All Forum Posts by: Neil Goradia

I can mentor and help if you need it, just send me a pm! :p

Steve L - After a 4 year break from this post and re-reading your reasons for continuing - those are great reasons. I think everyone needs to find what they can be passionate about and pursue those while dropping almost everything else off their plate. Hope all is going well!

I can help if you still need advice, just send me a message.

I have about 10 years experience in landlording, flipping, and land development. I am willing to mentor anyone, just send me a message. I've also started to wholesale. I have 2 small kids so sometimes my time is limited!

No strings, just paying it forward. :)

Actually only 2 per acre, roughly 41 lots. Builder wants 80-90 ft lots depending on front or side load configuration. Density is low, but lots are worth more. If we went with 70 ft lots we could get closer to 50 but the value of each drops. It was basically a wash. Ill send you an email, appreciate it!

Good luck on your development.  Keep me in the loop as it progesses! 

@Jay Hinrichs   , development costs in the area are double that, 50k/lot. There are a lot of utilities we need to extend on the site and other various hurdles we have accounted for. Hopefully, being the engineers that we are, we are being overly conservative.

@Bill Gulley   and @Joe Fairless  , thanks for your comments. Unfortunately we already have an agreement signed with seller. However, if we are unable to find an equity partner, we will definitely approach them.

@Ben G. We will definitely consider crowd sourcing if that's what it takes! I know I can get this funded just a matter of time. Also, I am interested in flips so I'll send you a PM.

Jay,

How much would be reasonable to give up to an equity partner? 

Yes we believe we got a great deal at a little more than 20k per acre, multiple sources tell us the range in the area is 40-60k/acre. We are selling to home builder at around 85k per lot with an escalation built in over the takedown term.

David,

Thank you for your insights. Great ideas!

I was concerned as well about the lien position. My plan was that the investor would only have 1st lien position until the construction loan was initiated. After that, we may have to give up equity in the project.  At that point, the risk would be significantly less because we'd already have city council approval, construction pricing in place, construction loan pre-approval, etc. 

I haven't heard of SDIRA investors, but I have heard of crowd funding from equitynet.com but don't know if they are legit or not. I will private message you.

Hello BP,

Need your help in suggesting a way to finance this deal!

My business partner and I have located 22 Acres of land in Noblesville, IN (near Indianapolis), prime for development. He is a Civil Engineer, which is nice since we have done a lot of the work in-house. We have a contract on the land, spoken with the city and received a favorable review (preliminary), and sent RFP bid packages to 4 interested contractors. We are also very close to signing a contract with a large home builder that would buy the lots from us and build in the $400-$450 range. Total cost of project is around $3M, which includes $500k for the land.

The bank we are in discussions with is interested in the deal, but there are 2 issues.

1. This is our first development deal and banks are hesitant as they are just starting to get back into this lending space. We've tried to address this issue by stressing that my civil engineer partner has worked "across the table" so to speak from developers for the past 10 years on high rises, neighborhoods, etc, even though this would technically be the first time as the actual developer. I've also met with various experienced developers to review my proposal. I've met with 2 already, and both really like the project. They went over a lot of things to watch for and voiced their approval. In the end however, both declined to consult or JV on the deal due to the small size of the project. We did also get the home builder to agree to come with us and meet with the bank, but not sure if that will help.

2. The bank will only be able to lend 65-80% of appraised value, which means we'll need to come up with a fairly large amount of equity in order to make the deal work ($500k). To address this, my thoughts are that the land is roughly $500k (scheduled to close in January), so if we could find private money for that (giving them 1st lien on the property), then the construction bank loan funds the rest. I just can't find anyone that is interested.

Does anyone have creative ways I could make this deal happen? I really feel like this is a great deal with money to be made by all, but having trouble at the moment getting the right financiers.

Thanks in advance, and happy to answer any additional questions.

Neil

I have the exact same questions. I went to a few seminars where they talked about it but I didn't feel like paying the big bucks for the "software" or service they were offering to get my business LOC set up.

Here is what I learned though. You can apply for a D&B (Duns and Bradstreet) number, which helps businesses develop credibility with suppliers. It isn't required, but I've heard it will go a long way to developing your business credit. In general, I've heard scores are based out of 100, and if you are even 1 week late it gets docked 10 points. I believe good credit is supposedly around an 80. The key is to establish accounts with your LLC at places that don't require a personal guarantee, such as Wal-Mart, Staples, Home Depot, etc. We have had an account with Lowes for a long time but found out they did require it to be contingent on our personal credit, so try to avoid them. Once those merchant accounts start reporting your business in good standing, you should be able to show banks that you have good credit.

We got lucky and when we created a business account at PNC bank about 3 years ago, they went ahead and pre-approved us for a 10k credit card in the company name. We've had it in good standing ever since, and I believe that means we have good credit. But I don't even know how I would check the score. Perhaps my next step is to just approach our bank for a LOC.

Good luck,
Neil