you handle it? 

Does anybody have experience with Un-annexing a property from the city limits? What’s the angle? Are their any benefits of the city? I can only see disadvantages from their side, in that they would be losing control and tax money (even though it’s currently ag exempt).

Current situation is the city limit splits the subject property, and the ETJ is the other split. It also happens to have an additional city’s ETJ on 2 of the boundaries.

The city has quite different restrictions on building in the city limits vs outside (ETJ), so it’s advantageous for me to have it all in the ETJ. Note that the city does not provide any utilities to this property and has no plans do to do.

Getting anything permitted in dual jurisdictions does not sound appealing.

I've been researching the same topic lately and can offer a few thoughts / things to chew on:

What are building restrictions? Drainage requirements - can you use all 5 acres or do you need detention? You're in CA, so flood plain might not be an issue like it is for us in TX... Fire prevention - required by local / county fire department? Water (if needed by fire dept)? When you said rural - how rural - I'm in the process of needing to provide adequate water supply for fire prevention in a rural area and it's added quite a bit to my budget. How are you planning on financing? Construction loan, rolled into a mini-perm, investors, Cash?? What's your criteria for assessing whether this project should go forward (ie. 2x equity multiplier, 20% IRR, C-C return of 20%??) Do you have referrals to good contractors who can do the work?

Since you are developing, can you float the deal for 1-2 years without cash flow?  Developments are notoriously slow to start, and getting permits can take much longer than expected.  Are there any other buildings in the pipeline that will be in direct competition with you?  How hard is it for other people to build there, ie what is the barrier to entry?  

One of the most difficult questions I'm coming across is what is the number for a saturated market and how to define with data.  Will your tenants be coming from single family homes, or is this more of a vacation spot, with potential seasonal rentals?  If SF homes are the case, are there more communities coming to your area, and potentially bringing more tenants?  Is your area growing? Do you think with fuel prices that fewer people will need places to store boats / RVs?

PM me if you need any more questions!  I may be able to provide you with some data that I've compiled, although it's from TX.

James

Look up Quest Trust Company. I was referred to them and have self-directed IRA's thru them. They have a bunch of good training material and they are very knowledgeable. I don't get anything from referring them, FYI. As far as your question, I can't tell you if it's good for your situation, but if you want to diversify your investments, and this is the only capital you have available for that, then yes I believe you should consider it. There are some rules surrounding using that money, such as buying at arm's length (so no family transactions) and a few more that you need to be familiar with. A lot of syndications will accept self-directed IRA's too, just need to check with them. Some companies will let you borrow against your retirement, so that may be an option depending on your current employment and retirement setup. Then you basically pay yourself interest on that loan from yourself.

Let’s chat!  I don't think property in Sargent is eligible, but am interested in seeing if there is an opportunity and what the cost for your service is.

Thanks,

James

Plain and simple, it's hard to make the numbers work in a coastal town with the new flood insurance numbers.  However, not necessary if you are grandfathered into old flood rates or are considering a cash deal.  I got quoted $6500 for flood and another 2500 for wind in AE flood plain for $250k value....  VE is even higher.  

I'm not saying it can't be done, as lots of people do it (many of them are pre-existing ownerships).  There's a reason you see lots of RV's down there tho!! 

Holler at me if you are still looking down there, I'm in the process of platting 27 acres and can give you some local knowledge and things to think about.

Investment Info:

Industrial commercial investment investment.

Office / Warehouse space development from the ground up. 1,500 sq ft spaces to be used for small business / entrepreneurs in the rapidly growing Fort Bend County.

What made you interested in investing in this type of deal?

Creating passive income

How did you find this deal and how did you negotiate it?

We built it

How did you finance this deal?

Savings, accompanied with Roth 401k loan to myself, and a business loan thru Prosperity.

How did you add value to the deal?

Built it from the dirt up

What was the outcome?

70% rented in the 1st two months of operation. Currently 100% full.

Lessons learned? Challenges?

Development is a long game. Be prepared for frustration on the permitting side and meet face to face with difficult officials.
Always add 10-20% over budget. Always.
Think long ahead on your financing. I got hit with pretty hefty re-financing fees because of improper planning / agreements about refinancing after the building was up and running.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Prosperity bank is one of the best options available for us at the time. However, I'm always looking to network and find new ways of financing!