Objective of Development Plan - The current housing market precludes the easy sale and development of residential real estate.  Although there is a ready market for affordable housing; it has become a difficult task to development, finance and sell.  Creative associations must be pursued that allows the Developer/Builder to have the time required to sell over an extended marketing period; and allows the Landowner the means to realize a reasonable return on its land

These parameters must be met

1.     The Developer/Builder must acquire the land at a finished lot price that stays within the ratio of 20% to 30% of the ultimate selling price of the house including sewer and water tap fees.

2.     The Landowner must offer these lots in a finished form even though they do not have the expertise in the development field, and must offer them at a price commensurate with the aforesaid ratios, yet still try to recover close to their expectations in profitability.

 This can be accomplished as follows:

1.     The Landowner offers the lots in finished form to the Developer/Builder based on market determinations of value of initial product.  The task of completion is accomplished by the Developer, acting as an agent of the Landowners.  All operations are based on budgets and bidding that can approximate the ultimate cost of the lot improvements for the Landowner; thus allowing them to estimate the residual value of the land that they will realize. 

2.     Landowner and the Developer/Builder form an entity, or enter into a friendly contract,    depending on the number of lots involved; to market and build homes on these lots using pre-sales as the basis of building on the lots.  This new entity or contract reflects a predetermined bonus to be paid from the profit from the houses produced over an extended marketing period and is distributed soon after completion of each unit.  All costs are carefully controlled and only stated scheduled fees are allowed based on an Economic Model that is estimated and corrected from time-to-time to reflect the ultimate profitability of the housing operation. 

By using this method the Landowner realizes somewhat less from the initial sale of the land, but should recoup any deficiency by participating in the profit of the houses.  The final results should allow the Landowner to approximate their original goal.  The Developer/Builder has an "easy buy" which allows them to market and build without being under the normal stresses of the current marketplace.  This offers them the opportunity to try to maximize the profits on each unit by being selective with the type of purchasers they would sell, and trying to sell the more expensive unit so that the remaining lots have a higher value. 

The funding of the project would be accomplished as follows:

1. Initial Purchase - An option agreement is executed that give the necessary time to accomplish all the development, marketing and construction facets of the venture.
2. Development Loan - This is borrowed from an institutional lender on an interest only basis who will lend the money; or supplied jointly by the parties, depending on the amount required.
3. Construction Loans - This will be secured from the same lender and is borrowed on a house-by-house basis depending on pre-sales.  Before any loan is received the purchaser must be pre-qualified and a final commitment issued.  The construction time on homes should be between 6 and 9 months, depending on the complexity of the homes.  When all monies are received, all debt on that unit is curtailed and any residue is set aside as working capital or may be distributed depending on the current capital requirements of the venture. On the sale of custom homes the construction/permanent form of mortgage is recommended by us.  It saves the Buyer transfer taxes, and the land is paid for immediately before construction begins with funds remaining for working capital.

The above places the Development/Construction Plan in its most simplistic form.  I have some documentation which you can review that might enlighten you as to the ultimate outcome of this project using the minimum input that I could obtain.

An abbreviated Economic Model outline showing potential profitability from the construction of houses, plus a possible increase if options can be secured can be formulated after an initial market study.  The form of entity and the necessary contracts between the parties would have to be formulated at a meeting where each presents their ideas.