Land-PIE version 7.6 for Financial Feasibility Analysis Released

admin — Mon, 15 Nov 2010 23:44:47 +0000

Any company worth its salt will strive to improve their products or services… or die. The Tract-PIE Team continues to invest time and capital to deliver the most flexible, easy-to-use, versatile real estate investment cash flow projection software on the market. The Tract-PIE suite of systems has been benefiting large and small real estate residential and commercial builders and land developers for more than 20 years… and we plan to continue doing just that!

We have just released the latest version of Land-PIE, version 7.6 which includes:

Budget Analysis Report:

The Budget Analysis Report presents the results from a Primary Report showing all revenues, costs and profitability by Product Type, Grand Total, Per Unit Average, Per Acre, Percent of Sales, and Percent of Cost. This report also provides some other key analytical information.

The presentation of this report has been enhanced to be much more functional in terms of categorizing cost items as Finished Lot Costs with a corresponding sub-total resulting in Gross Profit and Gross Profit Margin-%, followed by Direct Costs with a corresponding sub-total, Miscellaneous Revenues with a corresponding sub-total, and finally Net Profit and Profit Margin-%.

Flexible Identifiers for Loan Categories, Developer & Investor Equity Participants

The Purchase Note and A&D Loan categories now allow you to enter your own descriptor for each loan category if you prefer to change the default descriptor. The Miscellaneous Loan category has always required that you enter your own title to identify the loan (if used). Also, the default descriptors for the Equity Participants (Developer and Investor) may be modified if desired. Maximum Report Periods Expanded to 360

The maximum number of report periods has been expanded from 240 to 360. Report periods may be designated as months, quarters or years. When a report is displayed in the report grid, a menu bar item is presented that allows you to present quarterly or yearly periods for a monthly report or yearly periods for a quarterly report.

Report Presentation Enhancement

Report presentation has been enhanced in that values that represent percentages (i.e., interest rates, discount rates, internal rate of return, (%) of sales, (%) of cost, etc.) are now shown with a percentage sign.

Improved Menu Bars for System Navigation

All information prompting forms now provide a menu bar selection that allows you to immediately return to the Main Menu whereas certain forms previously required you to advance to a prior or subsequent form in order to exit to the Main Menu.

New Analysis Metric – “Equity Multiple”

An important metric for investors to consider is known as the Equity Multiple. This is a ratio calculated as the Total Distributions for the Equity Participation divided by the Maximum Equity Advanced Balance. Land-PIE displays the Equity Multiple for the total equity participation and for the Developer and Investor equity participation on both the Primary Report and the Executive Summary Report.

Flexibility, ease of use and on-going enhancements, coupled with responsive Customer Support are what make the Tract-PIE suite of systems the software of choice for successful homebuilders, land developers, lenders and investors in these challenging times.

Tract-PIE Office Condominium Financial Analysis Yields Great Returns

admin — Mon, 15 Nov 2010 23:40:12 +0000

Rick McCann, CFO of Southern Home Builders, Shreveport, LA, purchased Tract-PIE about a year ago… but alas, it gathered dust on the shelf amidst the doom and gloom of a discouraged industry. Recently, however, Rick was willing to re-commit to learning Tract-PIE with a quick training session using a deal he was involved with. And what a deal!!

The deal involved 44 Executive Office Condominiums, each ranging from 1,225 to 4,900 SF in 4 – 5,000SF buildings. Pre-construction pricing began in the low to mid $250s. Quickly analyzing the deal in Tract-PIE was a snap and really opened Rick’s eyes to how easy Tract-PIE is. He confessed that “trying to learn a new system is always intimidating and time-consuming but Tract-PIE was incredibly easy!”

What’s exciting for Rick is that this and similar deals pencil out at about a leveraged IRR of over 200% with a Profit Margin about 38% with a short duration, start to finish, of less than 2 years. And with a slowly improving economy, proximity to large residential communities and a growing desire for small ownership versus rental, he’s optimistic about the future of similar projects.

“I’m definitely going to be using Tract-PIE to analyze similar projects because I firmly believe that we have found a perfect product at a great price for these times”, says Rick!

Maybe there are similar projects that you can take advantage of in your area too!

Click here to learn more about Rick’s project.

Land Development Financial Analysis at Sunwood & Associates

admin — Mon, 15 Nov 2010 23:37:46 +0000

With banks not actively lending on real estate projects, investment firms like Sunwood & Associates are very busy analyzing and evaluating all the deals that are submitted to them. That’s why Tract-PIE has been so important to them – to analyze potential deals quickly, filter out the viable deals and concentrate on the best ones and then optimally manage them over their life-cycle.

“Receiving an initial submission in a spreadsheet is typical, but we rely upon Tract-PIE to more accurately forecast revenues and expenses and structure the deal to make it a win-win situation”, says President Erendira (Eri) Cervantes. “Obtaining a cash flow projection already in Tract-PIE or working with a partner using Tract-PIE sure makes the evaluation and monitoring process that much easier and faster. And the fact that they are using Tract-PIE makes us more comfortable that the projections are correct”, she adds.

Under the experienced leadership of Don Knox, Don Faye and Erendira Cervantes , Sunwood & Associates is a privately held real estate investment firm that specializes in acquiring desirable real estate properties that will deliver solid returns on investment for their partners and associates. These purchases often represent residential land parcels where the hard and soft costs of the properties exceed their present market value. Sunwood primarily targets its acquisitions across the western region of the United States — including California, Colorado, Arizona and Nevada.

The Sunwood & Associates team offers over 70 years of collective real estate and business experience. Throughout their careers in finance and real estate, the partners have amassed exceptional expertise encompassing:

Executive Investor Management
Executive Developer Management
Executive Bank Management
Commercial Experience
Acquisition Management
Private Placements
Strategic Planning
Equity Raising, Foreign and Domestic
MAI Appraisers
Lending Experience

At Sunwood & Associates, they take pride in maintaining the highest ethical and professional standards with their partners, lenders, jurisdictions, consultants and associates. They value the relationships that are established, and recognize the importance of integrity, trust and responsiveness in ensuring successful, mutually beneficial transactions.

They also value Tract-PIE service and support… because in a fast moving industry such as real estate capital funding, you need the flexibility to handle every twist and turn that comes your way in a very competitive marketplace. Tract-PIE delivers big time!

Naive “Builder” is Not Realistic

admin — Mon, 15 Nov 2010 23:25:16 +0000

We were recently contacted by someone who wanted to evaluate our Tract-PIE financial analysis system for a proposed Midwest residential project. As we connected our PCs (me on Windows, him on a Mac) and began the live demo by inputting his "real life" assumptions, I started to sense naivety and a lack of seriousness with this prospect. The project involved more than 100 homes on partially developed property (to be actually purchased in a week at auction!!), but it became apparent that not much thought had been put into the accuracy and detail of the assumptive parameters… even going through what we call the Quick Feasibility (back of the envelope) module. Trying to make the presentation as worthwhile as possible, we probed deeper regarding the assumptions, the experience of the builder and the knowledge of the individuals who would be advising this person.

After comments such as "the family has been in real estate for years" and "we’ve done lots of projects on a handshake and didn’t need anything this detailed", I quickly realized this prospect was living in a completely different world. This was then confirmed when he shared that "he was bored and wanted to sign-off and get together with the boys for a beer!"

Why share this story? While marketing and supporting our financial analysis software for more than 20 years, we have never encountered such a response from anyone! We have found, without exception, that those who endeavor to be successful in this industry are hardworking, passionate about what they do, willing to make sacrifices to accomplish prudent goals, are realistic (for the most part) about the expectations of lenders, investors and homeowners and are open to using the most efficient tools available whether for construction or financial analysis purposes.

It has been a distinct pleasure supporting the real estate industry with our financial, feasibility analysis software and we’re proud to be associated with those who work in, support or serve the industry. I praise you for your consistency and courage as you labor in these challenging times. I also wish this unrealistic prospect good luck - he’s going to need it!

Confessions of a Homebuilder Spreadsheet Financial Analysis Guru

admin — Mon, 15 Nov 2010 23:23:43 +0000

I just got off the phone with Ruben Aguirre of Community Builders International of Las Cruces, NM. I smiled while hanging up the phone after hearing the "confessions of a spreadsheet guru"!

Prior to using Tract-PIE, Ruben had created many spreadsheet models for generating cash flow projections and doing the financial analysis for all their building projects. After using Tract-PIE for more than a year, he recounts how much easier, faster …. and more accurate Tract-PIE is compared to his prior models. Additionally, he’s more efficient and able to thoroughly analyze existing projects as well as do the prudent feasibility analysis for new projects and communities.

And vital for any company, their lenders are more receptive and responsive now to their presentations because the reports are professional-looking and endorsed by their accountants at one of the best recognized CPA firms in their area.

According to Ruben, "we can present reports to our accountant and respond to their suggestions much faster and confidently than when using a spreadsheet." "I make better use of my time with Tract-PIE. It frees me to analyze a deal from more angles instead of spending my time double-checking and triple-checking formulas for errors and omissions. And when I have a question about how a feature in Tract-PIE works, their customer support calls me back the same day, and always within 24 hours."

Tract-PIE version 7.6 for Financial Feasibility Analysis Pre-Release

admin — Mon, 15 Nov 2010 23:19:40 +0000

We are wrapping up the latest release of Tract-PIE, version 7.6 and I wanted to give you a sneak preview of what will be released shortly. While this is not an exhaustive list, it will provide you an expectation as to what will soon be available.

User defined titles for all expenses	No more being limited to pre-defined titles
Permits and Fees based upon different fees by plan types	These different fees affect the profit margin of each plan type
4 additional User Defined Expenses	Combined with the above User Defined titles on existing expenses, you have many more expenses available to describe your project
User Defined Loan Titles	Used to describe your unique funding source
Budget Analysis Report Expansion	Now reflects expenses allocated to Lot cost, Construction cost (leading to Gross Profit), reduced by Direct Costs leading to Net Profit. Loan fees and interest are also assigned to the appropriate categories

This Tract-PIE release is scheduled for the Summer 2010.

Live, Work, and Enjoy Life - Mixed Use Development in UT

admin — Tue, 29 Sep 2009 05:25:42 +0000

Our latest interview with Jared Westhoff of EGI Financial in Leeds, Utah gave us great insight into a
company that plans to remain profitable even though we are in the middle of an economic downturn. Located in the southern part of the State while working on projects from St. George to the greater Salt Lake City area, EGI focused mainly on land development and distressed properties and mortgages in the early 2000’s. In 2006 EGI began planning along with DAI, Utah’s foremost land developer, for a 2700+ acre master planned community named Pole Canyon. This community has been designed as a place where people can live, work, and enjoy life. The crux of this plan is to combine the benefits of light industrial, commercial and residential building into one well thought-out community with upwards of nineteen different neighborhoods. This take on the “mixed use” concept seeks to appeal to those looking for a short work commute with everything necessary for an elevated standard of living.

The project is complete with 38 acres of pedestrian, equestrian, and ATV with access at several points to thousands of acres of federal lands. It will have a rodeo arena, a central park linked by trails to other neighborhood parks. This community desires to appeal to those already living in Utah and those desiring to leave more expensive states, such as California. With energy costs 30% lower and a state income tax 4% lower than California, this community will hold major appeal to many families looking for a more affordable lifestyle while boosting their quality of life.

While an ample short-term water system already exists with millions of gallons per day in excess capacity, securing a long-term option is currently in the works. On the industrial side, there are 100’s of acres available to companies looking to breakground in the near future. In the past six months there have been four fortunes 500 companies which have put Pole Canyon on their short list of sites to expand to. EGI sees the opportunity to provide an environment where companies can locate in a pro-business city, county and state where their employees can enhance their quality of life while they dramatically increase their bottom line. As members of the Economic Development Corporation of Utah, EGI have been very impressed with the representation gained through this quasi-government entity. Coupled with the state and local incentives to attract businesses to their area, they hope to attract not only local businesses, but those who see the financial benefit of moving or expanding operations into the mountain west region

“Land-PIE has been an integral part of the planning process for this large project. It has helped us focus in on the financial details of the development – details that have been the downfall of others. Performing “what-if” analysis using Land-PIE, while testing many alternatives, has made us much more productive and cost-effective with the small staff that we have,” said Westhoff.

On the other side of their business, purchasing distressed properties, they have found great benefits while using Land-PIE. “It’s extremely helpful in getting the owners to understand ‘why’ their property is worth the current, often depreciated, value,” explains Jared. They have seen Land-PIE as an excellent tool to determine a fair market value for the prospective properties. After agreeing upon the assumptions with property owners, they run the model and let the numbers speak for themselves.

While their activities have been limited during the present financial crisis, they are a company that has been able to remain focused and whole with a vision for the future.

Walkable Communities Are a Winner for Urban Community Partners

admin — Tue, 29 Sep 2009 05:15:06 +0000

While “sustainability” is a word that if often flung around in today’s society, hearing it in the world of building and development is becoming more common. According to Ian Gillis of Urban Community Partners, LLC, “Everyone has their own definition of sustainability. For me I prefer the word “walkable. We want to create a community where people can walk to work, to the store and out for dinner.” Not only is this idea something that is environmentally friendly, cutting back on use of cars, it is also much healthier for individuals. “Studies have shown,” he continues, “that people who live in mixed-use communities are actually healthier than those who don’t. They are using the two legs God have them, instead of their cars.”

In today’s towns, we are used to one-use communities that fit the building codes established after World War II. But according to Gillis, cities are rethinking their layouts and rewriting their codes to accommodate a changing world view and demographics, “Young and old are looking for more to do and are moving back into cities and towns, looking for a more vibrant and connected lifestyle.”

Along these lines, Gillis and his company have just completed plans for a new Walkable community in Yuma, Arizona, complete with 1100 homes, shopping and an organic farm. They were able to use a “smart-growth overlay” to convince city officials that altering city codes is going to be the best bet for future development. Cities along the California coast are also starting to adopt this more progressive planning method.

Master planned communities have become woefully homogenized over the past few years and while many are satisfied with their 2,000sf. Plus homes, where you need to drive to reach every facility and activity, others are opting for smaller homes, in integrated communities, neighboring condos, stores and libraries. With the climate change, rising cost of gas and adjusting demographics, people are looking for change, smart change. “I see mixed-use communities being a popular area of development for the future, explains Gillis. “This is a change that will be coming from municipalities looking for higher quality development for their communities but also from the market demanding this type of product.”

Gillis’ company was formed with the idea of developing Smart Growth walkable communities. Due to the economic and real estate meltdown development projects with a long term horizon are just not financeable today.. Like most, they have had to reinvent themselves in this economic climate. While consulting was always an aspect of what they did, it has become the main thrust of their company in light of decreased building. “Investors would rather purchase a finished product for 30 cents on the dollar than buy land and start from scratch. It’s hard to argue with that. Something has to change to make development viable again,” confesses Gillis.

The financial crisis has not been a welcomed guest, but as many builders and developers we have spoken with contend, it has perhaps led to a new way of thinking that will thrust us forward into a more stable economy and even a healthier lifestyle.

Tract-PIE and Land-PIE Aid Florida Builder in Challenging Times

admin — Fri, 18 Sep 2009 17:36:00 +0000

While there is much talk about having reached the economic bottom for the real estate market and that a possible upturn is right around the corner, developers and builders still may have uncertain times ahead. Our latest interview was with Jeff Daley, a 36-year old Assistant Vice President for a regional developer in the southeastern United States. Jeff gave us another look into those surviving the economic downturn. Daley was brought on as an analyst six years ago. Before the real estate crisis, his main responsibilities included sourcing and underwriting land deals along with the associated due diligence. Today his responsibilities have increased in light of the needed layoffs to cut overhead. “Like everyone else, we have had to downsize, and I’ve had to reinvent myself,” explains Daley. “I’m doing everything now from Power Point presentations to Real Estate Tax analysis.

As far as Daley’s project analysis is concerned, he strictly uses Land-PIE and Tract-PIE; “I can’t tell you how pleased I have been with the power and flexible capabilities of both Land-PIE and Tract-PIE. The ‘goal seeking’ element of the programs has been really beneficial. These systems are truly amazing and took my analysis to a whole new level,” praises Daley.

In regards to the economy, “I can’t say when there will be a turnaround. I have a theory that those who make a prediction, would be better served to simply say, ‘I don’t know.’ There’s just too much political risk,” surmises Daley. As far as personal growth is concerned, he has learned to be glad with the job he still has. “My wife and I have learned to cut corners. Well, I have had to. My wife comes from a more frugal-minded culture and I’ve learned a lot from her.” While admitting that this is his first economic “down stroke” experience, it has been more valuable than sitting in school earning his Masters. Apparently the school of hard knocks has another well-educated graduate.

Senior Housing Opportunities for Newlands Group

admin — Tue, 12 May 2009 23:50:25 +0000

Since beginning our interviews last year, we have come across one amazing story after another. While no one is enjoying, necessarily, the changes in the present real estate market, they are welcoming the creative opportunities rising from the ashes. Our latest interview with Michael Barnes was an exciting glance at new unforeseen opportunities and investments.

Situated in Reno, Nevada, Barnes was co-owner of Copper Canyon Development, a master planning developer from 2000-2005. Unlike many of his real estate contemporaries, Barnes and his company were able to sell at what turned out to be the height of the market and walk away with not only a profit, but an opportunity for a personal year - long sabbatical that led to a renewed enthusiasm for real estate potential.

Forming a new real estate development company in 2007, Newlands Group LLC, and taking on new partners, they have considered every possible method for land/real estate development popular over the last twenty-five years, and found them no longer effective in today’s market. He chuckles as he states candidly, “We are self/unemployed and looking for opportunities. We are having to feed our investments now until the market turns around and with a lot going out and nothing coming in, we’ve investigated all options. ” After stumbling through attempts to capitalize on the market downturn, they have landed upon the growing need for decent senior housing. With Baby boomers getting older, a considerable percentage of our society is going to need comfortable future housing. Instead of the sterile, tiny, “McDonald’s” cookie cutter standards of current senior housing available today, Barnes, desires to build appealing dwellings based on universal design standards, with outdoor common areas and gardens, adjacent to pathways, storage, garages, and an aquatic center. “I want to build something that I want to end up living in. They existing senior housing in our area is unsatisfactory, and I’m not working my whole life to end up in one of those,” states Barnes.

This is an area he has never before ventured into. Instead of entitling and developing land and selling for profit, this investment requires a long-term commitment of not only development, but operation as well. They envision rental properties, 50% larger in size than currently on the market, geared towards active adult and independent living, with unbundled services adjacent to neighborhood retail, providing part-time job opportunities geared towards seniors. “Operating expenses with such projects are generally greater than 50% of revenues. It’s like running a restaurant, hotel and apartments all with healthcare provisions,” explains Barnes, adding that this project, while smaller in acreage than what he is accustomed to developing, it is far more detailed than anything he has involved himself in adding, “The entire project is people dependant, often with mobility and health issues, and that is where larger companies will lose out; meeting the particular and often delicate needs of the client will either make or break the project.”

There are many challenges, not only as far as developing schemes and limited financing, but also in terms of affordability; the market for seniors able to afford rent between $3,500-$5,000 a month certainly limits their client potential. Yet, regardless of all the hurdles, not only does he see the potential, but also the necessity for this niche market.

While there are many challenges ahead, Barnes believes this to be a more lucrative direction as land development and building probably won’t see a turn around before 2013-2015. While the stimulus package has been initiated, it will take many months before its effects trickle down to the people changing their purchasing power and opening up job opportunities. Not only is the US market to be considered, but also those of the EU and Asia that are facing considerable challenges as well. There are so many unknowns that sitting back waiting for financial stability will leave people in an even more precarious situation.

While spearheading this movement toward senior housing, some of Barnes’ contemporaries are waiting for the outcome instead of diving in themselves. Regardless of the lack of company, Barnes is more than optimistic about the potential.

Michael can be reached at MBarnes@NewlandsGroupLLC.com