Advice - Is there a structure

Financing, Hard Money Lenders, Private Money
1

Project description

3+ acres with excellent location; in heart of city on hilltop. Unblocked view. Stubbed, partially graded, zoned with precise grading plan. Roadway and paved access in place. (Location 9/10). Last untouched hillside in city for 4 estates. Slope is <20 deg. Very very workable with 90% of land usable after grading. No environmental, geologic, flood/fire sone, or other negatives. Seller just does not have time to move dirt and is relocating.

Adjacent lots of 0.22 acres assessed value of $210K; homes (standard 4K sq ft. homes - tract community) at current value of around $800K (Prices down 10% from prior year).

Purchase price of 3+ acres @ $540K with owner carryback available. Recent appraisal as is $800K (last sale price $740K - 2006).

Dilemma

Only have $30K deposit, and need $60K for improvements (complete grading and permits, plus cul de sac).

Expect to parcel 3 X 0.5 acre lots and 1 X 2 acre lot and then sell pads. Estimate sales revenue of $1 - 1.5 million on lots within 12 months.
Potential for custom build/spec later, but separate transaction.

Architect and engineer providing services as soft-equity until sale.

I know this is brief, but I need some creative options.

Regards.

2

Have a source that would potentially fund 90% of the land purchase and 100% of improvement costs. It appears you may be lacking the 10% down though. With the seller carry may be able to work something out.

3

It might make sense to bring in a partner with money to give you a litte room for when things get tight, which they often seem to do. There are many private investors out there who may hold a note subordinate to your seller, if you go that route.

I would be careful in leveraging residential small plat development too highly.

If you’re in an area with depreciating value it might be hard to convince investors or hard money lenders that you’ll be able to take them out a year down the road.

Craig