My first new development deal I'm looking for a equity partner
I'm Working on my first new development project in Tucon az. I'm looking for an equity partner on this deal due to my lack of funds. The total cost is $5,680,000 and the arv is $7,900,000.
The project is break ground ready now and will take 14 to 18 months from breaking ground. 840k is the cost of the land valued at 1.2m as it sits. 430k is the cost of the horizontal development and will take 2 months to complete. 4.41 million is the cost for the 14 home builds. The homes are 4/2 2100sqft and will cost 150 per sqft to build.
My plan is to start with two homes for model homes. Then 4 homes at a time for the rest of the project. I will pre-sell the home as I build them.
anyone with development experience I'd love to connect for insight on the the process.
Thanks for reading looking forward to connecting with you
@Saxxon Rybski It seems like you really have two projects going on:
1. Take x acres of bare land and develop into 14 finished lots.
2. Take 14 finished lots, build two model homes on them, and then build 4 spec homes 3 times.
A couple of quick takes:
1. Your horizontal development costs of 30.7k per finished lot seems extremely low. That would only work if there was minimal development done like no curb/gutter/sidewalk and individual septic's on each lot. If it's a normal finished lot with curb/gutter/sidewalk, storm water retention, sewer/water/power, those numbers are from 3-4 years ago, and you will be closer to double that amount at today's prices.
2. It's not very common to build two model homes for a 14 home subdivision build out.
3. If you are not experienced in new construction, you are better off developing the 14 lots and selling them. Now is not the time to cut your teeth in new construction because of material shortages, labor shortages and declining demand due to high home prices and high mortgage rates.
Quote from @Mike Smith:
@Saxxon Rybski It seems like you really have two projects going on:
1. Take x acres of bare land and develop into 14 finished lots.
2. Take 14 finished lots, build two model homes on them, and then build 4 spec homes 3 times.
A couple of quick takes:
1. Your horizontal development costs of 30.7k per finished lot seems extremely low. That would only work if there was minimal development done like no curb/gutter/sidewalk and individual septic's on each lot. If it's a normal finished lot with curb/gutter/sidewalk, storm water retention, sewer/water/power, those numbers are from 3-4 years ago, and you will be closer to double that amount at today's prices.
2. It's not very common to build two model homes for a 14 home subdivision build out.
3. If you are not experienced in new construction, you are better off developing the 14 lots and selling them. Now is not the time to cut your teeth in new construction because of material shortages, labor shortages and declining demand due to high home prices and high mortgage rates.
For the horizontal development the 430k includes the sidewalk, curbs, drainage and every thing. I do have bids that came in at double the cost. However my GC and partners are going to subcontract out alot of the work and source most the material from Mexico since we are so close. Witch is a big savings.
my plan is to sell them I do not plan on keeping any of them. I already have 4 LOI to purchase. I just can't sell them until I fist purchase the land and get the slab done so my buyer can buy via construction loan.
the timeliness I have to development the raw land into finished lots is 2 to 3 months. Then another 14 to 16 months to build the homes.
I'm actually talking with my architect and zoning with the city abou changing the plans due to the sifting market. Right now the plan is 14 custom home above the median home price. I'm thinking about switching them to smaller starter homes just under the median sale price. That will double the build from 14 to 28. When talking to a hedge fund yesterday they gave me a LOI to buy all 28 at 345k. So now I'm in the process of getting pricing for the rezoning, and the new price to the horizontal infrastructure.
My comps for the smaller 28 homes are 400k with the cost to build of just the homes is 150 per sqft. The plans are for 3/2 1200sqft so depending on the new cost of the horizontal and rezoning. I'm thinking that is going to be a better play.
The 2 module home build is my GC plan. He said that will make the pre selling the other 12 easier with the customer seeing a finished product. I'm open to suggestions this is my fist development.
@Saxxon Rybski has the land been purchased?
Are you planning to get or have you looked into a construction loan?