Unique situation, I need advice on some free land

[DJ Cummins]

Hello all,

It’s been forever since I’ve made a post on here. Been a busy year with my blog and current real estate investments. As always, I appreciate any input you can give.

Anyway, long story short, my business partner and I have the option to acquire about 10 acres of land for no cost. He already owns it in a different partnership and they need to liquidate it. The land already has paved roads and sewer, and has been approved by the city for 14 duplexes. The two streets are located right behind the brand new local high school. Great location. I know it’s a great opportunity. The property tax of 19k per year is kind of scary but it’s still a fantastic opportunity. The land has a current appraised value of $450k.

I’ve never had a big land acquisition like this before. Since we will have the land free and clear, would we be able to use that as collateral to build the first one or two duplexes? My initial thought was to try that. We also have enough money to get a loan to build 2 more right off the bat. I had thought about using the land to build 2 free and clear duplexes, refi this to build two more, then 2 more, and keep that train going.

I'm not sure how that works with using a BRRR(missing an r for no rehab) type strategy while we own all of that land. Should we look at subdividing it into 14 different plots rather than one large 10 acre plot? I like the idea of them all being together but separating each might make sense. A few years down the road we might want to sell but I guess we could sell them all in a package as different plots anyway. Please let me know your thoughts. I appreciate it!

DJ Cummins

[Canesha Edwards]

@DJ Cummins

You have a decent amount of cash on hand.

I would visit some local banks and talk to some lenders and see what they can offer you.