All Forum Posts by: John Blackman

@Karen Margrave

I have used them on one house on a slope from the garage to the living area.  It sold to a software developer in his mid 30s rather quickly.

We are putting them in a new duplex condo right now.  We have to use them as there simply isn't room for a full flight of stairs. but they go from the second floor to the attic/loft space which will have a full downtown view.  I expect that these will sell to young professionals.

I will send pictures when I have something more interesting to look at.  They look neat, but are typically narrow.

Jon, we constantly run into this.  We have a specific 'Market Ready' checklist that includes an internal QC pass and sign off from our QC person, the builder, and the Realtor.  We have hired independent inspectors as well that give us lists that we fix, but the buyer's inspector *always* comes up with a new list.  

So we tried to hire that inspector for our next house.  The same problem shows up again.  I haven't found a way to have a buyer's inspection come up perfectly clean.  The inspector always feels compelled to show they are earning their keep, so they are always going to find something.

We fix everything that is reasonable and offer price concessions for items that are more troublesome like we want this doorway 2 inches to the right, or we want this fixture moved.

In general I find that if I can get the builder talking directly to the buyer, everything goes much easier.  The Realtors in general are poised to attack each other and prove their worth by pointing out everything the builder didn't do.  We always want the buyers to be happy and will fix or adjust all reasonable requests.  So if you can, get the builder to do a walk through with the buyer present.  Every time we do this, tensions lower, everyone gets happy, and transactions close.

Jason we cannot guarantee anything.  

We offer a targeted return based on our projections.  Even with debt there are no guarantees.  It depends on the offering, but you could offer monthly payments or a simple return on the back end that is still in first position, although usually if you are going to offer debt, you should offer payments in my opinion.  The full offering details are in the securities documentation which is very exhaustive and covers all of the possibilities and disclosures for gains and losses.

1122 Linden Project Status - 02/13/2015

Budget Status: GREEN

Schedule Status: GREEN

Capital Provider: iFunding

Construction Week: 23

Estimated CO Date: March, 2015

Estimated Market Ready Date: April, 2015

Overview

We've completed most of the sheet rock at this point. Next week we should mud the rest of it, start the decks, and pour the driveways.

Work Items

• Complete this week
• Sheetrock
• Order cabinets

To Complete next week

• Begin pouring driveways
• Decks
• Fix broken window

Blocking Issues

• None

Schedule

1/31 - Target date to do survey if title comes back in time. - COMPLETE

2/3 – Survey performed - COMPLETE

2/4 – Survey docs delivered, feasibility start - COMPLETE

2/21 - Have site plan rough ready and approved by COA arborist - PARTIAL, waiting on arborist

2/24 - Complete material submission for iFunding - COMPLETE

4/21 - Designs complete and handed to engineering - COMPLETE

5/13 - Engineering complete - COMPLETE

5/29 – Permit paper is ready to submit - COMPLETE

5/30 - Submit permits to the city - COMPLETE

6/25 - Submit response to city feedback on permits - COMPLETE

6/30 - Permit approved - COMPLETE

8/8 - Gas lines removed, slab demolished, start foundation - ON TRACK

8/11 - Tree removed - COMPLETE

8/29 - Foundation complete - COMPLETE

10/10 - Framing complete - COMPLETE

12/19 - Mechanicals complete - COMPLETE

3/15 - Complete construction

5/15 - Units sold

Pictures

Video

http://youtu.be/VzFGPv34ywM

We do both depending on the design.  If we have enough room we'll do a free standing tub in the shower.  In this project we had a lot of breathing room.

In others we may be tighter and as such will have to use an integrated tub.  So again, depends on the market.  Personally I love the tub inside the shower.  I think it looks fantastic.

I don't even have an address on my business cards.  I hate paper, so I always push for an electronic version of anything that would need to go to a physical address.  Email and cell# are plenty for your business card.

Are you doing an attic exemption (little to no more structural cost) or a full 3rd floor?

I would suspect you will have more costs in the following areas:

1) Engineering design

2) Possible foundation 

3) Framing

4) At least a 2 zone HVAC system

That being said, we've never done a full on 3rd floor, only attic exemptions which jsut finish out the attic as a 3rd floor.

Keep in mind, even if it is just a note, you are still selling a note that is securitized by the property.  So you are technically still subject to securities laws.  The risk all comes down to whether or not your investors sue you if they are unhappy.

I know of someone in Austin who was broadcasting 12% returns to anyone who would read his web site.  He wasn't checking for accredited status or submitting offering docs.  He was raided by guys in black suits with guns.  It was not pretty.

You can solicit to anyone, but you can only take money from accredited investors if you work under a 506(c) exemption.  You also have to verify that they are accredited.  It sounds like you are not going to file an offering with the SEC which can be dangerous if you are soliciting to people you don't know.  If there is an existing relationship there is less ground for a lawsuit. Consult an attorney.  Tread carefully.

@Kyle B. 

I will echo all of the aforementioned advice.  Ultimately in order to grow your business you need to scale it.  To scale it you need to hire out everything you are spending your time on.  Find someone to buy deals from.  Hire GCs.  You will make less per deal, but that is ok.  You just need to make sure that you are making a return on your investment in those personnel.  It is a hard task to accomplish, and in all likelihood you will probably get burned on a few along the way.  However you will ultimately find ones that work.

Business owners that plateau are the ones that accept the amount of work they are doing themselves which is usually enough to keep them working 100+ hour weeks and are not able to hire it out so they can grow.

@David Friedman 

 Unfortunately there is no way to guarantee anything.  In our development business we have been through 8 builders to get to 3.  Those 5 that didn't work out cost anywhere from $25,000 to $50,000 each in mistakes or bad management.  For a project like yours the numbers are going to be higher.  So you will have to vet your builders very carefully.

Get several bids.  Make sure the builders have a long track record.  You are not going to get a 'deal.'  In fact you may end up paying more.  You are likely to make many mistakes which will cost you.  Hopefully you can absorb them in your anticipated margin, but such is learning a new business.  You are jumping into high stakes development on your first project which is risky.  The rewards could also be very high.  If you want to try builders out on smaller projects, that would minimize your risk but it will take time. 

It takes us about a year to fully vet a builder on a new project.  We're 5 years in and still just have a few trusted providers.  Others may be able to do this faster or get lucky, but unfortunately there is no way to know until you try them out.  Everyone talks a good talk, but performing is entirely different.