Real Estate Investing Adventures

Meeting with the Bank

From our previous post on this development you will recall that we just found out we couldn’t build the building we wanted and keep it close to our 3,200 SF we had in our initial financial model. We decided that the first step in figuring out whether to build the bigger building or drastically change our initial concept was to see if we could get additional funding. If the bank wouldn’t lend us additional funds, it made no sense investigating that option any further. We sure couldn’t afford to put $250,000 more of equity into the deal.

Our meeting with the bank was a tough and embarrassing discussion. We had originally presented a plan where funding of $1,250,000 would be sufficient. Now we were telling them that we needed significantly more money. We couldn’t tell them how much yet. We just wanted to know how much additional funding they would lend us. We couched it in a story that we thought the market might be right for a much larger and higher end home. However, before we investigated that option, we needed the bank to tell us if we could get the funding. Read the rest of this entry »

If you are as interested as me in all aspects of real estate, you should visit some of the real estate carnival hosts. These are sites that review numerous posts every week and publish the best in a specific topic. One of our posts was chosen as a standout. Here’s what was said about one of the posts here by the people at Hotpads.com with their post - http://daily.hotpads.com/hotpads_daily/2008/03/the-greatsfunny.html

Real Estate Financial Model- First Development
Terry offers some sound financial planning advice for those who are entering into a real estate investment or development project.  Terry shares first-hand experience and offers a model for others to follow.

There is a wealth of good, insightful information out there that people are sharing. It would be time well spent to review the best posts every week. You never stop learning.

Four Ways You Make Money 

Before you actually purchase that investment property you have had your eye on, you need to have a well thought out plan on exactly how you will make your money on that investment. I have seen a number of first time investors get so enamored over actually making their first deal, that they don’t take the time to put together a well thought out plan for their investment.

There are four ways you make money with investment real estate:

1. Cashflow
2. Appreciation
3. Equity Growth
4. Tax Benefits

Your investment plan should recognize these “pots” of profit and maximize them. Read the rest of this entry »

First Big Problem

When we received the conceptual design layouts, we knew we had a problem. They were all 4,500 SF or greater. If you remember from a previous post, our initial financial model had us developing a 3,200 SF home at $200.00/SF. The smallest conceptual design was 1,300 SF greater than our model. At $200.00/SF, this would be an increase in cost of $260,000. This was a major problem! Read the rest of this entry »

Choosing a Design or Construction Contract

When you are choosing a contract for your architect and contractor, you have a number of standard forms to choose from. The AGC (Associated General Contractors), AIA (American Institute of Architects), CMAA (Construction Management Association of America) and others have their standards. In addition, the firm you deal with may not use a standard form, but use one custom developed for them.

Frankly, all contracts are biased. Which way depends on the writer. The AIA documents are slanted towards the architectural community. The AGC documents are slanted towards the contracting community. However, the benefit to using these standard documents is that they have been reviewed by peers and are coordinated amongst the various documents.

Contract Review Checklist

Here’s a checklist I use when reviewing or modifying a contract: Read the rest of this entry »

Design Meeting Agenda

We actually had our design kick-off meeting at the site. We wanted to combine the kick-off meeting with a joint meeting with our contractor to “site” the house or decide where on the lot the house would be placed. It is important to do this right the first time so you don’t run into problems that cause either project delays or costly solutions that could have been easily solved in the beginning. In addition, this development required a tree survey be done of the property that showed what trees would actually have to be cut to accommodate your building, drive and site improvements. We needed to site the house to get our building layout approved and get the design actually started. Read the rest of this entry »