All Forum Posts by: Zach Matson

 Thanks for the info! I have a bit more analysis and brainstorming to do to make sure they are even more marketable. 

I'm a builder and investor in Boise, ID. I'm currently designing my next builds, and want to make sure they are the most appealing and can make financial sense to investors. So, I have a few questions for those of you still buying single family homes as rentals. 

1. How are you analyzing your deal and what is your goal when you are buying a SF home? Is it cashflow still(and how much?), or more for long term benefits and try to break even? 
2. What is your strategy for renting... is it LT, MT, ST, rent by the room, or something else? 

3.  How do you value new construction as opposed to an older home that may look nice, but still older? Do you take into account that you shouldn't have any mainenance for at least 10 years or not really? 

4. Is there anything that you have really wished you could find in homes that you don't see often that would increase your return or lower your expenses? 

5. When you see a listing, does it help when the remarks are tailored toward investors? Such as ease of maintenance, durability, return on investment, etc?

6. Is there any other suggestions you have for me to adapt to the current market? 

Any feedback is greatly appreciated!

A few of my ideas so far, that I'm starting to implement...

1. On houses that have small yards I have done artificial(but real looking, they've come a long way) grass. People have mixed feelings but it seems that investors love it at least. 

2. My most recent floorplan has private bathrooms attached to each bedroom. This only increases my cost by maybe 5k(added a bathroom), but seems like it will be much more marketable as a rental. But, this did eliminate a family room upstairs, so the only living space is on the main floor. 

3. HUGE primary en-suite with walk in showers and soaker tubs. 

4. Model my homes and design after $1M+ dollar homes, but they are in more up-and-coming neighborhoods. 
            - So basically they are the nicest homes in the neighborhood, but the neighborhoods are very much improving around them. 

5. I use upper mid-level finishes. Better than builder grade but not top of the line like on the high end custom homes. The result is a very upscale feel compared to other comparable price points typically. I.E. Good quality LVP flooring, Upper mid level appliances, energy efficient furnaces and tankless water heaters, semi-custom and now custom cabinets, quartz counters, and each home is professionally designed. 

 Yes, that's true. Infill, build-ready lots are much faster. I've done a few of these, but have a harder time finding lots that are build ready and have profit potential. But they are out there, and it's definitely a niche that not a lot of people do. Still have more capital requirements than a traditional flip which is why a lot of flippers don't transition I think. 

 Not a preliminary plat, just a concept plan. I've even gotten them for as little as $500, but I did all the leg work first and knew the exact layout I wanted and could do, met with the city, etc. 
Engineering is another $15k+ depending on size and difficulty of project(15k for small infill subdivision). 
Approvals could be another $50k-$100k or more if hiring an architect to manage the process through entitlements. 

But, for someone just wanted to get a concept on paper and flip that land contract, it can be done for not much cost. I've seen a lot of people make multiple six figures on land flips by simply having a concept down on paper that's viable. 

Good for you for seeing an opportunity! We need more people to consider land. 

An answer to your questions, then a few comments.
1. In my area it's 1 year to get entitled, 1 year to put in infrastructure and get the plat approved, then 1 year to build and sell. Those can vary slightly but good rule of thumb. 
2. Developers typically buy the raw land in cash, then get construction loans for the hard costs. 
3. This may be hard as a newbie, and excavation companies are mostly just going to want to get their check and move on. 
4. Doubtful

The best strategy as a new person that's never done land is find raw land with that development potential, get it under contract with a long close (12 months or upon entitlement). Get the seller to agree to allow you to go through entitlements before closing. You'll spend some money to get it entitled, but then you'll likely double your money or better if you have the right deal. You could even potentially flip that contract as it's not super easy to get a contract that a seller is willing to wait through that entitlement phase.

With very little money out of pocket you can get it under contract with an extended close, then have a site plan drawn up, and sell that contract as a wholesale deal to a developer that can actually close and develop the land. This will basically cost you some earnest money and 5-10k to have a professional site plan made. The key in this market is to have the best land deal for a developer to buy, as, at least in my market, those deals have slowed down significantly. 

I transitioned from flipping to new construction basically at the beginning of the pandemic. The 3 biggest differences in land/construction deals vs flipping are:

1. Time - Unentitled land takes 2.5- 3 years to go full cycle from contract to exit. Mostly because of... difference #2... 

2. Working with government entities for approvals. Surveys, plats, engineering, working with every single P&Z department plus the highway district, health district, irrigation district, etc. Multiple cycles of redlines and corrections to plans based on all the reviews. 

3. Financing. You need a larger percentage down payment, or pay in cash, and you need to be able to carry that for the full cycle from contract to close. This is perhaps the highest bar for a lot of people. 

There is a reason why a lot of people don't transition to new construction from flipping, and that's because it's complicated and it takes time. But we need housing and we need to lower the bar for people to get into new construction. I have been seeing more education on land deals, so hopefully that translates into more people jumping in. I personally am planning on scaling this year as it's looking like it's going to be a great time to buy some land deals! 

Hi Anna, sorry I missed your call, I'll call you back this afternoon when I have a minute!

I'm an infill developer in Boise, ID. I've found a niche where I have nice margins and have a huge opportunity for significant growth this year and beyond. While I am in the process of setting up my syndication infrastructure, I'm looking to fund deals creatively with other investors for the next few months. I currently have a project under contract that after funding the purchase and carrying costs(then using construction loans for construction costs), a private money person can walk away with a free townhouse after the return of capital from other sales. This townhome value would be ~350k, ultra conservatively, on the market today, with long term rents $1750 conservatively. (Closest comparable is active on the market for $500k, albeit probably overpriced by $50-75k)

Details:

This would be a partnership deal with a 50/50 split of proceeds.

Seeking: $365k total in funding of purchase plus entitlement costs

Upon entitlements (8-12 months later), would need another ~50k for development loan costs for another year

For Vertical infrastructure (after 2 years) would need another ~250,000 for vertical construction loan and carrying costs.
Total Investment: $665,000 for 3 years, upon which funds will be returned upon sale of 6 or 7 of the 8-9 unit townhouse project.

2 units will be left, free and clear, with 1 going to the developer (me) and 1 going to the investor. Investor can then have unlimited return on capital going forward.

I have already done a similar development, completely on my own, where I built 5 houses and was left with a 6th free and clear. I have another on my own completely where I am building 4 houses, and just barely will need to leverage the 4th house if I wish to keep it. This deal I have the lots under contract for less than half the cost of my previous developments.

I have also done several partnerships on smaller deals where we shared proceeds, so this type of deal is familiar and right in my wheelhouse of what I do.

I have this deal under contract, and several other larger deals I have access to off-market that the same could be done with more units left at the end.

Anyone interested?

I have a 27 unit townhouse subdivision downtown Caldwell(suburb of Boise, ID) that I am currently applying for entitlements. Roundtable has been done and the city is very much on board with this project with this layout. I will be doing a 506c and 506b fundraise for this development down the road, but for now I am looking for a private money investor to fund a portion of the purchase and development costs while I complete the infrastructure to set up the fundraising. Can provide more details on this if interested. For now, I am looking for a $380k private money loan for between 6-12 months, and will pay 12% interest only(1% per month). Loan will be in 2nd position behind seller carry note, and the deal is 74% debt to value, conservatively(based on similar deals that actually are selling). Private money investor may have the option to convert to an equity share upon completion of the fundraise if they prefer, but not required. Shoot me a message if you're interested!

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $250,000
Cash invested: $1,825,000
Sale price: $3,300,000

7 House subdivision with 1 existing house and 6 new construction houses. Purchased land for first 5 houses for $250k, unentitled. Then the 6th house is a trade for the existing house as part of the deal.

What made you interested in investing in this type of deal?

I had been flipping in Boise but the flipping market was getting way more competitive and it was hard to find deals. I had also been interested in getting into development for several years.

How did you find this deal and how did you negotiate it?

It was on the MLS, but overpriced. After being on the market for 6 months and multiple price changes, it came down closer to its value. I called the listing agent and inquired what it would take to get a deal done. Listing agent told me they had a verbal offer for $225k, but they were looking for something in writing. I sent a written offer at $200k, and through some back and forth we settled on $250k with the owner carrying $200k of that at 5% interest.

How did you finance this deal?

20% down with an owner carry note on the remaining purchase price. There was also an agreement to trade the 6th new construction home for the existing home. That was a win win as the homeowner would get a new house that was valued higher than her existing house, and I could build the new house for less than what her existing house was worth.

How did you add value to the deal?

Bought dirt, entitled, constructed infrastructure, and built new homes.

What was the outcome?

Built 5 homes to sell, traded existing house for a 6th new construction home. Own existing house free and clear.

Lessons learned? Challenges?

The entire process was a learning experience as this was my first development from raw land to finished product. I experienced many challenges along the way in the form of delays in working with governement agencies, contractors, supply chains, etc. Building and developing is hard and there is a pretty high barrier to entry!