Question about land development deal

[Richard Nguyen]

Hi all,

I wanted to get some comments and thoughts about a proposed deal. I was approached to help buy land that has been zoned for 34 townhomes at $2.7M (would be me and a couple of investors). The land is in a good location surrounded by homes valued around 750k and up. Also close to shopping and entertainment. The builder would then build the townhomes and split the profits with the investors as the homes were sold off. Builder has been building in our area for 15 years and I've gotten good reviews from banks, prior investors and sub contractors. Based off the proforma, we would get approximately a 25% IRR. Full turn around on the project is 4 years. Is this worth pursuing and how would you structure this? Via LLC or through a syndication of some sort? Thanks