Question regarding land owner/developer partnerships

[Roger D Jones]

Hi all,

Just a newbie question seeking some quick insights on land development.  My brother and I own a simply spectacular piece of property overlooking the Columbia River in Washington State.  Right in town... breathtaking views.  Lot would need to be subdivided for two very large homes or two duplexes.  Obviously we need to do some groundwork with the City planning department and potentially zoning.

We are approached constantly by developers seeking to purchase the property for them to develop (everything from we want to build homes to help the environment to building condos for our 98 year old grandmother to live in).  We are wondering how we could best maximize our return on the property- either by partnering with a developer to eventually share returns or hiring a developer/general contractor/house builder ourselves and managing the project ourselves.  My brother and I are pretty smart guys but this is a venture we would be new to.  

What would you do?

Thanks in advance for the advice.

[Bryant Brislin]

A joint venture could end up being great for you, as far as entitlement, development and building are extremely difficult to do and risky. So it may be better to let someone else do the heavy lifting and take most of the risk (i.e. they be the sole guarantor on a construction loan, etc). You should have a transactional real estate attorney represent you when negotiating the Joint Venture Agreement and formation of the special purposes entity (i.e. an LLC) that you'll be a member/limited partner in. Of course you should vet the potential GP to make sure they have the wherewithal and bandwidth to execute the project correctly and in the most timely manner as possible.