Housing Giants - June 23, 2008 - (Page 27)

impairments, particularly the private builders.” Some banks have decided to get out of the business of lending to builders altogether, Burns notes. But public builders have an advantage in raising capital, Thomas points out. “Public builders still have access to capital,” he says. “Investors are still willing to put in cash.” Any loans required to raise capital, however, come with high interest compared to recent times, and lenders are demanding that builders put Land’s location is important. Listen to bob eck describe why. maximize your margins In these difficult times, the margin separating success and failure is thin. Builders need to focus on the fundamentals of running a business, and this includes a value approach to choosing the right lots. “The name of the game is efficiency,” says Bob Eck, principal with Land Asset Strategies of Arvada, Colo. Eck recommends that builders choose properties and projects based on the following: • Focus on areas that still have strong markets. • Try to acquire lots that have minimal upfront infrastructure costs. • Be able to generate revenue quickly. • Supply product that is really in demand. Large-lot single-family suburban homes are now in disfavor in many areas, so consider alternatives. in a lot more cash upfront. Some cash-rich private and institutional investors who can afford to hold property for several years are looking to acquire home lots under the right conditions, says Bob Eck, principal with Land Asset Strategies, based in Arvada, Colo. “If they can buy at a low enough basis so there is still room at the margin to hold and sell back to a builder in the future at a good return, then it makes sense,” Eck says. These types of investors include high net worth individuals and institutions such as large pension funds, he says. Home builders typically find such entities through networking and sometimes by sending out RFPs. These sales tend to be cash deals today, Eck adds. When buying makes sense Builders shouldn’t expect investors to line up at the door to take their unwanted properties, though. Prices may still have www.HouSinggiAntS.com 6.23.08.HouSing giAntS 27 http://www.landassetstrategies.com/ http://www.landassetstrategies.com/ http://www.landassetstrategies.com/ http://www.landassetstrategies.com/ http://www.housinggiants.com

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Housing Giants - June 23, 2008 Contents Viewpoint News and Moves Sell Workforce The Land Dilemma

Housing Giants - June 23, 2008

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