Subdivision, Failed Septic and Deal Structure

[Aksel A.]

Greetings,

I am interested in a multi-leg deal in Holliston, MA. MLS# 72292342

This is a single family rehab deal on an 8 acre property. The gentleman who landed the deal got the property under contract under his family LLC, and he is looking for a partner to complete the downpayment funding.

The 8 acre land is open to a big subdivision potential. The best case would be to divide the lot in 3, rehab the property and sell on its land, and then we can either sell the 2 other lots separately, or build on them and then sell the finished product.

The surveyor company, GLM Engineering Consultants, threw a bid for 30K. We have decent reasons to believe the subdivision strategy will succeed. If not dividing in 3, then at least in 2.

Current numbers:

- Expected purchase price: $385K

- Downpayment: 10%

- 100% Rehab cost financing

- Contractor bid: between 60K to 100K (30K + between 30K to 70K to fix the failed septic)

- Surveyors cost: 30K

There are 2 main issues:

- Deal structure: The property would fall under his family LLC, so we need to adjust the right legal structuring and contracting framework for me to enter as a foreign equity investor.

- Failed septic: At this time, it appears that the contractor is not seasoned of septic issues, and we do not quite have a good idea of the failure details.

Therefore, in addition to the whole subdivision ballgame, both issues above are fairly new to our ventures, so this will be interesting. Comments are appreciated.

Thanks