Asset Growth Using Non-Cash Equities

A few years ago, a partner and I owned a piece of encumbered vacant land. Through rezoning, site planning, and approvals, it was approved for a residential subdivision. We sold the land to a developer and took back a mortgage.

That mortgage became the down payment for an apartment building.

We moved the equity through the apartment building into a net-leased government building and a mobile home park. The park had 67 pads, all rented, and 10 of the homes came with the purchase. We did lease-to-own agreements with the renters of those 10 homes. We then rezoned the excess lands to allow a total of 170 pads and sold to a group who developed them.

The increased equity was then moved out of the revalued park and reinvested in a new geographical jurisdiction.

It is a good story, and true. But it did not just happen. Certain fundamentals needed to be in play from all parties to these transactions.

How to prepare

1. Start with internal due diligence. Determine the crucial aspects of your future personal and corporate plans. The articles in this library exist to help you set those objectives honestly.
2. Then begin the search. Once asset classes and goals are identified, the hunt begins. If time and energy allow, the hunt is traditionally one of the most interesting and educational parts of the process.
3. Look beyond the listings. Some properties surface through traditional listing systems, but substantially more off-market opportunities are lying at your doorstep. Driving your adopted farm area with this mindset will expose alternatives.
4. Do the homework. Beyond the physical attributes and zoning, research current and historical redevelopment applications, ownership (corporate searches, public records), and title, so you understand outstanding debt and easements before you talk.
5. Most important: meet the owner. Seek an initial meet-and-greet with the beneficial owner of the target property. Over coffee or lunch, a get-to-know-you session with non-intrusive dialogue starts the thought process. Do not be in a hurry. We have finalized transactions up to ten years after first contact. "We don't sell" only lasts until some life-cycle event requires a change. Stay in touch for the duration. A transaction, in the end, finally happens.
6. Or engage counsel. If there is no appetite to converse directly, seek out a qualified broker who understands buyer agency and counseling, and be fully prepared to pay the fee. It is the cheapest investment you will make.

Always remember: people do transactions, not properties. Property never has a problem or circumstance. People do.