All Forum Posts by: Jonathan Orr

@Bryan Hancock I appreciate the tips.  I completely agree about treating it the same as with other investors.  I want to take every precaution and make sure this is done correctly so everyone is protected properly.

I have been trying to study more about the 506b vs 504.  It is not a big raise and would fit both scenarios.  Do you by chance have any information or maybe places to look more about the 504 offering?  I was reading about it and it seems extremely similar to the 506b except has a limit on amount raised.  I am just concerned that there are other stipulations that I may not be catching.

Thank you again.

@Jeremy Long My partner is doing a similar thing out in CA.  However he is doing strictly the "horizontal" development.  He has done several of these in the past.

What he does is gets a larger plot under contract with terms that are long enough that he can go through his entitlements. He then begins going through the entitlements (zoning, getting lots drawn, etc...) by the end, he has lots drawn out and approved for building (this can even include streets and offsite work).  He sells the individual lots then to home builders and end users who hire contractors.  The lots are ready for permits.  however, what this does in dramatically decreases his cost because he does not have to go through the construction aspect nor the money for using the architect for each individual lot and that added costs of construction.  Additionally he sometimes can work a way to start pre selling the lots and he can use that money towards the off sites and streets so he does not have to come out of pocket as much.

Just a thought.  With something that big I would try and master plan it like that then sell it off in pieces.  Taking on a project that big and wanting to take it all the way to completion will be a lot of $$$ and time.  

When you go through you entitlement process you can then start approaching smaller construction firms or other developers that do residential building but they may only have the capacity to do a couple.

just a thought.  Good Luck!

Hello, I am looking to put together a Memorandum for raising capital from Friends and Family.  In the past I have partnered with other people to raise the capital and they have been much larger offerings than what I want to do on my own.  I feel a friends and family raise would help me start some new projects and start utilizing my own network.

I am wondering if anyone can give me a crash course on what I would need to do and some of the boundaries I have to follow.  

In other raises, they have been Reg D offerings to outside and Accredited investors.  I have the memorandums to go off of for those but they are like 100 pages, I like the material and the documentation but seems excessive. Do I still need to have a Reg D offering to raise capital from family and friends?  Additionally I don't want to be limited to Accredited Investors only.  Most of the friends and family are non-accredited, so how would i have to change something?

Any tips or leads to information on this would be helpful.

Being a hotel developer I see Air BnB not being a true competitor. As @Joshua Fulenwider stated, many cities and municipalities are coming down on them because of complaints from neighbors and the cities don't receive the bed tax revenue like they do from hotels. Additionally, it caters to a different market of people who are looking for the absolute cheapest. With nearly all new hotels built today, they are designed for 2 travelers, the business traveler who is most concerned with consistency of their stays and being used to what they are receiving regardless of where they are, and the family, which typically does not use BnB due to needed multiple rooms and safety, a big priority (not sharing a house with the owner or other occupants). If you take into account of renting an entire house on BnB it's pricing is hard to compete with a hotel room(s) in major destination areas.

As for small houses, I looked at a couple projects and thought about a desig for the "micro house" and it is extremely difficult to get them to pencil from the construction perspective on a large scale. Yes people can individually pay for them but again, very small market. I don't see it thriving and taking place of traditional sfr or even town homes or RVs. 

The difference I can see with a rv park vs the tiny homes is a rv parks income is based on temporary lot rentals while a tiny home is permanent, if you talked about a tiny home that is mobile, it is virtually a glorified trailer.

I don't think either make a dramatic impact on real estate, if anything air BnB in a neighborhood may hurt the areas pricing due to people who want do not want new occupants ever couple of days. I even saw a news story out here in California a week ago about a community in LA that is stating it is difficult to sell homes that are located close to air BnB homes.

Very intriguing articles though and how creative people in this industry are to be successful and make a $$$

@Reba Marabotto Looking for 1-4 acres.  The major stipulation is utilities to the property line.  PM me and we can talk.

Hey BP

Started looking for some commercial development deals in the Temecula Valley Area of California (Murrieta, Temecula, etc...) wondering if anyone has commercial tips and tricks out there.  Seems like there is not alot of ready to develop land out there.  Lots of land that needs major infrastructure added but no "infill" or pieces that have utilities stubbed.

Hey everyone. I have some deals and doing some work in Oklahoma City area. I am looking to expand my network and wondering if there are any local REIA's you can refer me to?

Thanks!

Hey BP

I have been talking with fellow investors and agents here in California.  I am getting different answers on if you directly need to put "subject to inspection" into a Purchase agreement even if you stated in the RPA a contingency period.  I am in California so looking for advice specifically for CA. The offer is a blind offer for purchasing of rehab properties but getting it under contract is the main goal here then performing all of my due diligence.

Thanks

@Account Closed not in the market for existing hotels, however if you ever run across land for development of hotels let me know.

Is the hotel a rehab play? 

@Tyreese Gadlin If you are getting into the world of ground up development there are several steps you got to get through first.

1) finding the right property with the allowable zoning.  Even if you find a property for sale that you like it may not fit the density that you want (50-100 units).  If that is the case, you would have to go through a rezoning with the city or get a Conditional permit to build.  This would require Architects and possibly some entitlement work.

2) is to go through any other entitlements.  If you find a property that fits the zoning you will have to go through the city and possibly get studies done to have it allowed.  This could include, traffic studies, environmental, etc... Additionally there may be others hurdles like planning comission and other steps with a city or municipality to get approved

3) getting a construction loan.  When you get your porject approved most lenders for multi want to see a track record or extremely deep pockets for a loan.  I would receommend partnering with a developer who has a history of apartments so it is easier to talk to the banks/lenders.

In terms of construction cost it really depends on your area.  For example something where I live in Southern California will most likely be much more expensive compared to WY.  It also depends on what you want to build (4 story stick, single story layout, etc...)  A majority of those questions can be answered once you start talking with a architect and when you get a sense of what you want to build then you can go to contractors and start getting most definite numbers.

I hope this doesn't discourage you, just want to lay everything out.  This is a long process but can be extremely profitable in the end.  My first action item would be to find a piece of property then go get a feasibility study (you can find a 3rd party company to do one for a price).  they will tell if you a great deal about rents and if they find that building additional units would be profitable for you.