5 Acre Parcel in Lakebay

[Shane M Plummer]

Investment Info:

Raw Land Bundle

Purchase price: $35,000
Sale price: $105,000

Purchased 3 raw land parcels (2ea. 5-acres parcels and 1ea. 3-acre parcel) as a bundle for $105,000. We then logged all three parcels for a total of $70,000 in logging profits. We are now selling the parcels.

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

The savings of buying all three lots together. The potential income on the timber, and the increasing land price over time.

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

I was told about the land from a mutual friend. The sellers where two brothers who had run a dirt work company for many years. Both brothers were retiring, and one was in very poor health. They decided to liquidate all their assets. Unfortunately for them the market at the time was slow. I did not have the money at the time. I reached out to a few friends that I thought might be interested. One of them saw the vision and we decided to go in halves on the deal. I negotiated the deal myself.

How did you finance this deal?

Both my business partner and I put in 15k each to cover taxes and any other expenses that might come up. We took out 2 private loans from friends who wanted better return on money than what the banks gave them. One for 80k and another for 25k.

How did you add value to the deal?

We logged the site, cleaned up the garbage, cut in a few roads and waited for the market to boom.

What was the outcome?

We have sold 1 of the parcels for $105,000 on an owner contract. 40k down, 8.5% interest and 5-year balloon. We 1031 that money and the money from the timber into 3 lakeview lots in Idaho that already have water, power and sewar.

Lessons learned? Challenges?

Deals come with networking. I enjoyed the negotiations, and the search for new investment opportunities. we were challenged with the setting up a business, 1031 exchange, and paperwork side. Fortunately, my business partner is great in that aspect.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No