Gandalf update (For those that don’t know who Gandalf is, do a search, or maybe just ask me…maybe I’ll reiterate the story):
Some of you remember that I’ve vowed to leave the carpentry “business” behind. I’m now one step closer to that goal. It’s been a very long year since my syndication mentor and I started searching for a viable project. We’ve looked at a lot of different properties, some vacant, some in need of refurbishing, a 37 story loft project, spot lots, commercial lots…basically we spent the year gathering market information.
Today, we got the call- a deal we have been working finally came together and the seller accepted our offer. Tomorrow starts our due diligence period. We intend to work it hard and fast.
Heres some of the details. The 4.5 million dollar project consists of 15 prime residential lots in a fast moving northern suberb of Detroit. We are contemplating 300k homes catering to familys making their move up into the suburbs.
There are some very interesting aspects of this deal. We “won” a hard fought negotiation…and it took a little luck, a little skill, a little perserverence and a little effort (research). I’ll take lucky every time! Amazingly, we beat out a builder that offered MORE THAN THE ASKING PRICE….twice! We ended up giving 68% of the 550k asking price and getting the land.
Now, for those that say that a zero down deal can’t be done…you are right. Yesterday, I had to take a ten dollar bill out of my wallet and hand it over to the nice real estate lady to lock up this deal. My mentor was somewhat embarrassed and pitched in two twentys of his own for a total of $50! We had twenty four hours to find an additional 5k deposit if the seller accepted. We knew the seller was going to accept because we were meeting the sellers bottom line figure.
So, it really isn’t a zero down deal…I had to come up with $10. I’ll be giving another $2500 from a refi check that is coming later this week….so in essence, my bank is financing the down payment. If that refi money hadn’t been so timely in arriving, I would have been forced to write a check for the $2500 using an unsecured credit card line….which I hesitate to do because they charge me about $50 if I want to write one. I almost wrote one on general principle…jjust for the fun of it….but instead I’ll pay from the refi proceeds.
There will be more money brought to the table at closing. None of this money will be ours. All of it will come from investors.
The beauty of this deal is that we will not be on a loan, nor will we be responsible for any payments. In fact, we will be getting our 5k earnest deposit back immediately, as soon as the first investor signs on.
We anticipate a potential healty profit for Gandalf and I. We have not decided whether we will be developing it, then selling the lots to builders, or developing it, then building the houses too. Either way will work for us. We’ll be doing a lot of research to get those answers this week.
We do have the potential for a quick flip. That builder that was offering 600k, would probably be willing to give us that amount, or very close to it. If we choose to go that way, we could easily clear 200k in ninety days. There are some doubts as to his ability to fund his aspirations though, so I’m not really focused on doing a deal with him.
Summed up: $10 down, no risk, huge short term payoff possible, bigger long term payoff probable, could easily have been a zero down deal with zero risk.
The investors will love our deal and we will work hard to make them some money.
It’s been a fun day. If you look at the times of my posts, you’ll notice that I haven’t been sleeping well and neither has Gandalf. He’s pumped and glad I dragged him out of retirement.
We’re already looking for another…..
blue
Replies
Blue,
Congrats and good luck, care to share a few more details about the project or possibilities?
Thansk Cagiv. I don't mind sharing details. Which ones are you interested in? I'm willing to talk about this stuff because so many carpenters think you have to have money to make money, which isn't really true.
blue
Well for starters, why 50 bucks down, What was the point? legal technicality I assume?
For starters, how are you figuring out if you want to develop it and sell lots or develop it and build yourself, or some combination of the two.
What are using in your calculations and what economic factors are you taking into consideration when doing the analysis.
Secondly, where is the capital coming from, how much are the investors asking for in return for their capital and what actual liability rest on your shoulders?
For starters: The ten bucks that I plunked down on the table represented the valuable consideration that makes the deal legal. I didn't want paperwork signed without a check and neither of us had brought a checkbook. If we had, we would have written the 5k check at the offer.
My fear was that if the seller had a change of heart overnight, they would have that legal out. So, I insisted on the agent taking the money, instead of trusting us to bring it in tomorrow, when we picked up the accepted offer.
The question of development hinges on an adjoining 5 acre development and the paving of the main road out front from us. The paving is scheduled this season and the adjoining developer has received preliminary plat approval, but hasn't filed for final plat. We will be ascertaining his schedule/intentions and making a decision about that. If he goes first, our sub entrance will be through his development. We find that desireable.
The econcomic factors played heavily into our negotiating sessions. We had to impress upon the seller that the bleak economic outlook of our state/communitity was forcing us to anticipate a longer holding period. A project like this would easily sell out in one season but we will be planning for a 3yr deal. It probably could go 4 or 5 and we still would get paid. If everything tanks, and new housing values depreciate, then perhaps we will get nothing. Values of new lots have been stagnant or slightly appreciating so we anticipate much of the same.
The final numbers on feeding the investors aren't in yet. That will be some of the work that we will be doing this week. We are factoring in a return of around 15% for them. They will be funding the purchase, development and carrying costs. We will only be responsible for managing the actual development and be getting a set fee for doing so.
We have no liability once the investors sign on other than losing all our potential profits due to a poor economic downturn. We could possibly end up selling the lots for cost or below and the investors would get everything, and us nothing, if they don't get at least 15%.
That's the program. We'll see how it shakes out.
blue
good luck on your deal...
I've just about always put money into deals if i had to or not... just something about being "invested" these days I have no partners, always have people wanting to be partners, always have people offering cash wanting to know "what we can do"... the deal is... I've always made my partners money, most of the time i took the smaller part of the pie and did most of the work... but if all goes well and i hope it does, you will learn... that unless you have something to do with the money you make (past what it takes you to live) it's just not that big of a deal... money just isn't worth that much sit'n somewhere.... so someday with gods grace you can be the one put'n money into a deal... one thing i know... you'll feel better if the guy you're hand'n it too has his azz on the line since.... it's your money and just his azz....
p
Interesting perspective Ponyti.
You are right, the money isn't everything. Getting this far into the deal has been a lot of fun and I'm looking forward to the next steps.
You are saying a lot in that post and if I have time, I'll come back and we can hash this one out a little.
Gotta start my work week now.
blue
Why did you get it for less than the developer was offering?
And I suppose this means you won't be moving to south Texas.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Actually Ed, a deal like this makes it a lot easier to move to TX. If we decide to build out the lots, Frank will hang back and start the ACC subdivision building phase of his/our career. That would provide the day to day cash flow for both of us as I re-establish myself in TX.
We beat out the other developer for a variety of reasons. The primary reason was because he complicated his proposal with difficult to understand outs. Ironically, his intitial offer was for 600k!!! and the asking price was 550k. That sent up a huge warning signal to the selling broker and he later told us that he immediately figured that offer to be a bogus offer designed to stall the closing, then come back later and re-negotiate. The seller needed to close in about 120 days. That bogus offer would have taken the deal past that date.
Our initial offer was for 235k. His was for 600k. We won the battle. Go figure!
blue
Blue - I am totally facinated by this. Keep the info coming.One thing I would like your insight on. The Seller was asking for 550K. You offered 235K. That's less than half. We know the end result, but how did the Seller, Seller's Broker and your Broker initially respond to this offer?I understand - they tell you what they want ideally and you offer what you want ideally, but how do you decide what lowball offer to make without killing/ coloring the deal? Big cahones and thick skin aside, is the initial offer like the first batch of pancakes - you make it knowing that it will be thrown out but it gets the process going? Do you slowly inch up to the final price? How many rounds did you go?I know these are very rudimentary/ naive questions, but I gots to know...FrankieThere he goes—one of God's own prototypes—a high powered mutant of some kind never even considered for mass production. Too weird to live and too rare to die.—Hunter S. Thompson
from Fear And Loathing In Las Vegas
Let's call 'em what they are.... "cojones"
Iknewthat.There he goes—one of God's own prototypes—a high powered mutant of some kind never even considered for mass production. Too weird to live and too rare to die.—Hunter S. Thompson
from Fear And Loathing In Las Vegas
Edited 3/20/2006 11:19 am ET by Frankie
I am totally facinated by this. Keep the info coming.
I kinda figured someone would be fascinated...I know I am.
I am totally facinated by this. Keep the info coming.One thing I would like your insight on. The Seller was asking for 550K. You offered 235K. That's less than half. We know the end result, but how did the Seller, Seller's Broker and your Broker initially respond to this offer?I understand - they tell you what they want ideally and you offer what you want ideally, but how do you decide what lowball offer to make without killing/ coloring the deal? Big cahones and thick skin aside, is the initial offer like the first batch of pancakes - you make it knowing that it will be thrown out but it gets the process going? Do you slowly inch up to the final price? How many rounds did you go?I know these are very rudimentary/ naive questions, but I gots to know...
The negotiating process was/is very interesting. I find it entertaining.
We used a good guy, bad guy approach on this one. We sent in Gandalf, the good guy' first to establish rapport. He is in his late 60's and presents himself as a very credible buyer of investment property or development property. He is very good at slowly asking questions. He acts interested in whatever you tell him even if he has no interest. We even looked at other properties that the selling broker had.
We didn't use a buying broker, but we had one waiting in the wings. In fact, at the 11th hour, we were going to shift our gears and send in the hound dog buying agent, but we collected our wits and decided to hold out and let the thing play out. It was tough because we knew the other builder/developer was seeking a third party to go in and make offers on his behalf. We couldn't afford to let a few days go by and risk a different credible offer to come in and scuttle our progress. A new offer from that builder, disguised as someone else would have cost us 100k or more, even if we were going to be able to deflect that offer by telling them who the offer really was from. We additionally had to worry about real offers coming in from new players. This property is in a hot area, but it's 1/4 mile off the well traveled roads. It wouldn't have lasted a week if it was 1/4 mile west.
The actual development of the original offer was based on some erroneous assumptions and a picture of a proposed development that showed only ten lots possible and maybe as little as eight (it has a drain that runs through it.) We did two days of preliminary due diligence and discovered that we could close the drain and change the road layout and get up to 11 lots. We kept this secret and tossed out a verbal bid of 235k and told the selling agent that we were coming in to write that offer.
Understand that the original bid was a cash offer. When you are offering cash, you get to whine about the carrying costs and always talk about how hard cash is to come up with, compared to owner's terms.
It doesn't really take any cahones to make an offer like this, if your number indicate that it is a prudent number. Investment and development property is just like business property...it's value is determined by it's end use, not the current use. So, we just went in and made the offer on what we believed we needed to make our deal work...never mind the offering price.
By the time we went in to write up the offer, we were aware that the other 600k offer had been made, but we knew from the builder, not the broker. We also had determined that we could get additional lots, so we knew our basis was flawed and we agreed to up the ante. We really thought that the signals were strong that a cash offer was critical and would be accepted. When he got to the office to write the deal, Gandalf wrote it up for 285, instead of 235.
It took a day or so to find out that the offer was rejected and we were dejected ourselves. I had deteremined that we could get even MORE lots and I withheld that info from Gandalf till he talked to the broker. I wanted him to be 100% sure that the 285 offer was the most we could go. Even with the few lots, he verballyallowed the bid up to 300k becasue of a suggestion from the selling broker. I wasn't happy with him for doing that and I told him so. He should have waited for a couteroffer after our 285 bid.
We immediately had the verbal 300k offer rejected and I thought our negotiations were shot. We had to regroup. In the process of that verbal offer call, Gandalf expressed some mild displeasure that the offer had been rejected despite signals that it would fly. The selling broker told him that she'd get back to him with more info. She seemed to be playing straight up, but after not hearing for a day, we wondered if she was playing the front man for a good cop, bad cop routine herself. We wondered if they were using our offer to shop it around, or possibly develop it themselves (the broker originally, briefly considered buying it themselves).
After sitting a day, I told Gandalf that he had to make call to the broker and warn them that I was getting antsy and wanted to leave this deal behind and start working another. In that conversation, we agreed to have a four way sitdown (the hidden broker and I would sit with the selling agent and Gandalf) and see if we could have a meeting of the minds.
They tried to do the meeting without the broker because he was out of town, but we refused. We delayed it till we all could sit. We were determined to find out if we were being played.
Heres the lucky part. Just before our sitdown, Gandalf was sitting waiting for us to meet. We had set aside an hour to plan our strategy in the meeting. While he was sitting, he idly starting scrutinizing a mortgage deed on an adjoining plot. To our amazement, we discovered that the five acre plot that had changed hands in 2004 for 450k was actually TWO five acre plots. This gave us the ammo to aggressively attack the broker for their valuations and asking price. It also justified our original offer. We had originally planned on making them prove that the piece was worth more than our offer, but instead we could now go on the attack. Since I was the bad guy going in, it was planned that Iwould be the bad guy in the meeting.
In the sitdown, Gandalf continued playing the sincere, credible buyer and patiently asked a couple q's. After about five minutes of polite exchange, I had enough ammo to attack...and attack I did....but in a polite manner. After whining about the overpriced asking price based on our comps, I begged them to show me some comps that would make us believe that we should be paying more. They couldn't produce anthing.
So, after hamerring that fact at them three times, they finally came out with the seller's bottom line of 400k! They couldn't guarantee that number but they "thought she would do a deal at 400k".
Inside we were thrilled because we were prepared to go to 450k after learning about the extra lots.
So, when the agent sent up a trial balloon at 350k, she thought we would immediately go for that...after all, her trick had worked with Gandalf when she got him up to 300k. I immediately shot down the 350k trial balloon and basically told them that I wasn't interested in making any offer that I didn't know was going to be accepted. I looked over at Gandalf and asked if he agreed and of course, he assented with me.
So the meeting ended with them promising to find out what the selling party's real bottom line was with the new found facts (the comparables that we produced). We also warned about an impending 65k road assessment that could occur this year because the main road was being paved. We left the office with the dreary warning that the combined information (comparables, road bond, and poor economic outlook) was making this property look even worse than it originally did. We warned that it might actually start declining in value if she tried to sit on it.
Two days later we got her bottom line of 375k and I told Gandalf that we had to move fast...and we did. Two hours after hearing the news, we were sitting in the office making our offer.
To answer you question Frankie, we never felt like we were making a lowball offer. We honestly thought every offer was acceptable. We did consider sending in a third party lowball offer when the party was stuck at the 500k bottom line figure. I'm glad that we didn't have to resort to that because it comes with some risk.
Fascinating subject. I'm loving it.
blue
Congrats Blue and best of luck.
So is your offer contigent on getting approval for all the lots you believe you will get out of it?
That's how I see it done, you won't know until you get an approved subdivision, exactly how many lots you have.
Eric[email protected]
It's Never Too Late To Become What You Might Have Been
Eric, we have an escape clause, but it's a rather vague, all incompasing statement. It allows us 120 days till closing and quite frankly, I'm not sure why the agent, broker and seller allowed us to leave it in without making us narrow it a bit.
There are also two technical glitches on the paperwork, errors by the agents and sellers that allow us to declare the proposal null and void. I was mildly surprised to find the first one when we were offering our proposal, but was floored when the second one showed up when we picked up our acceptace papers.
We can walk from this one anytime we want.
That's the technical answer. The reality is that we don't want to walk, and will aggressivley pursue the feasibility of this project in the next week or two. We verbally promised that we would know within two weeks whether we are moving forward and we intend to stick to that idea. We also verbally offered to turn over all information that we uncover to the seller if we choose to abandon the deal. In fact, if we do decide to abandon, it will be for very good reasons and we will turn over all the info...because we won't want a part of this anyways.
We couldn't possibly get final approval for this sub in the 120 days. We have a rezoning, preliminary site plan approval and final site plan approvals to do. That will take at least 6 months even with the pro-development authorities.
blue
Blue, congratulations! You sound pumped. Couldn't happen to a nicer guy.
Best of luck. Keep us up to date.
"A job well done is its own reward. Now would you prefer to make the final payment by cash, check or Master Card?"
Is there going to be demand for lots in the foreseeable future? I assume yes or you wouldn't be making the deal. My mother in Ann Arbor says nothing is selling, nothing is happening. My contractor buddy there has work, but he's just one guy and does very high-end hand-holding remodeling jobs and is established. Nonetheless I wonder if he'll call me this year and say it's dried up.
David, the question of demand is certainly a concern, but we all can't bury our heads in the sand and do nothing.
It's highly probable that the only reason we were able to get this property is because there are a lot of developers that have enough inventory and can't/won't buy anything else till they sell off some stuff.
That very same thinking will be a key presentation to the investors. I've used that same line to an investor "if things were hopping, I wouldn't be here offering you this opportunity. Instead, I'd just forge ahead myself and reap the rewards. At the present time, my cash flow doesn't allow me to take on the risk of a slow moving market and therefore you have an opportunity that you wouldn't ordinarily have."
We'll be using some form of that statement when we talk to investors and ask them to take on all the risk. Remember though, they are "risking" it from long term investment money. A guy like me might have to risk it from working capital. If I fail, I go bankrupt and lose everything. If it stalls, the investor just has to wait out the market.
blue
Nice work Blue-- when you buy that low you cannot lose!
L
GardenStructure.com~Build for the Art of it!
Nice work Blue-- when you buy that low you cannot lose!
Thanks Lawrence. Your right, when you buy it right, you won't lose unless you do something incredibly stupid later.
I've made a lot of bad buys in real estate and they always worked out good. After you make a few bad buys, you learn to try to make good buys. No one will make good buys unless they make offers that are good buys.
Every real estate investing book that I have ever read talks about getting property at wholesale instead of retail. But most investors don't believe that can happen and therefore dont make the offers. They don't want to waste their time making offers like that but the reality is that a lot of propertys are offered with no sensible basis.
This particular property was offered at 550k but I found out later that the seller actually told the broker to list it at 600k. The broker thought that the 550k was too optimistic based on his erroneous number of lots, and pretended like he didn't hear the seller's request. He listed it at 550k and mentally decided that he'd change it if the seller complained. So, basically, we won this negotiations at less than 50% of the seller's true asking price.
DanT talks about looking at lots of properties, making a lot of offers and getting only a few accepted. I agree with his method. It's time tested. Most buyers are too much in a hurry to buy something and they don't want to go through the process. Eventually, they decide that there's not enough money in it. We were beginning to think that we couldn't find anything either...we looked for more than a year to find somthing that fit our criteria.
The starting point is to have logical criteria. Thankfully, Gandalf continued to steer our ship in the right direction. I give him all the credit. He didn't want something that will move slow and we passed on a lot of stuff that was great property but would market too slow. This one will fly in a normal market.
blue
So true,
No one will make good buys unless they make offers that are good buys.
I remember balking at the idea imparted by my Aunt when I bought this place. I was afraid of insulting them with an offer of 50% under asking price. Turned out to be a huge project, but we got the house at about 25% discount, which covered the numerous things that lay undiscovered.
All too often people fall in love with an idea, a house, a posession. Staying objective is just plain good business.
LGardenStructure.com~Build for the Art of it!
Where's it located, blue?
Mike
I have never worried I'd offend someone by offering what something was worth to me at the time.... many times i'll look and they'll ask for an offer...
i've offered 100k for something they wanted 550k for and i was scared they'd take my offer!
been told i smile way too much... but don't know a day that i don't have fun... sometimes this comforts people sometimes it offends em think'n i'm not serious... I let people know I'm not there to offend anyone and I'll many times tell them they can prob get more for it than i'm willing to offer... what i can do is give them a firm offer to buy for a price that I'll be able to close on in a set amount of time... people are so use to be'n dorked around that when you can give them MONEY today and full payment in 30-60 days that has great value to many people...
one thing i do is.... i make one offer my best offer on the front end... i never change it... accept if you want reject it if you want but don't make a counter offer... if i tell you on the front end... this is my best offer... any offer after that would have just proved to you i wasn't telling the truth... what i won't deal with is a sellers agent that will not accept /take my offer to the owner no matter how stupid they might think the offer is it's their job to present it... if they are dorks about it i have no problem contacting the owner and asking when the agents listing expires and telling them i'll call them on that date... at this point in my life I only buy maybe 1 property a year... i don't look for anything sometimes they just pop up... something next to something i already have maybe... but i don't want anything... which makes me a better buyer...
the real deal is... asking price has nothing/little to do with the real value of anything
p
If you're not embarrassed when you make the offer, it's not low enough.
I always felt if the seller wasn't PO'd on the first offer it wasn't low enough lol. DanT
I understand that you are just re-iterating a cute saying that we've all heard, but I don't necessarily agree with this thought.
The entire sequence of a negotiation is serious business and there are a lot of methods of getting to the end game. I see the process as a game similar to chess, every move is critical.
The first offer is chosen as the means to get to the final offer. The goal isn't to get the property as cheap as possible, but rather to get the property at a price that you can make money on it. Getting it cheaper than that level is just a bonus. In our case, we felt like we got a bonus, because we really thought we would end up paying 400k. It's quite possible that we actually paid more than we had to, but even if we did, we don't care. We need to be somewhat greedy in a negotiation. Greed is not always bad, but you can't let it destroy every deal.
We were not embarrassed, nor were we trying to peeve the seller. We were just doing what we thought was right for us, and made the offer in good faith knowing that we were offering a substantial amount of cash on the barrelhead. Our offers were designed to get us to the closing table.
blue
Update for those interested in doing real estate deals:
Our due diligence period is four days old. All we've gotten is good news and good breaks. I hope this streak continues.
The biggest break came when we were discussing the project with the planning supervisor in the city hall office. She mentioned that the main road paving seemed to be imminent and that the bigger developers were anxious to get the road done. She said if the road gets paved before we get our project started, we wouldn't have to post the paving bond, which is somewere around 65-75k!!!
Essentially, that means that if we sit on this project for a year, we'll save 65k!
We like that because we intended to sit on it anyways for that year. The 65k savings will pay our carrying costs for that year and maybe another!
The next bit of news is both good and bad. We made the original deal thinking that we could probably put 13 untis in. We now know that we can put a minimum of 13 units in and probably 14. We also have a good chance at 15. It all depends on how it comes out when it's drawn on paper. I'll be trying to do a preliminary this weekend.
We've gotten favorable news regarding comparables for both the finished lots and the raw land.
Also, I'm going to deliver my share of the earnest deposit tomorrow. I have been waiting for a refi check to come in and that means Ive been owning a very nice deal for the sum total of ten bucks for almost a week. I mention this because a lot of people think that you need a lot of money to get involved in a deal like this and I've just proved that theory wrong. I made this deal while on waiting for my unemployement check to arrive. I did it without a credit check. I did it with only ten bucks cash!
The gurus will tell you that you don't need a lot of money to get involved in the real estate game and I agree with them. I'm not in desperate financial situation but if I was flat broke and didnt' have any credit or much money, I still could have done this deal. Instead of delivering the promised $2500 in five days, I could have shopped my share of this deal and assigned my interest for a tidy sum. I know for a fact that I could line up buyers for my assignment for a minimum of 25k and probably as much as 50k in less than five days. So, if I really, really, really needed to do a quick flip deal, this would have been a classic.
Thankfully I'm not that needy, but I have been in my earlier days of my business. At this time, Gandalf is pursuing the long range financial arrangements to keep this as a buy and hold and possibly a buy and hold and develop deal. I am concentrating on structuring a quick flip deal. I already have a broker trying to line up some buyers and I haven't even began to contact possible buyers that I know in the business. Personally, I'm open to either the quick flip or the long term hold. Either way, I know that I can use the asset as collateral to do other deals now.
blue
Blue, thanxs for the update, keep us posted.
Excellent! Glad to hear it.
Now same as I asked SHG, when you buy that big yacht in a couple of years, you going to give us all a ride on it?
If I hang out here long enough, I might get two yacht rides. ;-)
Anyway, keep the news coming.
"A job well done is its own reward. Now would you prefer to make the final payment by cash, check or Master Card?"
If I ever buy a yacht, I'll gladly invite all the boys and girls from BT to help me sail it.
I'll keep updating since it seems like someone's interested.
blue
Blue,Please do continue with the updates.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Sounds like you are riding high. Very, very nice.Looks like a YatchFest is in the future!Please keep us posted. I am following your thread as a course in real estate developement. Kinda like an on-line college - Go Devils!FrankieThere he goes—one of God's own prototypes—a high powered mutant of some kind never even considered for mass production. Too weird to live and too rare to die.—Hunter S. Thompson
from Fear And Loathing In Las Vegas
Frankie, I'll keep you posted but I don't know if I'm the right guy to learn anything from.
At this point in time we are somewhat stalled after a conversation with an engineer regarding engineering estimates. He alerted us that some devlopers were running into problems with the drain commission when they tried to enclose the open drains. He wondered if we were going to need a retenion basin onsite.
That led us to discovering that the developer to the east of us had indeed ran into a snag dealing with the drain. If we can't enclose it (we cant), we have to find an alternate way to shed our water. Since we are within 1000' feet of a creek, it's a simple matter to dump into there.
The other developer has an open ditch at the back of his property and decided that he'd use that route. If he does that, he'll have to clean it out and deepen it to accomodate all of his acreage as well as ours. He can't just re-route the existing drain without giving us an outlet.
It turns out that he needs to get a few easements signed. He had no trouble getting the first two, but there are several others that won't return his letters. He basically can't make contact with them.
At this point, he might have to make a deal with the road commission and have them upgrade their storm drains to accomodate us.
In any event, we feel that he will infact figure something out. If he doesn't, he'll stand to lose up to eight lots...at about 100k each. Or he could build some retention ponds that will also eat up some lots.
We have some more work heading back to the road commission and drain commission to verify all of the above. We'll be doing that later this week as well as presenting a formal offer to flip our property to the adjoining devloper.
We'll see how this all shakes out.
For what it's worth, at this point we are very encouraged about everything, despite this small setback. The main accountant that we are counting on to provide us with guidance and probably some investors has skimmmed the deal and given us the thumbs up. He was very familiar with our particular area and spoke very positively about it. All of our comps are proving to be within the expected range that we based our purchase decision on. It looks like this deal willl go to fruition. We don't know if we'll just flip it or go the long route and develop it, but either way, it appears to be a winner.
Yes, I am excited. I'm excited because I know if I can do it once, I can do it a thousand times.
blue
There are lots or retention ponds and run off ponds here in Texas. The developers spruce them up with a trenched and concreted border and call them water features. The lots arond these "water features" sell for a premimum. Some have been known to house gators without any effort of the developer or others.
trenched and concreted border: select a low area that will naturally receive runoff / layout a retention pond (large or small) and trench 6-8 inches wide and 4 feet deep along the layout / fill the trench with concrete/ round off the top of the concrete / excavate a pond inside the concete leaving about 20 to 30 inches of the concrete exposed inside the excavation / provide level grade to the top on the concrete outside / add a airation pump and you have a water feature
The concrete edge defines the pond and helps in keeping the edges of the pond nicely trimmed. It also prevents unwanted creatures from nesting and inhabiting the edge growth. Mow and "weedeat" right up to the concrete edge.
Options: waterfall / bog filter / water plantings / lights / benches / picnic area pathways / dock / parking areas / playground area. A nice and helpful option is concrete paving inside the concrete beam 6-8 feet out into the pond to prevent unwanted plant growth / dyed water (which can also help with unwanted plant growth).
WE are no strangers to ponds and bogs and lakes around these parts TX. Thankfully, we don't have to worry about keeping the edges clean to keep gators out! Our biggest threat is the Geese. The Giant Canadas seem to live to poop.
blue
>> what i won't deal with is a sellers agent that will not accept /take my offer to the owner no matter how stupid they might think the offer is it's their job to present itI thought that agents are required to take all offers to the seller...?
>>"I thought that agents are required to take all offers to the seller...?
They are. I think that's kind of the point. There are a small minority of RE listing agents who forget they work for the seller and treat it the other way 'round. They can be impossible to negotiate with productively.
If it really is an offer so low the agent "knows" (or thinks they know) the seller doesn't want to hear it, the agent is still supposed to present it (a simple phone call will usually do -- the agent I work with will also either email a scan or mail me a copy after the fact).
"Let's get crack-a-lackin" --- Adam Carolla
I am reading with interest. So what is up with your move to Texas? What area / city?
Tx, we will be neighbors....somewhat.
My daughter and SIL have purchased a house in Round Rock, a northern suburb of Austin. We'll be tagging along so we can be close to the grandkids. I'm attempting to liquidate right now.
They are having their house built and it will be ready in August. It will be overlooking the 14th green on the golf course. I'm jealous.
blue
Austin, great town. If you are still in carpentry or development, conditions are very good in Texas.
It is a great place for land investment. My 100 acre ranchette has tripled in value the last 6 years, and things are still relatively cheap.
I bought 35 miles outside of Houston and Houston growth is knocking at my door. I would not hesitate to buy 100 acres plus 40 - 50 miles outside of Austin.
Let me know if I can help with anything. I think CapnMac lives over there somewhere.
Are you and you relatives prepared for the heat?
Good news from Waco, Texas.......David Koresh of ATF fame finally quit smoking.
Are you and you relatives prepared for the heat?
Yes we are, as long as they sell air conditioners!
I would not hesitate to buy 100 acres plus 40 - 50 miles outside of Austin.
I think I'd prefer to buy 100 acres inside Austin!
I am interested in the development process in Texas. It appears that the big nationals are controlling the market to some degree. The Austin area is different from Michigan because around here, I could find hundreds of "small" developments of five or ten acres. There are hundreds of 20 and thirty acre developments. In Texas, you have fewer developments but they are larger.
Because of that difference in development styles, I might very well opt out of the residential market entirely. I'm leaning toward commercial development. I see a huge need for strip malls and small commercial buildings all around Austin in the growing burbs.
blue
blue,
I am working to develope 100 acres in Hungerford, which is about 1.5 hours from Austin. I am still in the planning stages, but it is coming along.
100 acres in Austin, if you can find it, big bucks. My 100 acres just 35 miles from Houston (Austin side) has tripled in value since I purchased in 1999.
We are indeed rural, but the large pdf below shows the kind of new commercial that is only 20 minutes away. 5 years ago this kind of development was 40 mintues away.
That looks like a great commercial development TX. I want a pad site in that strip mall!
blue
CapNMac knows your coming. He is closer to Austin..... in Waco.
He suggest you wear all of you winter clothes everyday, all day until you move in order to be ready for Texas heat.
I have a theory. There are more northern states posters on BT, becasue we southern boys are working when the northern states posters are inside trying to keep warm.
It could be that y'all are just smarter with computers, and generally smarter in that you do not need to work as much.
Of course we can be pretty smart, here's some free redneck wisdom: Next time you are too drunk to drive, walk to the nearest pizza delivery joint, use the pay phone to place an order. When they go to deliver it, catch a ride home.<!----><!----><!---->
I just wanted to pop in here quickly with a -
Way to go, Blue!!
Carry on.
"Citius, Altius, Fortius"
Thanks Heck.
Carrying on....
Here's another minor update:
We had a long visit with the drain commissioner's engineer today. We discussed the various solutions to our drain situation. We came to the conclusion that we will be able to bury our drain and no one can hold us hostage. We don't need signatures, easements or anything more that a little time and money.
So...basically, we got some very good news and we were very pleased.
Now...here's the good part.
We were so pleased, we went directly to the real estate office and sat down and told a long sad story about how complicated the drain situation is becoming. We explained that we are still very interested but that the time issue and money is causing a lot of concern....
Basically, we are softening up the agent for a renegotiation. After dropping off the satelite photos and explaining what needs to be done, the agent seemed like she was resigned to finding a way to lower our price. We bantered a figure of 75k for the expected costs.
Now, some might think that this is fibbing but it's not. It will take someone a lot of money and time, but we didn't tell her that that someone has already spent a year getting the legal work to improve the downstream drain, and that party will probably be footing all the costs this season! That other party might incur 75k but our offsite bill will be perhaps 5k.
We don't expect to get a 75k concession on the contract but we are hoping to either get a modest 25k or perhaps have this "favor" in our bag if we need some time extensions.
Now...onto the next phase...looking for a flip. We have been waiting to fully understand our drain and school and road paving options before we contacted a party that we are sure would be interested. We just wanted to have our facts in order. We'll be talking real soon.
And....another realtor is bringing a couple of buyers by this weekend.
Time will tell....
blue
Need an update...I find waht you are doing here fascinating.I hope Chuck Norris never potato sacks me!!!!
bstcrpntr --- I hope to grow into this name.
There's not too much to report at this time Bstcrpntr. We finalized a letter that we are sending out to try to flip this property to the developer that is west of us. We'll know in about a week or so if he's interested. If he's not, we will fund this deal through and investment group, which is not yet determined. We will be meeting with a CPA within two weeks to start this process. The CPA will be advising us as to the current market situation for investors: what interest rate is expected, how many shares we should make for an investment of this type, what form the entity should be, etc.
I'll keep you posted.
blue
Heres an update and an interesting story.
Update first: We were verbally offered 500k for the property today by a realtor putting a deal together for two investors. I don't know what the guys are going to do with it. In fact, I don't have any information at all. In order to properly process the verbal offer, I'll need to dig into who, what and why these investors are. Once I figure out that stuff, I'll have a better idea on how to proceed with the negotionations to flip this property. I haven't made contact with Gandalf yet to discuss this turn of events because he's on vacation till Saturday.
At this point I'm not too excited about the offer, because I don't know enough about the people behind the offer.
Now, here's the interseting little story. It's a story about a true zero down deal that worked out quite well.
A builder acquaitence of mine relayed this story to me about John, his step brother-in-law. iAbout four years ago, John's mother called him up. She was somewhat worried because the owner of the trailer park that she lived in (in Florida) was putting the park up for sale. She was worried that the new owners might sell to someone that would jack up the rents, or maybe even bulldoze it and build a subdivison. John flippantly told her that she shouldn't worry and to tell the seller that he'd buy it.
Well the next day, the mother saw the owner and asked how much he wanted for the trailer park. She told him that her son was interested in buying it. The owner was happy to hear of a potential buyer so he got the number and called John, telling him that he wanted 400k for it.
John was surprised that the trailer park owner called him and told him that he was sorry for wasting his time because he wasn't really serious about wanting to buy the trailer park and besides, "I don't even have any money". The owner replied "Don't worry, you won't need any money....I'll sell it to you on a land contract and you can make the payments. The montly rents will be enough for you to make payments".
It's probably a good time to explain that John was a sheet metal worker in Michigan. He didn't have any desire to be in any business. He never thought about investing in real estate. He never thought about real estate but...he did decide to take over this trailer park to help keep his mom from getting booted out of her home. So, for the next few years, he managed the trailer park, making the payments and breaking even.
We all know how Florida property has appreciated.....
This year, he sold the trailer park for 3.5 million dollars....cash!
So, he netted 3.1 million in about 4 years, on a property that he didn't want to buy, with no money out of his pocket! He managed to do all this doing sheet metal in Michigan!
I guess I was wrong....sometimes zero down deals DO WORK!
blue
>>"So, he netted 3.1 million in about 4 years
I'd imagine his mom no longer lives in a trailer. ;-)
"Let's get crack-a-lackin" --- Adam Carolla
Sounds like a Lonny Bird story....
I think I'd prefer to buy 100 acres inside Austin!
Whoooo-Hoooooo!
Let the good times roll!
Live the Good Life in the Permian Basin.
As was pointed out they are REQUIRED to write every offer and present it to the seller... many times the property was priced by the listing agent (never ever a good thing to do if you are the seller)
I've been in several situations where a listing agent wouldn't show me property... told me there were contrats on property... wouldn't returns calls ect... If i was really interested I'd contact the owners many times there was no contract and several times the agent had told the sellers they had no calls the property was overpriced ect... many times the agent had made an offer... I have one 82yo agent I trust and i still have to push him to make the offers i want to make... but I know he'll present every offer and swear to the people he told me i was offer'n too much....
p
as a rule I've found 90% of agents are not creative nor do they understand ROI ... If they knew so much they'd be buy'n & sell'n... vs broker'n there is that 10% that really knows their stuff that can make a deal happen... if ur lucky thats who u'll be deal'n with
p
I agree Ponyti. Agents in general have their own hidden agendas. Quite often their agendas don't cater to mine.
I've heard of agents that don't want to be bothered with buyers. They won't even bother answering the calls. They don't want to have to take them to different houses and propertys. It wastes their time. All they want to do is find listings.
blue
Agents are required by law to present all offers. That doesn't mean that they'll present them in an enthusiastic manner though!
Buyers can insist on being present when the offer is presented. If an offer is complicated and tricky to understand, it's probably a good idea to be there.
blue
We bought in one of the hottest markets in the last 15 years; Macomb Township, MI.
blue
GREAT news. Glad to hear it.