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E43 - Risks and Rewards of $100mm+ SoCal Ground Up Development - Asym Capital

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E43 – Risks and Rewards of $100mm+ SoCal Ground Up Development

The most fundamental stage of any real estate is one that hasn’t been covered in great detail on the program yet. It is Ground Up Development and it is not nearly as simple as buying a cash flowing asset. There are many things that can go wrong with development due to the many moving parts that it consists of. The returns can make up for the additional risk if the market dynamics are favorable and you stick to your budget. In order to take ground up development properties full cycle effectively, you have to have an expert team which are guest and his firm have.

 

Our guest for today is Chris Tourtellote, who is the Managing Director of Acquisitions are LaTerra Development. LaTerra is one of the most active real estate developers in Southern California and focuses on high barrier to entry markets such as Santa Monica, West Hollywood, Los Feliz, Silver Lake and Orange County. Their success shows through their one billion in project value across fifteen active projects and their nearly two thousand apartment units under construction or in the pipeline.

 

In this episode we discuss…

-How increased market prices make it challenging to build workforce housing and incentivize luxury development

-The key underwriting assumptions that our guest uses to find out if a deal is going to succeed in this current economic climate

-The key stages of real estate development financing which includes a bridge loan, construction loan, and permanent loan

-The difference between recourse and non-recourse loans

-How certain terms in loan documents can turn a standard CRE non-recourse loan into a full recourse loan, which could really damage your balance sheet if something went wrong

 

Ground Up Development is much more risky and difficult than buying a cash flowing asset. If an expert team is used and a plan is followed through, the rewards can outweigh the risk. Knowing where to start can be complex, so seeking outside help may be the way to go.

 

Find out more about our guest:

Website: laterradev.com

Email: christ@laterradev.com

 

Interested in hearing Hunter speak at FreedomFest? Register here.  https://www.freedomfest.com/register-now/ Discount code: CFCFreedomFest

 

Subscribe in iTunes: https://itunes.apple.com/us/podcast/cash-flow-connections-real-estate-podcast/id1193877994?mt=2

 

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