Build To Suit Pricing - Advice
I am working on the lease rate for a build to suit warehouse/office building with a 10 year lease from a credit tenant. The firm bid on construction is $3,000,000 and the land has a market value of $1,000,000, so I will have $4,000,000 in the building when completed plus the carrying costs during construction. It will take approximately 12 months to build and the building will be 50,000 sq ft. Current interest rates near here are 6.25%. I know every investor is different but if this was your deal, what rental rate, would you throw at the tenant a NNN lease rate?
I agree with your banker but then again, I am a builder. (smile)
Currently I am building in an upper end neighborhood where the restrictions are very tough..........my fellow builders hate it but I actually see the benefits.
1. There are quality standards......this gets ride of the track or cheap builders.
2. Aesthetic concerns..........this is not a cookie cutter neighborhood where builders come in and build 2 or 3 of their fast selling cheaply designed homes.
3. Landscaping requirement..........from sod, irrigation systems, type of plants etc........talk about curb appeal. I spend 30 - 40,000.00 on landscaping alone.
4. The comps are consistent and the standards are always maintained.
This development has been around for several years but was dead for a while because of lack of standards. New guy came in and now the lots are selling as well as the houses. He has enforced the restrictions across the board.......I have seen where builders submitted a plan and then deviated from such without his approval.............that cost them any where from $3000.00 to $30,000.00 as was the case with one builder when he had to tear out brick and put in stone as was originally submitted and approved.
If you do it right then your reputation will proceed and and the builders will want to follow you. (repeat business)
warm regards
NC_Yank
Another idea is to sell to investors.
NC lots sell well on the internet. Get a good marketer that sells this way once you have all you ducks lined up. You need to get some builders involved right off the get go - but put in a building compulsion in your contract ( must build within one year, for example)
Search for sites that are selling similar proects.
GFous,
Can you tell me more about what you mean about a marketing group that sells property via the internet?
How would I find someone like that? What kind of questions should I be asking someone like that?
Any thoughts from anyone else would also be appreciated.
Thanks,
Barbara
I am working with a GC, that called me to be his mtg broker and realtor, He has taken 20 acres and re zoned and platted, and permitted and approved it.
for 44 homes and 32 condos, gated communities 300k-400k homes, and we are looking for a investor, or private money to help get the A&D finished, teh current value is 4,360,000 with no homes,
we need 1.3 to 2 million, rate and terms flexable,
2 yr hold back on intereste. possible 18 homes spoken for and 8-10 lots, with no marketing.
please call me 360-920-6304