Advice For A Beginner
What do I need to do to start learning about developing real estate? I want to hear personal experiences like you read books, you got a job at a developing company, you knew an associate,etc. I like to use other peoples experiences. Thanks.
I'm a RE broker specializing in land. When I began this work over 20 yrs ago, I tried to find books and courses on the subject. Nada. So I had to learn the hard way--much trial and error, mistakes, wasted time and effort, cornering people and asking them a lot of questions.
I will tell you how I started. When I was in high school I started working on a framing crew as a gopher. I progressed through the ranks and after graduating from college,worked as a project manager/superintendent for 3 years. I also took a 5 year hiatus for law school and a legal practice, before becoming a partner and eventual owner. I have been doing this a total of over 30 years.
Just Do It! Go ahead and jump in, if you got what it takes you will learn to swim.
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Nancy Chadwick[ Edited by NancyChadwick on Date 04/29/2004 ]
My start...I purchased a duplex 16 months ago with $500 of my money and the rest was borrowed (first and second mortgage, downpayment from a 5.9% until paid off credit card offer). I also got 2 tenants. I am now a landlord. I started small. I have learned alot on what to do and what not to do with people and property. When the lease on one unit came up, I changed it to fit my style. When the other person leaves, I will do the same. This duplex was a partial rehab (new windows, doors, walls, ceilings and floors upstairs, better parking lot, fence, some new electric). The nice thing is the rehab costed me NOTHING out of my pocket, the rent paid for it. 16 months later, the house is worth 15K more than I paid for it, the renters have paid off 3K of the loan, and I got a bigger refund check from uncle sam(due to passive loss). Now I have decided that I have what it takes, I am looking for another property...it will be rented/sold 10 minutes after I buy it to one of my current tenants.
For me, this is a side job. I am a professor at a college (don't do it for the money, because it is not there). I look forward to saying so long to my PIA boss some day.
THis is a tough business to really get into b/c there is no school or class that you can get a degree in to learn. Even books have their challenges b/c everything is site specific and municipality specific. I develop in about 4-5 different local municipalities and they are all different w/ their requirements. In a large sense, I would say that it takes relationships to make this work successful.... Relationships with council members, zoning and engineering staff, relationships with banks, relationships with subs, etc. It really boils down to it also takes a lot of time. Some developers i know wouldn't know what CMP was and wouldn't know an what an invert was if they fell in one! So it also takes a personal understanding of infrastructure placement.
We just put together a 15 parcel assembly that encompasses about 1/2 of a towns downtown acreage and are going to redevelop this site. There were several developers over the years that tried to do what he have succeeded in doing but they did not develop the relationships to make it work, or have the technical abilities to pull it off.
I personally learned by starting in remodeling, then heavy into new construction detached housing, then small multi-family developments from ground up, to mixed use communities in the 500 lot range.
Quote:
On 2004-04-29 09:57, woodsong wrote:
Some developers i know wouldn't know what CMP was and wouldn't know an what an invert was if they fell in one!
woodsong,
Or think that binder course was some type of contract. Ain't that the truth! Yes, patience, the value of cultivating relationships, and understanding how to work with people. Evidenced by your pulling off a 15-parcel assemblage (and living to tell about it).
Nancy,
Actually doing that assembly was one of the funnest acquisitions I have done to date. It went like clockwork actually which really surprised me.
One developer I know starts off his review of site manager resumes/applications by asking himself, "has this guy ever stepped in a mud hole before," even if he was hiring for a V.P. level job. There is much to be said about field experience.
woodsong,
About your 15 parcel assemblage..
If you're willing to share some tips on how to get multi-parcel assemblies to go like clockwork, I'm all ears. I'd like to know ways to eliminate the hair-pulling (mine).
Nancy
Nancy,
I have been doing development and acquisition for a while though so I am used to working deals out.
For some odd reason I have been doing quite a few assemblies in the past year, though that one was the biggest one to date.
My situation is unique in that I am an agent but also do acquisition for the development company I work with. Thus I am both an agent and V.P. of development. I do take listings if it is a property we are not interested in personally as we are very selective in our sites (high end new urbanism developments).
I can tell you that if I had tried to do the 15 parcel assembly as a listing agent it would never have happened. Part of what made it work was being able to approach owners and essentially acting as a buyer's agent. Some of them would have listed with me but I know some would not have, but all were willing to look at offers. A large part of it was "people skills." I know that about 3 developers tried to come in before me and do exactly what I put together but they invariably (somehow) made at least one of the sellers mad or otherwise insulted them and then they refused to deal with that company any more and the deal would fall apart on them. I work really hard to develop a sincere raport with the sellers, believing that there is always a win/win situation where sellers needs and buyers needs can be met in somewhere in the middle.
If you are doing assemblies I think it is critical to have a buyer immidiately ready at hand. I usually don't have the seller paying my commission as they tend to get irriated by that when it was I/we who knocked on their door to sell. If they had called me it would be different. In doing deals like this I have found that it is always better to have the buyer pay the commission and make it clear that all offers to the seller are "net offers." Psychologically it is a big boost to the sellers b/c they feel like they are on the winning end of the table and keeping that % to themselves.
I think it also takes an extremely capable buyer that can adapt to change and always is looking at the big picture. Some parcels you will have to pay absurd amounts for but if the total package ends up at a reasonable number then that is ok. If I told you how long I have had my license you would probably not believe me, so let's just say "not that long."
woodsong,
Thanks for your reply. I usually have the buyers pay commission (unless it's a listing of mine). The challenging aspect of assemblages for me has been all owners wanting the same price even though their properties do not have the same value (of course, they all talk with each other and find out what number has been put on the table with one owner). If they're motivated, they understand that in large part, their properties have maximum value only if they can be "lumped together". But, as you know, greed often rears its ugly head. Congratulations and continued success to you.
Nancy
>"On 2004-04-29 09:57, woodsong wrote:
Some developers i know wouldn't know what CMP was and wouldn't know an what an invert was if they fell in one!
--------------------------------------------------------------------------------
woodsong,
Or think that binder course was some type of contract. "<
CMP, Invert, Binder course
So for us rookies out here, what are those three terms and what do they mean? :-D
A beginner should start interviewing a professional team. Find a good Mortgage person, realtor, CPA and attorney. You would be suprised how willing people are to help you. Be careful you will also run across some who don't really care about your success.
Good Luck.
Quote:
On 2004-05-06 18:13, MrREI wrote:
CMP, Invert, Binder course
So for us rookies out here, what are those three terms and what do they mean? :-D
MrREI,
CMP = corrugated metal pipe
Binder course = the middle layer of paving
Invert = the elevation of the sanitary sewer line typically shown at specific points, such as manhole locations, and in relationship to existing and proposed grade as well as elevation of rim of manhole
Nancy
www.Mr.REI,
Nancy's response is 100% correct. This is more in the realm of construction than development, but for folks doing in-fill type home construction (i.e. taking an old vacant lot in an established subdivision and building a new house on it) knowing about inverts and the invert elevation can mean the difference between success and major disaster. YOu always hear to verify that sewer is available and that is an important first step in due dillegence. Problem is that that only answers 1/2 of the sewer question. The next question once you discover if it is available or not, is to find out the invert elevations for where you are tying into the existing sewer. Technically, the invert elevation is the bottom of the round pipe, or in other words...where the water (and stuff!) flows in the pipe. When sewer lines ties into a manhole those manhole bases are precast concrete with a flat concrete bottom. Once the lines are installed in a new manhole, the "invert" is constructed. THis is where the pipelayer uses brick and mortar to build up the base of the manhole to replicate the bottom to be like the pipe continued through the manhole to the downstream pipe. Imagine if you will taking a flat piece of play-dough and then pushing a magic marker into the play-dough along the length of the marker. You would be left with an indentation of that marker, right? An manhole invert essentially does the same thing via brick and mortar. This way water (and stuff!) flows continuously through the manhole w/o just sitting in the manhole and getting stuck. I hope that makes sense. When an invert is propertly constructed you can actually stand at the bottom of the manhole on each side of the invert and NOT be stepping in anything if you know what i mean. Go pop the cover off a manhole and look down and you will see what i am talking about.
Anyway, if you do in-fill housing you have to make sure that the pipes (if tying into the middle of a run of pipe via a service lateral) or if tying into the manhole directly, you need to confirm that the sewer is lower than the house finished floor elevation (FFE) enough so that gravity sewer will work. Failing to verify this will result in having to pay lots of $$ for a pump to pump all the sewer to the line. Not only is that expensive, it is also a maintainance headache and usually can reduce the selling price. You can determine pipe elevations by obtaining the as-built (i.e. field surveyed and verified after construction was done on the line) invert elevations for the nearest uphill and downhill manholes. Once you know those two points and the distance between manholes it is simply math to determine the depth of each line at any given point. I have seen new builders fail to verify this stuff, build a house, call the plumber to connect the sewer and then boom! They relize they messed up and now have an expensive problem! A prime example of why development and construction work is not as easy and "hands off" as some think. You have to really know what you are doing to succeed in being hands off and the only way to be capable of really doing that is to start out being "hands on"!!
Now then...let's keep this thread going. Who knows what RCP is???? What is the difference between RCP and CMP and why would you use one over the other???
Wow....that's alot to swallow.....which leads into my next question...
How much is too much? I mean let'e be honest do I really need to know all of that to be a successful developer? As a developer shouldn't I focus more on the whole deal? Making sure land is acquired for cheap as possible, hiring the best people, contractors, subs, etc., running the numbers, etc.
Forgive my ignorance, but what you are talking about is more building/construction type stuff correct? I don't intend to become a contractor/construction co....
I mean wouldn't my contractor/builder take care of that?
or are the two: developer/construction interchangeabe?
I know Trump outsourced for all of his construction needs...wouldn't one do the same as well for time/money maximization?
Forgive me if I sound naive, I don't intend to...I'm eager to learn.
BTW, Nancy and others, what exactly have you guys developled in your history so I can become more acquainted with everybody and see if that gives me any more questions to ask...
Forgive me if this is long winded..
Thanks in advance for the dialogue and answers.[ Edited by MrREI on Date 05/07/2004 ]
MrREI,
I don't use 'builder" and "developer" interchangeably. To me, the primary business of a builder is building. The primary business of a developer is taking a property and changing it in some way that enhances its value. For instance, gettting a zoning change or subdivision approvals. Sometimes builders are developers, though in my experience, they're developers usually to get subdivision approval so that they can build and sell the finished product to end users.
MrREI,
that they know, that even though you may not know as well as them, you gotta know what they're talking about, so you can help them fix problems as they come up. Make sense? Besides, if you hire someone, don't know ANYTHING about what they do, just HOW easy is it for them to take you to the cleaners, and you'd never know? KNOWLEDGE IS POWER!
I'm just beginning to dabble in new construction, and am learning LOTS of things. I've learned that I didn't know a 1/10 as much as I THOUGHT I knew about construction. I have also learned that when my builder comes to me with a problem, we HAVE to be able to speak the same language. So, my point is, there's all these TLA's (Three Letter Acronyms)
woodsong,
RCP = reinforced concrete pipe
I don't know for sure, but I think the use for this would be similar to a culvert and would be used where pipe would have to be underneath an area that takes weight--underneath a load-bearing surface. CMP is used to carry stormwater--storm and not sanitary sewer.
I agree with you completely about invert elevations being the difference between success and failure. I was involved in a situation where the builder's engineer didn't check on inverts in an existing trunk line at the point where the builder thought he would be tying into the line. Turns out, the invert elevations were higher than the elevation of our proposed line. (Discovered this after the feasibility period had expired.) Municipality wouldn't permit grinder pumps on the lots affected, so the builder had to acquire an easement through 2 intervening properties so he could tie into the trunk line where the invert elevation was lower.
I think where someone wants to be a developer rather than a builder, they need to have an understanding of issues that impact the suitability and $$ feasibility for the site to be built out by a builder. So, for instance, if the site can't be "sewered" by gravity, alternative means, as you point out, take money and time. That reduces the desirability and value of the property to the guy they "sell" (assign) to--the builder. I would seem to me that developers should know the critical questions that have to be investigated--such as, can the site be sewered by gravity, are sewer permits available, am I going to need a waiver for length of a cul-de-sac street. This also means that they should acquaint themselves with the people, places and things that are the sources of the information. They also need to have the right RE attorney and engineer and be able to rely on them.
Great posts everyone. The term builder and developer, typically, are not interchangable. A builder may call himself a developer but you will never hear a developer call himself a builder.
While the two jobs are interconnected, the skills required to develop raw land are completely different than the skills to build houses. Typically builders don't know a lot about true development work at the higher level of government approvals, site planning, etc. etc. My background is a mix of doing remodeling 8 years ago, then doing new home construction at the field level, then at the admin level as the director of construction (overseeing budgeting, ordering, scheduling, etc.) From there i got into small subdivisions I started doing, then up to multi-family (town homes and some condos) projects on a smallish scale, and now I do mixed use developments in the 200-500 lot size range. I basically worked my way up. I am also an agent doing raw land sales for deals that don't fit our development style (high end historic architecture product). I have not had my agent's license real long but I am certainly enjoying it.
One of the posters asked if the stuff we are talking about is "too much." In my opinion, no it is not. One of my problems, to be honest, with the REI websites I visit is that many people think you can make a ton of money with very little experience or knowledge. I can't think of a better way to open yourself up to "loosing your shirt" than starting out in development and not knowing what is going on. It is so comprehensive and ever changing it is a difficult thing to master (I'll let you know when I get to that point!). So many of the decisions you make in land planning are based on the finished construction that it takes a good understanding of the entire process from start to finish to make a product work well. While we all start out not knowing really what is going on, it takes constant learning to be a success. You will know you are ready when you can sit down and read an entire set of LDP plans and understand what you are looking at. It should be noted that the really costly stuff is often not the big stuff on the first couple of pages. Sometimes the most expensive and unnecessary expenses are the little details hidden in the notes.
And Nancy...you gotta stop answering the test questions- you already know the answers!!!
SO with that...let's go to the next test question for us aspiring developers....
What is an LDP? WHy do you need it?
woodsong,
Sorry about that. I won't answer any more of the "test" questions.
Nancy
haha no problem Nancy. Just trying to give the other folks time to scratch their head. If they don't come up with the answer soon feel free to throw your thoughts in! I was not trying to discourage you from the thread at all- you post here a lot more than I do.
Excellent Thread by the way....
OK, so I understand you are saying obviously one must know what is going on...but where does a beginning developer obtain/learn this knowledge??
It's not like I can enroll in land development school...
How does one determine the feasibility of a project?
How does one reduce the budget of a project?
How much construction knowledge DO you need?
I agree with all you are saying, but I'm saying (and what was in line with the original post on this thread) is where do you get started???
I do not know what LDP plans are...
Good thread....let's keep it going.
BTW, nobody answered my other question....
Nancy et al. what types of projects have you developed in the past?
Thanks.
MrREI,
If you'll look at my very first post in this thread, you'll see that I said I am a broker specializing in land.
As for getting knowledge, I suggest you do some research on this site and you'll find other building and land-related Forum topics and posts as well as several Articles.
Nancy,
So you are a broker AND a developer?
What have you developled in the past?
Any books anybody reccommends? although I'm doubtful there are many good books on the subject...
MrREI,
In response to your question, in addition to brokering land, I have also worked inside residential developer and building organizations taking property through the municipal approval process, analyzing feasibility and doing site and market due diligence.
LDP = land development plans[ Edited by NancyChadwick on Date 05/08/2004 ]
Right you are Nancy, although around here we call them Land Disturbance Permits.
For the new folks this is typically the overall permit for the development. WIthout this permit you can't do any site work and usually no clearing or grubbing. Sometimes you can get a clearing and grubbing permit issued prior to the LDP but typically municipalities don't like to give those out.
For the new folks it should be noted that one of the best ways for you to structure your purchase contracts is to tie closing to the issuance of the LDP. This gives you all the time you need to work out all the engineering issues on the site and guarentees you that when you close you will be able to build per your plans. I have seen properties that have been successfully rezoned and then the new developer closed on the property after that but prior to the LDP. What do you know...when they got further into their engineering studies they discovered a fatal flaw with their plan and then you can't build. Stuff like that usually only happens on smaller projects as their is usually always a way to work through issues on a larger tract.
Ok...which one of the other experienced folks wants to through out another "test" question?
woodsong,
Land buyers here usually tie their obligation to close to getting all approvals, permits, waivers, etc. required in order to record plans and get a building permit. Prerequisites here to recording a plan, in addition to getting approvals & other permits, is posting security for developer escrow.
Is your experience that the LDP and building permit are one and the same or are they 2 separate things?
Nancy
OK, here's another "test question"--it has several parts to it:
Suppose you found a parcel of land and wanted to determine quickly (ie, without hiring an engineer or doing any testing) how many lots you might be able to get out of the property so that you could decide if you should make an offer to the property owner.
1. What's the first information you need to get and where would you find it?
2. How would you know if public water and sewer are available to the site--where could you find that out?
3. How can you roughly estimate the number of lots?
I am going to let someone else try and answer all the questions so as to not hog all the fun but I will give one little criptic answer....
R2= 12,000
property 5.5
239,580 sq. ft.
19, make an offer based on only 15 (street)
Nancy, I think you know what i am saying....
Good test question though Nancy!
Quote:
On 2004-05-09 23:30, woodsong wrote:
I am going to let someone else try and answer all the questions so as to not hog all the fun but I will give one little criptic answer....
R2= 12,000
property 5.5
239,580 sq. ft.
19, make an offer based on only 15 (street)
Nancy, I think you know what i am saying....
Good test question though Nancy!
Great thread! Let me take a stab at the test. I am totaly new to developing but have had a cram course n last few weeks from buying a subdivision (closed Friday).
I am not sure based on your cryptic answers above but I have an idea. I think.
Find out your zoning, say maybe 2 lots per acre in this case (R2), deduct your land used for roads. Then figure out what to offer based what you can make per lot after you figure out how many lots you can get onto your land after the deducton for roads. Am I close? This is sorta like jeopardy. LOL :-D
Quote:
On 2004-05-09 13:50, NancyChadwick wrote:
OK, here's another "test question"--it has several parts to it:
Suppose you found a parcel of land and wanted to determine quickly (ie, without hiring an engineer or doing any testing) how many lots you might be able to get out of the property so that you could decide if you should make an offer to the property owner.
1. What's the first information you need to get and where would you find it?
2. How would you know if public water and sewer are available to the site--where could you find that out?
3. How can you roughly estimate the number of lots?
I forgot to answer her questions:
1. First thing? The zoning and the utilities available ex) city sewer and water or septic tanks? Even though zoning might be for 4 lots per acre, if water and sewer not there yet, then you can't really have that density. You find out from the local municipality and zoning maps at city hall.
2. The municipality or local city hall or county.
3. How many lots? Divide the acres or total square feet of land by the zoning. In other words, R2 is 2 lots per acre so roughly, on 10 acres you would have 20 lots (2 X 10) before you deducted for roads etc.
[ Edited by Ricker on Date 05/10/2004 ]
Ricker,
1. You're right. You should check the current zoning out first by looking at the zoning ordinance and map at the municipal office. This tells you what uses are allowed, min. lot size requirements, etc.
2. Right again. The local government has maps showing where the existing water and sewer lines are.
3. woodsong's cryptic reply:--
assume in the R-2 zoning district, the minimum lot size is 12,000 sq ft., parcel size 5.5 AC
Here's a good rule-of-thumb for roughly estimating yield:
a. First you convert AC to sq. ft. because usually the zoning provisions talk of minimum lot size in sq. ft. and not acres
total gross AC X 43,560 sq ft
5.5 X 43,560 = 239,580 sq. ft.
b. If you figured site yield based on 239,580 sq. ft., you'd wind up with 19 lots. But you can't develop 100% of it because land area will be lost to constraints (like slopes & floodplain) as well as because of proposed roads, catch basins, etc. So you can quickly and roughly estimate yield by applying a rule of thumb. As with all rules of thumb, modify them to fit the particular circumstance.
gross sq. ft. X 75%
239,580 X 75% = 179,685 sq. ft.
c. Then you convert the "net" sq. ft. to lots. Always round down. Be conservative.
net sq. ft. divided by min. lot size
179,685 divided by 12,000 = 14 lots
Remember, the actual yield is going to be what the municipality approves. If the property doesn't have public utilities, the yield will also depend on how many locations test out for on-site sewage disposal systems.
Well, Nancy you and Woodsong have done a magnificent job with this post. I gotta tell you the truth when I look at it when Gusrock first posted I thought, "There is no point even responding to this guy. The question is way too broad and the answer way too complex". But you guys have managed to give some idea of the complexity without getting overwhelmed in the details-- again I am very impressed.
The part of the responses I liked the best was Nancy's distinction between a builder and a developer. The Developer adds value by transforming the property. One of the ways to do that is to build on it. But it is not the only way. A friend recently did very well buying a property and demolishing the building thereby transforming a junky hardware store into a development site. I know a guy who specializes in getting zoning changes. Buys the land, changes the zoning sells the land with greater value due to the ability to build different things on it. In Woodsongs case a great deal of the "added value" is assembling a large parcel. I'm working on a deal which works the opposite way around, in that market smaller pieces are worth more than larger ones.
A second distinction I'd make is between a Developer and an Investor. An investor makes his money by capitalizing cash flows. A Developer, by adding value. So when you buy a house and paint it and resell it for more you've acted like a Developer (though on a small scale).
So, where do you begin. You begin by thinking like a Developer and not like an Investor or a Builder. Look for places where you can add value. "That property would be worth more if ....". I recently did a deal where I bought a piece for $260,000 and sold it for $400,000. What did I do to add all that value? I rented the property. That renting made the property worth the cash flow. There are millions of ways to add value. I suppose that the next set of questions should be to try to list them all.
So, a small, and by no means exhaustive start:
You add value by:
Renting a property which was otherwise vacant (creating cash flow)
Building a building
Removing a building which is undesirable
Acumulating sufficent adjacent land to allow a use which was not permited on the smaller sites (shopping centers for example)
Dividing land where the smaller parcels have a greater value than the whole.
Changing the use of the property. (converting obsolete manufacturing buildings to housing, for example)
Making an unattractive site more attractive (landscaping for example, but also getting the city to install a stop light)
Changing the perception of a site in the market (coming up with a new name for a neighborhood which had a bad reputation for example)
I'm sure there are many more and I look forward to your suggestions..
commercialking,
Thanks for your coments.
As other ways of enhancing value by "developing," I would add..
Getting zoning approvals from governing body and Zoning Hearing Board for special exception uses and conditional uses, respectively, so that the property can be used in more ways, thus expanding the potential market for it. Getting a variance from the ZHB that would relieve the property from having to comply with some specific zoning requirement, like a side or front yard requirement, that would allow the property to be built on or used differently.
Extending water and sewer lines to parcels, thus making residential or non-residential development more feasible and profitable.
Acquiring an easement through another property so that sewer lines could be run to or away from a property.
Acquiring frontage on an existing street so that a land-locked property could be subdivided.
Getting the municipal governing body to grant a waiver from its subdivision & land development ordinance as to street length, thus permitting a more practical and profitable subdivision/development configuration of a property.
OK--who's got some more? Let's keep this going!
Nancy
Congrats to Ricker for figuring out my somewhat cryptic reply!
Nancy, I usually use a factor of 80% for lot yield vs. your 75%. My projects have typically worked out to around that amount but obviously each site is unique and going with 75% would not be a bad thing!
So...another test question....
You are a new developer. You just bought a piece of property and are doing a small subdivision...Needless to say you are excited as excited could be. You decide to head over to the site to check on the progress of your grading contractor who just finished clearing the site about 1-2 days ago. As you pull in the county inspector is about to leave the site and you get to talking. He asks you where the sheepsfoot is and when you will be getting the geotech. report to them. As he drives off he shouts out his window, "Don't forget! No more than 8" lifts!!"
What kind of site work are you doing to need the mentioned piece of equipment, why would you need a geotech (extra points...what is a geotech?), do you really need the piece of equipment and if so why (if not, why not??), and what does the inspector mean by "only 8" lifts"??
Here's a hint:
Most of the lots don't front on an existing road.
Quote:
On 2004-05-10 17:03, woodsong wrote:
So...another test question....
You are a new developer. You just bought a piece of property and are doing a small subdivision...Needless to say you are excited as excited could be. You decide to head over to the site to check on the progress of your grading contractor who just finished clearing the site about 1-2 days ago. As you pull in the county inspector is about to leave the site and you get to talking. He asks you where the sheepsfoot is and when you will be getting the geotech. report to them. As he drives off he shouts out his window, "Don't forget! No more than 8" lifts!!"
What kind of site work are you doing to need the mentioned piece of equipment, why would you need a geotech (extra points...what is a geotech?), do you really need the piece of equipment and if so why (if not, why not??), and what does the inspector mean by "only 8" lifts"??
Ok...here is the answer. Maybe this one was a bit complicated. The site work being performed is the placement of fill soils in a low area. This could be for a street, a sink hole, etc. etc. A sheepsfoot is the machine that is typically used to compact newly placed fill soils. You have probably seen them around job sites...they look like a steam roller in the front but with protrusions coming off the drum, i.e. the "sheepsfoot." The back of the machine is usually on large rubber tires. A normal steam roller has a smooth drum and has drum front and back. One thing the sheepsfoot also does is vibrate. The vibrations help compact the soil as you drive back and forth over the fill material. The 8" lifts is in reference to how thick of a layer of fill soil you can place at once while compacting it. Typically, the maximum you can fill in one layer is 8", then you "walk it in" with the sheepsfoot to get proper compaction and then add another layer of new fill soil, compact with the sheepsfoot, etc. Failing to install fill soils in 6-8" lifts will result in failure to get proper compaction and the entire fill area would have to be removed and completely redone. A geotechnical report is where you have hired a geotechnical engineer to do compaction tests during the filling operation. They usually test every 2' of depth as you build the fill are up. Thus, you do not wait until the end of the fill operation to get it tested...you test as you fill and then you know things are good. I have filled some areas on my sites in excess of 20' so it is critical to properly test as you go. A geotechnical report is usually required for any fill over 2' deep if a structure, road, etc. will be built on the fill soils. I usually have my footings tested though even if not required by the county just to verify there are no issues.
So do you need to have a sheepsfoot on site when filling?? Yes and no. Often times contractors will "walk it in" with a tandom dump truck. They will fill an 18 yard truck with dirt and then simply drive back and forth over the fill area to get compaction, still doing everything in 8" lifts. This is usually the "poor boy" method of getting compaction. It works but a sheepsfoot roller is easier to get in tight places, move around, etc.
For an example of why the above is important...one of the first subdivisions I developed was a small 16 lot residential subdivision. We were cutting on the left side of our new street and filling on the right side to balance the site. The filled lots were being filled about 8-10 feet in depth. As luck would have it I happened to go on a vacation the week they were doing the fill work. I watched their work while cutting in the street and I felt comfortable with their work (I had never worked with this contractor before nor will I again!). When I came back from my 5 day vacation 6 of the fill lots were "done." I could see the indentation of the sheepsfoot roller on the building pads and walking around it felt solid. Odd thing was though that the sheepsfoot marks were only on the tops of the pad...not the sides like it should have been. For the heck of it I got my soil probe rod out to see how things looked below the surface (this is a T shaped metal rod that just lets you push it down in the soil to test for soil resistence). At first compaction seemed great but then I punched through the top crust. The contractor had simply dumped the fill soils off the dump truck, load after load w/ no compaction, and then ran the sheepsfoot over the top to make it look like it was done properly. Once through the compacted top crust the soil probe went through the fill like butter! That contractor had to tear out all 6 lots and recompact them all over again. What is more I discovered when he removed the fill soil that he didn't even strip the topsoil prior to begining to fill, which would have potentially resulted in a massive failure even if he had compacted as he went. It is like trying to build a castle on top of a cake. Luckily I caught it and was able to force him to redo all the work. Had I not discovered this flaw, I would have paid him the contract amount (a lot!), as well as if it had continued to go unnoticed homes could have been constructed and I can only imagine the lawsuits. Had my geotech firm followed through on our agreement for them to watch the fill while I was gone this would not have happened.
Ok...Nancy...do you have another test question???
Thanks for your explanation, woodsong. I do have another "test question".
OK, here's the question:
You're a developer, not a builder. You've found a property--10 AC of vacant land--and the owner is thinking of selling. You've done some due diligence and found out that the current zoning allows single-family detached housing on 30,000 sq. ft. lots with minimum lot width of 150 feet, and that there's public water and sewer at the site. The new construction (new house on its lot) would sell for $450,000. The seller wants $1.5 mil.
How would you quickly determine what the value of the property would be to a builder?
Come on you guys...you gotta let us know you are still out there and at least take some guesses!!!
I'll say this for now though....based on the way I run numbers in my neck of the woods, that property better be able to be rezoned to allow a minimum of 25 lots, preferably 30 or this deal ain't going to work!
Quote:
On 2004-05-11 14:42, NancyChadwick wrote:
OK, here's the question:
You're a developer, not a builder. You've found a property--10 AC of vacant land--and the owner is thinking of selling. You've done some due diligence and found out that the current zoning allows single-family detached housing on 30,000 sq. ft. lots with minimum lot width of 150 feet, and that there's public water and sewer at the site. The new construction (new house on its lot) would sell for $450,000. The seller wants $1.5 mil.
How would you quickly determine what the value of the property would be to a builder?
Ok, since no one else is responding, I will add more of my thoughts to keep this educational thread going for the new folks.
10 acres = 435,600 sq. ft. total
divide that by 30,000 sq. ft. lots = max. of 14 lots.
average only 75-80% total lot yield due to installation of street, etc. = 10-11 lots.
Seller wants $1,500,000 for the property. If only 10 lots can be created, raw land is $150,000 per lot. If 11 lots can be built, $136,000 and change per lot. Using the average cost of about $18,000 to $20,000 to fully develop a detached home lot, a developed lot cost would be up to $170,000 per lot, not including soft costs of finance charges, overhead, legal and marketing fees, etc. etc. Let's stop calculating right there and see if things work at cost of $170,000 (no profit for me as developer is included in that number).
Around here a builder will pay and a bank will loan about 1/5 of the appraised/retail value of a new home for land acquisition for the builder. Thus, for a builder to finance that lot in my neck of the woods, that builder would have to be able to sell that home for $850,000, and again, I have not even added in my soft costs and profit.
This guys land is no where near worth the asking price with the current zoning conditions. To reach that price one would have to rezone to at least 25 lots, preferably 30 lots. With 30 lots I could have a raw cost of $50,000 per unit, developed would cost me around $70,000 per unit, add carry costs and profit and retail those lots for $85,000 to $90,000 per building lot. At that level a builder could build and sell a home for $450,000 per house and still keep his margins.
Thus, I walk on this deal unless I like the property and know I have a very good chance to rezone it.
Nancy, if any of what I have said conflicts with what you think is right feel free to publicly point that out for the benefit of others!
:-D
woodsong,
My yield calc is the same as yours. My other numbers are:
end product $450K X 25% = $112.5K for finished lot value
horizontal improvements to lot = $37.5K (150 ft X $250/LF)
raw lot value to builder = $75K (112.5 minus 37.5)
total value = $750K (10 lots)
If I followed you correctly, you indicated $18-20K for lot improvements ($133/LF). Is that the rule of thumb that works in your area? Here I use $200-250/LF (with public utils) and $150/LF with on-site.
ok...another test question for the fun of it (Is anyone besides me an Nancy reading this thread???). This one is a bit more straightforward than my last one:
You left your site that the grading contractor is filling in the area for your new street using the sheepsfoot roller, etc. As you drive, you are glad the dump truck driver that works for your grading contractor explained to you what the inspector meant by "8 inch lifts" and you are struck by how much people who supposedly don't have an education really know a lot more than you do when it gets down to a hands on skills and practical level. As you contemplate this, you decide to go over to check things out on an acquantainces development site, whom you met a few weeks ago. As you pull into site he is there and you ask him what they are doing that day. He tells you he has a subcontractor on site that is pouring the throat for some single wings. What on earth is he doing? Why is he doing this? Typically speaking, would your developer friend have already installed the new water main for this project or has that phase of the work not begun yet?? Bonus points for this question: Is/are the single wings connected or related to the water line in any way? If so, explain how, if not, explain that too. [ Edited by woodsong on Date 05/14/2004 ]
Quote:
On 2004-05-13 08:08, NancyChadwick wrote:
woodsong,
My yield calc is the same as yours. My other numbers are:
end product $450K X 25% = $112.5K for finished lot value
horizontal improvements to lot = $37.5K (150 ft X $250/LF)
raw lot value to builder = $75K (112.5 minus 37.5)
total value = $750K (10 lots)
If I followed you correctly, you indicated $18-20K for lot improvements ($133/LF). Is that the rule of thumb that works in your area? Here I use $200-250/LF (with public utils) and $150/LF with on-site.
Nancy---
I am very interested in the numbers you have come up with. I am new to construction/developement, but here is my situation:
I am looking to buy some land, mainly just one lot, and build a manufactured home on it. I am trying to figure out the costs to develop the land and prep it for the house. I got the comps in the area, and from talking to MH dealers, it sounds like the costs would be around $50,000 to prep a site for a MH. I have been plugging in the numbers to see if they work, but I am new and scared I might calculate wrong.
I was very interested to see your post with the calculations. will those calculations work in my situation.
Basically comps = $190,000 for a finished MH. $190,000 X 25% = $47500.
What is the Horizontal Cost? I have not heard that term before?
Thanks
Learning a lot from this post. I am actually a programmer and would love to make an online calculator for land value for developement
uno,
Mobile homes are very different than stick built houses when it comes to running numbers. If you are just buying an individual lot I cannot imagine how it could possibly cost you $50,000 to prep a lot for a mobile home. Do you mean $50,000 to buy the land and prep it or are you saying land purchase is seperate?
Basically, you need to figure out a few things. How much will it cost you to buy the MH and move it to your site? How much will it cost to set it up on it's "foundation" and put the skirting up around it? Do you have a well or public water? Sewer or septic tank? Do you have to clear it and grade it or will the lot be relatively clear and flat?
Give some more info. Horizontal improvements is the term used to describe development work...laying the pipe, installing the street, utilities, etc. Home construction is everything vertical.
Nancy, I failed to see your question until today re: cost to develop lots. Yes, those numbers of $18,000 to $20,000 per lot ($133/ft) are typical for around. Difference in price may be cost of subs, etc. I pay about $12-$14 a sq. yd. for asphault (6" G.A.B., 2" binder, 1" type E or F topping), $5.50 per ln. ft. for machine poured 24" curb and up to $8 or $9 for hand poured, etc. etc. For my smaller lots (5,000 sq. ft.) we will end up around $11,000 to $12,000 per lot for development costs. For quick budgeting though I figure $18,000 to $20,000 costs per detached lot and $14,000 to $15,000 for town home lots.
unomateo,
I believe that woodsong answered your questions.
woodsong,
It occurred to me after I posted my question to you about the $/LF rule of thumb that my ROT ($250 or 150/LF) includes soft costs and not just hard costs.
Nancy
HI,
My numbers for a manufactured home were given to me by the dealer. He included all costs, including fees, permits.
I think the actual cost for the foundation was about $12,000. Some other costs were sewer: $5000, permits and fees $15,000, etc...
I have actually found a seller for a lot, but he says the lot failed to perk? Have any of you ever worked with land that had special conditions like that, or would you just pass on it?
Quote:
On 2004-05-14 14:10, unomateo wrote:
HI,
My numbers for a manufactured home were given to me by the dealer. He included all costs, including fees, permits.
I think the actual cost for the foundation was about $12,000. Some other costs were sewer: $5000, permits and fees $15,000, etc...
I have actually found a seller for a lot, but he says the lot failed to perk? Have any of you ever worked with land that had special conditions like that, or would you just pass on it?
In all honesty I would have to say find another lot and save yourself a big headache. Last year a house we built for a friend had to have an Advantec septic system. The house would have been finished in about 4 months, had my buddy not been slow about getting his finances in order. Long story short, the house had to sit through the better part of the winter as the engineer would not allow the system to be installed until spring and when the ground was dry...yes funny as spring and dry don't go together here. In any event, it set my buddy back about $18K not too mention the extra finance charges....
Awesome thread Woodsong and Nancy! Keep the "test questions" going, and could you answer some more "test questions" about putting propery under contract, assemblages, and dealing with prospective sellers.
Thanks guys!
LittleHunter,
I believe that woodsong previously posted on doing assemblages.
Did you have specific questions about the other topics you mentioned?
This question is for Nancy, Commercialking or whomever has had an experience with a vacant commercial structure.
The building in question used to house a Winn Dixie grocery store in the north part of town. It was located in the intersection of two main roadways. Well the winn dixie went out of business and since then a furniture store has occupied the premises, it has since left. I would like to gain control of this property- Land and Building and I was wondering if the creative purchase option strategy would work to gain control of the property at a certain price for 2-3years while scouting potential anchor tenants/buyers(JCPenny, CVS, Eckerd, etc..). Would this strategy work for buying already existent buildings or is it just used for building on vacant land?
The location is prime and sits across from a brand new wal-greens pharmacy. I would like to bring in some companies that will enhance the value of the area and better serve the surrounding community.
Thanks in advanced- Your experience is priceless!
William
Quote:
On 2004-05-14 00:53, woodsong wrote:
ok...another test question for the fun of it.
He tells you he has a subcontractor on site that is pouring the throat for some single wings. What on earth is he doing? Why is he doing this? Typically speaking, would your developer friend have already installed the new water main for this project or has that phase of the work not begun yet?? Bonus points for this question: Is/are the single wings connected or related to the water line in any way? If so, explain how, if not, explain that too.
[ Edited by woodsong on Date 05/14/2004 ]
Ok, Since no one took a stab at this test question I will give the answer.
First off, a "single wing" is a type of storm sewer catch basin. You have all seen them. It is the type of catch basin with a concrete top and a manhole ring in the middle of the concrete top. Single wing catch basins can be indentified in several ways:
1) As noted, they have a concrete lid, about 99.9% of time that lid is poured in place.
2) The catch basin top extends beyond the curb line of the street, going towards the houses behind the street.
3) The top appears to look like a trapazoid that has been cut in half. One side of the top/lid to the single wing basin is angled back to the street.
4) If a sidewalk is installed within 1-2 feet of the curb, the single wing catch basin will often interupt the sidewalk where they will pour the sidewalk around the top.
So what is the throat of a single wing?? It is the concrete "flume" that routes the water from the adjacent curb and gutter down into the actual basin portion of the single wing and down into the associated piping. For a job with a good amount of curb and gutter to be installed, they will pour the curb using an automated curb machine. The curb machine pretty much just does strait runs of curb so they skip over the areas where the catch basins are. They then come back a day or so later and pour the throats for the single wing basins and tie the throat into the already poured curb and gutter.
Typically speaking, one would not have installed the water mains on a job at this point. This is b/c, typically speaking, one installs the curb and gutter prior to installing the water lines. Sanitary and storm sewer go in prior to curb and gutter, but water lines don't go in until after the curb and gutter.
And no, single wing catch basins are not related in any way, shape, or form to the water lines as single wing catch basins are soley for handling storm water run off and have nothing to do with incoming water service to the finished homes.
So there you have it....next time you are out driving around with your spouse you can start pointing out all the single wings in the area. FYI- there is also such a thing as a double wing catch basin...bigger and can handle more volume of water.
Ok here is another test question open to all and as an aside, this issue comes up a lot and can be a critical step to getting approvals to build:
You have a piece of property under contract to build a new town home community. You have met with the zoning staff and they have told you that the property is already zoned where you could build 40 units. You made a quick phone call to the public works department and got one of the secretaries. THey were able to look on the maps on their wall and confirm that sewer and water are both available at the site. The sewer line is 8" diameter and the water line is 2". As you are leaving the zoning office though the planner you met with says that this has nothing to do with what he oversees in planning and zoning, but he asks you if you have done any fire flow tests yet b/c he heard a property down the street had a problem with them last year. You scratch your head, not wanting to admit you don't know what he means, tell him no, no you haven't done that yet but will be doing it very soon.
Points for answering any of the following: What is a fire flow test, what does it tell you, and who is the govermental person most likely going to be concerned about the results of that test?
P.S. I have seen people loose a lot of money for not taking the time to have this test done prior to closing so it can be, though not always is, extremely important![ Edited by woodsong on Date 05/16/2004 ]
wmwealth,
I have seen options used as a vehicle for both vacant and non-vacant land. However, my experience has been primarily in residential and not commercial, so I don't know the extent to which options are used with improved commercial parcels.
Nancy
WmWealth,
Yes an option is a good strategy in that case. A few things to know/keep in mind.
Lots of commercial owners very rarely sell property. You may find yourself beating your head on a wall (but not necessarily) relative to a purchase. On the other hand "sandwich" leases are very common. You agree to lease for a low rate for 30 years, find a tenant who will pay more.
Finding a national tenant (penny's, CVS, etc.) is also a very competitive business. There are agents who specialize in these clients. CVS is expanding rapidly in your area (in spite of consistently loosing money for years-- guess they are trying to make it up on volume) and likes going head-to-head with Walgreens. An attractive anchor tenant who does not use all the space is probably your best bet. Then you can rent other space at a higher rate. Those national anchors, tend to be pretty cheap leases. On the other hand because they have great credit and sign long term NNN leases banks love them and will loan up to 1.1 DCR.
How old is the building? Frequently landscaping and other exterior improvements are part of such re-leases.
If you think woodsongs test questions have been cryptic so far wait 'til you get the pleasure of trying to understand joint marketing pass throughs, parking ratio restriction clauses and the other greater and lesser arcana of commercial retail leases..
Still, good luck and hang in there a few of these deals go a long way.
well, maybe my test questions are too complicated???
Anyone else want to try their hand at putting forth a good test question for new folks to learn from???
P.S. A fire flow test is where the water main is tested for adequate flow. for a town home development there is no way you could tie into a 2 1/2" line. It would need to be at least a 6" line. Failing to know that or to test the water lines for adequate flow would cause the fire marshal to refuse to approve your project until a new line was installed...extremely expensive! If you had talked to a knowledgeable person in charge of water and sewer they could have told you that but since you only talked to a secretary they only told you what was on the maps....make sure you are talking to the right person when doing due dilligence. Just like with sanitary sewer lines, knowing "water is available" is only 1/2 of the equation. You need to know what size line is there and what kind of pressure it has for fire safety and to serve your proposed development. Setting up water lines on a loop greatly helps build up pressure as dead-end lines tend to loose pressure quickly.
woodsong,
Thank you for all of the valuable information. I'd like to throw a "test question" out there...
Suppose you want to subdivide a property and are wondering if one or more of the lots should be configured as flag lots.
1. What's a flag lot?
2. What would be some of the advantages in using flag lots in a subdivision layout?
3. What could be disadvantages in the long run with flag lots?
4. How do you know if they're even permitted?
Nancy
Come on now folks...this thread has had over 1,800 views and none of you are posting or trying to find the answers....
Let's all participate and learn together!!
:-D
Quote:
On 2004-05-18 12:22, NancyChadwick wrote:
woodsong,
Thank you for all of the valuable information. I'd like to throw a "test question" out there...
Suppose you want to subdivide a property and are wondering if one or more of the lots should be configured as flag lots.
1. What's a flag lot?
2. What would be some of the advantages in using flag lots in a subdivision layout?
3. What could be disadvantages in the long run with flag lots?
4. How do you know if they're even permitted?
Nancy
---I'll give this one a try. I'm thinking flag lots are those that start out at a particular narrow width at the curb, and get wider as they go back. The advantage of them is they give you the minimum amount of area while using up minimal road frontage. The disadvantage I can think of is the lots may be less desirable to buyers and difficult to lay out??? I think you can find out if flag lots are allowed at the planning and zoning department of the city or county you are developing.
millionby30,
You are right, right, right! Great job!
Flat lots are parcels that have limited frontage (like 25 or 50 ft) on the existing road. So you'll have this narrow "lane" going back a ways and then you have what may be more of a normal shape--like the "flag" at the end of a pole.
Flag lots can be less desirable for a couple of reasons. First, the views are impacted--look at your living room window and there's a house in front of you. Or front and back, if the flag parcel is sandwiched in between 2 other lots.
Then there's a long driveway to contend with--repair, replacement and in some places, aggravation and expense of snow removal.
The municipal zoning ordinance will tell you if flag or "lane" lots are permitted, min. size, frontage, etc. In a subdivision, the municipal subdivision & land devel. ordinance may also have restrictions--like the numer of flag lots permitted in a subdivision.
Nancy
Here is a good test question and an issue I often see in contracts w/ new developers:
You are placing an offer on a piece of property. It seems to be a good deal but the price is a little high. You have talked to the local zoning office and it looks like getting a higher density zoning is very likely which will make your numbers work. You talked to the seller. He seems pretty agreeable to waiting to close after zoning has occurred. You are going to make your offer contingent on rezoning the property from zoning "X" to zoning "Y." You sit down to draft the contract and state in the special stipulations:
"Sale is contingent upon Property being rezoned from zoning "X" to zoning "Y." All costs of rezoning to be paid in full by purchaser."
Here is the test questions for you:
Is the above language adequate to cover the rezoning contingency? Are you, as the buyer, adequately protected on this issue of the rezoning? If yes, how so, and if not, why not?
woodsong,
Great question!
Quote:
On 2004-05-19 22:56, woodsong wrote:
You sit down to draft the contract and state in the special stipulations:
"Sale is contingent upon Property being rezoned from zoning "X" to zoning "Y." All costs of rezoning to be paid in full by purchaser."
Here is the test questions for you:
Is the above language adequate to cover the rezoning contingency? Are you, as the buyer, adequately protected on this issue of the rezoning? If yes, how so, and if not, why not?
ok. no takers on this one??? it doesn't take a lot of energy to post and say "yes it is ok" or to post "no it is not ok." If no one answers this evening I will post the answer later tonight.....
woodsong,
Well, since nobody posted any response, here are my thoughts.
The hypothetical rezoning contingency provision is NOT adequate. Here's why.
The municipality could grant the change to the desired zoning classification but attach all sorts of conditions (including trying to put a lid on the density or number of units or overkill site improvements) that would make the deal unattractive. You'd need to have the rezoning contingency spell out that you had the right to accept or reject the terms & conditions attached to the rezoning change.
In addition, the change of zoning has to be final and unappealable. Once the board grants the rezoning petition, there is an appeal period--length is set by statute--whereby someone can contest the board's action. You don't want to be put in the position of having to either appeal the board's action (if say, they denied the rezoning or tried to impose conditions you didn't want) or if the rezoning was granted, to defend an appeal filed by someone who opposed the rezoning.
Finally, it would probably be advisable to have a "drop dead date" for getting the rezoning. In other words, if you didn't get a rezoning on acceptable terms by X date, then you could terminate the deal.
Nancy
Now this is a thread!!!
Thanks Nancy.
Folks, the word is "wetlands".
I haven't seen much discussion about that here, so here's the question...
1. What are wetlands--are they like floodplain or what?
2. Why is it necessary to determine if the property has areas of wetlands and how is that done?
[quote]
On 2004-05-22 09:22, NancyChadwick wrote:
Folks, the word is "wetlands".
I haven't seen much discussion about that here, so here's the question...
1. What are wetlands--are they like floodplain or what?
2. Why is it necessary to determine if the property has areas of wetlands and how is that done?
---I'll give this a try. Wetlands certainly are not necessarily floodplains, which I think is where a lot of people are confused. An area can be designated as a wetland by various characteristics. Soil types and moisture content and plant indicator species are the biggies I can think of. You can have an area with no visible water, but yet particular species of plants, and it be designated a wetland. It's important to know where these areas are because there are many laws and regulations protecting these areas from development. You can determine the location of wetlands by having an environmental assessment done on the property. Hope I'm not too far off.....
millionby30,
Congratulations! You hit the nail on the head for wetlands criteria and why you need to know!
The first 2 (certain soil types & plant types) are pretty straightforward. The third criterion (saturated or waterlogged soils or standing water) can be tricky because the soil conditions just have to exist during some part of the growing season--not all of the time. So wetlands don't have to be or look "wet" 100% of the time.
This is why the people who do wetlands delineations have to look for other indicators--like water marks on trees & other objects, debris and sediment that look like it was carried along and deposited somewhere. The US Army Corps of Engineers works with EPA in the wetlands program. Here's a link to the Army Corps' website where you can find a really good publication called "Recognizing Wetlands: An Informational Pamphlet":
http://www.usace.army.mil
Usually, the environmental assessment is focused on determining if there's contamination of the property from toxic substances & regulated things (like tanks and oil). The people who inspect and research the property for wetlands are a separate group of specialists.
If you're subdividing land for development, the municipality will want your plans to show areas of wetlands. Your engineer would take care of applying for permits or waivers if any site development work was going to be done in wetland areas--like road or utility crossings.
The municipality will also want floodplain areas shown on your plans. Floodplains are mapped by FEMA and show areas that are subject to flooding during different time periods (ie, 1 yr, 5 yr, 100 yr).
Great job, millionby30. How about if you post a "test question"?
Nancy
Ok....Millionby30 must be out on vacation for the weekend. Since he has not been able to reply yet, I will jump the gun and post one myself.
You have a property under contract. You found an attorney you have heard does a good job. You tell said attorney that you want him to represent you and handle the closing. He says ok and his very first question to you is this:
"When do you want the title objection letter to go out?"
Your test question(s) are as follows, answer any and all that you can:
1) What is a title objection letter?
2) On what basis is a title objection letter generated?
3) What does a title objection letter do for you?
4) What can, would, or may happen to you as the buyer if you do not have an objection letter?
"You have a property under contract. You found an attorney you have heard does a good job. You tell said attorney that you want him to represent you and handle the closing. He says ok and his very first question to you is this:
"When do you want the title objection letter to go out?"
Your test question(s) are as follows, answer any and all that you can:
1) What is a title objection letter?
2) On what basis is a title objection letter generated?
3) What does a title objection letter do for you?
4) What can, would, or may happen to you as the buyer if you do not have an objection letter?"
OK I'm gonna take a stab at this one. I hope i'm not to far off base.
It seems to me that that title in question must be clouded. The title objection letter tells the owner that there is a problem with the title and to get the title cleared up or deal is off. I would assume the this letter can be used to nullify a sales agreement. I don't know what would or could happen to a buyer if they did not have this document.
Hope i'm not to far off base. Can this document only be produced by an attorney?
Keep the test questions coming!
woodsong,
My take on the title objection letter..
The provisions relating to "quality" of title in the buyer's purchase contract (expertly drawn by the savvy RE attorney) give the buyer the right to advise the seller which, if any, liens, encumbrances and other title conditions are not acceptable to the buyer--these would be conditions that can't be cleared off by the seller by closing. They could be conditions that don't prevent conveying title--say, easements, or matters discovered through a survey--but could nevertheless impair or destroy the ability of the property to be developed as the buyer wants to do.
The contract would spell out timeframes for the buyer to obtain a title report, provide the seller with a copy, and advise the seller of title conditions that the buyer found objectionable. The seller would then have a stated period of time to "cure" or eliminate the problems. The contract would provide what happens if the seller can't cure--eg, the buyer having the right to terminate the deal.
If the contract, however, didn't have the above provisions, and just required the seller to convey good, marketable title, the buyer could be required to take title that's free and clear of liens and is marketable, but that might have conditions that are otherwise objectionable to the buyer.
Nancy and Littlehunter are right. Littlehunter, you are correct that a title objection (letter) could indeed void a sales contract, IF the seller cannot cure the issues the buyer outlines in the objection letter. Stating that objection letters are for clouded titles is not 100% accurate, as Nancy has pointed out. It could be that the title is good and marketable, but you as the buyer may have discovered previously undisclosed easements, etc. that negatively impact your ability to use that property. One example I was involved in recently was a property where a "developer" began developing a piece of property. He basically messed it all up and spent a lot of money in the process (got detention pond and sanitary sewer in the ground but no paving). He needed out so we signed up a contract. He built his detention pond earlier in the game and then for what ever reason that still eludes us, he subsequently subdivided off a small parcel, leaving only 2' betwen the face of the pond wall and the new property line. He failed to note that the city requires a minimum 10' maintanence easement around all said structures and he had committed the other tract to someone else. Poof...he could not meet the conditions he obligated himself to with us...objection letter went out and we ended up cancelling the deal b/c of that and various other reasons. This is why the permitted exceptions in my sales contracts will vary a good deal, depending on whether I am representing the seller as an agent or purchasing for myself as a buyer. The fewer permitted exceptions stipulated in a contract the better for the buyer. The more permitted exceptions is better for the seller.
Ok, so this leads us to a NEW test question on the issue of title....
What are "permitted exceptions"?? What do they relate to?
Why are they potentially important?
If you want to get a quick general idea of what permitted exceptions a property will need, how can you potentially verify this without hiring an attorney???
[ Edited by woodsong on Date 05/24/2004 ]
"What are "permitted exceptions"?? What do they relate to?
Why are they potentially important?
If you want to get a quick general idea of what permitted exceptions a property will need, how can you potentially verify this without hiring an attorney??? "
OK i'm gonna take a stab at this one too.
My guess is that pemitted exceptions are things like easements for the use of public utilities,roads and highways, drainage ditches, ect. . The P+S aggreement will have spelled out which of these items are permittable. If they are not included in the P+S agreement then the buyer can use a "nonpermited exception" as an out. So, obviously the less permitted exceptions there are in the P+S agreement the better for the buyer because it gives him more ways out., and vice versa for the seller(more is better).
I'm not sure of the answer to the last part of the question. I would guess that a trip to the local town offices and talking to the guys in the planning office would answer many of those questions. My town has a a awesome GIS system where i can go online and get all that info easily, but I have found many towns don't have the computerized GIS with all the overlays.
[ Edited by LittleHunter on Date 05/25/2004 ][ Edited by LittleHunter on Date 05/25/2004 ]
Littlehunter,
A great first stab at this question. Since you are replying and no one else is I think we will give you an A!
You are more or less correct on what permitted exceptions are. The typical or standard permitted exceptions are usually: 1) zoning, 2) general utility, drainage, and sewer easements, 3) subdivison or condo covenants and restrictions (if any..not typcially an issue on land deals as developer creates those covenants), and 4) any leases on the property. This could include anything from hunting leases to rental homes.
In a nutshell, the permitted exceptions are the conditions and issues that a title insurance company will NOT insure a property. While your idea of going to the planning and zoning office to find out what the permitted exceptions is a step in the right direction, that actually will not get you what you need to know. Planning and zoning departments don't keep records on private easements, power line easements, fiber optic easements, etc. etc. The best way to quickly and easily find out what encumberances are likely to impact a piece of property is to ask the owner/seller for a copy of Schedule B of their title insurance policy. This will list all the known permitted exceptions at the time of the issuance of the title policy. I often deal with properties that have been in families for generations and they typically do not have a recent title policy so this sometimes works, sometimes does not. It is always worth asking the seller though if they have title insurance and if so to get a copy of their schedule B. The title exceptions are always shown in Schedule B.
Ok...I have more test questions up my sleeve but who wants to throw another one out on the table next???
Woodsong and NancyChadwick thanks for the efforts made to help us new and prospective real estate entrepreneurs out. I've enjoyed the postings and test questions thoroughly.
I am currently in the early period of the SFR redevelopment stage of my RE investment career but look to move into the developer/builder stage within the next few years. For those who are looking for research material and resources, the Urban Land Institute has development/construction, finance, and etc. courses that can be taken to educate yourselves from a theoretical/application/classroom standpoint. I have not personally taken these classes but have read books authored by the ULI. The reading were informative and I'm sure the courses will be also. I have in my goals to attend a few of these classes soon and to continue reading/researching and learning through my redevelopment efforts. Also the local university libraries should have resources that could assist you. I think initially I will joint venture with a more experienced developer/builder and then branch out on my own on projects. My investment method is to research and know as much about the process as possible. I treat every project as if its my first and apply lessons learned to every new deal.
Best of Luck to all new entrepreneurs and Woodsong and NancyC. keep the post/questions coming.
K. Blue
Nancy and Woodsong,
Sorry I didn't follow up on my earlier post. I would be glad to ask a test question. I will ask a question about the process I just endured.
Here's the scenario:
You've found a property consisting of 25 acres and it seems to be listed at a fair price. You have grand dreams of subdividing this land into a multi-million dollar subdivision of .5 acre lots.
1. Whom would you contact to see if your vision is within the ordinances of the county?
2. If your plan is not allowable as the ordinances exist, what can you do to change this?
3. What government will you deal with to get this done?
4. Will it be a slam dunk, or can you meet with resistance?
5. How long will the process take?
Nancy and Woodsong,
Sorry I didn't follow up on my earlier post. I would be glad to ask a test question. I will ask a question about the process I just endured.
Here's the scenario:
You've found a property consisting of 25 acres and it seems to be listed at a fair price. You have grand dreams of subdividing this land into a multi-million dollar subdivision of .5 acre lots.
1. Whom would you contact to see if your vision is within the ordinances of the county?
2. If your plan is not allowable as the ordinances exist, what can you do to change this?
3. What government will you deal with to get this done?
4. Will it be a slam dunk, or can you meet with resistance?
5. How long will the process take?
hello, to just follow up on pspiers advice. please do yourself a favor and dont just "jump in" and "learn how to swim". I am not a developer at all but I did plan on buying a lot and having a house built. long story short I am about 35k over costs because I "jumped in" and "learned how to swim". talk to many many people in the business. find a mentor if possible. follow some developer around for a while. call your dept of community development and have them tell you everything they know. if you use an agent get one that specializes in raw land. be careful of the advice you get on this website, county rules and regulations differ with county, what may be standard with yours may be unthinkable in another. due to my experience I have learned to swim, in fact I can swim very well now. but 35k is a lot to pay for a lesson. good luck, get educated, and be smart.
millionby30,
Good questions. Here are my thoughts on them:
1. I would first determine what uses, lot sizes, etc. are permitted by the current zoning. After looking at the zoning ordinance and zoning map, I would look at the municipality's comprehensive or master plan to see how the property fits with the present and future land uses identified by the municipality.
2-5. If the property isn't currently zoned for half-AC singles, then you'd have to get the zoning classification changed for the property. How difficult is this? Depends on many factors, including how "disparate" current zoning is compared with your desired zoning. Each state's land use regulation laws are different. Here in PA, municipalities are not required to even respond to a petition for rezoning. They don't have to rezone unless a court orders them to do it. So much depends on how your intended use fits in with the municipality's land use planning, political & economic "agendas."
If you contemplate seeking a rezoning, first, I REPEAT, first hire a real real estate attorney who is well connected in the community and knows the players. Seek his/her advice on feasibility of zoning change. Even if municipal governing body decides to entertain the rezoning petition, there will be public hearings, notices to adjoining properties, and this can go on for months.
Slam dunk it is not--at least based on every rezoning I've been involved in in my experience as a broker and also as land acq director for a building & developing organization. It ain't over until the municipal gavel hits the table and the resolution adopted by the board.
Which government depends on your state's laws. Here we have townships & boroughs and they have the power. In some states, this is done at the county level. Your attorney can advise you.
Finally, whenever you make an offer on a property requiring rezoning, make sure your attorney includes adequate contingencies in the contract so you're not stuck buying the property if you can't get the zoning change and development scenario you want.
Nancy[ Edited by NancyChadwick on Date 05/26/2004 ]
Great questions Millionby30. Rezonings are not a slam dunk!
Nancy, while you are correct that most people use attorneys to handle their rezoning, I personally have historically handled my own. I have found that a lot of the rezonings are about negotiating and since an attorney doesn't know what numbers will work and what conditions will or will not work, I tend to like to be there face to face with the council, etc. I usually meet with every council member face to face and one on one (or two on one) and talk to them about what I am proposing. So far, knock on wood, I have not lost a rezoning yet. Granted, I've backed out of a few after it became very clear upfront that my vision and the council's/community's vision were not in alignment and there was no point in spending more money!
Also, at least where i do development, rezonings are finally and conclusively set in stone not at the time the gavel goes down in the council chambers but actually occurs 30 days after that event. Around here there is a 30 day appeal period whereby someone could dispute the rezoning and bring it to the courts.
Nancy...have you got another test question?? If not I have some more. :-D
woodsong,
Yes, I agree, the zoning has to be final and unappealable. Guess I was speaking more metaphorically on that point.
Go ahead with your next question. My mind is a bit like mush right now. LOL.
Nancy
dlitedan,
"Education in any form is expensive." I for one learn best by doing. My biggest successes have come after my biggest failures. I hate to fail! But when I do I get back up, learn from my mistakes and make it work.
I suppect that if you build another house, you will not make the same mistakes. And if you build another and another that you will get realy good at building houses.
My advice for a beginner still stands, JUMP IN!
Nancy and Woodsong,
I wanted to ask these questions because I wanted others to be aware of the process and that no, it is not a slam-dunk. I can relay a recent personal experience:
I recently applied to a local county for approval of a subdivision. The subdivision did not require rezoning, just approval by the county's planning commission and the the county's board of supervisors. The same engineering firm that is handling my project was also representing another landowner, who was applying for a subdivision as well. In his case, he had a 75 acre parcel. The current zoning allowed him to subdivide into 2 acre parcels. Rather than do this, he wanted to do a "cluster development", whereby less than 30 acres would be developed, and the other 45 acres left as open space and closed to further development. His project passed the planning commission with flying colors, which consisted of 2 meetings 1 month apart. He was applauded for his efforts. I on the other hand, was told there were some concerns with my project and that the county would like to see shared entrances to the lots, as opposed to indivdual driveways. When we went to the board of supervisors meeting, which is the final step, his project was met with huge opposition by adjoining landowners who were extremely rude and emotional. His project was well in compliance with the ordinances dictated by the county, but because of the strong reaction of the neighbors, his project was delayed two months. My project was approved in less than 2 minutes before the board. I left the meeting a little baffled at how his project had turned from wine into water, and mine had passed with no problems. If my project had been delayed two months, I may have lost a great deal of money. This is a good example of the process.
millionby30,
Thank you for sharing your experience. The subdivision approval process could easily be called "Ripley's Believe It Or Not." Unfortunately, members of municipal governing bodies are elected officials serving without compensation and often have no special qualifications for the job.
It's likely that at least some of the planning commission members do have land planning or development credentials. If the governing body and the planning commission hate each other, the result can be much like what you related. The PC likes a plan so the governing body nixes it. The PC wants changes made or further review so the elected officials approve it fast. I have seen two members of the governing body almost start throwing punches at each other in the middle of a public meeting. Then there was the story of another member pulling out a gun and putting it to the head of a colleague.
Those who want to subdivide property need to do their homework--not just on the property, but on the municipal players. This is why I recommend people hiring a RE attorney who's well acquainted with the local powers-that-be.
Glad you got your project approved. I'm sure it was invaluable experience for you.
Since my reply here is lengthy, I will throw out another test question in a separate post.
Nancy
OK folks, the subject is: you want to put togetherr a basic due diligence checklist for a parcel of land you're thinking of buying.
Now each property will be different and you may need to know things about one property that don't apply to another property. But there are items that usually need to be checked out on every property.
Here's the kicker: when you post an item for the DD checklist, also include possible sources or ways of getting the information and why you think it would be important to have the info.
I'll start off -- let's get a really good list together and I hope "lots" of people will post their replies. Even if you think an item might be unusual--not a common thing--post it anyway. The object is to take a "shotgun" type approach.
1. Current zoning of the property and that of its immediate surroundings (current municipal zoning ordinance and zoning map). Permitted uses, min. lot size, min. lot width, setback requirements, min. frontage, flaglot provisions, general provisions that apply to all zoning classifications. This info will tell you what you can do with the property without rezoning, give you clues to possible site yield, horizontal improvement costs, etc.
2. Pending residential & non-residential developments, highways, facilities, etc. (municipal personnel and records of properties that are in the development or subdivision approval process, municipal master plan). Pending developments can impact the value of the property--either up or down. Would the development be a "noxious neighbor" like a manufacturing plant or proposed highway? Would it be a value enhancing neighbor, like permanent open space?
3. Properties owned by municipal officials (names of gov. body, committee members, PC members obtained through municipal website and/or newsletters, mun. personnel; ID properties through tax assessor databases). Municipal officlals may be opposed to any development near their properties. You can be better prepared to deal with and overcome their opposition if you know going into it that they may have a personal or "hidden" agenda.
OK, now it's your turn. Post away!
Nancy
Hi all, Sorry to drop out of the thread for a day- yesterday I was busy and away from the computer. Nancy, your item #3 above made me laugh. A couple years ago I probably would not have given that a lot of though...until I had a property under contract next door to a city council member! Let's just say i saw the writing on the wall quickly on that one, thank goodness.
To continue the list.....
4) Check local mapping of GIS department to see if they have any topography and/or aerial maps available. Around here they usually only have 5' contours but they still help get a conceptual plan together.
5) Confirm water line size available at street and talk with Fire Marshall to see if they have performed any recent fireflow tests on that line (see previous posts in this thread for fireflow discussions). Confirm which side of the street said water line is located on (if on other side from your property you will more than likely have to bore under the road as most places don't let you do open saw cuts anymore).
6) Confirm sewer locations and invert elevations (see previous posts in this thread). Confirm line sizes as well.
7) If project requires any public meetings take the time to personally write to all the surrounding neighbors, explain your proposed project, etc. and encourage them to contact you to discuss any comments, concerns, or questions. Usually they will not take the time to call but will instead show up the night of the first public meeting en mass w/ petitions against the project, etc. At least when this happens you can tell the governing board that you are disappointed they never contacted you b/c you wrote them all letters.
ok...someone post some more.......
I would have to add:
1-Not only checking aerials and topos but, initially more importantly, checking for floodplain and wetland areas on the property.
2-Zoning ordinance is important but the overall (say 2020) land use plan for the area is also important. Zoning will give the min lot sizes, etc but the LUP will typically give you a better idea of the overall "density" allowed on subject parcel.
3-Ideally new subs hook up to existing sewer, water, etc. However, in areas where POWTS are allowed soil samples will be needed. I don't know about other areas but here I can actually look at a "soil survey" which gives me a good idea of the soil types on a parcel. The county I used to work for actually required soil boring test results to accompany the conceptual "plat".
Just off the top of my head.
Oh yeah,
As soon as you contact someone regarding a parcel you would like to subdivide...
Ask them for an existing survey of the property.
If they have one they usually don't have a problem giving you a copy.
Make sure it is to scale so you can utilize it.
dheckel,
You're right about the master plan. I should have expanded my #2 to include reviewing the comp plan to get a feel for what the municipaltiy sees as the "highest and best" use for the property from a land planning point of view.
Let's have some more DD checklist items.
Nancy
I forgot, as Nancy suggested, to list "where" to get some information relative to the DD checklist...
General rule of thumb here in Wisconsin and I believe for most east of the Mississippi....
If your project is located in an "incorporated" area (i.e. a village or city) then that particular municipality will have jurisdiction relative to zoning and land use matters
If your project is loacted in an "unincorporated" area (i.e. a town) then it is most likely the County which that town is located in has jurisdicition relative to zoning and land use matters.
There are exception especially when we talk about shoreland and floodland areas....but I won't open that can of worms just yet.
In addition to the current zoning of the surrounding properties, check out how the properties are being used (visual inspection, mun. files).
Also, when you're scoping out the immediate surroundings, be on the look out for "noxious neighbors"--existing uses and facilities like power lines, sewage treatment plants, quarries that can negatively affect property values.
Issues relating to title--who owns the property, does it have some sort of special assessment (like under a clean and green program) where subdivision might trigger liability for payment of "rollback" taxes and penalties, easements, deed restrictions, other types of restrictive covenants, etc (tax assessor database, county courthouse, title company). Copy of the deed and any documents referred to in the deed (courthouse, title company).
If the owner doesn't have a survey to give you, then you'll want to get a copy of the tax plat or tax map from the municipality. This will give you an idea of the dimensions, shape, frontage and if the property's land area is all contiguous (as opposed to being separated by a road).
OK, who's next?
In addition to the current zoning of the surrounding properties, check out how the properties are being used (visual inspection, mun. files).
Also, when you're scoping out the immediate surroundings, be on the look out for "noxious neighbors"--existing uses and facilities like power lines, sewage treatment plants, quarries that can negatively affect property values.
Issues relating to title--who owns the property, does it have some sort of special assessment (like under a clean and green program) where subdivision might trigger liability for payment of "rollback" taxes and penalties, easements, deed restrictions, other types of restrictive covenants, etc (tax assessor database, county courthouse, title company). Copy of the deed and any documents referred to in the deed (courthouse, title company).
If the owner doesn't have a survey to give you, then you'll want to get a copy of the tax plat or tax map from the municipality. This will give you an idea of the dimensions, shape, frontage and if the property's land area is all contiguous (as opposed to being separated by a road).
OK, who's next?
I know things were very quiet over the holiday weekend.
So does anyone out there want to add to this due diligence checklist?
If not, does somebody have a question they'd like to ask--doesn't have to be a "test" question. Just a plain old regular type of question. Do I hear a yes somewhere?
Nancy
here all the infrastructure has to be done by a license civil engr. Enver silly things like curbs.
Most bigger cities have their zoning code on line, and you can start reading the terminology.
cjmazur,
Not sure I follow you. Are you saying that in your area, civil engineers have to do all the design work--or are you saying they have to be involved in the actual installation of the improvements?
This is a great thread, very informative for me as rehabbing is an area that I'm looking into with developing further down the line after I've gained some experience and knowledge at rehabs. I wish I had noticed this a couple of weeks ago before it got so large and I'm glad someone reposted so it would show up as the last 10 replied to.
I have a question I hope no one has already answered here (wanted to post so I could save it on my list of recent posts and finish reading some of these earlier pages) about rehabs. What is a similarly expensive area (to sewer lines for development) to look out for that can be overlooked or originally estimated less till the actual rehab takes place? What area would you recommend to rehab first when going about a major renovation (whether or not its including foundation work)?
QuietStorm,
Hopefully, there are some rehabbers reading this thread who can address your question. Most of the posts on this topic have been in the context of new construction, subdividing and developing.
Come on you all....you gonna let this thread die??? I would have loved to read some of this stuff when I first started!
I will add some more due dilligence items:
1) As already somewhat mentioned, if public sewer is not available, a soil test acceptable to your county will be required pronto. No point in getting head long into everything if the soils are bad.
2) Verify if any building, development, or sewer moratoria are in place that would delay construction.
3) Get utility availability letters from ALL utility companies...gas, water, sewer, power, phone, cable. Lenders usually require these items at financing and they are good things for you to have to make sure you have not overlooked something major.
4) Get a zoning confirmation letter in writing! While checking the zoning maps online, etc. is a good first step, trust me...you NEED to get this bit of information on official letterhead and in writing. I have done deals where the maps were wrong and it has had a big impact on development plans. Get the zoning in writing!!! Always, always, always, always, always, always (did I say always??) get a zoning confirmation letter prior to closing...and i mean ALWAYS.
No dying yet!
Have we mentioned a Perc Test, to make sure there is water soak-away-ability--the land "percs".
It can go either way on some of that high desert, former volcano land, such as in Show Low, Arizona, which happens to be a nice, developing location in our great U.S.
And OLD POOLS. Yeah, they're a mess. Have fun taking turns with a sledge hammer and get rid of the major pieces. Plant over it and the water will not "pool", which is a good thing, to prevent wild mushrooms from sprouting up.
Alan
Quote:
On 2004-06-03 02:20, fearnsa wrote:
And OLD POOLS. Yeah, they're a mess. Have fun taking turns with a sledge hammer and get rid of the major pieces. Plant over it and the water will not "pool", which is a good thing, to prevent wild mushrooms from sprouting up.
Alan,
Not sure I understand this about not pooling and the mushrooms. Could you explain a little for me?
woodsong,
Excellent point about getting it in writing, always, always, always. Also, what I do when doing due diligence is keep notes of phone conversations with people (whether connected with the municipality or not) who supplied info, insight on specific issues and stick them in the file. "Telcon X date with Y person re: Z."
Nancy
Well to add to your due diligence checklist: you want to check prior uses. Even apparently enviornmentaly clean uses like farms can have serious issues. Friend did a subdivision of an old apple farm once that had a barn full of DDT spills from the days when it was a commonly used insecticide. More urban areas also have the potential for underground tanks, etc. I looked at a building once which 50 or 60 years ago had been a feather factory. They took feathers and "fluffed" them to make down. Unfortunately what keeps feathers from fluffing is oil. To remove the oil they had dumped these feathers in a big pit and poured solvents through them. The solvents just soaked into the ground. 35 feet down the polution plume was still getting bigger. I took a pass but somebody else bought that site.
Relative to the renovation questions you want to make sure that you can change uses or number of units and to what. Here in Chicago, for example, we have a law that if you add even one apartment you must come up to code on the Parking ordinance which requires a parking space for every unit in the building. So a 20 unit which previously had only street parking and where you decide to add a single unit in the basement is now required to have 21 private parking spaces. Occasionally this makes otherwise viable projects not work.
In the commercial biz the other concerns include things like zoning. For Example I'm doing an industial condo conversion project now which I am buying from a seriously motivated seller who bought the building thinking he would move his auto body shop into it. But the Chicago zoning ordinance is very pecular regarding body shops and you cannot put a body shop in an industrial zoning. He could put in a steel foundry but not a body shop.
Water retention and run-off provisions are another area you want to check.
I'm glad to hear that other people have "political" problems. A great deal of anguish can be avoided if you can find out who the power brokers in an area are and find out what is going to comport with "local sentiment" (read-- how some politican feels).
commercialking,
Thank you for your great points. I never would have seen a red flag with a feather factory use.
While we're talking about prior uses, let me add something along the same lines. You'll want to find out if the property has gone through subdivision (or is currently going through subdivision). I once came upon a property being marketed by somebody else as one having development potential, and the listing agent happened to mention that it had gone through a 2-parcel subdivision in the past. The property was owned by an estate. So I took myself off to the township and asked to see the file on the property. There on the subdivision plan for the 2-parcel subdivision was a Note stating that no further subdivision of the larger parcel would be permitted. I did some checking around and found out that there was some sort of family feud going on and the executor/sibling decided to "stick it" to the other siblings by agreeing to the restrictive covenant.
Conditions of subdivision and other municipal approval are often listed right on the plans as well as being in the municipal file on the property. A typical plan "Note" relates to maintenance responsibilities of the owner of the lot where the detention basin is located.
So make sure you check with the municipality, look at the file and any plans they have on the property. The file also contains copies of "review letters". These are done by the municipal engineer and other officials/agencies charged with reviewing, commentin on and approving aspects of the plan--state dept of transportation, environmental agency, mun. sewer & water authority, etc.
This varies by individual state law, but land development and subdivision approval has a certain "life". In other words, once a property receives approval, that approval expires after some period of time unless an extension is obtained or other action is taken. So you'll want to verify the "remaining life" of any of the permits and approvals issued.
ok. so you are trying to pave your site. You hire a paving company and your grading contractor tells you he has got the site ready for paving. You have the forman of the paving company come over to see the job. He wants to know the following things:
1) have you proof rolled the subgrade? What on earth is he talking about? what is this and how is it done?
2) he asks if you want to lime or soil cement? why do you need this, when would you need it, and what does it do?
woodsong,
You started my day off with a laugh! Thanks.
I will sit tight and wait for some others to respond first to the current question "on the table."
Nancy
great post cmkoenig! Welcome to TCI. I agree with your comments 100%.
I spent most of the day Friday in the Planning and Zoning office and Economic Development office of a local town where development has really increased the past few years. I gained some extremely valuable information. The head of Economic Development gave me a recent marketing survey that the town had done. The information included what businesses were currently available, their market share, and what businesses the town needed and the potential market share for those businesses. By meeting with the director of Planning and Zoning, I was able to receive valuable insight as to where the town was heading as far as development, and even received a few leads on properties that were "hotspots" and could be developed. I also made valuable contacts and I think the "face time" will be priceless should I attempt to develop properties in this town. I would highly recommend meeting with these people where you are and asking some questions. These people are public servants and they should make time to meet with you. I think you will find that they WANT development and will be very cooperative in assisting you. I only wish I had done this sooner!
Thanks,
Brad
This is really great guys! I have learned quite a bit.
Thanks,
Gil
bluemele,
Glad you found it helpful. Quite a number of posts in this topic. Poor gusrock must have been bombarded with email notices of reply posts!
Nancy
Thanks woodsong. I have yet to find a specific definition for my slab question. I appreciate your comments. The question came up after discussing my needs with an engineer whom I was referred to. As it turns out he will not be working with us on this project. The engineer we will use has met all of our needs so far and is awaiting the plans from our design firm so that he can properly figure the loads.
Here in N. Texas the soils are predominantly expansive clay. Countless foundation companies make a good living in our area.
Thanks for your response and advice.
A+!
You should be asking the questions with an accurate and thorough answer such as that! Very good.
Around here we do the mandrel, TV, and pressure test the lines. All three typically have to be done to get approval for the sanitary sewer.
Next question:
An inspector comes on your site and asks to see the results of the standard proctor. What he is he refering to, does such a thing exist? If it does exist, what is it used for/what does it tell you and lastly, what on earth is he probably looking at/concerned about to ask you such a thing???
You got me on this one.
I believe it has something to do with the compaction rating of the subgrade for roads.
good ones Nancy!
did everyone wimp out??
Nancy, you have evidently stumped the masses of TCI!
What a great thread! I am sorry that it took me so long to read it all.
The DD checklist is very helpful, as that is the phase that I am in currently with my development. We did run into some wetlands issues but were able to salvage the project.
Both woodsong and NancyChadwick: I see another money maker is your future, write a book! I have spent days and days at book stores trying to find some gold between the pages of development books; the problem is that I could never find any development books. Many builders have told me that the highest margins are found in development, but there is no text on the subject.
If you wrote a book, I would buy it. And after you write it then you could make $$ as consultants in which you advertised through your books.
Just a thought.
Wes
It is my understanding that the goal of a Developer is to develop property in any form. Therefore if a Developer were to take any action to restrict development, then they would be working against their primary goal as a Developer.
woodsong,
Do you want to throw another question out here or add anything on the issue of restrictive covenants?
Nancy
Sorry for my absense- I have been absolutely slammed with work the last couple of days/week!
Here is a new question:
Your civil engineer calls you and tells you the prelimiary site layout he has been working on and he tells you that you have 25,000 cubic yards of cut and fill on the 50 acre site and your street grades are at 15%.
Does this sound good or bad? Why?
I just wanted to mention that there are many books on development; however, they can be difficult to understand on your own. The Urban Land Institute (ULI) has a bunch through their bookstore.
They, as well as some universities, also offer coursework for beginning developers.
correct for the error but not so much correct for the reason it is not good. Anyone want to take a further guess as to what the problem is? I will post more later tonight when I have time....
Great thread. Thanks to all who have given input on this thread, and thanks to Ricker for turning me on to this site throught the FS Forum. The answer to the last question is burying the underlayment of organic materials. Any organic materials need to be completely removed prior to fill placement. Her in Fl in a cow pasture can be anywhere from 6" to 12" or more
exactly. top soil has to be stripped back to prevent undermining the new structural fill. Not doing this is like building a house on top of a sponge and expecting it to remain stable.
that there is what you call a good question!
Who wants to take a stab at it?
how can you all let a great question like that go un-answered??
Ok,
Here is a new question....pretty basic one too.
You are working on a site plan with your engineer. He calls you up one afternoon and tells you lots #23-29 will need a retaining wall behind them. He asks if you want to do a geoggrid or something else and wants to know which you want him to show on the plans. What is a geogrid wall, what do they look like, how are they constructed, how are the different from the typical wall?
Good question, I like the technical ones.
A quick search reveals that a geogrid wall is a trade name for a wall system that uses an interlocking concrete block system. There website has a pretty good slide slow on the installation process.
Woodsong, how does this system compare with a conventionally constructed retaining wall in price, performance, etc?
just bumping this thread up to the top for some of the new folks to the forums to read. There are a ton of answers to some of the basic development questions in this thread- enjoy.
Quote:
On 2005-12-02 19:21, vikingchild wrote:
Woodsong
Thanks for bumping this thread. This is one of the most interesting threads I have read in a while. It reads like a novel. I cant "close" it down. Hehe.
This may be the most read thread on this site.
Glad you found it worthwhile to read!
[ Edited by GFous on Date 06/03/2006 ]
Well, Christmas IS coming up...maybe the $1m will be waiting in the stocking over the mantle??
Honestly, our company is big enough to where we just use our reserves. If we wanted to go another route though, we get a private investor on board to handle it and cash him out ASAP.
Would love to hear what creative method you are using for the $1m. One of our current projects is a $75-85m build out....prelim costs tend to add up. We pay out of pocket until closing the land/ A&D, and then pay everything off the A&D. Residential units we just do off lines of credit, and then do separate finacing for the vert. commercial structures...
I was hoping for some suggestions from our associates. I do have some other methods but lets see if anybody else has some ideas.
Well, for professional services, I might try finding service providers willing to not get paid until I do. For any hard costs, I might consider some private equity. Sounds like there is enough meat on the bone for a few outsiders, if necessary.
Wow! What an education!
I am waiting for more?
Rick
Anyone else want to try???
btw, good answer on the porous asphalt. There are quite a few other methods that could be used.
Nancy,
You said that sellers do not need to sell to a builder that cannot finance the deal themselves in this market. I disagree. In this market sellers are having trouble finding something to do with their money. I have had no problem getting seller involvement.
The market is appreciating so much that (some)sellers are pleased to be offered a chance not only to sell their property, but to continue to participate in its appreciation by taking a piece of the deal.
(By the way, I have to kiss alot of frogs.)
I love purchasing a piece of prime property and having my friends in the business ask how I did it...I make alot of offers, and I make logical, good sense presentations. And in this market I pay top dollar for prime real estate.
Someone today asked me if I knew the difference between a dreamer and a visionary.
A visionary has money.
Gregg
[ Edited by GFous on Date 01/11/2006 ]
You are both on the mark. You are correct that the most important thing is how the city/county interprets height.
In our case, we were able to get in an extra floor by convincing them that the height of the building should be measured as the median height - as measure from the peak to the eaves.
We applied this to a multi story building design and brought the "eaves" to be below the top floor. Hard to descibe in words, but in effect we brought the lower limit of the "roof" down in order to bring the median down. Hence the height.
This of course will not always work - it depends on how they interpret the code.
Where do we put the ruler on the ground; and where we put it on the top....thanks....
G>
[ Edited by GFous on Date 01/12/2006 ]
In our metro area, there was approx. 140k population in the mid 90’s. Currently this is reaching 200-240k. A decade ago, many people that could afford the move and had ‘the need’ would actually move a couple miles out of town and put up a small horse ranch. Now these are the same areas that are being developed, the city leaves these areas zoned as agricultural unless the “ranch” designation is removed. My connections are allowing me and 2 partners the chance to buy several of these for development. Our margins on paper are seeming unusually high even after horizontal development. What could be the catches involved or what could we be missing.
The only one that comes to my mind is the city annexing the land as soon as we develop and throwing in specials…which in our area are 18-30k on a .5 acre lot. But don’t these costs get passed on to the ‘future residents’.
I am researching and learning as fast as possible but my current position/career is limiting me….Please assist???
Quote:
On 2006-01-13 12:24, woodsong wrote:
well we may need to give the general population of these forums a D- for lack of effort!!
<IMG SRC="images/forum/smilies/icon_biggrin.gif">
woodsong,
Perhaps you could start the ball rolling with one of your cogent answers and then that might get the populace going.
Nancy
well, the only thing is that would require me to know what the heck cogent means!!!
I have met many agents that would lead one to believe no matter how many of them you piled together, they still would not equal cogent!!!
Thanks very much for your input. This deal was happening around me the last week or so.
Well, in this case I am indeed the buyer. I opted for no closing until lots are delivered ready to go, not 15 days after D.O.
I am going hard with a substantial amount in 60 days and closing when lots are done. In this case it will be around 18 months. ( a DRI issue) This gives me 18 months to design the building put the collateral material together and presell office condos before closing on the property.
I am thinking of your idea of a fee based deal, another way to work that would be to hold a reserve out in escrow for the horizontal work.
Now if I was the seller, I would stay in the deals with the buyers ( I am talking about if I was the seller of the remaining lots).
I always like to defer and convert - defer income to a later period and convert it to capital gains treatment. I could also lease the lots instead of selling.
Thanks for your input.
My plans for the corner are to build 100,000sf of office condos - and I will presell them. I did a preliminary site plan while negotiating the deal . My first site plan had two 40,000sf buildings - but we figured if we made one 100,000sf one we could still get the right balance of parking ( 1 for every 250sf of building). This will be a four story building, "L" shaped at the corner with a corner feature like an arch or fountain.
BTW, I dont have to come up with the earnest money for more 60 days, I will let you know how I do that......
Gregg
ermauch,
It is not unusual for a developer in this area to put in a private STP and then remove it once the community can hook up to the city system. Mechanically not difficult - politically you normally will required to hook up - if the capacity is there. I know of a developer that has moved his sewage treatmant plant three times to three different communities. There are some very inexpensive and compact systems now. For the right sized community the systmes are as inexpensive as septic.
Quote:
On 2006-01-17 23:53, GFous wrote:
ermauch,
It is not unusual for a developer in this area to put in a private STP and then remove it once the community can hook up to the city system. Mechanically not difficult - politically you normally will required to hook up - if the capacity is there. I know of a developer that has moved his sewage treatmant plant three times to three different communities. There are some very inexpensive and compact systems now. For the right sized community the systmes are as inexpensive as septic.
GFous,
How large of a development could justify such a setup; also, do you know of some companies or websites I could research for this?
I do not have company that I can send you to.
I did the math for a 105 unit community and we were happy with the results.Sometimes it is a question of timing. The STP will let you develop sooner.
There were many exhibits at the recent Orlando builders show.[ Edited by GFous on Date 01/28/2006 ]
An Update.
Estimated costs for an stp - 150 homes - $8000 a home, includes lift station at each home.
Sorry for chiming in out of the blue. I was viewing your posts about private community STPs and was also curious as to the cost and amount of units to justify one of these systems. The couple of sites I was thinking about are a 12 lot and an 18 lot. Any input?
Here are more questions:
I just found a 12 Acres lot for sale. It is zoned agriculture and the owner wants 12,000,000. The owner said I can change the zoning to commercial.
The lot has water, sewer, and electricity. There are road on two sides of the lots.
My questions are:
1. What is the best way to finance the deal? If I bring in investors, how do I structure the deal?
2. What contingencies should I include in the purchase contract?
3. Can I lock up the lot and try to sell half of it, then do simultaneous closing?
4. Things I should be looking out for?
5. What would you do if this is your deal?
Regards,
Alex
This is so interesting I am bumping it back to the top...
Chris
Woodsong, I believe that Nancy may have placed here alliances with another similar site and may not be posting here any longer. You can find her on google.
A GREAT thread that should not be lost.
James, AKA stockpro, is an active member of the forum.
Which makes me wonder- are you interested in options, or promoting a book?
Chris