Small Residential Development - where to start?
There is some land available in a market I know extremely well. 5 years ago I proposed something similar to a builder who basically laughed and within 12 months, a huge developer came in and was doing EXACTLY what I had proposed. I am equally confident on this deal.
The problem that I have is: who to partner with and how to make it equitable? It makes sense to me to partner with a builder who has knowledge and experience overseeing the actual construction process. The civil engineering, subdividing the land, etc, I can primarily handle. But I don't know what to propose. For example (and these are completely made up numbers), if I expected the cost to be $1M with net profit of $400k, and wanted to have a builder partner, plus potentially 4 other investors, how would I structure that? Should I create a partnership for this small development, or just draft a legal agreement between the partners and a separate investor agreement for "investors"? If I were to put in 10%, should I expect the builder to put in 10%, or something less since he is bringing more knowledge? Or should we consider it equal since I am bringing the deal and other investors? Am I looking at this wrong?
[For the record, this would not qualify as a subdivision, it is truly a small deal, where it would be building 5-7 homes in a cul de sac extension of a neighborhood].
Thanks in advance for whatever advise you have to offer!