Developed from $85K to almost $500K with $12K invested

[Tysson Dykes]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $85,000
Cash invested: $12,000

21 Acres with a shack for a house on it. Got into it nice and low. Knocked down the house ( if thats what you could call it ) and put in a manufactured. All in cash wise $12,000...bank loaned the rest to total $225,000...Appraised just south of $500K. Currently have the grassland field leased out to a cattle man as grazing pasture.

What made you interested in investing in this type of deal?

Seemed like a no brainer really. Got the land $0 out of pocket, put minimal down for the bank for the build and development and the ARV was way better than I even anticipated.

How did you find this deal and how did you negotiate it?

Family had the land for years but didn't know what to do with it. I have build experience and explained to them the equity that could be put into it with just a little bit of creativity. So they tossed me the property, I handled the contractors and permits and got it done. At the end of the day we all own the land, the bank funded the development and we took an $85,000 dollar property that had been around for years and turned it into almost 500K.

How did you finance this deal?

We used the bank to fund the development using a construction loan which closed into a conventional afterward. Nothing creative on that end. The land was owned free and clear so that was used as collateral for the loan which saved us on the down payment. The $12K we are into the deal is just due to permitting and misc requirements required during the process.

How did you add value to the deal?

I managed the build, did the permits myself and even the demo of the old structure on the property. By adding the new manufactured to the lot we massively added value to the lot and the LTV is currently around 42%.