Posted by Chris in FL on June 09, 2006 at 07:10:17:
Ron,
I wish I was dealing in numbers that large, and could advise you better. I know if I was interested in developing the project, and if I thought I was going to make a profit similar to what you talked about, I wouldn’t mind you making a million or two to assign me the property. If you want to make more than that, maybe you should try to set up a double closing instead, and not disclose to your buyer what you are paying for the property (or did they already know the asking price?).
Also, if you really want to be in on the project, due to the allure of a monster payday, try giving a large developer a partnership offer that they can’t refuse. If they aren’t interested in a standard 50-50 partnership, what if you offered them 75% of the deal? You still stand to make a whopping big payday, but you are recognizing that the developer is taking on most of the risk and work, while your contribution, in that situation, was limited to getting the land under contract (I think; you didn’t say if you already did some rezoning or not, etc.)? You would probably do well to post on the commercial board (on this website) and ask people with more experience in that arena. I have only done residential deals, and just threw a suggestion out there to make sure you were aware of other alternatives. Often people get so focused on a project that they lose sight of an easy avenue to a payday by wholesaling. I have seen people walk away with nothing on a great deal because they couldn’t close, and, meanwhile, they could have wholesaled and still made a decent profit. That just seems silly. Best wishes!
Do I really need $2 Million ? - Posted by Ron M
Posted by Ron M on June 06, 2006 at 09:53:20:
I am working on a golf course / residential development with a finished value of $120 Million. In speaking with a financier, he said that I needed to have the initial $2 million (50% of the golf course price)to make the initial purchase. My total cost of development & building is going to be approximately $60 Million.
A real estate broker friend told me that I should be able to get 70% loan to value on the finished project, and that I shouldn’t have to put any of my own money in, as long as I find an investor / partner with a great financial statement, development experience and established banking relationship. I realize this is a tall order, but as an experienced RE/MAX broker with both residential and commercial sales experience, he believes my project is 100% viable.
Can someone give me advice as to the best way to approach getting my financing or finding an investor? I will most likely need to come up with a financial statement to give to the owner of the golf couse by the end of this week to prove that I can do this project. According to the seller, there are other developers beating down the door for an opportunity at the deal, they are just working with me first because they have personally known me for 20 years.
Thanks for any assistance.
Ron M
Re: Do I really need $2 Million ? - Posted by Chris in FL
Posted by Chris in FL on June 07, 2006 at 13:02:54:
Ron,
Are there really other developers beating down the door? If so, auction off your deal to them. Either the first one willing to partner up with you, or, if that is not feasible, then the highest bidder to take over your contract (assign it), wins. Either way, if the numbers are what you say, then you should be looking at a pretty good payday. Best wishes!
Re: Do I really need $2 Million ? - Posted by Ron M
Posted by Ron M on June 08, 2006 at 15:30:30:
Chris,
I have been given a couple of names of large developers who are interested in the project. I suppose I have always had an assignment of contract as Plan B. The numbers are just so darn attractive, that this one deal could easily be the biggest payday I could ever see (over $40 Million Gross Profit conservatively).
If I end up assigning this contract, do you have any ideas on a fair amount and how I might structure the assignment fee?
Thanks for stepping up to my questions.
Ron M