Simple Land Development-Subdivision / $244K Gross Profit

[Donavon DesMarais]

Investment Info:

Other other investment in Corcoran.

Purchase price: $625,000
Cash invested: $1
Sale price: $980,000

I bought a rural 40 acre farm that was on a tar county road. It had an old farmhouse on it with some older out-buildings (barn was in very poor condition, 40x60 shed was in good shape, a few small garages were so-so, etc) on it that we just left as-is. The property included 3 building rights/entitlements so I subdivided the property into 4 new lots, no new road required as there was enough road frontage to meet minimum requirements.

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

The simplicity of it and the huge upside ROI. It took just 7 months from start to finish!The new lots were 10 acres, 10 acres, 12 acres and 8 (old farmhouse + buildings) acres +/-. We sold each those 4 new properties for $220,000 / $220,000 / $245,000 & $295,000. We paid $125,000 in downpayment to close on the initial purchase, plus put another $100,000 into holding costs/survey/wetland delineation/etc so we were all in "cash" at $225,000. Gross profit (pre-tax) wound up $244,000. I'd do 100% of

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

It was a retail listing for sale on the MLS. As a Realtor, we negotiated the sale with fairly simple ease.

How did you finance this deal?

Local bank that does commercial loans. It was easy!

How did you add value to the deal?

Having the background, knowlegde and foresight to see the upside is the only reason this deal happened. We put together a superb team of the professionals to bring it all together.

What was the outcome?

Success! $244,000 gross-profit in just 7 months!

Lessons learned? Challenges?

The lessons learned was how to get through the subdivision process in that particular city. Who the key decision makers were, how the process went progressively from one step to another. Getting the team together to make it all happen and being proactive about gauging the risks of any possible hurdle.

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

Yes, you are getting it straight from the horse's mouth; I, Donavon DesMarais, took this deal from A to Z along with the help of a business partner. He was instrumental as well in getting it done, he was invaluable!