All Forum Posts by: Vic Reddy

Abbas - First thing, as others recommended stop development and look for tenants. For Commercial retail/office spaces our practice has been to get preliminary site plans approved by the city, make nice building elevation CAD pictures, create brochures/flyers and market them aggressively. Typically it takes 1yr+ to get 50-60% leased and then start construction. 

Some of the tenants may require to modify your initial plans. For example we had a Veterinary clinic, who wanted some open space in the back and we could adapt to their needs.

Make a list of prospective tenants and market to these select businesses. Is their a dry cleaner/dentist/nail spa/coffee close by? 

Ashwin,

Few questions -

1) Is the developer assessing ur land value at 15% of total project cost? Do you also pay for anything else like development fee?

2) Do you need to guarantee for the construction loan?

3) Does the developer also responsible for sale/leasing of the property after construction is over?

Assuming your lot will have Class B/C building, the construction cost will not vary much on a premium lot in a urban area vs suburbs but the lot cost can vary significantly based on location. The % of lot price in whole project makes a huge difference.

I would ask for equity equivalent to ~150% of current fair market value of the lot. If the lot value is $100K and the overall project cost is $1mil, I would ask for 15%. 

Developers also over-state development costs to work out better for them. Do your due diligence carefully before u select a partner.

Arvind Contact me and I might be able up help u. I worked with several investors from CA. Frisco & Plano home prices have increased significantly in last 4-5yrs and it is hard to have positive cash flow There r other suburbs with decent schools where rentals still work but these homes move quickly.