Demolish, Subdivide, Flip

[Dan Illes]

Thought I’d share a deal with you guys that I completed a bit ago as I rarely see people talk about projects like this.

I purchased a house that was repossessed by the bank. I bought it sight unseen as I viewed it as a small development project, did my due diligence up front and didn’t really care about the state of the house.

There were 5 offers on the property to which I ended up knowing a few of the other bidders. I was asked “how could you pay so much for the property, did you make money”? Where they were all looking at it as “$250,000 to fix it up”, I was looking at “how much to tear it down and subdivide”. We viewed it completely differently.

I ended up demolishing the house, went to city council got approval to subdivide the vacant land into two building lots, then flipped both building lots off to a builder. There were some costs involved for demolition, making an application and a survey coming in around $30,000.

One of the best parts of this deal was the “return on time”. This was almost exclusively done from my desktop, although I went to site a few times, I could have probably gotten away with never having went.

My biggest regret with this project ….. Selling it.

Shortly after some zoning changes came into affect that would have permitted triplexes to be built on both lots. This property is also 15 minutes from my house. I’ve got projects located 50 minutes to 2 hours away from me. Would have been so nice to have one in my own back yard.

Feel free to reach out of you're doing similar project or have interest in this strategy.