All Forum Posts by: Barry Ruby

Yeah, at the end of the day it is going to have to come down to delivery of real, wet, potable water. After air, nothing quite gets the job done than water.

@Matt M.raw water in Frederick and Firestone is about $46,000 for a single family lot.

Your offer price should be the figure that produces a return that is satisfactory to you based on your own due diligence and analysis. If you are considering making a proposal that is structured as a purchase with and without owner carry, each scenario should meet the aforementioned criteria, that is a deal that produces a satisfactory return that also meets the Seller's objectives.

@Greg Dickerson

Thanks Greg, I didn't see mention of these costs in your prior post and wanted to confirm the composition of the "sticks and bricks" cost range cited in it. The $300k per acre for site work matches the ~$30,000 per unit I use in running early pro forma analysis as confirmed by competent GCs. 

Another formidable cost that is in play in the "wild west" of Colorado is for raw water, which is now running as high as $47,000 per single family lot and a bit lower for MF. This figure is on TOP OF hook up fees and associated impact costs...try building something affordable with them apples.

@Greg Dickerson

Greg, does “bricks and sticks” include horizontal costs for on and off site improvements?

@Tim Carlson Hi Tim I live in Longmont and would be happy to answer any questions you may have if I’m capable of doing so.

Thanks William. Getting a preliminary sense of demand can be gained by identifying built and operating projects in the market area of the planned development and determining their occupancy factor as well comparing their rent rates. Using this data to compare the existing, planned and under construction properties to the project under consideration for development is a good first step.

All of this data will be refined in a formal market study, but should give you a good sense of how the planned project "stacks up" against competing properties.

Before spending any substantial amount of time or money on this or any deal, I'd run a preliminary analysis to see how the project performs. You can establish your unit count by using the units per acre permitted by the current zoning times the number of site acreage to determine the total units allowed by right. You can apply the unit mix (% of Studios, 1, 2 and 3 BD) and square footage of existing product and prevailing rents in the immediate market area for this first pass analysis.

Doing this drill should also inform you as to the structure the price, terms and conditions of the purchase agreement which should be your very next step before commissioning (and paying for) a feasibility or any other study, which makes little or not sense to conduct on any site that you don't have under meaningful control. The purchase contract should be structured to close at a point and time that you have all of your entitlements (shovel ready) and your debt and equity committed.

The highest and best use can be defined by doing the initial analysis and by continually refining your view of the Project as unknowns become known and more and or better information is learned during the pre-development due diligence process.

Drop me a PM to let me know if you need some help with doing the initial analysis. 

Hi Nathan, 

Given the scarcity of viable SF and MF product in many national markets, I am focusing on finding and vetting raw ground in the form of vacant land and assemblages. Placing properties with development potential under contract with the right terms and conditions (meaning at the right price, option payment structure and closing date) and getting them entitled and defined as to use and density provides an opportunity to create value that can be realized selling the entitled property/project to a developer or developing all or part of it yourself. 

Many developers prefer not to go through the entitlement process which involves time, capital and a certain amount of brain damage in working through figuring out the highest and best use of a property and securing the entitlements required to build the project. Getting through that process to arrive at a "shovel ready" project is no where near as capital intensive as ground up horizontal and or vertical development and can be very rewarding if it is done correctly and provides the option to develop all or part of the project yourself or in a JV with investors.

I am working on a 30 acre site that will be developed as a "build to rent" single family project that will provide the value add opportunities note above. If entitlements are secured, I can sell the project on a "paper" basis, do the horizontal improvements and sell improved lots or build out all or some of the vertical improvements by selling some of the improved lots to local homebuilders.

@Jesse Stahl

Jesse I am not an attorney but what you are suggesting sounds and smells a bit like loan fraud. I think it would be wise for you to run your plan by a lawyer to make sure your desire to expedite your adventure in RE investment isn’t impacted by sitting a spell in a jail cell.

You may want do consider asking a lender if they would accept you as the borrower and have a family co-sign for you.