Investment Info:
Other other investment in Gig Harbor.
Purchase price: $50,000
Cash invested: $10,000
Sale price: $275,000
Land investment: we went in with a logging partner who paid for the trees, while we paid for the dirt ($50k). The logger had all the rights to the trees and timber sales, while we had the rights to the dirt after the fact. We were able to sell it for profit of $215,000 before selling fees. I am an agent, so the commission rate as reduced.
What made you interested in investing in this type of deal?
My father-in-law has been doing these land deals for a long time, so we got involved organically.
How did you find this deal and how did you negotiate it?
We knew the logger who owned it, partnered with another logger who wanted the timber. Since the logger only had interest in the trees, and I had the ability to market and sell it for a significant profit, it was the perfect partnership.
How did you finance this deal?
Personal Cash.
How did you add value to the deal?
Since I am an agent, I was able to broker the deal for a discount. I also have worked with many loggers on previous listings, so I had the knowledge I needed regarding our counties logging requirement. For instance, there is a building moratorium on any land that is logged with a DNR permit for 6 years (Pierce county). I was able to work around this by leaving a building envelope with the best mountain view, and allow the Buyer to move forward with building before the moratorium expires.
What was the outcome?
The project length was 20 months from purchase, to sold. We were able to make a profit of $215,000, before real estate sales fees (reduced commissions 5% total).
Lessons learned? Challenges?
It will be challenging to find another dirt flip with this much of an upside, because the opportunity presented was purely because we knew the loggers involved. Time and time again, it is made very clear that knowing people and building solid, lasting relationships is crucial.
