All Forum Posts by: Lynn Currie

@Jenifer Levini

I'm in town and wearing layers!!

@Donald S.

Make sure there is a good market for a spec in that area. The subdivision is going to bring your values down because of the available inventory PLUS they're building cheaper. Not saying it can't be done or is a bad idea, but the fact that there are only 2 specs besides the subdivision seems like a red flag to me.

@Alex R.

I have investors in my builds, but they’re all specs so the investors share in the upside.

Private money rarely comes in at 6-7%. For most investors, there are investments with less risk for that return.

@Wayne Brooks To do it through the city, it would cost about $30k

@Karen Margrave

We have two electric meters, but if I wanted to do 2 water meters, I would have had to do some taps work to the tune of about $30k. No thanks.

On another project I'm considering using this for a client to submeter electric for a tenant https://www.amazon.com/Neurio-Electricity-Monitor-...

To your point, it's a little bit of a pain in that she will have to read it, but she's okay with that.

I need to setup a submeter system for water on a new construction project. There are 2 houses in the project. We ran lines separately, so we're ready to go on that side. I've looked at a couple of options and think I know which product I'm going to buy but wanted to hear from BP folks first.

Anyone done this and have any input?

This is what I'm thinking:

• service setup through Guardian and they will do the biling
• pulse output meters installed at street
• gateway system that has both cell and wifi (assuming buyers have wifi, they can save $10 per month by not using cellular)
• gateway has app built in for owners to connect and see usage via mobile app
• water bill paid by HOA and the owners pay the HOA for their individual bills

My goal is to make this as seamless and painless for the buyers. 

@Karen Margrave have you ever done this?

@Aldin Tirak

As @Jay Hinrichs said, you probably will have to fix the sidewalk before you can record the plat. 

The best way to know ANYTHING for sure is to go down to your development office and start talking to the folks that work there. Ask questions, hear the answers, ask more questions, don't get mad, just be curious and look for solutions.

You should try to get a good understanding of what/why it went wrong. I usually try to get the original contractor to fix before bringing someone else in BUT it depends on how bad they've screwed up - is this an incompetent contractor or is there a logical reason? In Austin, it's actually (sadly) common for city inspectors to fail inspections when they shouldn't.

RE: the architect

I would bring one in as soon as you're reasonably sure that you are solid with your subdivision. I don't work with online drawings so I can't tell you if it will work for you. Our Land Development Code makes that an unworkable solution.

@Elaine Lai

The developer take on this seems to be about $130,000 - $200,000. This would be way too low for my liking. That's about $26,000-$40,000 per house. Personally, I wouldn't take on a project like this.

I'll echo what @Jay Hinrichs says about lenders. They're not in the business in taking a lot of risk and a 5 unit deal with someone who's never done this before is risky. Because of this, it's likely that you're going to have to bring more cash to the table and/or maybe pay a higher interest rate (because traditional banks might not touch it).

Here is my logic on the costs based on your posts. Let me know if I misread or an missing something:

• Cost = $1.9M+$100K
• Sales = $2.5M - $2.6M
• Before loan costs, that's a possible $500,000-$600,000 gross
• Assuming traditional lending with 25% down, financing costs with traditional lending will likely run you around $100k (for a year long project). I'm using 5.5% for 70% of 12 months to account for it being a construction loan (you aren't carrying the full balance). I'm not sure if your closing costs/taxes change in CA.
• Realtors and other ancillary costs could equal $200k or so ($150k for realtors at 6%, + closing costs + taxes, etc). Of course you could sell without a realtor, etc.
• This means a net of around $200k-$300k at the end of the day. That's a 10-15% return. 
• You mentioned that you need to bring on an investor to help with down payment and to guarantee the loan. There are various ways to structure this. I usually do an 8% pref + an equity split.
• At the end of the day, the builder take would be around $130,000 - $200,000

@Hank Wu

The benefit is that you don't have any out of pocket carrying costs during construction. Of course, they are considered part of the loan, so your loan is bigger.