All Forum Posts by: Kelly Douglas

[quote="czseller
I don't know of a standard structure for this type of deal.

I would start by figuring out how badly you need the investor. You may have a purchase price low enough that with a 20% seller 2nd you can get financing through non-conventional financing.

Then you would need to weigh the pros and cons.

100% Investor finacing=partnership/non-conventional financing you will pay higher fees and interest and you will bear the full financial burden.

If you can structure a deal with an investor who takes a limited participation you may be better off with an investor. Or you may find an investor who is an asset (experience) to the project and it would not hurt to give them a controlling or equal participation. Then there is always the combination of a limited participation for the required down and bank or non taditional financing.

Thank you for your input. We will probably need to bring an investor into the mix. This is vacant land in a development corridor and obviously will not generate cash flow . Plus our investor has a wealth of experience in real estate investment, not to mention a wealth of cash.

There are so many ways that we can structure a deal such as this, that it can become confusing. Just a little apprehension with giving away too much ownership for investment dollars, when there could be other options?

We are exploring the possibility of bringing an investor into our land deal and would like your input.

We currently have an option on land. Our contract is "buyer friendly", due to the fact that we have been in contract for 3 years, without a close date. We also have 20% seller financed. This is a good size deal that is over $2 million.

How is a typical deal structured if an investor fronts all the money?
What percentage of ownership is typical for financing a deal?

If more information is required, please let me know.

Thanks for the help.

Thank you again. Sorry for the delayed response.

We are currently preparing for everything we have discussed. I have shared your comments with my partner and attorneys. We have attorneys that specialize in real estate, but they are always appreciative of quality and useful information.

I will also keep you updated on this project and future projects.

Also, I just signed into your website

Quality and useful information for anyone involved with real estate! Looking forward to digging deeper into it.

Again, thank you and I will be in touch.

Alacri,

Thank you very much for your well thought advice.

Fortunately, we have some time. I plan on presenting your words of advice to our team and then aggressively moving forward. Of course I will give you all the credit. This is all about sharing ideas, not stealing ideas. That’s why biggerpockets is so valuable.

How would you handle the following special assessment for sewer that directly affects our parcels: Our SSA was formulated to “maximize” our land usage, without consideration for current zoning (which is basically minimizing the land usage).

Obviously, there is an extremely large difference between current zoning and the special assessment fee that will apply. We believe a density somewhere between the two will be negotiated.

In our land valuation process, would you recommend maximizing our land usage using the SSA formula? This process eliminated setbacks/buffers, some height restrictions, etc…

Does the following make sense to you? I do know the cost involved, but to reach our ultimate goal of maximizing our usage, we may need to go this route:
1. Site plan/appraisal with current zoning before condemnation
2. Site plan/appraisal with current zoning after condemnation
3. Site plan/appraisal using SSA formula, maximizing land usage (eliminating setbacks etc.) before condemnation
4. Site plan/appraisal using SSA formula, maximizing land usage after condemnation

Obviously there is a lot going on in this deal, but as you put it, there are opportunities.

Thank you again for your insight.

This is a legitimate case of condemnation for public use.

Here is the deal. An eminent domain move by the village will reduce our site by approximately 10%. We need to determine the fair market value of the land required (10%) and the loss of value to the remaining 90%.

Questions:
1. How is the fair market value assessed? How many appraisals are typically required?

2. With the 10% percent loss in usable land, how does this affect the value of the remaining 90%? Obviously it is reduced, but how is compensation figured in this situation?

3. The adjacent developer is required to negotiate with us in good faith, before the village will condemn the land needed for public use. For the adjacent developer to break ground, they need an agreement with our company to use 10% of our land for public improvements. In this case, how is “good faith” negotiating defined? Would it be more beneficial for the adjacent developer to half heartedly negotiate with us and to just let the village condemn the land?

4. Would it be better for us to actively negotiate with the adjacent developer or let it fall into the village’s hands to be negotiated?

Thank you for your help.

We currently have a land option on approx. 30 acres.

Can we actively market this land for sale without jeopardizing our option? Signs, listing property, etc.....

A sign on the property would probably need to have permission, but what about a listing?

Our 25 page contract and amendments do not address this issue.

Thank you for any help.

Thanks Sooz!

We will certainly explore this possibility as well.

Thank you for your reply.

With this arrangement, how do I finance the $50,000 quarterly payments until the close date?

By the way, it’s vacant land.

Does anyone have some input on the following.

We've changed the numbers, but the structure is basically the same.

$2,000,0000 real estate contract.
to be paid as followed.

Original downpayment
$25,000 paid in 2006

Payments below will go into an escrow and then released as a payment towards the contract.
10/31/07
$50,000 payment

1/31/08
$50,000 payment

4/30/08
$50,000 payment

7/31/08
$50,000 payment

Close date
10/30/08
Balance due $1,775,000
Seller financed $400,000
Bank loan $1,375,000

We want to cover the $50,000 payments with a line of credit, only paying the interest monthly, and only using what is needed.

Does a $200,000 line of credit make sense in this situation? Or should I find an investor to fund the $50,000 quarterly payments?

Thank you for your input!

Thanks John.

All the information is greatly appreciated.