Real Estate Development

If this appeals to you, please read on. This program has been worked as outlined and could work for you too.

What is more American than owning your own home? Each year millions of new homes are built and sold making developers and builders very wealthy people. There is something exciting about a new house. Buyers would much rather have a new house than and existing house, all things being equal.

Our program will show you how to find land to develop, how to get the financing to start your project, how to evaluate the parcel of land and project your profits and the number of houses and phases of your project. We show you how to approach the land owner with a deal they can't refuse and how to structure the deal so it costs you nothing. You can actually give the seller more than they are asking for the land and still make huge profits.

Once you find a parcel of land, about 30 to 50 acres is good, our software will quickly show you how many houses you can put on this land, how many phases you will need to build it in, what you will need for streets, playgrounds and other offsite improvements, what the house will cost you to build and what you would sell the house for to the home owner. We also show you what the new buyer will need to make to qualify for a new loan to purchase this home. Finally, we will show you how much profit is in the completed project.

Let me walk you through a deal. I found a parcel of land that was 55 acres and the seller was asking $150,000. The parcel was rectangular shaped I went out to see it and take some pictures. When I got back to my office, I opened my development software Excel program and went to work. Twenty minutes later I had the particulars of the deal printed out and ready to make an offer. My philosophy is to build houses for the median priced houses which has the most amount of buyers making the marketing of these houses as fast and easy as possible. In my case I was structuring the development around a $165,000 selling price per house. I selected a finished lot size of .33 acres and my software told me I could put 115 houses on this parcel, allowing 4,910 linear feet of streets and leaving out 7 acres for a mini-warehouse complex. Normally we would build about 30 to 40 houses per phase but in this case we reduced it to 15 houses per phase making the total project completed in 8 phases. To start the project our lender would lend 45% of the finished lot value for streets and other offsite improvements for the first phase. This would amount to $115,000 to get the first phase offsites started. The actual construction loan for the houses would be financed by the individual buyers so we wouldn't have to qualify for these construction loans. We withheld 12 months of interest payments in reserve on the initial offsite construction loan and needed about 3 house sales to pay off this initial draw. Total time for the first phase was about 9 months. We continue to roll profits into offsite improvements for ensuing phases until the project is completed. This deal was structured around paying the land seller twice the amount they originally had asked over the length of the project. After this payment to the seller the project showed a profit of $3,867,946. Please view a copy of the Excel spreadsheet data as it contains too much information to discuss each item individually.

The Excel program is marked in yellow where not to enter data as these cells are automatically calculated for you. There are also comments in the cells to explain what data is in the cell and how it was calculated. We have made this spreadsheet bullet proof and idiot proof so you can work fast and error free. Again, All yellow cells are automatically calculated for you and allow you to analyze a potential building site in minutes; SEE BELOW.

Housing Development Model
07/07/2005 10:32								07/07/2005
Price:		$ 150,000	Price/Acre:	$ 2,727		Location:	25 W & SR 28
Acres of Land:		55	2,395,800 [1]	1,548 [2]		Phone:	555-1212
Off Sites:	8.198%[3]	20.0%	Ac. Left Out:	7[4]		Name:	Sam Seller
Buildable Land Area SF:		1,672,704
Finished Lot Size In Acres:		0.333	14,505 [5]	85[6]	170[7]
Number of Lots:		115		Build Out
				Grading			$ 1,500
Cut Lot Price (Unfinished):		$ 1,301		Septic			$ 6,000
Off-Site Per Lot:		$ 12,000	$ 6,169 [8]	Well			$ 4,000
Total Finished Lot Cost:		$ 13,301	$ 7,470 [9]	Foundation	1,500	$ 3.50	$ 5,250
Retail Lot Price: Mark-Up		$ 33,252	150.0%	Structure SF	1,500	$ 48.00	$ 72,000	1st Story
Profit Per Lot:		$ 19,951	$ 25,782 [10]		-	$ 38.00	$ -	2nd Story
				Garage	440	$ 12.00	$ 5,280
Retail Sales Price:	20.153%[11]	$ 165,000	$ 110.00 [12]	Fireplace			$ 1,500
Less: Closing Costs		$ 11,550	7.000%[13]	Patio			$ 2,000
Less: Build Out Cost		$ 104,406		Appliances			$ 1,500
Unit Profit:		$ 49,044	29.72%[14]	Driveway	750 [15]	$ 3.50	$ 2,625	Length	30
				Landscaping	13,755 [16]	$ 0.20	$ 2,751	Width	25
Civil Eng./Lot	$ 700 [17]	$ 80,721 [18]	$ 5,381 [19]	Acres Left Natural		0
Streets	$100 [20]	$ 491,030 [21]	$ 32,735 [22]
Legal & Appraisal		$ 10,000	$ 5,000	Total Construction Cost To Build House			$ 104,406 [23]	Cost/SF	$ 69.60 [24]
				Finished Lot Cost			$ 13,301
Totals		$ 581,751	$ 43,117 [25]
Interest Only	10.000%			Tota Cost Land & Build Out			$ 117,707	71.3%[26]	28.7%[27]
Carry Months	12		$ 4,312
Total 1st Phase Consturction Loan			$ 47,428	Total Off-Site Improvements		$ 1,383,784 [28]	Loan Amount:[29]	$ 115,034 [30]	45%[31]
House Profits to Pay Back			0.97	Street Frontage Linear Feet:		4,910	of Road (Houses On Both Sides)
LTV on Land Value			32%	Months of Carry For Off-Sites		12	Phases:	15	Tot Time In Yrs
Profit Division Joint Venture				Initial Off-Site	$ 92,252	Offsite Int.	10.000%	8	11.5
				Total	$ 101,477	Interest Per Mo	$ 769	Sold Houses	3.03
Land Value Raw		$ 150,000						Time > Phase 1	0.75
Total Built Out Sales:		$ 19,027,027				Buying Finished House:
Less Total Builder Cost:		$ 12,039,622				Price	$ 165,000
Less Off-Site Costs:		$ 1,383,784				Downpayment	$ 16,500	10%
Less Land Cost:		$ 150,000				Mortgage	$ 148,500	Interest	7.000%
Less Marketing & Promo		$ 23,063	$ 200	Cost / Home				Term	30
Less Sales Cost:		$ 1,331,892				Insurance	0.0045	$ 742.50	$ 61.88
Less Legal & Appraisal		$ 10,000				RE Taxes	0.012	$ 1,980.00	$ 165.00
Less Civil Engineering		$ 80,721				Principle & Int.			$ 987.97
						PITI			$ 1,214.85
Total Costs:		$ 15,019,081
						Income To Support Monthly Payment
Net Profit To Split		$ 4,007,946				$ 600.00 [32]	38.0%