Land development deal

[Kevin Romines]

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $54,500
Sale price: $125,000

We bought a 3 parcel package with 1 parcel having a 2020 Mfg. home on it, for $450,000.00. We sold the parcel with the Mfg. home on it for $395,000.00 leaving us with the other 2 parcels that need development for $54,500.00 each. We can sell the parcels for $125,000.00 each or develop the parcels with a new single family residence. All in costs at $270,000.00 with sales prices at $465,000.00 each.

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

I believe as it is becoming harder and harder to find flips to make decent money on, the money can be made in land development deals.

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

I found it on the MLS for $400K and we took it down for $450K.

How did you finance this deal?

We used local hard money that I work with frequently.

How did you add value to the deal?

We sold the 1 parcel that had the home on it in move in condition. Leaving us the 2 parcels at well below market value that we can either sell as is or develop to make even more money on the sale.

What was the outcome?

We are part of the way through the deal. We sold the Mfg. home on 1 parcel. We are getting permits lined up for the development of the other 2 parcels.

Lessons learned? Challenges?

Move quicker with all the paperwork needed for the permits. Carrying costs add up while you are taking the time to get things done.

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

I am the lender controlling these deals. I have an agent in my investment group. We also have 2 contractors as part of our investment group and we also work with 2 more contractors as well.