TOWNHOME
DEVELOPMENT
INVESTOR PRESENTATION
3 3 bed / 2.5 bath 1700 sq ft. Townhomes
Donovan Adesoro
Executive Summary
• Opportunity to take advantage of well located land and low building costs
for modern, but relatively affordable single family homes
• Little to no maintenance costs for the first ~5 years if we have to hold
• Aiming for price point at or below the median sales price of Houston, TX
• The target area has been considered “revitalized” by the City of Houston,
meaning public funds will be targeting this area specifically
• Area is not in a flood zone (https://www.harriscountyfemt.org/)
• Close to major highways and attractions
• Few minutes to the 610 loop, 45, and 288
• 5-10 minutes to downtown, U of H, Texas Medical Center, etc
Location, Location, Location!
• 5 minutes from 3 major
universities (Rice, TSU, U of H)
• 10 minutes from Texas Medical
Center (traveling nurses)
• 5 minutes from downtown
What will it look like? (3 bed / 2.5 bath SFH)
Timeline
3 Townhome Development Timeline
Jan-22 Mar-22 May-22 Jun-22 Aug-22 Oct-22 Nov-22 Jan-23 Mar-23 Apr-23 Jun-23
2/8/22 Close on the land, 15 Days
Close on the land
Replat
2/23/22 Replat, 81 Days
Submit for permits + arrange
5/14/22
Submit for permits + arrange financing financing, 101 Days
Construct ion
8/23/22 Construction, 241 Days
Sell or rent & refi
4/21/23 Sell or rent & refi, 31 Days
~14-15 months from purchasing land to sale/refi
Construction Costs (3 bed / 2.5 bath townhomes)
Third Ward Townhomes Lender Investor Total
Land Acquisition $ - $ 170,000 $ 170,000
Survey + Elevation $ - $ 3,000 $ 3,000
Land Closing Costs $ - $ 5,100 $ 5,100
Replat Fees $ - $ 8,000 $ 8,000
Achitectural Plans + Running $ - $ 8,000 $ 8,000
Impact Fees $ - $ 10,000 $ 10,000
Permitting Fees $ - $ 5,000 $ 5,000
Loan Closing Costs $ 20,528 $ - $ 20,528
Building Costs ($115/sqft) $ 586,500 $ 30,000 $ 616,500
Developer Fee (2%) $ - $ 12,000 $ 12,000
Holding Costs
$ - $ 21,994 $ 21,994
Build (10 months)
Total $ 607,028 $ 273,094 $ 880,121
Total Investor out of pocket: $273k
*Investor should have $10k-15k as a contingency that
will only be called upon if needed*
Exit Strategy
Sell: Hold:
Hold
Sell After Repair Value (ARV) $ 1,110,000
Sales Price ($370k per) $ 1,110,000 Refiance (80% LTV, 5% rate, I/O) $ 888,000
Closing Costs (3%) $ 33,300 Closing Costs (2%) $ 22,200
Loan Amount $ 607,028 Investor Capital Left in Deal $ (14,321)
Equity Created $ 207,679
Investor Capital $ 273,094
PITI (monthly payment) $ 4,425
Net Profit Split 70/30 (Investor's Gross Rents $ 6,600
$ 196,579
favor) Net Profit Per Month (10% EXP) $ 1,515
Investor ROI 50% Investor Cash on Cash (On Remaining
89%
Equity)
Operating Agreement for LLC
LLC Set Up and Formation Documents Created:
- $500 paid by the investor to Donovan
Investors:
- Will provide all out of pocket costs
- including but not limited to closings costs, land acquisition, initial payments to contractors etc.
- Guidance
- Will receive 70% of net profits**
Donovan Adesoro:
- Project management & ensure timeline is being followed
- Work with builder and City of Houston on soft costs (soil testing, permitting)
- Work with lender on acquisition and build terms
- Communicate with lenders in preparation for refinance
- Manage property for (7%) if it becomes rental or help with disposition for a sale
- Developer fee paid out over 10 months once the construction loan closes
- Will receive 30% of net profits**
Net profits**on sale are equal to sales price subtracting original hard money loan amount
out, closing costs and investors initial capital
Net profits** on hold are equal to gross rental income subtracting out PITI
(investor will keep any & all profits made from refinancing)
