Real Estate Option & Equity Partners
Hello,
I’m convinced I have found a fundamentally solid real estate development opportunity. The property is an existing series of “antique” mill buildings located on the waterfront in a small suburban town in Connecticut, a picture perfect New England Village. The property has been approved by the town for restaurant, retail and residential use. The current owner has an extensive plan for the development, but lacks the funding, ambition or ability to go forward. The town wants the property developed.
I would like to develop this project. I estimate the total cost will be upwards of $25 Million, including the acquisition. Potential value and profit with development complete is $50 Million+.
Not being able to secure “conventional” financing through normal banking sources, i.e. not having the minimum 20%+ as a down payment or reserves, I am considering seeking equity partners to fund this project.
Would it be feasible to ask the current owner to be a partner, putting in the property as his share, and me securing the funding source? How can I approach him to “lock-up” the property for a period while I seek the equity partners? How can I go about getting an option without putting up cash?
There is terrific potential here. I’d appreciate any insight you may offer.
Thank you.
"The current owner has an extensive plan for the development"
Is the current owner a developer? What does it mean "extensive plan"?
What is the asking price?
Hello,
Thanks for the reply. When the current owner purchased the property, he proposed a comprehensive plan to development, which included residential condo units, retail and restaurants. There are several buildings on this parcel, so a neighborhood atmosphere, with brick sidewalks and open air cafes, etc. were planned. The owner is not a developer. The plan which was approved by the town was too big for him to handle alone. His asking price is $6.5 Million.
P.S.: My name is Ines
You should do more home work, especially in regards of the price and enviromental issues ... Check, also, why his clean-up was so expensive, and if it is ok now.
Yes, the Realtors say "location, location, location" ... they just repeat what they have heard from other Realtors .
Do you know anyone, who bought a house because of a location only?
Why people choose this specific location?
#1 - access to employment
#2 - character of the area (incl. infrastructure)
#3 - lifestyle (recreation, sport activities, peace & quiet, entertainment, etc.).
Wow, great info.
I had a similar experience where we cut the GC loose mid project. We worked out a written agreement including final lien wiavers for money due to him. The only thing he did after the agreement was signing off on the bank draws to avoid the problem you are talking about.
Suggest you post your question in the Builder/Developer Forum on the Commercial Board.