First infill subdivision helped make me a millionaire using creative financing.

[Zach Matson]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $250,000
Cash invested: $1,825,000
Sale price: $3,300,000

7 House subdivision with 1 existing house and 6 new construction houses. Purchased land for first 5 houses for $250k, unentitled. Then the 6th house is a trade for the existing house as part of the deal.

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

I had been flipping in Boise but the flipping market was getting way more competitive and it was hard to find deals. I had also been interested in getting into development for several years.

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

It was on the MLS, but overpriced. After being on the market for 6 months and multiple price changes, it came down closer to its value. I called the listing agent and inquired what it would take to get a deal done. Listing agent told me they had a verbal offer for $225k, but they were looking for something in writing. I sent a written offer at $200k, and through some back and forth we settled on $250k with the owner carrying $200k of that at 5% interest.

How did you finance this deal?

20% down with an owner carry note on the remaining purchase price. There was also an agreement to trade the 6th new construction home for the existing home. That was a win win as the homeowner would get a new house that was valued higher than her existing house, and I could build the new house for less than what her existing house was worth.

How did you add value to the deal?

Bought dirt, entitled, constructed infrastructure, and built new homes.

What was the outcome?

Built 5 homes to sell, traded existing house for a 6th new construction home. Own existing house free and clear.

Lessons learned? Challenges?

The entire process was a learning experience as this was my first development from raw land to finished product. I experienced many challenges along the way in the form of delays in working with governement agencies, contractors, supply chains, etc. Building and developing is hard and there is a pretty high barrier to entry!