How hot is the land market in the I-35 Corridor? Meritage Homes just purchased 40 acres in New Braunfels from Rockspring Capital, giving seller Rockspring a killer 50% rate of return. Only Novak Djokovic has a higher return rate.
Rockspring CEO Jim McAlister tells us his firm bought the Whitewing site, which includes 117 home lots, a year ago. The deal had a short fuse and only worked because Rockspring had money in hand to close. Within weeks, Meritage came forward to buy half the property—46 developed lots—and that sale closed in mere months. Now Meritage snagged the undeveloped remainder of the site, and Rockspring’s investors are up 50%. Jim says the speed and pricing of this deal is indicative of a trend: New Braunfels is changing from a quirky little town to a high-growth area.
In fact, Jim says the entire I-35 Corridor is seeing incredibly strong land demand and pricing, and he expects very serious upward movement in land prices over the next year or two. Look for land to sell much more quickly than you’re used to. And unusually, both the purchase and sale sides of the market are doing well at the same time. Jim tells us Rockspring put $60M into the title company in the last two or three months. Most are sites the firm has owned for years, and pricing was much higher than he expected on those deals.
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