INVESTORS
We work with landowners as equity partners and passive or participating cash investors. Our experience and processes give investors the comfort and security they desire, along with reassurance and peace of mind to make passive income investments.
LANDOWNERS
Put your land in to a project as equity. Oftentimes, we can give more than fair market value when land is put into a project as equity and paid for over the course of the project or at the end. Project type and duration generally dictates how the land purchase terms transpire.
PASSIVE CASH INVESTORS
Just want to invest money and get a nice return? Utilize our experience and business processes to invest your cash and feel confident it will be intelligently invested in secure, under leveraged, highly profitable projects. Stay informed with our weekly and monthly reporting process. We provide weekly progress updates on key items such as scheduling, construction progress, financials and monthly in person meetings to review individual projects.
PARTICIPATING OR ACTIVE CASH INVESTORS
For investors who have a desire to get into development or just want a little more hands-on approach, we can partner on projects and work out a more active role. We will still provide weekly progress updates on key items such as scheduling, construction progress and financials, and the monthly in person meetings to review individual projects.
PROJECT TYPES
1. Traditional Spec – – Is a project that The Development Company through a project specific LLC, will pay cash for a lot, generally 15% – 30% under market value. In this case the seller does not participate in any project profits. Most construction lenders require 30% of the total cost of the lot and construction.
Example: A project lot is acquired for $300,000, with a design and construction budget of $1,200,000, totaling a $1,500,000 investment. The bank will want The Development Company to come up with 30% loan to cost, which equates to $450,000. The value of the completed home is $1,900,000. Once sold, before escrow fees and commissions, this project would generate $400,000 of gross profits equating to 90% return.
2. Joint Venture Spec – Is a project when a landowner puts their ‘free and clear’ property into a project transaction with an agreed to value, then have a spec built on it, then get paid for the lot at the time of sale of the build. Joint Ventures dramatically increase ROIs (Return on Investments) as the value of the lot goes towards the money needed down to close on a construction loan. Given the value the lot ($300,000) goes towards the 30% needed for construction financing, only $150,000 would be needed to close on the construction loan and pay the interest. This typically equates to returns ranging from 100% - 300%.
Example: Under this same example shown for Traditional Spec, if this deal were a Joint Venture, the value of the lot $300,000 would be credited to the $450,000 needed to close the loan. This means The Development Company would only have to come up with $150,000 to close the loan. So, once the home is sold, before escrow fees and commissions, this project would generate $400,000 of gross profits with only $150,000 out of pocket, plus interest, equating to more than a 200% return.
PROJECT FINANCING | CONSTRUCTION LENDING
Projects will be financed by The Development Company, project specific LLC’s, as the borrower. Most banks will loan at a 70% loan to value. Examples shown in breakdown of Traditional Spec and Join Venture Spec.