All Forum Posts by: Paul H.

LLC isn't recognized under Canadian Tax Law. You need to go more old fashion and look into a flow through entity structure that works for your situation. Find a good cross border CPA.

Franco,

I 100% agree with Michael Le.  It takes years of surrounding yourself with other developers and shadowing projects to try and run solo.  I would offer similar advice to Michael, I would build a team with a track record that would accomplish the goal you're looking to accomplish.  Donald Trump was a developer, not because he was knowledgeable about development but because he had the skills and negotiating power to put together a rock star team.  

If you can put together a great potential project and put a strong team around it with a deep bench of expertise your chances of success go from near zero to reasonable amount of risk.  I would look at a skilled Planner who can bring all the deliverables for a project together and help with the application process with the County/City. Strong engineering consulting (local tends to be better), Designer/Architect with a strong relationship with a Builder (ideally having completed projects like the one your proposing),  Legal (To get your offering documents together or real estate transactions) and you'll be adding more and more as you go.

I started out as your traditional buy and hold landlord and have transitioned to development, but I did it by joining a team that already had a bit of motion behind it.
 

12 units may not be enough to justify the hard cost, soft cost and land cost. If you get that figured out, you can then determine your lending and your rental income on sq ft. basis for the building. Ideally you want to create enough lift, that when you come out of construction financing into conventional financing you leave almost no money in the deal and pay yourself and investors back.

Also do you have enough land to accommodate the parking ratios for 12 units, and if you don't, you would have to build underground parking add that cost to the above.

TLDR: It's hard to make 12 units work in todays market, but can be done under very specific conditions.

I used Kevin Mulvihill in Arnprior for all my rentals in Cornwall.  I make them shop it every year before renewal and they have been fantastic in quoting product that I have accepted offers on but haven't waived DD on.

@Don Johnson 

Check your parking requirements for point #3.  That will determine what you can actually build on site to reach density... and then consider if the cost of underground parking will be worth the cost to add the units.

Then do some very rough napkin math, 

Determine your footprint and how many floors you can do within the height restriction of the zoning. = Total sq ft.

Then determine your usable sq ft. from the total sq ft. calculation, ideally you want to aim around 74% usable space. (More the better) Total sq ft. * 0.74 = Rough Usable

Then determine your rent per sq ft. of usable space. Then take your usable space and determine your gross rent for the building. You can also use these to determine the sale per sq ft. (Condos & SFH etc)

Then calculate your hard cost and soft costs and include your land cost. I use 30% of hard cost as the total soft cost in multi.

Once you start making sense of those basic calculations you can start solving other pieces of the puzzle.

1. Consulting can save you a lot of time and costly mistakes in your earlier projects.  Then once you see how they do the numbers and get experience you can start to take on more yourself and not use them for other projects down the road.

2. The first step would be to determine if you have a viable project, once you start engaging an architect and the like they will start to bill.  Architects will draw until the end of time and can become costly if you're not clear on the project and also hiring the wrong architect that doesn't have a track record with the type of building you want to build will be costly. (They will learn how to do it on your dime)

3. As much as real estate is hyper local, the proper team can be located anywhere.  However, using locals that are familiar brings a significant advantage since they are familiar with the key players in the area.

4. Unit mix should be market driven and keep in mind there may be benefits to having a % of the building affordable and accessible.  Keep in mind you can get more clever base don the shape of the building.  Studio, 1 Bed, 1 Bed + Den, 2 Bed, 3 Bed Penthouse.

5. 

I'm in OREIO, I would recommend it as well, since COVID it has been entirely virtual.

@Ryan Olsen We always underwrite our projects in their by-right scenario, and if we go outside of that we would use 3rd party planners that are aware of everything happening in that current market. For example zoning calls for 6 stories, but city planners have seen several applications result in 9 stories.

So we use what's exactly written in the zoning code for the property, pick the best use of the land that would net the best result.  If that pencils out as a profitable project, we will shoot for the moon and ask for relief on certain limitations in order to maximize the property.

Hope that makes sense

Paul

Honestly, if the zoning "by right" scenario only allows for certain types of home to be built on that residential property I would underwrite for that scenario first and make sure you have a viable project and 'Plan B", because going for a tiny home community without a plan B has a very high risk, and with 5 acres... you can find yourself upside down pretty quickly once you start adding all the soft cost / hard cost to your underwriting.

I would recommend talking to the planning department, ask them if any projects like the one you're thinking about has come across their tables, and how open planning and city council would be for such a product.  Being first is not always a good thing when it comes to those guys...

Lots to think about for sure... however with a well thought out plan and some very favorable conditions on the purchase, you could make something work if you don't overpay for the dirt.

Equity Multiple and IRR give great insight into the return & duration of an investment. The longer hold projects will have diminishing returns on the IRR but will eventually lead to an infinite return scenario where you maintain equity in the project and have all your money back.

Well written @Justin Goodin

@Mathieu Laquerre are you able to help @Matt I.?   Mathieu does a lot of projects like yours mentioned in Philly.

Cheers,