If done correctly, there is a lot of work put into arranging commercial financing for a borrower and many years ago, when upfront fees were more common, there was considerable expense involved as well.  

Lot divisions are controlled by county laws and involve fees and surveys and approvals by boards.

I have $120,000 in a fund with a local bank and want to use this money to become more involved in real estate.

Not with 1000s on the market in your area that are distressed.Not sure I'd want to get involved at all since if you buy it at a foreclosure sale, he may still not want to leave the house, or he might push his best buddy for some extra time to stay rent free.

Your property has 3 bedrooms but the square footage indicates that at least one of the bedrooms is going to be too small.

I plan on trying to increase equity in any property I get involved in-I have a construction background and a couple of contractrs I would like to get involved with me if this could become a reality.

Usually it involves a 1% fee and you will have to be underwritten.

With that said if you were looking to purchase at least you could use this as an option if the owner were to ever receive the OTD (Order to Docket) dont get me wrong some lenders are just down right nasty and will still proceed, but if you have no money involved and just contract paperwork by all means it is worth a try.

It's an 1800 square foot home.

Many of the successful firms involved with real estate have returns around 8.0% to 9.0% annually.