All Forum Posts by: Roland Brown

@Max A. Hi there, to follow up this was a crazy year. Were you able to get into your turn key property?

Good morning @Elijah Lewis McCall Jr. Welcome to BP. Atlanta is a hot market, its nice to be near the action. Do you have a strategy you are planning on pursuing?  There are many different roads to go down, so it can be easy to get overwhelmed, so niches help a lot. 

I am not in your area but its great to have you here. 

Hey there, looking through this post, I was surprised to see that suggestion on SBA, I have not experience there, but on primary residence, I have used a HELOC right before renting it. A company I was blown away with because of its lending simplicity and cheap rates was Light stream personal loan by SunTrust bank. I used it for a 30K rehab, cash was fast and the interest rate was reasonable. those are 2 options you could consider (I don't work for or have any affiliation SunTrust bank, simply a happy consumer)

@Ronald Rohde - Thanks

Density: The location is in the City's extra territorial jurisdiction (EJT)without sewer so  need to use septic tanks which means each lot must be 1 net acre or more.  The Local special utility district has a pipe running near the property so bringing water onto the lot is not an expensive prospect. 

Since its EJT, and needs to be an acre we plan based on ~70% of the land is buildable, as a rule of thumb.  Aprox.18 lots, unfortunately there was a creek on the property and the wetland impact so lost 3 lots but the numbers still worked. 

I'll update as the city approvals happen.

Replat: The surveyors took forever, we had to extend because of the time it took to get that retuned and it uncovered a Gas Pipe that was unknown to the seller.

@Logan Ingram Thanks. I am taking the project through entitlement for sure, but may do the next phase of the finished lots.  Either way we will sell off to a builder to take it from there. 

As the market has been tighter and tighter between price points and income the market has been very good for me.   The folks moving to the Dallas area from all over the county have been able to buy leaving their markets along the coast to come here. Additionally I started to really niche down into being the  knowledge source on land acquisition.  The competition is still high for land, however we are competing with a smaller pool of buyers, and the plan to buy and hold for a 10 year period has worked well for several of my long hold investors. As a team that is buying, entitling and developing the land.   

@Mason Moreland lol Dove Hunting. The builders are very hungry right now, so the development process is feeding a ravenous customer demand. With the Row crop ag to permanent ag entitlement change the land to be Ag exempt?

Investment Info:

Other other investment.

Purchase price: $700,000
Cash invested: $28,000

Land Development project. Purchased 23 Acres of Farmland, east of Dallas in the suburbs. The plan is to work through the entitlement process, then develop the property in preparation for home builders who have an unquenchable appetite for buildable land right now.

What made you interested in investing in this type of deal?

A longtime friend and mentor has been developing for several years recommended I state developing land. We found this location, ran the comps for what the property could become and were encouraged by the results so to the steps needed to acquire the land. Through the process I have been able to get my questions answered very quickly by having a trusted mentor to check in and get guidance.

How did you find this deal and how did you negotiate it?

Found the deal through MLS, the property had sat on the market for more than 100 days so we proposed a price point that made sense for the numbers we needed to hit. We were able to get the project under contract and ultimately closed on it.

How did you finance this deal?

The project was financed through a local bank who does acquisition and development loans. For the down payment I partnered with a few friend who wanted to be invested in land development to put down the initial down payment.

How did you add value to the deal?

The process of developing land can be separated into 3 sections: entitlement, horizontal development, and vertical development. The entitlement process takes the farm land from agricultural land and gets the city approval for exactly what should be built.
Even if the location is zoned, it needs to go through the cities entitlement process. Horizontal development is adding storm drains, utilities and streets.
Entitlement and Horizontal will add ~$523K of Value

What was the outcome?

We are moving through entitlement right now and actively working with a few home builders to market the property and get a final contract to disposition the property, targeting to sell the property either in April or October.

Lessons learned? Challenges?

Biggest lesson learned so far is to make more use of the feasibility study to get down the road on entitlement.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with First Capital Bank of Texas to get lending, which was very helpful in securing the property. 

@Account Closed  You make a great point, about the deal needs to be a good one. Unfortunately, we don’t make the market, we live in the market, so the hunt for a good deal gets a different definition than it had in 2010 - 2015.

So then does it make sense to wait it out?  Everyone’s investing plan and path is different. And I’m guessing you are very concerned that a new investor will be taken advantage of, hence your commitments. 

I'm guessing that there is some thoughts that anyone buying now are only buying bad deals at market prices or just below market prices is getting a bad deal. Deals are still available, and sometimes sitting in plain site on the MLS with some creativity. That's where working with the right team comes in. I know there some very smart realtors here on BP, looking out for first time buyers. I've seen several posts from folks like @Joe Funari and many others so the right team is here in the BP community. 

As for a housing market correct? wish I knew the future to say when the next one hits, but I just don’t. I do know that the economics for housing is still very strong. Prices are up because demand is up while there’s lots of reasons demand is surging (I listed 3 reasons driving demand below if you card to read that). 

Specifically where does the money come from on deal 2? It used to be much simpler when everything was a good deal but this is the market. But today is different, if a person wants to buy a perfect BRRR DFW is not the easiest one to work in, so creativity and patience is where that next deal comes from.

My opinion on economic drivers- 

1) COVID fatigue, folks got stuck in their homes for long time. That made a lot of people think if this ever happens again I want a much better environment.

3) Demographic demand - currently the largest demographic group millennials are at the median age of 31 - 34, which happens to be the average age of 1st time home buyers. The second largest group baby boomers are at youngest 57 years old , empty nesters and down sizing homes. The two largest demographic groups are trading right now with half of them not bringing anything to the table. With Gen X think both groups are nuts. 

3) Regional demand - I know my market DFW is a competitive market, and has not slowed down long enough in years for anyone to take a breather. The demand is real because DFW continues to have corporations moving head quarters relocate here and creates opportunities for new jobs. Jobs attract new people. New people need a place to live so they buy the available inventory, that creates scarcity and the law of economics are that low supply forces higher price.