What do you do when growth stalls just short of the community you were planning to make the next northern exurb of Dallas, leaving you holding a land plan that doesn't work in the new market?
1. Let the bank have it.
2. Work to get those Texas-sized lots up-zoned to maybe the size of Oklahoma.
3. Rethink everything about the land plan and reposition it to sell in today's market with the hope of recouping some of your investment and keeping your reputation intact.
Big Builder tasked our Dallas Dream Team of land planners, architects, builders, marketers, and financial experts to answer that question for a 279-acre parcel in the far-flung suburb town of Prosper. They answered No. 3.
It was a brave choice considering the market has 81,000 lots on the ground, roughly an 81-month supply at today's build rates. Making this site sell would take a plan that will make it stand out in the crowd.
Yet our team came up with a new plan to build a few more homes on smaller lots that would move the community to open two years earlier, shave six years off the community's build-out life cycle, and produce 9.8% unleveraged IRR by conservative estimates and 16.2% if there's a 20% price recovery over the life of the project.
Tune in to Day 3 of the 2009 Big Builder Virtual Conference with the Dallas Dream Team's live Webinar at 1:15 p.m. Central time today to find out how to prosper in Prosper. Register for free at www.bigbuilderconference.com.
Our Dallas team consists of Charles Merdian, LGI Homes; Dave Copenhaver, BSB Design; Paige Shipp, formerly of Mercedes Homes; John Landon, Landon Homes; Jamie Bigelow, Bigelow Homes; Bob Boyd, BSB Design; and Judi Schweitzer, Schweitzer + Associates.