NEW HOUSING DEVELOPMENT IN DOWNTOWN PHOENIX
EXCELLENT OPPORTUNITY FOR INVESTORS NOW
Castle Homes AZ, LLC is looking to acquire a parcel of land in the Phoenix Central Corridor consisting of approximately 40,162’ (+/-).
We plan to build 12 attached single-family townhomes approximately 1,500’ in size. Our design permits for two-story luxury units, consisting of 3 bedrooms, 2.5 baths and double garages.
After scouting the area and watching the comps in the area we have come to conclusion that this size and floor plan will be best for this location, emphasizing the contemporary, urban feel of downtown living, suitable for high performers, younger employee's taste and starter families preferences and meeting their needs for secure parking at their residences which right now is almost impossible to find in downtown Phoenix. Such approach will guarantee that we produce very attractive and thus lucrative product to potential buyers and therefore fast return on investment.
As of July 2016, there are both, severe shortage and very high demand for housing in Downtown Phoenix from people who work in the business district buildings. The purchase price for the property is set at $800,000. After the close of escrow, we will begin the engineering and design phase, which should take approximately 6 months to complete. At that time, we will begin construction of the improvement and model homes (See Pro-forma monthly cash flows). This phase will cost an additional $555,000 in improvements, engineering, planning and scheduled overhead, for a total investment of $1,355,000 for 12 fully improved lots.
The investor will be in a first lien position on the project. Castle Homes AZ, LLC will direct the title company at the close of each home to pay back 100% of the profits directly to the investor group from the closing, less costs of the construction loans and fees; and the closing costs and commissions. Castle Homes Arizona receives a 8% fee of hard costs to pay salaries and overhead. Castle Homes AZ, LLC receives no other funds until the investor is 100% paid back on total amount of capital invested. After 100% payback to the investor group, 50% of all remaining profits go to the investor group and then 50% of the remaining balance goes to the builder Castle Homes AZ, LLC.
Investor should receive 100% of their capital back in about 19 months from the date of the close of escrow after the sale of the first 6 homes. This will give the investor an annual rate of return on capital that is out of 13.5% annually approximately.
Note: Investor must invest 100% of the capital required and retain its own CPA to monitor all funds invested on their behalf. The land will be held in the investors' name and all funds distributed will be through the title company. Castle Homes AZ, LLC will have an exclusive contract with the group for the building and marketing of the project with the investor's group. After all capital is returned there will be a profit split between the investment group and Castle Homes AZ, LLC
NOTE TO INVESTORS
Homes with private parking are in huge demand in Downtown Phoenix. Some but not all office buildings have their own garage. Employees in the area are forced to use privately owned garages in the area or park at the street temporarily using parking meters for business meetings etc. Arizona has on an average 306 days of bring sunny days with around 100 days with temperatures over 100 degrees+. People can drive to work and luckily park in the office building but after work they are forced to leave their vehicles on the street and in the sun, pay parking meters or choose to live far away from their place of and commute to work -- or they can purchase from us.
This development would be very lucrative for residential rentals as well.
TOTAL CASH INVESTMENT - $1,355,000
· Parcel Size: 40,124’ plus or minus
· Purchase Price: $800,000
· Single Family Attached: Units 12/ 18,000
· Improvement Costs: $555,000
· Retail Price - $375,000
· Square Footage 1,500’ sq.’ / $ 80 Per sq.’ (120,000)
· Commissions: 6% (22,500)
· Closing Costs: 3% (11,250)
· Land Cost (66,667)
· Land Improvement’s (45,833)
· Sales Tax – (14,100)
· Building permit - Included
GROSS PROFIT: 12 units
INVESTORS PAYBACK 100% - $1,355,000
GROSS PROFIT ON INVESTMENT ~ 84%, $ 1,135,800
Investor gets 100% of the land and improvement costs back at each closing plus all profits until 100% of the cash is returned.
The $1,355,000 remaining profit is then split 50% to the investor and 50% to Castle Homes AZ
Total Cash Needed by Investor $1,355,000 is paid off in first 6 lots.
If you build it, they will come !
DOWNTOWN PHOENIX COMPS 2016
Price per Sq. Ft
$ 178 / 1825 sq.ft
$ 171 / 1670 sq.ft
$ 273 / 2415 sq.ft
$ 192 / 2264 sq.ft
$ 142 / 2022 sq.ft
$ 261 / 2250 sq.ft
$ 265 / 1930 sq.ft
As of July, 2016 the majority of these projects are sold out. Cosmopolitan and Catclar were just getting out of the ground at the time of this report in December, 2015. The average size of these projects was 18 units.