Due Diligence on a Spec Home

[Hal Cranmer]

My lender called me yesterday and said he had A deal for me. A developer he knows is starting a new development and needs some cash to build a spec home to sell future homes. The homes would sell for around $200K and I would lend him $130k with him taking partial payments over 6 months. At the end of six months his daughter would buy the house and I would make 20%. She can't buy the home now because she is still in nursing school. She has a job lined up supposedly after school ends at which point my lender can finance her because she will have income.

This is the first time I have thought of anything like this. The deal seems a little too good to be true. I was wondering what kind of due diligence I should do? The property is about 2 hours from me so it is not in an area where I normally invest. Any thoughts and opinions would be great. Thanks.