All Forum Posts by: Zachary Hickman

Hello,

My family bought some land that is almost directly across the street from what will one day be a major intersection. Currently, there is a T-intersection on a main highway leading into a large mixed-use development (currently under construction) and sports complex (already built and operational) across from us. Our property has a driveway that leads to this intersection but at an angle as our property line is directly centered on this intersection. We are looking to develop our property and would like the main entrance to our project to align with this intersection, as there's a high chance this will end up signalized. 

The only way to do this, is to build an entrance road half on our property and half on my neighbors property. I'm assuming the only way to do this is to do an easement of sorts and work out an arrangement on costs to do this.

My question to everyone is this, how do I go about starting this conversation with the landowner? The property just sold and is a small mobile home park. I've looked online for the owner and it's an LLC and the LLC has a PO Box as an address. Just not sure how I would start a letter about this or how this would all work out. Has anyone done a short street/drive on two properties before, and if so, how did that go?

Any advice would be greatly appreciated.

Thank you!

Quote from @Paul H.:

My questions to you is can you sever the AG land into the two 7.5 acre parcels and get more tiny homes?

It's three separate 5 acre parcels, each one is basically a square and they're all arranged in a rectangular shape with only one touching the main road. Additionally, zoning specifically states for tiny homes in Ag land, it's 3/5 acres, with a max of 6 per 10. We'll be building on the back 10 acres first. The front 5 has a preexisting duplex that we'd like to keep for the time being. It'll eventually be torn down and replaced by commercial/mixed-use development (that's the plan right now).

All that said, even if we were legally able to build more tiny homes, we don't have the funds available right now to do so. Eventually, we'll rezone into a "planned development" category and build more, but right now we want to start small-er.

Quote from @Chris Seveney:

@Zachary Hickman

Shouldn’t be any issues as long as they will always be rentals

If you tried to condo them or sell individually it may be difficult to finance unless you had a shred use / hoa agreement in place to make sure their are adequate costs / reserves

Also realize renters and septic systems don’t go well together with all the stuff they throw into the system.

Make sure to pump it very frequently

 I hadn't thought about the potential issues with renters and the system, will be something to consider, thanks!

Do you have any insights on removing a field in the future?

I'm working on developing a 15 acre plot of land in "rural" Florida and could use some advice. 

It's currently zoned agriculture and we intend to keep it that way for the time being. Zoning allows us to build tiny homes on the land, up to 6 in total. We have already purchased the land and have enough equity to build the units and some infrastructure. The reason to not rezone is the need to build a lift station, which would make this cost prohibitive. 

Instead we're going to use well water and a shared septic system for the 6 units. City and Civil says this works and we're good to move forward. 

All 6 units will be rentals. Additional phases will be built in the future after phase 1 is stabilized and has positive cash flow.

Question to this forum is, what sort of potential future issues will the septic system cause for future phases? The current thinking is that these units will eventually be connected to the city sewer/water system. I'm picturing that the leach field will either be built on in the future or used as open space. 

Any advice and thoughts would be greatly appreciated!

I would say that the neighborhood location is irrelevant for the construction cost (city A vs city B is different). That said, expect the higher number. I've had a quadplex quoted for me recently in Florida and the estimated cost was $170/sqft. Not sure if the cost per sqft for a duplex vs a quadplex differs much. Would be interested to get that quoted.

Here are some resources for Metro Atlanta:

https://www.atladuco.com/

https://www.kronbergua.com/new...

https://www.backyardatl.com/

Kronberg is really big in the ADU space and with infill in the COA. I would imagine they'd know some contractors that you could reach out.

There's a lot of "it depends" to this answer. I posted a similar reply in another thread earlier today, but there are two ways people get "paid" in projects. One is the "development fee". Basically, this is someone's cost to manage the project. In my day job firm, it's 4.5% of managed costs. Those are usually hard costs from your contractor, A&E costs, permits, legal, marketing, consultants, but it excludes contingency, financing fees, the dev fee itself and other things that aren't specifically managed by the "developer".

Now, for profit splits, it's a different ball game altogether. Some investors will want a specific return and anything less or more will be ignored. If you can find an investor who only wants X% and you make 2X% and get to keep the rest, let me know so I can partner with them :) 

Usually for projects I'm involved in, there's a waterfall in the proforma with promotes. Our projects are huge, and complex. For smaller ones like yours, I don't think you need to worry about those things. In speaking with potential investors on my projects, most are flexible with the terms, while others have been firm. Some are willing to do a 50/50 split once they get paid out their initial investment. Others have wanted 85% of the profits since they're putting up most of the capital/equity. There's no single or correct way to divvy up the profits, just do what makes you and them happy. Remember, if you aren't putting any skin in the game, any profit is great. Don't get greedy in your quest. 

Best of luck!

There are a variety of ways you can set this up. You can do an actual dev fee, so they get 2-4.5% of all managed costs, that's typically hard costs and direct soft costs (think AE, Legal, Marketing, Permits, but not contingency, loan/financing costs, etc). At my day job, we get 4.5% on all deals for managing the day to day of the project plus the equity split/payout. If the managing partner is less experienced, they might get paid out less. Some of this will depend on the bank's approval too. You could always negotiate the fee into equity of the project or additional equity in lieu of the fee. This is typically paid out monthly in equal installments based off of the construction schedule. For your project, tailor the fee schedule to the project.

If you're asking about profit split at the end of the project (whatever that looks like for you, either selling off lots or selling completed buildings, or somewhere else in the project), then you could do an even percentage depending upon how much equity each put into the project. Say they put up 75% of the needed equity, they would get 75% of the profit/loss on the project. You could do even 50/50 since you brought them the deal and had it mostly teed up and ready to go. You could negotiate with them for another percentage based off of other factors. How much effort you or them are putting into the project, who brought it to the table, who's more valuable to the project, etc. There's no right or wrong way to do it.

Not sure if this is what you're looking for, but it's a fantastic thread.

Quote from @Eliott Elias:

Before you look at cost, you need to look at zoning and if the city allows it. 

 Agreed. This is the only hurdle that really matters as it might not be one that you can do anything about. Rents and costs can be adjusted, but zoning and local approval is one variable that you can't really control.

If the current zoning on the property is for single family only, does it allows for an ADU? Maybe you could explore that route. Where I'm working, ADU's are allowed by right in all residential zones, but they're required to be owner occupied lots, so I couldn't rent out both units.

If a rezoning is needed, you should also look at the future land use map/comprehensive plan to see what the community is currently expecting to be built there in the future. Most cities I've lived in have this. If there are already duplexes, quads, etc in the area, a rezoning will likely be easier.

Best of luck!