All Forum Posts by: Jay Hinrichs

@Ricky Gibson 

  I am absolutely offended... being a RE broker for 40 years living through 3 recession depressions making millions losing millions I know how to think out side of the box..

But I am just giving you  a  hard time... most of us guys on BP that are frequent posters and RE brokers are pretty experienced and there is not much in the way of out of the box thinking that we have not already done or forgotten about... LOL

@David Jacques 

  When I met with the Realto guys they had just gotten their 5 billion in Tarp funds..

35 YO Harvard grads running around buying up banks that were going under..

are you brokering it for another owner?

@Rick H. 

  From the feedback I get these days the counties are getting kind of prickly on the overages claims by un related third parties.

And that was what I thought I did not think anything but IRS or State tax liens survived a CA Tax sale. and the only way to unwind one was to prove that public notice was botched in some way. ( which happened to me one time)

@David Jacques 

  They came storming in and they would buy this plat if we wanted to sell it to them this one is a no brainer.. flat lots as you can see by the pic's 20 minutes to DT PDX and 5 minutes to the Max line.

Now that you mention them... I had a meeting with the Rialto guys a few years ago they wanted to buy some of our bank OREO but we never put a deal together.. Also I am in talks with Eagle funding in Charleston for my vertical loans there.. They said they are owned by Lennar do you have any intel on this Eagle funding ?? would be interested to know if I am wasting time or if they are doing loans.

@Danny Day 

  A and D is the acquisition and development loan.. its the loan that is used to buy the land and build all the infrastructure and plat the lots... When we go vertical we will then have separate loans on each home ( just your typical construction loan).  The new construction loan will payoff the lot release on the A and D loan..

Loan terms are   1 point  6%  on  A and D  due in 18  months and  loan has 12 month interest reserve so no payments first year.

My verticals are the same 1 point and 6%  I could probably negotiate on this but my bank has been so good to me for so many years I just don't I think its fair and we all need to make some profit. The key is having the 500k equity up front.. That equity will carry us through the build out we will not need to put anymore cash equity into the project.

@Joel Owens 

  I bought a bunch of houses in the southern Atlanta area Henry county .. in 2011.. and sold last year... so I spent a fair amount of time there and yes you have sprawl. Most of our subdivisions prior to the big box builders coming in were exactly like you state .

what you had was a lot developer... I was one once... who then sold to builders. So take one of my PDX subs I built in the 90's it had 41 lots and I think we sold those to 8 to 10 different builders and each home is unique and different like you state.. the project I am doing now will have maybe 5 floor plans.

I wanted to raise money to buy those pipe lots in Atlanta 3 years ago when you could buy them for 1 to 3k each. I ended up buying 7 1/2 acre lots in a really nice little development in Henry county for 21k total and that was a nice deal.

From what I know the bigger builders stepped in and bought most of the pipe lots so they are building again and have no real cost for the dirt so they are in a good position to build again.

Oregon has Urban Growth boundaries and the land outside the boundaries depending on zoning may not be touched for 50 years and some of it never... When your inside the boundary development is pretty straight forward. Its not like CA where you need huge environmental impact reports etc and it can take years to get a project entitled. I went into contract oct of 13 on the 27 lot sub and had all entitlements in Place in April of 14. So one of the reason builders in this market did not tie up a bunch of land for the future they were used to buying it in the fall and building it the next summer.. Now its a little slower than that 18 months start to finish.

@Joel Owens 

  currently in PDX my limits are 12 specs up and unlimited amount of presales.. WE don't have 100 lot subdivisions here in our neck of the woods that's very rare.. typical is 5 ro maybe 50... There is no sprawl here we are basically all infill.  The competition for lots is so intense that most of the time there is no spread between what a lot is worth and what it cost to buy the land and develop the lots.. The national builders and the acute shortage has run dirt prices up again.  ON the one I posted about  we have a nice 20k spread on the lots but again that is rare.. profit for new construction is 10 to 15%  and some times more I just closed a high end ( high end for me 600k plus) and I did better than 20% Net. but that is once in a blue moon that I do that well.

Were we do well is with leverage.. My bank will loan me 90% of all in costs ( land and build plus interest reserves) So my average all in is 200 to 250k so 20k to say 30k is all the cash I need for any of my builds.. So If I can make 10% on average 300k home in 6 to 9 months that's double the money COC ... and again sometimes we do better.. I do have a leg up on many of the smaller builders here who have to use private and HML and are not bank able like I am.. I am getting the best possible rates and the least amount of cash into the deals compared to my competition.. so even though I am not be as efficient as some my carrying costs are lower by and large.

In Charleston were I have 6 going currently 350 to 450 price point we have done that with internal cash and some private money.. I am in the process right now for shopping for vertical financing.

@Joel Owens 

 spot on ...our dooms day scenario would to be build them out and rent them out.. they would carry themselves.. The bank that I am with has been my bank for 22 years and in the last downturn they did the same thing when I got stuck with about 5 homes in another subdivision and then sold them off a few years ago when things got better.. Its not ideal but these homes would rent right at 1800 to 2200 a month and be full in a day.. My bank would then convert my loan to a 20 due in 5 ... But like you say to get any serious scale and profit one must take some risk and you need some velocity can't just build one or two at a time. Much like those in the fix and flip business if they are going to make bigger money they need 5 to 10 homes in inventory  a few on the market a few mid rehab and a few just starting then keep the cycle.  We will come out of the ground with 5 homes.. then start 2 a month or more if demand stays anywhere were its been the last 24 months.

@Danny Day 

unlike many areas of the country we have NO lots.. So I could not recreate these lots at this price again.. ( unless there is another 08 type event).. And we are in the building business not the lot flipping business. However if for some reason Horton or Lennar offered me 100k or so I would probably do that deal... Our market here is just super competitive.

For instance in this town we are building in ( population 120k) and in the metro PDX area there is only one other new build subdivision.. So we are pretty confident unless some major calamity we can build and sell.  We are not allowed to take reservations in Oregon until our plat is recorded.. but we have a buyers list right now of 20 plus...so maybe 2 or 3 of them will convert.