How to structure a unique deal to develop a property?

Question

I have a seller that has a property that would be a good deal to develop for new construction. The owner only wants the builder to build him a new home for "free" and give the land over to be developed after. How would I structure this deal? I am also not a builder, but have a builder that I have a relationship with that is interested in the opportunity. I have found the deal and I'm a licensed Realtor. So, my value would be able to list the homes/lots and help in any way that I can to assist in the process to get everything going. What would be some recommendations on how to structure this unique kind of deal?

Connor Kline · Answer

The seller is wanting us to build him a new primary residence. So, would you suggest doing this and putting him in 1st position, once the home is completed have him removed from 1st?

Scott E. · Answer

If I understand you correctly, this is a simple seller-carry situation. They sell you the land (you may or may not need to put some cash down) and they carry a note in 1st position. You are free to build whatever you want, sell the house once is finished, and the lien-holder (original seller) is paid off through title when the new house sells.

Connor Kline · Answer

That is one of the fears is that there won't be an agreement on what he wants in a house. He seems reasonable in wanting a small 2 bedroom house. In your experience, how would you structure the deal?

Bryant Brislin · Answer

These scenarios often can be a real nightmare. Even if the owner seems like a really nice person, they will micromanage the builder and not like the specs of the house the builder needs to do, and/or the timing in which the builder gets it done, etc.  Just from my experience.