All Forum Posts by: John Blackman

I am currently using one QB file (not QB online) per project.  It keeps everything in isolation so I don't cross the accounts.  Every project has its own bank account.

Although I am using xero.com to do all of my unified entity accounting which collects pay outs from those individual entities.

Ultimately I would prefer to do everything online, but I have heard horror stories about businesses being used as beta testers for QB online and changes completely destroying their books.

We listed a deal on their web site as an equity promoter.  You need to have a package that describes your listing and all of your due diligence as well as the full capital stack.  If they like your project and you have a good track record to show that you can get it done, they will consider listing it.

If they list your deal you will need to provide all of the documentation to fill out their listing as well as create a video and do a webinar to promote your listing.

Their process may have changed in the last several months as we are still in the middle of executing on our project that we listed with them, but I am sure we will do more on their platform.

Transfer the title to the LLC now.

Find a lender that won't have a problem doing the refi on the property held under an LLC at day 0. You may have to do some shopping.

Good luck.

@Jerry W.

 We hire our GC's as 1099 contractors per build.  This allows us to hire multiple builders across projects which keeps them all honest and allows us to place the GC with the right skill set to the right job.  They are all a combination of good-fast-cheap.  So projects with the longer timelines get the good-slow-cheap builder, and projects with tighter timelines might get the good-fast-expensive builder.  We never sacrifice quality, so it really just comes down to speed, price, and bandwidth.  Having multiple GCs also means our business doesn't have a single point of failure.

We have crowd funded three deals to date, two with iFunding.com and one on our own site.  Using an existing portal is certainly easier, but costs more.  Creating your own portal can have long term benefits, but takes a while to generate an investor list from your track record.  So if you're going to do your own, make sure you have a track record and some social network in place to get it off the ground.

Rates depend upon the project and where the investors are in the capital stack.

@Kris Fahrenkrug

 This would be someone like <name drop> https://www.clsaustin.com/ </name drop> or a banking of finance consultant.  These are generally ex-bankers that know how banks work and what they like to see in a presentation to get it through the loan committee.  They have connections in the finance industry and connect lenders to borrowers.

I can appreciate cost savings certainly, but none are as effective as just getting done sooner.  Time is more expensive than cost savings hacks, but it's a hard one to hack.  Here are a few that I'm using.

1) Use pine trim instead of MDF.  Everyone loves MDF because it's cheap, the problem is it scuffs easier so you spend more money and time patching it versus just using a harder trim material that is more durable and doesn't scuff as easily.

2) Pipeline, pipeline, pipeline.  Do as many things as the same time as you can that wont create redo work because they get damaged.

3) Dedicated punch teams.  Find a team that knows punch and gets paid by the job. Punch is a long pole because it is detail work, and it is also what sells. Speed here is worth the extra spend.  Consider your estimated profit on a deal, divide it by 12 (months in a year) and add your interest carry cost for a month.  That is the true cost of a month.  If it costs less than that number more to get it done sooner, I spend it.

I can't stress time enough.  Always consider if what you are saving money on is going to cost you more time to do it.  If I can save $1000 on my cabinets but it will create a 4 week delay, I just pay more for the cabinets.

The first and one of the most difficult tasks is going to be selecting and entitling the land to develop.  Building a subdivision is a large and complex task.  You will have to spend a considerable amount of money to even figure out if it is possible.  I might start by selecting a few possible locations that meet their target size requirement and then start doing feasibility studies, but those are going to cost money.  Is this group prepared to make that spend which can be a 100% loss if the group decides not to move forward?  You'll need the right zoning, utilities, subdividing, and environmental.

All of the logistics aside, creating an entity is a good idea especially if you are going to be mingling funds from multiple parties.  You would likely be a GP to a SPV.  I would consult a lawyer who is familiar with creating legal entity structures for these kind of projects.

Good luck, it sounds like you have a big opportunity on your hands.

Don't take the lowest bidder, it means you may have to pay a higher bidder later to get it done correctly and now you've spent 2x.

Also consider time, especially with a surveyor.  You are usually blocked on doing anything if you are waiting on a survey.  So I am willing to pay a little more if the surveyor can get it done within 24-48 hours.

There are!  You have several options.

1) Traditional bank - You will need to talk to a lot of them.  Smaller local banks are more likely to lend to you.  Chase, BoA, and Wachovia will not.  Our team has talked to literally every bank in our county, about 80-90 of them.  From that list we have used 5.  Prepare a package that describes your project in detail.  Lay out the costs and timelines.  Consider hiring a professional to help you make your bank packet.  Once it is ready, give it to 10 banks and tell them all that you are giving it to 9 other banks.  This will get you the best terms, show them you are a pro, and greatly increase your chances of getting a loan.  You will meet a lot of bankers too which is great networking.  You will likely need 20% equity in the deal and good credit.  If you don't have those, get a partner that does.

2) Hard money - This is going to be more expensive, but there are plenty out there who will loan to a new builder if you bring enough equity to the deal.  These guys win when you default, so you had better be sure you can get it done on time.  These loans make sense when time is critical and you are confident you can deliver on schedule.  I would stay away from them on your first few deals.  Any Real Estate meetup is going to have a few hard money lenders present.

3) Private loan / Partner - Bring a partner into the deal that can finance it.  Here the options are what ever you negotiate.

If you are going to be doing new construction in the long term, you will want to develop #1 for sure.  #2 and #3 are also very useful and make sense for the right project.