Our Process
Multi-project Offerings Are a Force Multiplier for Investors
When you invest in one of OptIn Ventures' offerings, your funds are pooled with other, like-minded investors. This allows us to achieve two strategic imperatives: (1) close on opportunistic deals as quickly as 30 days after agreement in order to use our strong negotiating position to lock in beneficial terms. And, (2) optimize investors' returns and reduce overall risk by diversifying the funds across multiple projects. Let's dive a bit deeper into these.
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Our Four Growth Strategies for Land Deals
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Buy land and hold it for future appreciation. Here, the critical factor is identification: you need the right location. The team has to be able to understand the area's supply and demand, job growth, local politics and goals, future utility development, and competing projects.
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Buy land and entitle it. The "paper value" of rezoning, site plans, negotiating with utility providers, or even a flood plain recoupment plan, can all provide high value in a short time frame. Typically success in this approach requires deep on the ground understanding of the area and specific property.
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Buy land and execute horizontal development. Realize that moving dirt on a site has an associated layer of complexity and time management that may increase risk. On occasion, however, if the potential returns compensate for the risk, this may be an appropriate strategy.
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Swift funds. This is a wonderful category for providing fast returns to investors, yet is available only to the few organizations positioned to become aware of the opportunity. These deals come about when a developer is into a good deal and runs out of funds. They're looking for a partner to save the deal, and earn a very good return with modulated risk. These opportunities don't come every day, but when they do, you want to be positioned to learn about them, evaluate them, and act quickly.
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Our focus on small to medium size land deals has several benefits. Not only are we below the radar of REIT sized firms, we also frequently find off-market deals. We don't exclude an opportunity just because the acquisition price is low. For example, one of our projects was acquired for $600k, an objectively small deal. When it closes at our negotiated $5.5M net exit, however, the returns to our investors are anything but small. Real estate investment groups who seek to raise project funds only after they've stumbled upon an opportunity often miss out on the preferential pricing and terms we can achieve by using pooled funds.
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Because our projects range in size from sub-$M to $10M+ in acquisition and development cost, we are able to fit several projects into a single offering. This allows us to assemble portfolios of projects of varied durations, locations, and sizes to drive the best risk and benefit returns to investors.
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The Process in a Nutshell
We identify the right land at the right price, which implicitly includes a deep understanding of the market, the potential buyers or developers of the property long-term, and any required capital investment to optimize the deal outcome. That uses a mix of data analytics, and the expertise that comes from decades of experience in this business. Part and parcel of this is to quickly understand the range of acquisition costs that make the difference between an outstanding and a less attractive deal.
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Typically we'll use bank financing to extend the leverage of the investment, giving us an opportunity for even stronger investor returns. In our model, we borrow 50% or less of the total land value.
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We immediately begin the entitlement process for the tract. This includes working with local municipalities to expedite everything from utility feeds to zoning approvals. At times, we'll allocate additional capital to make improvements, when doing so is essential to a strong financial exit.
It isn't unusual for our team to have identified purchasers of a project parcel even as we begin the entitlement activities. We begin discussions with those parties early on, to help us prepare for a quick and profitable exit, as well as to guide any property preparation.
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