Posted by Laura on July 27, 2005 at 21:10:04:
Ray, thank you for your time. I’ve gained alot of input. Laura
Condo Office Park Ever Hear About? - Posted by Laura
Posted by Laura on July 24, 2005 at 21:01:10:
Would like some help. I live in the Tampa area in Florida. I have just recently had my offer accepted to purchase 4 acres of property zoned commercial for 1.3 million in Pasco County. The property has no wetlands (a big problem in Florida), on a major hwy and is located in one of the fastest growing areas here . My bank has agreed to loan money based on my financials with 20% down, interest only for a year and then I have to start building, with a construction loan. I already own a free standing commercial bldg that I built a couple of years ago, but this next project is out of my scope. I have read article after article on this site, but still haven’t come across anyone who has bought land to develop into a free standing condo office park. This is very popular here in the Tampa area. I want to put up five- six bldgs, 3,000 sq feet each approx. I want to keep one so that I can expand my title ins. business. I also want to maintain the maintenance of the office park. Does anyone know what I’m talking about? Thanks for any help. P.S. Ray I think you are one smart guy.
Re: Condo Office Park Ever Hear About? - Posted by ray@lcorn
Posted by ray@lcorn on July 26, 2005 at 09:50:43:
Laura,
I’m not quite sure what you’re asking, but it sounds like you’ve got the makings of a good development project.
A condo project of any kind relies most heavily on the legal documentation for the condo map and owner’s association. After that work is done, the project can proceed like any other.
You’ll need to prepare a plan that breaks the project into components (e.g. number of buildings, timing and phases, costs, etc.), and a projection of operations that matches the timeline.
Thanks for the kind words, and if you’ll follow up with more specific concerns I’ll try to help guide you in the right direction.
ray
Re: Condo Office Park Ever Hear About? - Posted by Laura
Posted by Laura on July 26, 2005 at 21:06:11:
Ray, I can’t tell you how excited I was to see your reply. Thank you so much. What I meant by condo was probably more along the lines of an office park not condo, I would like to divide the property into 6 lots, with a free standing bldg on each one. I would like to sell the bldgs with fee simple title and keep one for myself. I want to stay on as the owner of the common areas, parking lot etc, and give easement to the owners of the bldgs for parking, ingress and egress, and charge a cam or maintenance fee on each unit with the option to turn over the common elements to the owners in the future. My question is this do you try and pre-sell the office bldgs once you have the site plan and architect drawings? Do you think the bank will release each lot from the mtg? Do you think I should only do the outside of the bldgs and let the buyer do their own build out inside, or do you think you can make more money giving them a finished product. The last and most ignorant question is other than getting myself another bldg for my business and expanding, where do you really make the money if any on this type of project? I’m hiring my bldr who built my bldg to build the offices (he is also my neighbor) and keeps asking me can he put some money in and be a part of this. I’m really am not sure about taking on another person, I figure if I go under from my dreams of buying more property I will only have myself to find an apt to live in if things go bad. LOL As I mentioned before we have a couple of bldrs here in Tampa and they are building these office parks all over town and have them sold to doctors, lawyers, etc before there even built. I’ve been in the title business all my life and understand quite a bit, but this makes me a little nervous. Probably why I own my business the excitement of it all. Once again thanks for you help. Laura in Tampa
Re: Condo Office Park Ever Hear About? - Posted by ray@lcorn
Posted by ray@lcorn on July 27, 2005 at 14:15:52:
Laura,
Assuming the positive market factors and a desireable location, your plan is sound, it just needs to be refined to incorporate your end goals.
It is customary (and desireable) to offer pre-sales once the site plan is approved for permitting. Since you have a builder you would have the flexibility to sell either just the lots (retaining architectural control through deed covenants) or a build-to-suit package. Pre-sales are typically offered at reduced pricing for a limited time period. With a couple of lots or packages commited you’ll find the financing much easier.
The financing can be tailored for a paydown from each sale as they close. Typical terms would pay 75% of the sale price to the mortgage balance.
As for building shell building on spec, I can’t really answer that with any certitude without knowing the market. I don’t like spec building as a rule, but have done plenty of it over the years. In some cases it is imperative to have at least one building that can be used as a model just to give people a comfort level that the quality is as advertised.
Your last question?where do I make money??is the right one. Your profit comes from the sale of the finished lots and/or build-to-suit packages. You are adding value every step of the way.
Once the site plan is approved and the subdivision plat is on record, you have added considerable value, which justifies the pre-sale pricing. Once development is underway you will be in a position to end the pre-sale discounted prices and price the remainder at their fully developed value. This is where the market feasibility has to be known in detail regarding the going price for comparable properties. If this were my deal I would want to clear my own building, plus additional profit if feasible, but that’s just me. It comes down to what you are willing to accept as minimum compensation for your risk and effort.
ray