On My ... 1.06 Acres

Tim Hernandez, president of New Urban Communities in Delray Beach, Fla., has purchased many land parcels during his 18 years in home building. For most of that time he was with Pulte Homes. In 2000, Hernandez and two partners struck out on their own, beginning with the purchase of a 1.06-acre site in Delray Beach. While Hernandez has done much bigger deals, including one this year that could total more than 500 lots with a transaction value of $120 million, the 1.06-acre deal remains his favorite. Why? In a 10-month period in 2000, New Urban sold all 32 townhome units, successfully launching the startup.

What I liked most about this deal is that we saw something nobody else saw. I think that is the key to land acquisition in general. If all you can see is what everyone else sees, you never will be able to make a better deal than anyone else.

Kevin Rickard, my partner, had seen this sign up for this property on an old bank drive-through. The property also included small houses on the site that had been converted into offices. We had a vision that housing in downtown Delray Beach would be very successful, and nobody else was doing it. We knew it was a great location.

When we closed on the deal, it was for more money per square foot than anybody had ever paid in this area. So not only was this in an area where nobody had built housing, we also were paying more money.

Eventually we got it approved for 30 units to an acre. We had no advertising. We plunked a sign down and put one ad in the newspaper and sold them all.

The interesting thing was that all the big builders walked through our units. Centex, Lennar, Continental and Pulte all walked through saying, “What are these guys doing?” because we designed a product that nobody else had been doing in South Florida. It was a totally innovative product. So there are several reasons why this is my favorite deal.