Aktivum Capital Group (ACG) was pursuing a 3,000 acre real estate opportunity in North Texas in 2014. ECG had verbal commitments with developers for up to 1,000 acres to be parceled out and sold, and a partnership and strategic alliance with builders/developers whom would bring the financing and purchase lots. ECG decided to forego on the property due to the fact that price of the property exceeded our model during the bidding process. However, the below describes ACG’s strategy for large acre tracts.
When approaching a project of this magnitude, the first step is understanding the market. For example, understanding who the major developers are in the area, their price points, and what size tracts they are looking to develop. For increased profitability, you also want to know who the major builders are in the area, their price points, and their lot requirements. A project of this scale will need to have an extremely well thought out exit strategy including pre-sold contracts on tracts of land, and commitments from builders for the portions of land to be developed. ECG will produce a preliminary engineering feasibility, market study, & financial model, and have at least verbal commitments from builders and developers before even submitting a contract on a piece of land of this size.