Returns should be double digit. Returns are measured by using the ROI or Return on Investment formula. The formula is the Net Operating Income / Cash flow for the year. If the development proforma is not showing a double-digit number, avoid the investment.

• Land contract…….. 90 to 120 days                                   
• Entitlement………… Municipal Entitlement will take at least one-year. 
• Close on the site… Given that entitlements are satisfactory.
• Construction………. One year + to develop 87,000sf on 8± acres.             
• Lease up…………….. One year + at a rate of 7,000 to 8,000sf per month.

The commercial real estate market changes almost on a day-to-day basis.  Investing in a site, then entitling a site, then selling the entitled site is the highest return with the least amount of risk.  Municipal entitlement takes about a year and cost for entitlement is approximately $500,000 on a small site.

Today (2024) the best commercial real estate investment is as follows:

• Purchase and sell quality vacant sites that you have entitled.
• Flex space or R&D space or a small business center for small manufacturing, light distribution, last mile delivery or just storage.
• Conditioned and unconditioned Self-storage facilities.
• Truck parking. Florida needs 3,400 spaces today and 4,900 spaces by 2030.
• Central Florida is growing by 1,500 permanent residences per week.
• Lot development for to sell to small residential builders.
• Find a free and clear site and joint venture the entitlement and sell with the owner.

1. Ask a lot of questions. Then ask more questions.

If you run out of questions, ask your wife.  She will have a lot of questions.

2. Know your market, do your homework!
3. Know the zoning and land use, amenities, rents, absorption rate, mix of the units, competition, operating expenses, entitlements, municipal costs, closing costs, lender interest rate, lender conditions, value at stabilization, et al.
4. Have a real estate attorney that will discuss, at length, various items and make suggestions.
5. Use a civil engineer that will tell you “Why”.
6. Use an architect that will tell you “Why”
7. Discuss, at length, your proposed development with a knowledgeable commercial real estate appraiser.
8. Stay involved from a distance in the construction.
9. Read and understand the monthly management reports and accounting reports.

Do not judge the investment by only knowing the “Type” of real estate.  Follow the following.

• Investors, do your homework,
• Hold the Sponsor accountable to his advertised expectations,
• Hire a local seasoned commercial real estate appraiser to analyze the real estate and the market.
• Ride the site and environs of the proposed Joint Venture while talking with the appraiser.
• Ride by the competition and listen to the pros and cons of the site, location and amenities of the competition.

There are several options available to finance real estate.  They include banks, saving and loans, credit unions, life insurance companies and money managers.

I suggest a C/P (construction / permanent) loan from a local bank.  Subcontractors feel more comfortable when the lender is local.  It is inevitable that a lender in another state will delay the construction draw requests.

Understand that all the investors and the sponsor will individually guarantee the C/P loan.