new to developing - interesting twist - possible pitfalls?

Question

So I'm relatively new on this site, but have been lurking, researching, thinking and re-thinking, planning, and have finally come up with what I think will be a very workable plan. Let me preface this by saying I am not looking (with this post anyways) for a lender, or trying to make a specific deal. I'm simply talking in generalities and trying to get some feedback from more experienced members before I venture out there into the wild world of land development and building.

People say to start small, and I am ... small meaning 4 new construction SFR's, but with the right partner(s) I also have a different plan for 13 SFR's, ideally I'd like to do both, and plenty more after that.

I have a simple yet attractive and interesting twist, something I haven't seen any other developer market in this fashion, and will allow me to charge a premium for these properties. It appeals to most audiences, but ideally, we're targeting home-buyers with, ahem, bigger pockets. If this works even remotely well as I imagine, this could turn into a massive nation-wide production, easily scaled up with the right team.

Obviously, I'm very early in the process but my vision is clear, and my determination is undeniable. Coming from a background in finance, I know that I will, one way or another, be able to find either a single partner, or group of investors who aren't afraid to pull the trigger, and who are interested in actually developing land, not destroying it, and creating beautiful properties to be sold along with beautiful margins.

I'm also curious to know if any of you have tackled projects similar to this (I know I haven't given out the secret ingredient), just speaking of land acquisition / development / selling properties, repeat.

Thoughts?

Aaron Prichard · Answer

Thanks for the input, JD! I agree that it's likely a steep slope to climb, but not anything out of the realm of possibility. Part of the appeal (to me anyways) is the challenge. When I run numbers, even in worst case scenarios, it still pencils out. The challenge is just in gathering the right contacts and getting them to work in harmony...being the maestro, if you will.

As for the sauce, yeah it's certainly not anything mind-blowing. I'm not an inventor. I just haven't seen homes marketed before with the particular features I plan to include.

Peanut butter = pretty good. Jelly = pretty good. Together = hey, we have something. It's like that.

I suppose I have a lot to learn, and maybe some knee scrapes to obtain along the way, but fundamentally I think my idea will work.

JD Martin · Answer

All I am going to say is that starting out in new construction is a good way to lose your ass. I know reputable home builders that lose on deals, forget about newbies. There is so much to know, and so many pitfalls for those who have no experience in scale or competition with well-financed operations, it is like running a gauntlet through a field of landmines. I personally lost my ass in new construction almost 20 years ago. So I say good luck, and I don't know what your Secret Sauce is, but as the saying goes, "There's nothing new under the sun".