Hey Kids, brand new here except for similer post in “Commercial” forum. No one replied because I think they don’t believe it, but I need some serious advice.
I’ve only been in this business as a bird dog for a couple of months, generating a buyers list and researching residential properties. One of those investors contacted me with a land deal to see if I might find a buyer. Well I think I DO have one but I want to present this to him intelligently and establish good credibility from the start. I’m trying not to be intimidated by the #'s, but obviously I need to know what’s left to ask the first investor so I can have solid info for the second investor.
180 undeveloped acres
EXP. APPRAISED. VALUE: $24,000,000
INVESTMENT: $2,000,000 to be cashed out in 1 yr. @ 15%
Original investor backed out last minute
Original lender wanted a 3rd environmental study
New lender will except 2 completed environmental studies
Plans for development (particulars unknown to me)
I don’t know if there are any roads leading into this property or not. There’s much more information I need to give to this other investor. What would that information be? I’m posting this here because essentially this is a bird dog position I’m in, and out of all the 29 people that read my other post, no one responded. This is a real and serious situation with not a lot of time. I sure would appreciate any advice or suggestions ANYONE can offer.
You know the old saying…“Better to LOOK the fool, than to open one’s mouth and remove all doubt”! I’m trying to avoid that. Thanks in advance.
If I was the other investor and you presented this deal to me the first thing I would ask is
“What is my money going to be used for?”
You weren’t very clear but I gather the initial investment is for purchasing the land. What’s going to happen after that? Is the first investor going to subdivide, re-zone ect or hope for appreciation? The typical rule of thumb for appreciation on land is you have to hold if for 10 years to make a profit.
The reason these question sare so important is because the investor is going to want to know how he is going to be paid back. 15% interest is great but it doesn’t mean anything unless he’s actually going to get it.
For example if your first investor is going to turn the land into town homes that’s a huge process, you can just show up one day and start building roads and laying utilities. It takes months and sometimes years for towns or cities to approve plans so you’re going to have to demonstrate that the second investor will be paid back plus his interest.