How to take advantage of a Multifamily development opportunity?
How large of a project is it? Have you ever worked with the Republic of Boulder before? Are you working with the owner alone?
The owner is a committee who will vote on any offer made. So far no offers but a lot of interest. Purchase price is about half a million and the lot has no setbacks, the building footprint can cover the entire lot up to the side walk. I have been watching this piece of land for almost a year and it surprisingly has come up for sale.
Any recommendations on who I could speak with to make this happen?
Accidentally posted this question on my personal Facebook page and now have a phone call scheduled with a developer that does work in Breckinridge. He is willing to either partner up with me or give me advice on how to move forward. Wish me luck!
I had an informal meeting with a local developer, mason and excavation company that works closely with the city on many projects. I now have a list of questions I need to get answered and will be meeting with the city tomorrow to find the answers. Turns out I have already spoken with the city person at an unrelated business meet up. I feel good about this!
#4 Land & New Construction Contributor
- Real Estate Developer
- Long Beach, CA
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#4 Land & New Construction Contributor
- Real Estate Developer
- Long Beach, CA
How did your city meeting go today?
To get into commercial you'll need much larger downs and commercial credit. So you'll have to find a cash rich partner and need an entity with business credit. A 720 or higher personal credit score will also help.
The other option is to find a residential deal to build a 2-4 plex and become an owner-builder since you have the time and energy to invest.
I met with the city today. It seems the zoning and bylaws of the town are not in line with what the community wants. It is zoned public which means only 2 things are allowed. The current options are either a single family home "that doesn't seem like a good public use to me," or a park "which would be about the most expensive 12,000 square foot park I've ever heard of." So my next step is to get the community together and change the laws of the town, "never thought I'd get into politics lol." The town meeting is on March 28th and this issue will be brought up for discussion at the end of the meeting. This could be a long process but I'm gonna spear head it.
The meeting with the town planning committee was actually tonight and not last Monday. This lot and another lot are both zoned public but are surrounded by a sea of residential and neighborhood commercial zoning. The General consensus of the planning committee was that they do not like spot zoning and would prefer to have neighborhoods more uniform instead of allowing special review on a wrongfully zoned lot. Two things I took from this meeting: #1 is I will try to get this lot under contract with a rezoning contingency written in. #2 the owners of the other lot in question don't know that the city is considering rezoning their vacant lot, I should put in an offer before they find out their lot is going up in value by $300,000 when/if the city rezones it. Thoughts or input anyone?
I'm a little confused by the general consensus of the planning committee - "The General consensus of the planning committee was that they do not like spot zoning and would prefer to have neighborhoods more uniform instead of allowing special review on a wrongfully zoned lot.", did it sound like they are willing to consider rezoning or not?
Also, if under contract with a rezoning contingency how do you plan to petition the town planning committee further once under contract? I have looked into development in the past and am very interested by your situation.
Zach
Zach
The group that is selling the property is the towns historical society. They want to sell this lot and dump the money into another community project and I believe their opinion will carry weight with the zoning committee. Top dollar is not their motivating factor but they do know the lot is worth substantially more if it's zoned commercial and I'm hoping they will work with me on the contract.
I asked the sellers if they would be willing to go under contract with a zoning contingency in place. They would only be willing to do that if I provided some sort of letter or acknowledgement of intent from the city saying the city is on board with the rezoning. I don't believe I can acquire a "letter of intent to rezone" but I do feel the lot can be rezoned with little opposition. I would hate to do all the leg work for my competition and have someone step in five minutes after it's rezoned and cut me out of the deal. Essentially I need a "contract to go under contract" or a first right to buy if I succeed in the rezoning. Is this a thing? Suggestions or input?
Look into option contracts. You're going to have to pony up some coin.
#4 Land & New Construction Contributor
- Real Estate Developer
- Long Beach, CA
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#4 Land & New Construction Contributor
- Real Estate Developer
- Long Beach, CA
You could do an option contract, but our typical deal would be this (BTW, we used this on 16 ac. site in Westminster, off Hwy 36 and Church Ranch Rd./104th)
Purchase and sale agreement, with a standard escrow.
Escrow closes upon date certain, or when the city issues unappealabel entitlements, zoning etc.
DD of some period, 30, 60, 90 day, with some non-refundable upon reaching this date.
Reason to do it this way is you have a solid contract, if and when you receive zoning, you can close without question. Options are somewhat similar, but as said previously it's a "contract, to sign a contract" which overly complicates things in my mind. You use an option agreementbwhen you are doing a land deal, where entitlements will take some number of years, longer than you are going to take, given what you have said about the zoning process.
Agreed, city will not give you "intent to zone" letter. In my experience no city planner or dept. worth their salt will ever pre-commit themselves on zoning matters, particulary when there's a zone change. Planners have lost their jobs for less than that, so they just don't.
My question is this, do the sellers have any choice? Meaning does the value of the site depend on the zone change? If so, any buyer, you or others, would need this zone change to be in a postion to close. Unless there's some "greater fool" out there, who will buy without the zone change, your going through the zone change process will solidify the value that is likely being depended upon by you and the sellers to transact. Now, many sellers are and will be totally unreasonable, so you have to get ready for them to be stupid when it comes to needing the zone change in place by you for you to close.
You are the developer, you have to be more disciplined then the sellers, it's not their risk if you close now, and the zone change fails. I've never had that happen, because we don't close without either a very clear zoning story or actual entitlements, but I've seen others developers get stuck. Not a good scene to be in.
~ Scott
I would also recommend you get an architect on board to help with the Rezone process, as well as doing a site study based on zoning, setbacks etc.
Scott, thank you for your input. Correct me if I'm wrong but essentially you are saying to treat it more like a standard contract that closes not "if" but rather "when" the rezoning goes through. The contract would be locked in and I would be committed but if for some reason the zoning never happened I would be entitled to receive my earnest money back.
Dorothy, you bring up a good point that somewhat makes me nervous. I would love to hire an architect and have a site plan/ review completely laid out and tied up in a pretty little package but that sounds like money that I either don't have or am not willing to spend at this time. Is this something that I need to accept and fork over the cash immediately for, or should I be focusing on getting this thing locked under contract first? I know this is a rookie question but let's face it , I'm a rookie.
Dustin Frank I would suggest go ahead and get it under contract first, but make sure you have some clauses in the contract so you can do your due diligence-you need to make sure what you’re hoping can be built can actually be built within zoning codes. You can do some of the leg work on your own at first in terms of contacting the city to understand what the zoning allows. And a feasibility study can be done for a reasonable price. Send me a PM if you have specific questions, happy to answer questions regarding the entitlement side once you have it under contract and start to engage the city.
Originally posted by @Dustin Frank:
Dorothy, you bring up a good point that somewhat makes me nervous. I would love to hire an architect and have a site plan/ review completely laid out and tied up in a pretty little package but that sounds like money that I either don't have or am not willing to spend at this time. Is this something that I need to accept and fork over the cash immediately for, or should I be focusing on getting this thing locked under contract first? I know this is a rookie question but let's face it , I'm a rookie.
Can you perform if the deal is accepted right now? If you don't have the funds to hire an architect, then quite frankly, how are you going to make this deal happen? Do you have a lender letter and will you represent to the seller that you have funds readily verifiable for a down payment?
Tieing up the property without the means to perform is bad faith in my opinion. Yes you are an agent, but a self-admitted rookie. If you want to do this deal, you need to bring in some experience, which will potentially require some real skin in the game on your part.
With all the desparate investors here in town, what really bugs me is why hasn't someone else snatched this up???
Matt, I have a local home builder that wants to do the deal and is willing to buy the lot with cash. The 2 big players which I consider my main competition currently have their hands full. One of them is not interested in development at this time but would love to purchase it after it's built, and the other guy has his energy focused on a 50 million dollar project redoing the Main Street.
Got a bit of good news today. It's very likely that the lot in question IS already zoned Commercial but an employee of the city made a wrong assumption when mapping and recording about a decade ago. We are waiting on 100 percent confirmation of this but it seems to be true at this point. We should have confirmation next week.
Matt, I found your post valuable yet I am confused by these words:
"With all the desparate investors here in town, what really bugs me is why hasn't someone else snatched this up???"
Are you simply suggesting that he needs to be super-alert as there may be something that he's missing that has repelled the more experienced.
Originally posted by @Matt M.:Originally posted by @Dustin Frank:
Dorothy, you bring up a good point that somewhat makes me nervous. I would love to hire an architect and have a site plan/ review completely laid out and tied up in a pretty little package but that sounds like money that I either don't have or am not willing to spend at this time. Is this something that I need to accept and fork over the cash immediately for, or should I be focusing on getting this thing locked under contract first? I know this is a rookie question but let's face it , I'm a rookie.
Can you perform if the deal is accepted right now? If you don't have the funds to hire an architect, then quite frankly, how are you going to make this deal happen? Do you have a lender letter and will you represent to the seller that you have funds readily verifiable for a down payment?
Tieing up the property without the means to perform is bad faith in my opinion. Yes you are an agent, but a self-admitted rookie. If you want to do this deal, you need to bring in some experience, which will potentially require some real skin in the game on your part.
With all the desparate investors here in town, what really bugs me is why hasn't someone else snatched this up???