The developer is making $190k on $1mil invested 20% cash on cash return, if everything goes right, the land owner is making $490 in equity on the three houses, plus getting paid $300k for the land, so $790k for ZERO money invested.  

If you took that $135,000 in equity, you could put $40,000 down (20%) on 3 separate properties.

We also acquired it well below its current value so we already have some built in equity so if we do ever decide to sell we are still in great shape.

Stealing equity from sellers is another.I'll bet dollars to donuts that if some wholesaler got your grandmother's house under contract like that and screwed her out of $40,000 in equity, you'd be irate. 

I agree with the comments that this feels like a bad deal unless you know for a fact you have built in equity (buying under value or you can create value somehow).

After management my cash on cash is about 10% and I have 40K in equity if I need to get out of the project.Good luck.

Hi @Grace Na , it sounds as if you'll have a good amount of options to work with due to the fact you and your brother will have nearly $400k in equity.

I have $150k in equity I'm attempting to tap into in order to purchase my next property.The other property which I do occupy is solely under my name.

I Will hold my 401k 100% in equities, the combination of these three will yield more than my current annual salary which is far more than I need to survive.

Every property comes with $20,000 in equity and returns 10-30% depending a property's financing.