Ground lease PPSF; what’s a good starting point????
Hey everyone, 

I’ve come across a good piece of land that is in a decent up and coming area. I think it would be perfect for a BWW and D&amp;D they would do well in this area (a lot of blue collar folk). I have investors ready to deploy some capital to make a development like this happen. This is my first real syndication. 

This piece of land is broken up into many smaller parcels I am putting 3 of the parcels under contract contingent on a rezoning hearing. However one of the key parcels owned by a guy who is refusing to sell but told me he’d entertain a lifetime ground lease. 

I think my plan of action here is to enter a partnership with him and put his ground lease in. Anyways what is a good basis PPSF range for undeveloped land? 

Anything helps.
[{"id": "h00kqmn", "text": "My experience is with turds like that - you probably won\u2019t be able to make a fair deal with him. He will want all the money and for you to do the work. That is all I have to add. I may be wrong \ud83d\ude02. Good luck\n\nSolution : make it work without him", "replies": [{"id": "h00rvgk", "text": "Agree life is too short. Also unless you intend to hold this forever ground leases fucking blow unless you\u2019re in a market where it\u2019s an accepted part of life and it\u2019s creating artificial leverage. \n\nThis doesn\u2019t sound like that type of situation so I\u2019d be super wary. While you might get your deal done selling it could be tough with the GL. Anyways good luck hope it works out and if not hope the next one does!", "replies": [], "depth": 2}], "depth": 1}, {"id": "h00ur3m", "text": "To answer your question about rent or starting point in a negotiation. If you just bought the properties around him, you know the market value of his land. Add 1% to your cost of debt -  and multiply that by his land value. Offer to pay him that. Essentially your getting 100% financing on his land forever. Don\u2019t partner with him, just enter into an arms length transaction. If he\u2019s not doing any work, he shouldn\u2019t expect to get much upside in the development you\u2019re putting together.", "replies": [], "depth": 1}, {"id": "h017afb", "text": "May be hard to exit your deal with a ground lease - does the deal work with the 2 parcels.\n\nSounds way too complicated for a first syndication deal if you ask me...", "replies": [], "depth": 1}, {"id": "h01b22g", "text": "Do you know if these tenants want to be here? If it\u2019s a hole it\u2019s very likely they have already reviewed it. Add on top that it\u2019s a tough deal because of the GL, it should probably be a pass. \n\nGo find another deal and save yourself a headache and the money spent on legal.", "replies": [], "depth": 1}, {"id": "h01mlre", "text": "Assuming you do a ground lease, negotiate it so it stays liquid. Never have the payments exceed 10% of annual NOI to ensure lenders don\u2019t  view the leasehold as being financed through the ground. Make term 65-99 years to make it finacable. Give yourself a fixed purchase option in the first few years. Discount the ground rent between 4-10% based on quality and location and compare that npv to your other land trades", "replies": [], "depth": 1}, {"id": "h04ku1p", "text": "Never partner with someone you don't know.  Do the ground lease.  It'll be cheaper, less stress, and by the time it terminates neither of you are alive.  Use FAR or an appraiser to determine ground lease.", "replies": [], "depth": 1}]