new development Los Angeles

6 Replies

Hello everyone! So I am trying to do my first Luxury real estate project and it is in Los Angeles area. It is a single-family residential luxury home that is a total of 7800 sqft, which 5500 is living space and 1300 is garage and storage. So from my research I have done and the information I have gathered from a few brokers whom specialize in this area, the comps are averaging about $1,440/sqft.

Property price: $2,900,000

Development cost: $1,950,000 (estimate of $250/sqft multiplied by 7800 sqft home)

Total estimated investment: $4,850,000

Estimated sale price of: $7,900,000 ($1,440/average sale multiplied by 5500 sqft living space)

$7,900,000 Estimated Sale Price

$4,850,000 Estimated total investment

$3,050,000 projected gross profit

after paying interest on borrowed money, taxes, commission to broker and other surprise expense, estimated projected Net profit of 1MM- 1.5MM

  • My question now is I have close to 30% of 5MM for the down payment for this development, what would be the best way or any way if there is one at all to raise the other 70-75% to do this project.
  • What options do I have to raise or secure the rest of the capital for this deal?
  • Please fill me in on any other expenses or important info I might be missing?

The property is already approved with permits to develop a 7800 sqft home,

Even though this is out first time doing our OWN luxury development, my father has about 20 years of overseeing ultra luxury developments from start to finish in NYC. Please any advice or guidance feel free to post any of your thoughts, thank you!

Hi @Anthony Caleca

Do you have a pitch deck or any kind of deck outlining the opportunity for external investors? I have access to capital who may be able to help you close the gap - one contact is with a bank who does construction loans and the other is a private lender with access to private equity cash.

I'd be happy to make the introductions if you'd like. PM me and we'll work it out.

Hi @Anthony Caleca

Many of the local, regional banks have re-entered the construction loan market. Try East West Bank, City National Bank, Farmers and Merchants, or even Wells Fargo. 

My quick observation, unless you're a GC building on flat land I think you're $100-$150 Psf low on your hard construction costs for your expected price range; and that's before architectural, engineering, or other soft costs.

The only part of town (LA region) that's achieving $1400 psf and has flat lots would be the flats of Beverly Hills, maybe ocean view portions of Pacific Palisades...

Good luck. Keep us posted on your progress

Allan

Exciting stuff. PM me as I have a full team if you need help on development.

Originally posted by @Allan Glass :

Hi @Anthony Caleca

Many of the local, regional banks have re-entered the construction loan market. Try East West Bank, City National Bank, Farmers and Merchants, or even Wells Fargo. 

My quick observation, unless you're a GC building on flat land I think you're $100-$150 Psf low on your hard construction costs for your expected price range; and that's before architectural, engineering, or other soft costs.

The only part of town (LA region) that's achieving $1400 psf and has flat lots would be the flats of Beverly Hills, maybe ocean view portions of Pacific Palisades...

Good luck. Keep us posted on your progress

Allan

 Hey Allan yes we are GC ourselves we would do the whole development/construction process our selves from start to finish, it is not flat ground though a hill with sweeping views. $250 per sqft was a rough estimate of us doing all the work ourselves which we would be, and the $1,400 sqft average selling price was put together by multiple brokers in that area, thank you for your reply. So do you think my numbers are way off?

@anthony caleca

If you add 20% contractor profit and 10% contingency to your hard costs they feel more in the ballpark. This still does not address your soft costs. 

Regarding your end values I have no way of knowing without knowing where the property is located. 

@Anthony Caleca This is an interesting project to look at, mind if you invite me on the progress on this? I would like to site visit once a week if this is on-going, and more often on the finishes stage, it is just for self education. That is if you don't mind. I will lend my guys if you need them with no strings, as counter compensation. Thanks.

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