39 1-Acre Mininimum Equestrian Lots
This is a high-end equestrian community. There are 39 lots on 51 acres. The property connects to the local equestrian trail system. The community "amenity" is a riding ring.
Many of the homes will have views.
The entitlements require the minimum home size will be 5,000 square feet
Financials
The link above shows a proforma we have developed that reflects some key assumptions.
- We know ownership paid about $6,000,000 for the property in 2006, and that they have been in litigation with the unoffiial neighborhood association since about 2010. More on this subject below. The first offer we received acceptance on in 2012 was $16,000,000 with a seller carryback of $10,000,000 until permits were issued.
- Since 2012 we have remained in contact with ownership almost monthly. We have even helped them locate several retail centers as part of a 1031 Exchange. They have stated several times they think the property might be worth $30,000,000 now.
- Using standard home building IRR criteria we believe the highest value may be $22,000,000 and would prefer to pay less. Our asssumptions inlcude:
- Development costs and fees for development and home building that were prepared by a well respected third party consultant.
- Sales prices for the homes that are about 30% higher than our assumptions in 2012.
Business Plan
The business plan is to develop the lots and build production homes and to sell the balance of the lots as custom lots to individuals. The actual number of homes to be built can vary depending on the demand we get for the custom lots. In an attempt to limit the term of the investment we assumed we would need to deliver 32 homes and that 7 custom lots can be sold quickly. We have seen expressed interest in this number of lots and are quite confident in the estimate. It is possible demand for lots will be higher. If that is the case we will sell as many possible to improve the financial returns on the investment.