What should I do with a large single-family home development
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Over the past few years I have been able to entitle a large development just outside of Austin, Texas. I have offers from home builders to purchase finished lots. The project is over 800 single family lots with half being 45 ft and other half 50 ft wide.

I would build the lots myself but not feel my company is setup to take on this kind of risk.   

What do you think is the best way to move forward without taking huge risk?

Thanks
[{"id": "ikzmufb", "text": "Assign it to a builder or developer. On a per lot basis", "replies": [], "depth": 1}, {"id": "ikzqe7n", "text": "JV with a home builder. You put up the land and they build the homes. Figure out a profit split that works for you guys\n\nAnother idea could be rent to build models. Build them then rent them. Wall Street guys would buys these all day", "replies": [{"id": "il2j97y", "text": "*build to rent", "replies": [], "depth": 2}, {"id": "il2sppi", "text": "\\+1 - build to rent just makes sense and you can still keep the underlying asset at the end of the day", "replies": [], "depth": 2}], "depth": 1}, {"id": "il04mnp", "text": "I\u2019m a broker in Austin, specializing in land sales. We do a lot of JV work on similar deals like this. Happy to advise if we can. Sent you a private chat.", "replies": [], "depth": 1}, {"id": "il0ff4i", "text": "Phase is out. Phase 1-2-3. \n\nBe your own GC. You\u2019ll learn quickly.\n\nI\u2019m assuming demand is high since you\u2019re near Austin. Interview architects. Build the models. Pre-sale.", "replies": [{"id": "il1x3ho", "text": "Great advice. Learning to GC on a $35M project. Oh, while you're at it, learn how to be a home builder and do that too.", "replies": [{"id": "il1x9d1", "text": "I forgot reddit largely attracts men with no balls.", "replies": [{"id": "il1zu5z", "text": "Let's pretend for a second your idea is the best route to go. \n\nWhatever bank that underwrites this deal is going to tear OP to shreds. He is going to have to bring a ton of equity to the table. So based on your idea, that's a couple million on day 1. \n\nThen, you suggested self GC. Not even self develop. Which is obnoxious because even if the first phase is 100 lots, you're getting a site contractor at a minimum. With 800 lots, there should be a clubhouse and pool, plus other amenities. It is a huge project.\n\nFinally, the market is changing quickly. I don't know about Austin, but even if the market is great, the first home won't sell for 18-24 months. If OP \"interviews a few architects\", builds a model, etc that means he would effectively be buying lots from himself and he would be in the deal all the way until the last home is bought. That's 8+ years easily. That's creating an HOA. Marketing. Getting another construction loan. Managing 10 closings a month, and then dealing with the buyers after closing. You're talking about starting a homebuilding company with 30 employees. \n\nRegardless of the fact the idea is a bad one, you didn't even read the post. OP asked how to limit his risk and you literally suggested the riskiest path. Which suggests you've never done this before and shouldn't be responding.", "replies": [{"id": "il2cwt4", "text": "Also, it\u2019s fairly common for large developments in Texas to have their own Municipal Utility Districts or MUDs where the developer is reimbursed for infrastructure work with bond sales once the homes are complete and occupied. \n\nThey are complex to set up and you have to discount the bond proceeds appropriately in your models. There are also record keeping and filing requirements for the final bond sale. Definitely not something for an inexperienced investor.", "replies": [], "depth": 5}, {"id": "ildj6s2", "text": "Thanks for the thoughtful response. It sounds like you may have found some of pitfalls of construction before. This is exactly what I am trying to avoid even if it means leaving a little money on the table for the next guy.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "il0r4oq", "text": "I have two 150+ home developments in austin proper and am actively looking to buy more 45\u2019 lots.\n\nWhat is their depth?\n\nMessage me as I could be interested in buying a piece or the entire project", "replies": [], "depth": 1}, {"id": "il0tf9p", "text": "That's a substantial project. It's enticing to want to stay in for the upside and that depends on your personal situation, risk tolerance, and financial condition.\nThere is nothing wrong with hiring a competent broker and selling. You can say that you are open to JV but I have a very big problem trusting people in something like this.", "replies": [], "depth": 1}, {"id": "il0w34q", "text": "You have two options, sell the land or partner with someone who can take the development risk. I would pick the latter, unless you have something else to do with the proceeds if you were to sell. \n\nSFR is one of the hottest asset classes right now and I\u2019m sure if you put yourself out there you could find a dozen partners within a few weeks. Find out which of them have the best track record and offer the best economics, offer up the land as equity and spend the rest of your time looking something to invest in upon exit.", "replies": [], "depth": 1}, {"id": "il1t53e", "text": "I think just yesterday I read that the housing market in Austin is starting to soften.\n\nInterview a couple of brokers and get a feel for the value and the current market.  They should also be able to advise you on JV partners, as well.\n\nThen it\u2019s really just a business decision of how much risk you are  ready to take on.", "replies": [], "depth": 1}, {"id": "il212e0", "text": "My brother has been a high end home builder in the Austin area for the last decade.\n\nI would expect you'd sell off the lots to a small number of builders.  Let them worry about all the details and spread your risk out that way.   Or just sell the entire thing wholesale to one big buyer.   I'd expect you'll make less doing that but be done with it quickly.", "replies": [], "depth": 1}, {"id": "il2co43", "text": "Are the horizontal improvements in place or is it just dirt?  If it's dirt, is it graded or just raw land?\n\nIf it's just raw land, is the engineering completed? Do you have the grading plan, utilities plan, will serve letters,  etc?", "replies": [], "depth": 1}, {"id": "il2i0eg", "text": "Jv with a builder, do 4 phases of 200 homes each. Just do the initial infrastructure on phase 1, possibly phase 2, sell them off to other builders to fund phase 3 and 4 (keeping debt load and risk low). Build out phase 3 to sell, then do phase 4 as a build to rent. Once you have phase 4 leased up, either hold it for cash flow or sell it as a packaged deal at a 5 cap to some Chinese buyers. I do this for a living from the lending side", "replies": [], "depth": 1}, {"id": "il32rkf", "text": "So, it looks like you are wondering between selling the paper lots or doing the horizontal work, correct?\n\nThe first question you need to figure out is the cost for both and compare it against the potential profit spread against the time and effort needed to offset.\n\nI've done this exact thing in San Antonio, and have sold finished land to major builders, as well as paper lots to developers. \n\nIf you would like to talk shop, let me know, and I'd be more than happy to let you bounce ideas off of me if you ever need to.", "replies": [{"id": "il76fo4", "text": "What are the size of your deals? Are you selling paper lots with all permits? Do you ever close on land without all permits? If so, how common is it to close without all permits in land development?", "replies": [{"id": "il7b6mc", "text": "One of our latest deals is a 600 lot with Lennar. $650/lft on 300 45' and 50'.\n\nThey want us to do the horizontal work so, we will be doing that process.\n\nWe generally buy the land, permit it ourselves, and then decide whether to sell the paper lots or build it out depending on the timeframe and size of the build.\n\nI've done deals from $3mm-$60mm and we're chatting with a landowner that may contribute 1,500 acres to do a Master Planned community.", "replies": [], "depth": 3}], "depth": 2}, {"id": "ildka9p", "text": "Just sent a PM", "replies": [], "depth": 2}], "depth": 1}, {"id": "il35b8q", "text": "I have about 10 acres just outside of Lockhart, does anybody know a good broker in Caldwel county to talk to, I\u2019m going out there to visit the property early October I would like to see what I can do with this land.", "replies": [], "depth": 1}, {"id": "il48j76", "text": "Contribute land to a JV. With a property of this size, I\u2019d reach out to a broker. The fee is worth it in this situation. Let me figure out the right single family development brokers in that part of TX", "replies": [], "depth": 1}]