Final Descent

Today we begin our final descent into the development program. One day before the final class of presentations, and Brant and I feel as if we have exhausted all resources of information, and have little left to add to our presentation. Now we are slowly collecting the date we have gathered over our 5 week journey in order to funnel our thoughts into a collection of comprehensible ideas that maybe somewhere someone might be willing to fund.

We met at 10:00 to begin the final touches on our presentation; hopefully we are not missing anything. See you tomorrow.

Will you take a check?

While my counterpart is concentrating on the design, I was looking into numbers. Using the deal structure providing by Mr. Geesling, I infused our numbers that we have to work with: construction, acquisition, soft costs, potential rents, conservative underwriting and investor returns. I decided to do a Best Case and Worst Case cash flow.

Cash Flow Excel

Speaker Week 2

This week was the second round of speakers set up for our class. The two speakers lined up for the class were for marketing...bummer, because I really wanted to hear what the lawyer was going to say. I am not sure if that is because we attribute so much to lawyers, or that I truly wanted to hear this person speak???

One of the marketing speakers was Mrs. Mund, of the Jarod Mund clan. And having lived with a pregnant woman for 9 months, I applaud her attendance in our class on a Saturday morning. She shed some light on the marketing aspect of residential, as most of our projects will more than likely have their highest and best use as residential (at least to begin with). Her marketing program for real estate is very similar to my own (which was refreshing to hear): get as much done with FREE mediums, then pay as little as possible for the print!!! Speaking of print, she concurred with what I was thinking regarding the print venue of marketing: for this demographic, it is on its last leg. The demographic that will be most enthralled with the south-side and a project like ours, is going to be the young Maven (if you had not read Gladwell's book, The Tipping Point, you should...no matter what field you are in). And the way to reach them is through Internet publicity and "social media".

The second speaker was Cody Payne, which he gave his opinion on why certain assets yield higher rents...better assets.

Mapping the Comps

Today was a day for comps...both residential and office (Brant has the retail). Because I am a visual guy, I decided to put the comps on the map with a description of each unit. Our numbers come out to be very close to what we assumed woudl be the going rate.

Most residential units are commanding a $1.10-$1.20 PSF; our best case scenario is going to include $1.15 PSF.

Residential Maps

Our office space came out to be slightly less that what we predicted, at around $.90-$1.10 PSF; this is too far off what we want to be for Best Case, therefore, as predicted, most units will not rent as office.

Office Map

Brant was in charge of retail comps, of which he also sent them to me in a map (sorry, no link).

Speaker Week

This week's class was allocated to professionals from different specialties within the development process to enlighten us on the "in's and out's" of the field. We had three scheduled speakers, and all three showed up.

The first speaker was an architect turned marketer turned developer. His story was unique in that he graduated with a degree in architecture and business (MBA) and decided to pursue his passion for business. After creating a marketing company, found that he still had the itch for redeveloping older buildings and, with a built in tenant (his company), decided to undergo the restoration of the Awalt building in downtown Dallas. From the perspective of a successful redevelopment, he told stories of how they took advantage of "decor" and development process from a fore-gone ear and juxtaposed them with modern technique and aesthetics. The one key he stressed (and I agree) is don't fake it; if its not old, don't try to make it look old, just bring in the new and mesh it with what you have. Great topic and speaker; he will be good to know for future endeavors.

The second speaker was more of a "question and answer" setting, where we fired our lending and finance questions her (Lorie Houston from Wells Fargo) way. The short of what she said regarding the lending environment today: there is no way around the personal guarantee! She did bring up a few good options for those of us finding it difficult to raise the funds. One option that Brant and I had already begun researching was the SBA 504 program (She actually discussed the SBA 7A, but I think the 504 works better for our situation).

The third speaker was from the city of Fort Worth. Her position as the Deputy Director of planning and development allowed for great conversion pertaining to zoning ordinances, necessary paperwork for the city as well as various incentives offered by Fort Worth for projects such as these.

The information provided in this class session was informative and incredibly useful. It allowed us to think of areas where we might not be as well versed as we should be regarding our individual properties. For instance, I know that after hearing Dana from the city speak, I need to become much more well versed in the zoning, platting, and municipal restrictions on my property and ways I can get around (bend) those rules to help my project. Lorie Houston gave some creative financing alternatives to think about, and the design discussion brought about by our architect friend made us think about using old material in a whole new light. Can't wait for the next class: Marking, Law and Construction.

Construction Costs

Today I met with Royce Coker, owner of Coker Construction. Royce has spent most of his adult life in construction, the majority of which has been spent in TI work for commercial real estate; however, because of the economy, he was let go from his previous position which has spurred him on to starting his own company. So, I thought what better person to go to with our construction numbers.

After discussing with him the logistics of our property, showing him pictures and giving him drawings and layouts, he came up with a break down of numbers that seemed to match pretty well with the numbers Brant and I had come up with (at least from a holistic standpoint; he shed a vast amount of light on what the numbers would actually go for). Brant and I had figured staying within $25-$30 for the overall construction, and the best case scenerio that Royce gave was $27.00 PSF.

The only number we threw at him was the cost of the overhead doors, which Brant secured a quote for from BP, a total of almost $48,000!!! For six doors?

BP does more than Oil

Brant contacted the company in charge of overhead doors, BP. We received a quote. We used to think this project was feasible.

The quote we received was $46,000, which is 1/3 of our budget. The doors are nice, but, really???