All Forum Posts by: Jason Gray

Points and loan details are TBD still as we're just getting the tentative process down on paper as we wade into the details. 

Points I can roll into the cost and don't mind a buy down if necessary.

My primary concern is the bleed rate monthly for the build, Airbnb stabilization and the year after while we season it and prep for final financing for long term hold.

The initial plan is a 1200 sf build out with plans to expand back away from the cliff later as finances and interest rates are more favorable.

As it stands now, the sweet spot in that area in the market for rent seems to be a little larger 2/2 house with large living area for guests.

The foundation was already approved, permitted and finaled years ago for a 3400 sf house, and its solid and I won't be building directly on the overhang edge; but rather back away from the edge a few feet to prevent any load issues all the weight will be on the longer sides of the existing footing. I'll have an engineer look it over and stamp off before I move ahead.

Real estate is one of the best mind-sharpening exercises in the investment world simply because getting it wrong there is no stock liquidation or quick way out. So you really have to do your homework solidly.

And you're right, it moves fast when the value-creation chain is created on both sides of the transaction.

Quote from @Nolan Marshall Jr:

Thanks, Braden.  That's helpful.  In general, what sources and heuristics do you use to determine if an area can support new construction in general, and in specific in GNO?

I generally look for two things: new homes on the market for sale are they being sold very close to asking price, with short days on markets or not.

In a slow market homes sit and rot, they are on the MLS forever and the longer it sits, the lower the price goes to find the sweet spot for just the perfect buyer.

As those prices fluctuate, there is a builders somewhere putting his feet up waiting to see a market turn more active because the last thing he wants to do is start paying crews to build houses, that could drop in value while he's halfway through the build process and losing equity halfway into the project.

So lower Days on Market, and near or above asking price is usually the turning point (or just before) when buyers for land are most active. They're looking for a stable market that is gobbling up houses just after a slow period so they can still get good deals on land before it gets hot and popular again.

Start with the county, zoning, planning commissions etc. More deals are killed by procedure and regulations than anything else it seems. 

Once you know how the land is allowed to be used by City or County zoning, start working to a "highest and best use" mindset where you find out how the deal can be quickly turned into money by the end user.

Land is only good if you have a warchest to immediately turn it from dirt to cashflow or sale so keep this in mind when you're going forward. Find the people who turn dirt into pads, pads into foundations, foundations into hosueses and houses into communities. Those are the players for residential...commercial the same way. Ask around for architects who have build nearby, they know rooftops to dirt finishes.

Also you could start with local Plan-printing companies as they're always printing plan sets for architects and designers before they go to county and after the county comes back with changes. Someone in the build chain knows the guy who writes the checks.

Most land buyers who are developers usually stick to a very predefined region within their local market and they hunt and wait for killer deals and market swings to get the land they want for the very specific purpose they want.

Unless you're locking up 10 acres in a large metro where a DR Horton or KB homes might come in, thats a little less localized.

Remember when land buyers pick a target, they have TONS of work to do getting that property from dirt to payday, so they know their purchase choices, and they have a war chest usually stacked up ready to go. They'll wait years sometimes for the right down-market cycle to build.

Perhaps going to the local building department or title company to see who the big land buyers are in your area would be helpful for starting to discuss the idea with someone nearby?

Start with a standard offer, and write a contingency into it for electricity, all the below ground utilities, and then work your way to zoning, permitting etc. I just wrote an offer for full asking price at 30 day close, with a contingency to extent at BUYERS choice for 30 more days if I don't get an favorable response on the electricity install costs. They were agreeable...nothing lost on either side as long as both sides are aware and informed.

Put yourself in the place of the buyer and know the highest and best zoning use for the property before your buyer does. The more issues you can take off their plate before you lock it up under contract the better you'll be.

Always ask, could you be replaced by a realtors listing? That might be a way to start, finding recently sold land on zillow, back trace agents to sold listings and tell them you might have some land coming up soon and see if they have buyers. You can always build in a small extra fee for a realtor if its an off market property.

In this market, you're better off finding buyers for land before looking for land for buyers.

In a hot market, the unobtainable thing is the most valuable. As Grant Cardone used to say,  "who has my money."

Right now, land (unless in a hot market) takes a special type of buyer/developer to turn it into money, so you're better off finding the thing the people with the money want.

land tends to sit a long time...

Hey gang, I've been radio silent on the forums for years. I sat out the boom bust since 2008 and focused on returning to full health after a spine injury.

Now I've got a property under contract:

$78K purchase
$35K in development of utilities.
$24K in soft costs (permits impact fees etc)
$200K (or less) buildout of the house (size tbd on after-build-appraisal) Likely going with 2/2 A frame 1000 sf.

Comps solid $410K - $555K (newest) in the area (comps are 1400sf to 1700 sf) and several along this creek sold for above asking price recently.

I'm wondering if I should build out the house to sold comps valuation (bigger more expensive house chasing equity valuation)

OR

Should I build just enough of a nice mountain cottage for best cashflow. Smaller house cost, lower loan costs.

The property has an amazing creek canyon (attached photo) is 5 miles from all the major attractions to Yosemite, and 7 miles from a lake.

Whats the going consensus?  This property has some one-of-a-kind qualities namely a nice creek with inbound and outbound waterfalls at each end of the property (its on a hill w creek canyon).

I've gotten the septic scoped and certified, well is good, power needs to be reinstalled as property was abandoned years ago.

Intent is to get the foundation blessed off by a Civil Engineer and save about $15K in foundation costs as the original design was for a 3400 sf house. I've been to County already and discussed this in detail. They can bless off on it after a civil engineer signs off.

Sorry for the long winded back story, but end game is to put a A frame on the existing 20x40' stem wall above near where I"m standing, and put some stairs into a drop down area below for chairs/fire-pit overlooking the river canyon below (but out of view) under where the drone is flying.

Pad plan. Creek directly below drone.


creek view, directly behind is 30' waterfall.

I've got a property under contract

Purchase price $78K out the door (I have cash to close)
Intent: build on the property which already has a functioning well, septic, and needs PGE installed
Total buildout on the property utilities: $128K including the original land purchase price.

House comps recent solds $555,000 up the road for 1400 sf house.

I've got plenty of room to build out a nice place with all the finishes.

The question I'm up against is what private money is going for these days for a build with this much room for upside.

I have a hard money lender at 10%, who will amortize at 30 years, with 5 year balloon so a potential loan of $200k is in the works.

What I'm planning: buy and hold the property, brush and clean it up with intent to hold until cost of funds drops a little in 4-6 months. I an afford to sit on this property as its in the Yosemite AirBnb hot spot and don't need to do anything right away as its in a killer location.

Any input on whether you know of rates likely to drop? What is private money going for these days with a LTV in the 55-65% range?

Recent solds are pushing $328/sf up to $413/sf for houses nearby that are built in the 1980's... This would be a ground up new build.

Thoughts/input?

Thanks. 

Project File is at link below. w overview of plot, creek and proposed house designs for the build. I think the A frame idea works great for this setting, but some have said the A frame style steeper peaked roof works better.

https://www.instagram.com/redtail_cabins_adu/

I agree, if it was currently cashflowing $6000 a month and they were at or very close to 50% of FMV, I'd be on the phone with you and my lenders tomorrow AM. STAT.

PM me as I'd like to see more info. Depending on where the props are located there maybe something I can do.

I make it work in Detroit really well, so I can't imagine these "war zones" are all that bad...

JG