I work and invest in boise idaho. You may have heard of that city before, but it’s doubtful You know a lot about this. this important At least for this purpose, what we need to know is that our population is booming and builders only Not keeping up with housing demand.
As you know, supply is low and demand is high direct impact Cost of living. So in In response to this problem, the city of Boise overhauled most of the our Residential zoning code last winter.
For approximately 75% of residential land, these The changes increase allowable density by more than 50 percent. They create new partitions and names allowing unlimited density as long as You can meet setback requirements. them Created Adu Permissible regulations for A rubber stamp permit can be obtained for basically any residential complex.
New zoning laws create opportunities
There There are so many opportunities for infill and large-scale development With these changes. The city is really trying to create more density and housing — in part because they want get Cost of living down A little bit, but also, More housing equals higher taxes.
Subject to new zoning, we have identified an opportunity to build up to 24 units on two acres in a highly desirable part of town. one important part of The reason for the development was that the city required another developer developing an adjacent parcel to connect a sewer line to the edge of the parcel, knowing the parcel would eventually be developed.
We were able to acquire the property under contract, with the owner carrying a note and splitting the small payments in process Two years. We met with an attorney, drafted our operating agreement, and filed our partnership and SEC filings in order. In the meantime, we are working with an architect to help come up with Our initial layout maximizes the available space within the new zoning code to create the highest possible density.
With these pieces of the puzzle in place, we able to get Preliminary meeting regarding planning and zoning. We sat down with city planners and architects, and I was surprised how eager the city seemed to be to help us get this project off the ground.
With guidance from city council, planners should help people make efficient use of new zoning codes and create the highest possible density. Planners helped us finalize the design and even give suggestions How we restrict easements and exports for Create more units.
Based on our progress, one of the larger commercial general contractors in our market gave us a verbal commitment to build the project. this company owner Not only does it give us direct access to their project managersbut expressed their interest in investing in the project themselves. We visited the property with the project manager and listened to their suggestions and feedback besides.
Transaction encounters obstacles
Now that we have initial support from the city and submitted paperwork, we can start raising funds. We hit our spherewith us Talked to existing clients and other developers in town. After several live and recorded webinars, We have a lot of investor commitments Invest in the syndicate based on our preliminary data, which are quite conservative.
Everything is going well and we are about to 10 Number of days since closing date escrow. Out of the blue, we received an email from the city’s public works engineer stating that the city was not planning for the density allowed by code and that the sewers in this particular neighborhood could not support the capacity of our project. So instead of building 24 units, the city would only approve one.
As you can imagine, this changes the numbers a bit. So we spent a few days going back and forth with the city to come up with some possible solutions to this problem, among which we met All accounts have “maybe” on them. Well, maybe that’s not a comforting answer when you Betting Investments amounted to millions of dollars.
We need more time to find possible solutions or get clear answers to sewer capacity issues. We went back to the seller and asked for an extension. The only way they would agree is if we give them all of our earnest money, which not going to This is what happens when we walk into such uncertain waters.
So, after months of hard work and hundreds of hours of work, something within the scope After spending $15,000 on an architect and attorney, we had to terminate the contract a few days before closing.
Why I’m glad it didn’t work out
That was about six weeks ago. I’m not happy that we have to terminatebut I We were relieved and very grateful that we got this information before the deal closed and definitely before we took any actual deposits from investors. What an important lesson this is: Everything is going great until something goes wrong, and this seemingly small message completely changes everything.
So, you ask, why am I happy about not succeeding? there are many reasons:
- First, we received a very cheap education due diligence. Many people have paid much more than us for Learn the lessons we learned.
- We interviewed several contract and syndication attorneys and developed a great working relationship with an experienced and talented attorney.
- Several other developers in our market recommended a specific architect who happened to be an old high school friend of my wife’s, so we reconnected and had a very experienced teammate who was already working with P and Z established a relationshipalso City Council. Additionally, he is an expert on new city codes, is helping us and underwriting New deals based on his experience obtaining project approvals.
- We have a lot of people in our network, who I didn’t know were interested or capable of investing in something like this, who are committing their hard earned money to our project. established new relationshipit’s great to see other people step out of their comfort zones with us.
- We didn’t lose anyone’s money except our own. We’re already return Keep our investors informed and transparent actually Increased their trust in our work.
- The best part: less than a week after we terminated our agreement, we better one Opportunities under contract with better terms, higher density, and greater compliance with new city codes. In addition, some surrounding property owners also expressed interest in cooperating with us to expand projects in a very important way.
final thoughts
this experience only Confirmed my attitude to take action. You can read all the books and listen to all the podcasts, but Unless you take action, You won’t make any meaningful progress.
I find again and again In my 20+ years of investing, every time an opportunity passed me by or didn’t materialize, a better opportunity presented itself almost immediately. As long as you keep your eyes open, it will work.
Yes, we have verified that the sewer capacity is suitable for the new works site. I just make new mistakes!
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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
