Real Estate

Rfd RE joint venture

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  • Feb 18th, 2021 3:49 pm
[OP]
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Sep 9, 2007
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Rfd RE joint venture

I was wondering how good or terrible would be an idea to pool a number of RFDers into a joint venture with the goal of purchasing land and building a small subdivision? Not sure how a structure for a venture like this would look like but I think ideally a venture would need to consist of people with some experience in the construction industry: project managers, tradesmen, legal etc. I personally have project management and excavation experience. The project would probably take anywhere from 2-4 years. I think coming to agreeable terms would probably be the most difficult task :)
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LembergMX wrote: I was wondering how good or terrible would be an idea to pool a number of RFDers into a joint venture with the goal of purchasing land and building a small subdivision? Not sure how a structure for a venture like this would look like but I think ideally a venture would need to consist of people with some experience in the construction industry: project managers, tradesmen, legal etc. I personally have project management and excavation experience. The project would probably take anywhere from 2-4 years. I think coming to agreeable terms would probably be the most difficult task :)
What you are referring to is called a Real Estate Limited Partnership. I've done something similar in the past on an industrial development, value prop wasn’t RE based, but the concept is the same.

You will need a General Partner that orchestrates the deal, structure, value prop, and find the land/deal/pitch the proposal. The pitch would then be to the limited partners, in this case people on RFD who’d be interested in providing capital for the land acquisition/development.

Coming up with the terms is straight forward, the question is who is the General Partner and what do they bring to the table, are people comfortable investing in them and whatever the proposal is?

While the idea is cute, are you aware of the capital needed to do this, the returns required by investors in order to make this a palatable pitch? Ideas like this don't take shape over night.
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If you got money to invest in large scale projects, I suggest you look into investing with Greybrook.
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Also.. what would be advantage over investing to residential focused REIT. Low liquidity, higher risk. Are profits that much better?
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LembergMX wrote: I was wondering how good or terrible would be an idea to pool a number of RFDers into a joint venture with the goal of purchasing land and building a small subdivision? Not sure how a structure for a venture like this would look like but I think ideally a venture would need to consist of people with some experience in the construction industry: project managers, tradesmen, legal etc. I personally have project management and excavation experience. The project would probably take anywhere from 2-4 years. I think coming to agreeable terms would probably be the most difficult task :)
Since it might be best to start small and have as much expertise on your side.
May be easier to group purchase land and partner with one of the Pre-Fab/ Packaged home builders to order 20-40 homes. That way you cut down the time involved in getting consensus on the nitty gritty - design layouts, materials etc .
There are independent contractors who are experienced with setting up pre-fab builds, so engaging them for large project will be a plus.

I guess you are aiming at a product, that is something better if not cheaper than available from builders today.
With that in mind maybe share with all a simple excel with approximate final cost of a house in such development and who knows you might be onto something ! good luck.
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mstefa wrote: Also.. what would be advantage over investing to residential focused REIT. Low liquidity, higher risk. Are profits that much better?
Skip the middle man and get all the profits yourself. However you take on all the risk.

Easy to sell a REIT & bail if it isnt going well.
Difficult to back out of a real estate partnership like this without getting sued and having angry people feeling screwed go after you.
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Karma2000 wrote: Since it might be best to start small and have as much expertise on your side.
May be easier to group purchase land and partner with one of the Pre-Fab/ Packaged home builders to order 20-40 homes. That way you cut down the time involved in getting consensus on the nitty gritty - design layouts, materials etc .
There are independent contractors who are experienced with setting up pre-fab builds, so engaging them for large project will be a plus.

I guess you are aiming at a product, that is something better if not cheaper than available from builders today.
With that in mind maybe share with all a simple excel with approximate final cost of a house in such development and who knows you might be onto something ! good luck.
I need to start thinking bigger if starting small is TWENTY to FORTY homes, no biggie boys, just start small. lol

I've participated in multiple 1 off residential developments, a single larger industrial development as the GP...and if someone told me FORTY homes is starting small that's the equivalent of me going to my neighbour who recently built a nice shed in his backyard and asking him if he is ready to start small by throwing up a new condo tower based on his shed building experience.

20M-30M starting small. I am in the wrong biz.
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RichmondCA wrote: I need to start thinking bigger if starting small is TWENTY to FORTY homes, no biggie boys, just start small. lol

I've participated in multiple 1 off residential developments, a single larger industrial development as the GP...and if someone told me FORTY homes is starting small that's the equivalent of me going to my neighbour who recently built a nice shed in his backyard and asking him if he is ready to start small by throwing up a new condo tower based on his shed building experience.

20M-30M starting small. I am in the wrong biz.
Got your point. OP asked for building a small subdivision. This will be economics of scale if anything and trying to get investors here.
Labors, materials etc. would be better procured for a decent number of houses instead of 4-5.
OPs idea is more relevant today that before as the so called $1.2-1.4mil+ detach houses sold by the distinguished builders are nothing but assembly of cheap products.
The brochures always have glorified language and so are the visually pleasing presentation centers.
Visited such house in Milton recently, it was almost like hearing a waterfall thru the walls, as someone used the washroom on second floor. Cheap flooring throughout etc..Any upgrades from builders were thru the roof so they opted for cheapest...etc etc..we all know the story...
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Buy a REIT. Maybe MINTO, they do this type of stuff.
Why trust a bunch of people who look for deals on RAM to do this, lol....
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Karma2000 wrote: Got your point. OP asked for building a small subdivision. This will be economics of scale if anything and trying to get investors here.
Labors, materials etc. would be better procured for a decent number of houses instead of 4-5.
OPs idea is more relevant today that before as the so called $1.2-1.4mil+ detach houses sold by the distinguished builders are nothing but assembly of cheap products.
The brochures always have glorified language and so are the visually pleasing presentation centers.
Visited such house in Milton recently, it was almost like hearing a waterfall thru the walls, as someone used the washroom on second floor. Cheap flooring throughout etc..Any upgrades from builders were thru the roof so they opted for cheapest...etc etc..we all know the story...
I don't understand what the cost of the construction and materials have to do with this when they make up a fraction of the costs for a project like this. Or are you under the impression that to build a subdivision you are looking at cost of material and trades - market price of house and everything else is profit?
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