Purchased Land for $200k Under List in Charlotte!

[Evans Wright]

Investment Info:

Other buy & hold investment.

Purchase price: $45,000
Cash invested: $1,000

- .52 acres of land listed on MLS for $250,000.

Exit strategy - Partnering with a GC who has been in the business for over 10 years and lives in the neighborhood to build a custom home.

ARV ~$1M. Many new builds are selling for around that price. Timeline is 15 months.

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

A local GC who I befriended and I started looking for land to purchase to build a property to sell in areas that support seven figure sale prices.

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

- Originally offered $51,000 because the owner bought at foreclosure for $30,000. They turned it down.
- Followed up a month later and offered $55,000 cash or $90,000 on seller financing terms and they countered at $60,000 cash and then we went under contract.
- The survey uncovered additional erosion in the land so I renegotiated a lower purchase price of $45,000, they accepted and we closed!
- I am a Realtor so my commissions for this deal covered most of my closing cost.

How did you finance this deal?

- Leveraged OPM.
- Investor provided $44,000 cash and is getting 8% interest annually for the next 36 months or until the project is complete and sold.
- The cash was secured with a promissory note and deed of trust against the land.
- Upon selling or 36 months, the investor will get their entire principal balance back

Lessons learned? Challenges?

The main challenge is seeking private capital or bank funding for the construction cost at a reasonable LTV to borrow capital. Estimated build cost is $600000.