My recipe for this decision is quite simple, provided I am on track for my cost forecasts. If I have much better suited for beginner apartments or not-up apartments, I will usually sell to builders. If these are lots with many additional amenities and premium prices are to be obtained, I usually sell them individually. Of course, not a single answer is correct every time, but what is most cost-effective in terms of time elapsed is my usual modus operandi. DEALMAKERS: The Atlantic Co. will purchase land identified by a contractor, install the necessary infrastructure and resell the finished lots to the contractor under a flexible sales contract. “Before, everyone was a vertical builder. They did everything: they bought the land, got the permits, built it and sold it,” says Grebow, who founded The Atlantic Co. (TAC) in 1995. Fred Delibero, CEO of Summit Custom Homes, has seen banks in his hometown of Kansas City, Mo., the market only relaxes the development fund for new phases in existing municipalities in 2011, and then for the development of new communities from 2013. Lenders told him that they would rather finance developers/builders than speculate on developers, because they feel more comfortable with the likelihood that manufacturers like Summit will put a finished product on a package and monetize it. As soon as the claims are available, the company acquires the land, uses the improvements – “roads, pipes, everything,” says Grebow, and sells the land to the owner, either as requested as part of an agreed but extremely flexible dismantling plan.
Although the land bank has a premium for the builder, it is a structure often used for builders of private and public homes. As a result, home builders could consider such a process for an existing or future project. Before the crash, Kansas City developers would typically grow in phases of 30 to 60 lots and sell these parcels to a number of builders who bought them as they needed. Today, developers are still developing tickets, but they are collaborating with a select group of contractors who can work together during an entire development phase. This approach effectively excludes small owners from municipalities “A” and “B” located in the busiest parts of the subway market, as well as Overland Park and Olathe, Kansas, de-says Delibero. Another alternative is The Atlantic Co., a land acquisition and development company based in Iselin, N.J., which offers public and private contractors the opportunity to secure land, install necessary improvements and have stock – all without making a big dent in their balance sheets. Land bank also reduces market risk. If the builder has the royalty title on the property, if the market turns, such a rebound could have a very negative impact on the manufacturer`s balance sheet. However, if the builder only has the option to buy the property, the builder is better able to exit the agreement – and only loses his option fees.
Perhaps the best way to describe the TAC is a hybrid, a cross between an investment fund and a developer. Few financial organizations offer rural development services. And most developers don`t have the capital to support individual builders. But TAC does both. Drumm also sees more land options that include real ups. These are agreements by which the seller and the owner agree on a sale price and a gradual adaptation on the basis of an agreed formula for the relationship between the house and the lot.