We believe in land development investment for a couple of reasons. Here are two of the main ones:
We were land developers for over 23 years, and we understand the business well
Today, we only act as an investment company and we don’t develop anymore ourselves, but we partner with the best and the brightest developers in Texas and can participate on some of the best residential and commercial developments throughout the state.
High entry barrier (less competition)
There are too many factors that can be scary for many investors. Unless you understand the process and have the financial capabilities to perform a lot of work with no cashflow, then land development might be an option for you.
High upfront costs are always associated with land development. The necessary time to secure land, getting entitlements, zoning and city approvals, financing and construction can rapidly dry-out many pockets and thus will remove some investors from these projects. Having the right team in place is absolutely required to have a successful land development project.
With any doubt, the biggest benefit of investing in land development is its appreciation potential. Although land development is a scare investment, there is a high probability that the land’s value will appreciate, especially if it’s located in a rapidly growing area.
Land Acquisition (opportunity for seller financing)
Land development allows developers the opportunity to use seller financing. Since traditional lenders (banks, and financial institutions) are often more hesitant to make loans on vacant land, developers usually partner up with landowners to use the land as equity, then they will have more opportunities to get traditional financing. If doing correctly, this will be a win-win situation for the parties involved.
Land Development Investment by Capital Insiders
We don’t lend or invest to purchase empty land just to bank on it, in other words, we don’t make any speculative investments by purchasing, holding and looking for future land appreciation. Without a well performed business plan, extensive market analysis and a clear path for an exit strategy, we won’t invest in it.
We only lend and/or invest in land developments with seasoned developers with a long track of record and will only invest with them when projects are “shovel-ready” (land entitlements, zoning, blueprints and all city requirements have been met and approved). We engage with the project at very early stages, and close-monitor the process. Since we are well capitalized, we are ready to meet the financial needs once the project is ready to start and requires the capital injection.