Land Banking With Walton International Group

[UTCVenturesLtd]

I know 4 sales people for them. It is starting to feel like one in 25 people i know are involved in selling their product. I looked over their brochure and see that you might end up holding as long as 19yrs and some of their exits were in the 10 to 13yr hold range. They try and target projects with an exit time of 3 to 6yrs. The overall average rate of return is 15.4% based on thier projects that have exited.

A land bank seems to have some attractive features such as no leverage is used, no landlord duties involved, strictly a passive investment, they have international investments, rsp eligible

Disadvantages seem to be the length of time your money is tied up, unknown rate of return til you exit, no interest on your investment unless they are renting out the raw land.

 

[GarthChapman]

They performed well for many years during times of rapid growth in the cities they were active in. Land banking is a play on growth of cities in the perimeters. It is important for you to do your due diligence - find out how their model works.
How do they pay for the land purchased - who funds that?
How much value lift do they apply?
How much do they take - and when do they take it?
What risk do they take on?
What is your risk?
What is your security?
How do you exit if things change and you need out?

 

[UTCVenturesLtd]

They performed well for many years during times of rapid growth in the cities they were active in. Land banking is a play on growth of cities in the perimeters. It is important for you to do your due diligence - find out how their model works.
222 1. Acquisition 2. Syndication 3. Planning 4. Exit

How do they pay for the land purchased - who funds that?
222 It sounds like they secure it and resell it to the LP.

How much value lift do they apply?
222 Projections.

How much do they take - and when do they take it?
222 Will have to explore the sales agreement to see what the split is at the exit.

What risk do they take on?
222 As little as possible. Idea is that you tie up your funds and they create a good rate of return so that you reinvest on new projects once the current one has been exited. If they do not get a decent rate of return, it is hard to get investors for future projects.

What is your risk?
222 Lack of liquidity. Holding for 20yrs waiting.

What is your security?
222 The property they say. If their company went broke, your LP still exists.

How do you exit if things change and you need out?
222 Good question. I guess it depends on what clauses they have for that.

I have posed these questions to one of the salespersons that i know.

 

[MonteDobson]

Make sure you dig into these types of investments very closely. Some will purchase the land for "X", then "lift" the value sometimes as much as 200-300% and sell it to investors for "Y", so they make all of their money upfront regardless of the final result.

Also, land is very risky right now given the fact that it is impossible to finance and is not going up in value as it was in the glory years.

There are much better syndications out there in my opinion...I know of a couple great apartment based funds if you are interested.

Regards,

 

[GarthChapman]

QUOTE (C2Ventures @ May 21 2009, 07:59 PM) Make sure you dig into these types of investments very closely. Some will purchase the land for "X", then "lift" the value sometimes as much as 200-300% and sell it to investors for "Y", so they make all of their money upfront regardless of the final result.

Regards,

Bingo!

 

[BrianPersaud]

QUOTE (UTCVenturesLtd @ May 21 2009, 05:06 PM) I know 4 sales people for them. It is starting to feel like one in 25 people i know are involved in selling their product. I looked over their brochure and see that you might end up holding as long as 19yrs and some of their exits were in the 10 to 13yr hold range. They try and target projects with an exit time of 3 to 6yrs. The overall average rate of return is 15.4% based on thier projects that have exited.

A land bank seems to have some attractive features such as no leverage is used, no landlord duties involved, strictly a passive investment, they have international investments, rsp eligible

Disadvantages seem to be the length of time your money is tied up, unknown rate of return til you exit, no interest on your investment unless they are renting out the raw land.


Walton was doing well when land was appreciating 5% per month...

what time of investments are you looking for? There are lots of ways to make a passive investment with higher returns secured against properties that cash flow.

 

[UTCVenturesLtd]

QUOTE (BrianPersaud @ May 22 2009, 07:51 AM) Walton was doing well when land was appreciating 5% per month...

what time of investments are you looking for? There are lots of ways to make a passive investment with higher returns secured against properties that cash flow.


I would like to have those new homes in California that are being demolished for a song! That is the kind of deals that i would like to get on! Talk about buying undervalued properties! Who out there has a LP that goes after these kinds of properties??

 

[BrianPersaud]

QUOTE (UTCVenturesLtd @ May 22 2009, 06:26 PM) I would like to have those new homes in California that are being demolished for a song! That is the kind of deals that i would like to get on! Talk about buying undervalued properties! Who out there has a LP that goes after these kinds of properties??


Well according to Don there are 20 Million of these type of properties.

As for who?
CBI is buying in Arizona. They are the only people credible that I have found buying distressed US properties.

You can find lots of people promoting REO properties if you google bulk reo.

When you look at what`s behind the curtain of these promoters...they themselves are re-selling them to investors. The people I had experience with get these properties in Rust belt states (Detroit, Ohio, and Western New York, Pennsylvania).

These properties are in rough shape so you would have to raise enough funds, to not only buy them in bulk, but to repair them also (think hiring trades is hard in Alberta? try Rochester). This group promise to have them hands free for $35/mth (ya right!...they made most of their money buying it for 10 cents on the dollar and selling it to you for 30 cents). It`s like flipping a hot potato.


In closing you need to show the bank holding the mortgages that you have the available funds (have a few million sitting in an LOC? you need a proof of funds to buy them). After that you have to set up the people systems and relationships to find them, repair them and manage them.

 

[Thomas Beyer]

QUOTE (C2Ventures @ May 21 2009, 08:59 PM) Some will purchase the land for "X", then "lift" the value sometimes as much as 200-300% and sell it to investors for "Y", so they make all of their money upfront regardless of the final result.
indeed !

QUOTE (C2Ventures @ May 21 2009, 08:59 PM) Also, land is very risky right now given the fact that it is impossible to finance and is not going up in value as it was in the glory years.
indeed !

QUOTE (C2Ventures @ May 21 2009, 08:59 PM) ...I know of a couple great apartment based funds if you are interested.
indeed !

 

[Thomas Beyer]

QUOTE (BrianPersaud @ May 22 2009, 07:51 AM) Walton was doing well when land was appreciating 5% per month...There are lots of ways to make a passive investment with higher returns secured against properties that cash flow.
indeed !

 

[UTCVenturesLtd]

QUOTE (thomasbeyer2000 @ May 22 2009, 08:08 PM) indeed !

Thomas, i have not known you to be a man of a few words! Indeed! I was amused when i read your replies. I have been a stone`s throw away from you this week, up the hill from Dead Mans Flats at the Banff Gate Mountain Resort. Will be back in early September for another timeshare week.

 

[UTCVenturesLtd]

Well according to Don there are 20 Million of these type of properties.
222 Wow, where did all the people go in order to leave them vacant?

As for who?
CBI is buying in Arizona. They are the only people credible that I have found buying distressed US properties.

222 Just have a peek at their website. They are getting some nice discounts over the presubprime times. Supposedly, Phoenix and Atlanta are two places where inmigration is happening so they are posed for growth and a turnaround in property prices. (According to material from Walton International researchers)

You can find lots of people promoting REO properties if you google bulk reo.

When you look at what`s behind the curtain of these promoters...they themselves are re-selling them to investors. The people I had experience with get these properties in Rust belt states (Detroit, Ohio, and Western New York, Pennsylvania).

222 Quick flips or short turn investing. Wholesalers!

These properties are in rough shape so you would have to raise enough funds, to not only buy them in bulk, but to repair them also (think hiring trades is hard in Alberta? try Rochester). This group promise to have them hands free for $35/mth (ya right!...they made most of their money buying it for 10 cents on the dollar and selling it to you for 30 cents). It`s like flipping a hot potato.

222 You would have to bring in your own team. Not much demand in the auto areas with so many out of work i would think. Maybe if you want to retire somewhere really cheap and put the bulk or your funds in the bank.

In closing you need to show the bank holding the mortgages that you have the available funds (have a few million sitting in an LOC? you need a proof of funds to buy them). After that you have to set up the people systems and relationships to find them, repair them and manage them.

222 A bit of a gamble there... my original idea was to target vacation destination properties with a group of investors who would use it like a timeshared property until it was rented out to the general populous and the group could go onto acquiring more properties in other nicer more desireable locations. It would be great for investors who love to travel and can do both investing and vacationing at the same time!

This post has been edited by BrianPersaud: Today, 05:08 PM

 

[UTCVenturesLtd]

I seem to get the impression that no one has actually done land banking from the investors reading the posts. The future doesn`t look that promising for the land banking game nor much else for the rest of the year. If the land banking folk have been marking up their prices for the investors and the investors still get a decent return for their money, and they can establish a good track record, what does it matter that they mark up the prices in the beginning as they have created a win win for everyone?

 

[Thomas Beyer]

QUOTE (UTCVenturesLtd @ May 22 2009, 09:14 PM) .. If the land banking folk have been marking up their prices for the investors and the investors still get a decent return for their money, and they can establish a good track record, what does it matter that they mark up the prices in the beginning as they have created a win win for everyone?
1) A rising market masks many mistakes or marginal operations ..

2) Uplifting upfront extends the profit horizon significantly

3) Disclosure is now required under Canada`s security legislation ..

 

[BrianPersaud]

QUOTE (UTCVenturesLtd @ May 21 2009, 05:06 PM) I know 4 sales people for them. It is starting to feel like one in 25 people i know are involved in selling their product. I looked over their brochure and see that you might end up holding as long as 19yrs and some of their exits were in the 10 to 13yr hold range. They try and target projects with an exit time of 3 to 6yrs. The overall average rate of return is 15.4% based on thier projects that have exited.

A land bank seems to have some attractive features such as no leverage is used, no landlord duties involved, strictly a passive investment, they have international investments, rsp eligible

Disadvantages seem to be the length of time your money is tied up, unknown rate of return til you exit, no interest on your investment unless they are renting out the raw land.

Check out this forum on Walton

I invested a couple of years ago in Walton International without doing proper DD.
I have not exited yet, but most likely, I will get good profit on the 2 properties I purchased near Edmonton alberta.
But I did purchase a few units in Cactus springs, Az., without reading the prospectus.
In it I found that Walton was selling units to their clients at 7 times what they paid for the land only a few months earlier, and that they got the land appraised by only one appraisal company for 7x their purchase price.
I find that kind of markup very excessive----I should have invested in Walton, and not their overpriced land.

They had a buyer for the land after only one year, and the return would have been approximately 16% after costs, but the purchaser didn`t close and the deal fell through.
with the plummeting of the real estate market in the USA, it will most likely take years to get any return at all for that property.

I was offered a similar deal a few weeks later, also for a property in Az, but the prospectus showed that Walton was selling the land to it`s investors(suckers) at a roughly 5x markup from their also recent purchase price of the land.

don`t forget, in the deal you sign, you take all of the risk, and pay all of the developement costs, and Walton has walked off with 5x to 7x their cost on the land.

I purchased my "investments" from a friend who no longer works for Walton, and it was on the basis of their huge markups on the land that I decided to not buy from them again.[/i]

 

[BrianPersaud]

QUOTE (UTCVenturesLtd @ May 21 2009, 05:06 PM) I know 4 sales people for them. It is starting to feel like one in 25 people i know are involved in selling their product. I looked over their brochure and see that you might end up holding as long as 19yrs and some of their exits were in the 10 to 13yr hold range. They try and target projects with an exit time of 3 to 6yrs. The overall average rate of return is 15.4% based on thier projects that have exited.

A land bank seems to have some attractive features such as no leverage is used, no landlord duties involved, strictly a passive investment, they have international investments, rsp eligible

Disadvantages seem to be the length of time your money is tied up, unknown rate of return til you exit, no interest on your investment unless they are renting out the raw land.

Check out this forum on Walton

I invested a couple of years ago in Walton International without doing proper DD.
I have not exited yet, but most likely, I will get good profit on the 2 properties I purchased near Edmonton alberta.
But I did purchase a few units in Cactus springs, Az., without reading the prospectus.
In it I found that Walton was selling units to their clients at 7 times what they paid for the land only a few months earlier, and that they got the land appraised by only one appraisal company for 7x their purchase price.
I find that kind of markup very excessive----I should have invested in Walton, and not their overpriced land.

They had a buyer for the land after only one year, and the return would have been approximately 16% after costs, but the purchaser didn`t close and the deal fell through.
with the plummeting of the real estate market in the USA, it will most likely take years to get any return at all for that property.

I was offered a similar deal a few weeks later, also for a property in Az, but the prospectus showed that Walton was selling the land to it`s investors(suckers) at a roughly 5x markup from their also recent purchase price of the land.

don`t forget, in the deal you sign, you take all of the risk, and pay all of the developement costs, and Walton has walked off with 5x to 7x their cost on the land.

I purchased my "investments" from a friend who no longer works for Walton, and it was on the basis of their huge markups on the land that I decided to not buy from them again.

 

[UTCVenturesLtd]

QUOTE (BrianPersaud @ May 29 2009, 09:36 AM) Check out this forum on Walton

I invested a couple of years ago in Walton International without doing proper DD.
I have not exited yet, but most likely, I will get good profit on the 2 properties I purchased near Edmonton alberta.
But I did purchase a few units in Cactus springs, Az., without reading the prospectus.
In it I found that Walton was selling units to their clients at 7 times what they paid for the land only a few months earlier, and that they got the land appraised by only one appraisal company for 7x their purchase price.
I find that kind of markup very excessive----I should have invested in Walton, and not their overpriced land.

They had a buyer for the land after only one year, and the return would have been approximately 16% after costs, but the purchaser didn`t close and the deal fell through.
with the plummeting of the real estate market in the USA, it will most likely take years to get any return at all for that property.

I was offered a similar deal a few weeks later, also for a property in Az, but the prospectus showed that Walton was selling the land to it`s investors(suckers) at a roughly 5x markup from their also recent purchase price of the land.

don`t forget, in the deal you sign, you take all of the risk, and pay all of the developement costs, and Walton has walked off with 5x to 7x their cost on the land.

I purchased my "investments" from a friend who no longer works for Walton, and it was on the basis of their huge markups on the land that I decided to not buy from them again.[/i]

This is a good answer! I buy undervalued properties so this certainly doesn`t work for me. The actual prices Walton had paid are hidden so you cannot do any price comparisons, only go with their track record which had given investors a profitable return over the years of the properties that have been exited.

 

[MonteDobson]

QUOTE (UTCVenturesLtd @ Jun 2 2009, 08:44 PM) The actual prices Walton had paid are hidden so you cannot do any price comparisons, only go with their track record which had given investors a profitable return over the years of the properties that have been exited.
No they are not hidden...they are required to be disclosed within the OM (Offering Memorandum). The thing is that typical OM`s are about 50-60 pages long of `legal jargon` so 95% of people don`t even read them. They just sign the papers and carry on, hoping things will work out.

 

[BrianPersaud]

QUOTE (C2Ventures @ Jun 3 2009, 12:18 AM) No they are not hidden...they are required to be disclosed within the OM (Offering Memorandum). The thing is that typical OM`s are about 50-60 pages long of `legal jargon` so 95% of people don`t even read them. They just sign the papers and carry on, hoping things will work out.

These must be the same people protesting when they lose their money

 

[ekisielewski]

QUOTE (UTCVenturesLtd @ May 21 2009, 03:06 PM) I know 4 sales people for them. It is starting to feel like one in 25 people i know are involved in selling their product. I looked over their brochure and see that you might end up holding as long as 19yrs and some of their exits were in the 10 to 13yr hold range. They try and target projects with an exit time of 3 to 6yrs. The overall average rate of return is 15.4% based on thier projects that have exited.

A land bank seems to have some attractive features such as no leverage is used, no landlord duties involved, strictly a passive investment, they have international investments, rsp eligible

Disadvantages seem to be the length of time your money is tied up, unknown rate of return til you exit, no interest on your investment unless they are renting out the raw land.

Hello: I have purchased from Walton International just outside Edmonton. This was approx 5 years ago before they changed their investing structure and therefore I hold title. I based my decision on their performance track record and compnay`s history.

When I purchased the projected exit was 20 years. I believed that whith what has happened in the last 5 years the exit will be sooner. It is difficult to know how the investment is doing although they do have a secondary market for people who want to sell before the exit year. I have not checked this value lately.

I bought this land thinking it will be for my kids; and by the time the exit comes around I will be retired and my tax bracket will be low. It is a way of diversifying from buying houses.

But, I am not sure I would do it now that I know more about real estate investing. Since parking my money for 20 years does not look attractive anymore.

Regraeds
Elisabet Kisielewski