All Forum Posts by: Jamie Parker

 Thank you. 

Quote from @Jaycee Greene:

Quote from @Jamie Parker:

@David Mares The short answer is to build and develop the area. I purchased the property from the Shelby County Land bank. Im working out what that would look like in terms of price point. At the current cost to build estimate $150/sqft, It appears a 1500-1700 sqft new construction will need to sale for around 399,9k to make a decent profit. With no comps in the area for new construction and the highest rehab selling for 205k, building enough at the onset, 4-6 new construction homes, may be the only way to start a neighborhood turn.

The city is looking to increase density in the area and add anchor points in near the area to cater to future investment. I attached some visuals to give an ideal of the type of area. 

The city wants to have "Neighborhood Anchors Points" consisting of Mixed-Use and Retail/commercial

Visual of all land bank properties 

The area I will focus in.

A break down of cost to purchase all Land Bank properties on each street. 

How the City intents to rezone for density. Also with plans to reduce industrial "intensity" in and around residential areas. 

Understanding the Product mix. Small (1700 sqft or less) medium (1701 -1999 sqft) and large (2000 sqft or more)

Cost benefit analysis Estimates IF 300+ homes are built over 10 years

Alot of technical information to say that:

- When I start development, i will be going into uncharted territory. 

- New construction will be comped against other new construction 

- Start out with enough comps to justify the price point

- keep the area tight to consolidate the risk vs building one or two in different parts of the same neighborhood. 

@Jamie Parker This is fantastic! By any chance did you grow up in/around South Memphis? I have several current and former clients that have done similar projects, mostly in neighborhoods where either 1) they grew up in the neighborhood, 2) they still go to church in the area, or 3) they have a relative that still lives in the area. My hat is off to you for tackling this! 

If you don't mind me asking, who's running your numbers/proformas for you?

 I didnt not grow up in the area. My mom has relatives that grew up in the area. I started looking at the area about 8 years ago after my dad mentioned it. So I have have had interest in the area but didnt know how to start. Finished my MBA (Business Analytics) in September and this work was part of my thesis.

An official proforma has not been conducted. Used what I know from wholesaling to come up with the estimations 

The numbers is used are based on a these assumptions:

- Cost to build* (2024) = 150/sqft National average, 141/sqft Tennessee Average (Source: Houzeo  https://www.houzeo.com/blog/how-much-does-it-cost-to-build-a-house-tennessee/#:~:text=The%20average%20cost%20per%20square,idea%20of%20the%20construction%20costs.)

- All in Cost = Cost to build * Square foot  

- Sales Price = All in Cost + (All in cost * 20%)* Covers contractor and soft cost on either fee based or cost+

- Profit = (Sales price - (Sales Price * 7%))* - All in Cost   accounts for agent fees and closing cost

- Initial List Price = Sales price + 10%      A buffer to test market absorption

- Break Even being All in cost, point where everyone is paid except me. 

- List price is to test the market absorption at "x" price. 

250k land + build. Then 300k covers contractor and soft cost is break even. Would like to make at least 60k per build with intial list price at 399,9k that can fall to 360k and still make money after closing cost and realtor fees. 

@David Mares The short answer is to build and develop the area. I purchased the property from the Shelby County Land bank. Im working out what that would look like in terms of price point. At the current cost to build estimate $150/sqft, It appears a 1500-1700 sqft new construction will need to sale for around 399,9k to make a decent profit. With no comps in the area for new construction and the highest rehab selling for 205k, building enough at the onset, 4-6 new construction homes, may be the only way to start a neighborhood turn.

The city is looking to increase density in the area and add anchor points in near the area to cater to future investment. I attached some visuals to give an ideal of the type of area. 

The city wants to have "Neighborhood Anchors Points" consisting of Mixed-Use and Retail/commercial

Visual of all land bank properties 

The area I will focus in.

A break down of cost to purchase all Land Bank properties on each street. 

How the City intents to rezone for density. Also with plans to reduce industrial "intensity" in and around residential areas. 

Understanding the Product mix. Small (1700 sqft or less) medium (1701 -1999 sqft) and large (2000 sqft or more)

Cost benefit analysis Estimates IF 300+ homes are built over 10 years

Alot of technical information to say that:

- When I start development, i will be going into uncharted territory. 

- New construction will be comped against other new construction 

- Start out with enough comps to justify the price point

- keep the area tight to consolidate the risk vs building one or two in different parts of the same neighborhood. 

Thank you. 

I’m updating my profile, this was in 2016. Thought it would post with the dates . 

Investment Info:

Other buy & hold investment.

Purchase price: $3,000
Cash invested: $3,000

Vacant Lot

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

The city is changing the zoning in the area. Plan is to purchase multiple vacant lots for future development.

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

Land Bank Property

Investment Info:

Other wholesale investment.

Purchase price: $57,500
Cash invested: $100
Sale price: $90,000

Small vacant lot, overlooking I-40 on the westside of Nashville

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

Direct mail to this address for 8 months. Spoke with the seller a few month prior to contracting. Just before Thanksgiving the seller was ready to talk. The negotiation was: seller wanted 65, I wanted it at 50. Split the difference, 57,500.

What was the outcome?

Wholesaled to a builder to build a house.

Lessons learned? Challenges?

Leave some on the bone for the end buyer. A year or so went by and I wondered did I leave enough room for the builder. The city required the road to be extended a few feet, along with water and sewer.

Investment Info:

Single-family residence wholesale investment.

Purchase price: $255,000
Cash invested: $100
Sale price: $260,000

3 /1 894 sqft

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

The property is in an evolving area with an overlay for Detached Accessory Dwelling Unit.

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

Cold Called the seller. The seller had an offer for 250k. The seller wanted to get 300k. I informed the seller that because of the overlay, the property may be 2 build eligible in-spite its small lot size. When under contract at 300k with the expectation that codes would be the determining factor on what can be done on with the property, as it relates to new construction.

While the property was 2 build eligible, due to the lot size, highest and best use would be to rehab the property.

Lessons learned? Challenges?

Lessons learned are related to the title process I use with sellers and buyers. I gave up time with the expectation that the buyer would be able to close sooner. The time allotted on the initial contract was ample time for the buyer to close. I was eager to get one on the board and moved the dates up a week. That move created frustration on my part and the seller and had to amend the original contract.

Do not get eager for the close. Allow things to play out, unless the buyer closes sooner.

Investment Info:

Single-family residence wholesale investment.

Purchase price: $255,000
Cash invested: $100
Sale price: $260,000

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

Cold Called the seller. The seller had an offer for 250k. The seller wanted to get 300k. I informed the seller that because of the overlay, the property may be 2 build eligible in-spite its small lot size. When under contract at 300k with the expectation that codes would be the determining factor on what can be done on with the property, as it relates to new construction.

While the property was 2 build eligible, due to the lot size, highest and best use would be to rehab the property.

Lessons learned? Challenges?

Lessons learned are related to the title process I use with sellers and buyers. I gave up time with the expectation that the buyer would be able to close sooner. The time allotted on the initial contract was ample time for the buyer to close. I was eager to get one on the board and moved the dates up a week. That move created frustration on my part and the seller and had to amend the original contract.

Do not get eager for the close. Allow things to play out, unless the buyer closes sooner.

 
Point taken. I had a bad understanding about how an out of state investor would “choose” a property. Every property up for consideration gets a visit. At least 1, maybe more, to the full scope of what’s for sale. Thank you for clarifying that for me. 

Investment Info:

Single-family residence wholesale investment.

Purchase price: $220,000
Cash invested: $100
Sale price: $225,000

Wholesale: 2 build property to a Developer. (should have documented, dates may not be exact)

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

Starting out as a wholesaler appeared to be the best place to start in Real Estate for me. Understanding what a good deal looks like.

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

Door Knocking for 3 months. The seller wanted to purchase another home with the proceeds from the sale of this one. The pain point was that the seller grew up in the home. Parents and sibling died in the home. Moving on was tough, but helping him make peace with that was main part of the negotiation process no one else touched on.

What was the outcome?

Builder tore down the single family and built two single families on the lot.

Lessons learned? Challenges?

Negotiations are for discovery and are not always about price.