Unlike a traditional real estate investment that relies on construction and the sale or lease of a building, RDD focuses on land acquisition and preliminary entitlement. This unique approach was created based on 3 core principles: Risk Mitigation, Expedited Investment Timeline, and Elevated Return on Investment (ROI).
It’s All in the Details
RDD’s core principles ensure a maximum return on investment with minimal risk. By avoiding any construction the inherent risks of building are mitigated. Specific construction related risks that are avoided include:
Material Price Escalation
Subcontractor or Vendor Performance Issues
Unexpected Site Discoveries
Municipality and Construction Delays
Poor Post Construction Performance regarding Sales or Rentals of Development
Construction and Post Construction Litigation
The construction based risks shown above and more exist which means an Investors ROI (profit) could be impacted and even worse, their entire financial investment could be at risk. RDD removes these risks from the equation. The financial investment amount is reduced because funds are not required to generate construction documents, obtain building permits and develop the project. Less money is required with less risk, resulting in a greater opportunity for a successful investment. That’s the RDD business model.
Expedited Investment Timeline
The Construction process is exactly that, a process. It takes significant time to generate construction documents, obtain Municipal approvals, construct the building, obtain inspections and approvals and then sell or lease the built product. It takes numerous years start to finish under ideal conditions. The state of the economy is a critically important factor to consider when investing in real estate. We have economic cycles including downturns that are difficult to accurately forecast. For this reason it is very important to minimize the length of any investment duration. RDD averages only 13 months from land acquisition (purchase) to subsequent sale, which is ideal for implementing tax reduction and deferment strategies like 1031 exchanges.
Typical real estate construction investments will lock up investor money for significantly longer periods of time. This increases risk and elongates the investment time frame and creates a greater chance that a downturn in the economic cycle could occur during your investment.
Alternative real estate investments, such as Fix and Flips are heavily taxed and not eligible for 1031 exchanges resulting in a greater percentage of your profit is lost to taxes.
RDD appreciates the importance of reducing the investment duration which is why Brian utilizes his diverse network of developer-buyer contacts to begin preliminary marketing of the opportunity to future buyers before closing on its acquisitions. Doing so minimizes the time between the original land acquisition and the execution of a Purchase and Sale Agreement with a potential Buyer. Simply put, the faster a sale contract is established the faster we close the faster your money is available to re-invest.
Elevated Return on Investments
Regardless of the project type, every building is cited on land. Land is finite and the amount of available for development is reduced every day. This means it inherently becomes more valuable as time passes. Developer’s are always in search of a property that provides them the highest quality location, density potential, and use flexibility. RDD finds and acquires these properties.
RDD utilizes its comprehensive expertise in zoning analysis to design municipal compliant concepts that showcase density and use potential. RDD can market a design package that clearly presents all of these elements to a potential buyer, quickly and efficiently. Expediting this process, via RDD’s unique skill-set, creates competition amongst potential buyers and helps to elevate the sale price and create a sense of urgency.
RDD prides itself in bringing value to all parties. Our properties have consistently sold for high price points due to our unique process, core principles, and the value propositions brought to the table. ROI is averaging an impressive 86% per project, significantly higher than any typical real estate investment, which generally ranges from 10-20%.