High-rise Condo
How would an investor approach the aquisition of land and the construction of a high-rise residential condo development? What are the first steps, buy land, hire an architect, etc..? What is the best approach to financing? How many units/acre? [ Edited by jfoley on Date 02/10/2004 ]
I haven't been involved with highrises but offer the following general res'l development suggestions. First you'll need to make sure that the current zoning of a property permits this type and intensity of development. If not, you'll have to go the rezoning route which can be very difficult. The number of units, most likely, will be dictated by the zoning provisions, or in the case of rezoning or writing a brand new zoning classification, the number of units (density) will be a highly negotiated thing. The development expense (site improvements) will depend on the municipal land development ordinance and the plan that you "negotiate" with the municipality. You will need a civil engineer and a real estate attorney. I have found that most developers submit offers with contingencies for a due diligence period, municipal approvals and as appropriate, minimum number of units.
There are a few diffences in high rise development and other multi family. The most glaring is that you MUST build the entire building. In other word, you cannot pre-sell a dozen homes and then start building.
There are three keys to any development:
The Land
The Market
The Product
For high density development, I would start witht the land. Get it under control while you confirm zoning, impact, number of stories allowed, etc.
Presales will be critical - so make sure your know your market and what product it demands.
Good luck
Gregg
[addsig]
Regarding financing. This is my favorite area with high rises.
You will need 20% of your A and D. The bank will loan you the rest with 50% presales. In Nevada and Florida, this is not only possible but probable.
You will need mezzanine financing. This because you will have to spend alot of the A and D before the bank starts lending ( While you are preselling)
Get a top notch marketing firm that HAS EXPERIENCE in preselling. Get them on board very early as they are critical to you financing success.
try reading
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&sid=493&mode=thread&order=0&thold=0
_________________
Gregg Fous
Investor/Developer
"Under-promise and over-deliver"
[ Edited by GFous on Date 02/17/2004 ][ Edited by GFous on Date 02/17/2004 ]
Highmoney asked in a PM:
"Could you elaborate on what you meant by 20% of A&D. Aquisition and Developement?? Also, What is mezzanine financing. Thanks for your help"
A and D = Cost of land, infa structure, engineering, architects, marketing costs, development fee etc - all but vertical costs.
Mezzanine financing - You will need to spend a great deal of the A and D money before you actually get the A and D loan. All your due dilignece engineering, you architect fees, etc. If you borrowed this, this would be mezzanine financing - - Fiinacing you get at the first level of your project before your project financing. The term is aprtly applied to venture capitalists and on this forum hard money lenders. If you have to borrow this money you may have to give away a part of the deal.
Hope this helps.
Gregg
[addsig]