Hello,
I would like to put an offer on A HOME w/120 acres on main road…
with 2 road frontages, basically an L-shaped parcel.
The seller has shown interest in holding the paper. just don’t know the best way to put this together…
The house has over 2500 sq ft. It’s been used as a duplex, but needs
work to bring it up to code… plus there is a newer steel garage 36’x58’.
It is currently listed with a real estate broker…
It’s listed for $225,000, but after talks with the seller, it will go for less.
there is a good deal of mature lumber that can be pulled, plus screened topsoil…
MY MAIN CONCERN IS HOW TO GENERATE enough CASH FLOW with this property,
WHILE PURSUING ANY FURTHER DEVELOPMENT IDEAS for it…
ANY INFO ON HOW TO PUT THIS DEAL TOGETHER WOULD BE HELPFUL…
This is what I would do, if I were in the same situation. I am not sure what to do about the house, possibly a lease option with the buyer fixing it up to increase their equity make for easier finance. AS for the rest of the land, I would find willing and able surveyors and developers to partner with, and subdivide the rest of the land (1-3 acre parcel for the home) into 1.5-2 acre parcels, with covenants allowing for duplexes (duplex lots go for $40k+ up here), I would make sure the surveyor flags the road clearings/Right of way, then call a local woodcutter (around here they will do it for free, if they can keep the lumber) then put a construction crew to work (either as a partner or paid) and have them build the roads, and you’ve got yourself a subdivision…Granted there are a lot of out of pocket expenses (survey costs, construction costs, utilities, etc…) but that would probably be the most profitable thing to do…IN MY SITUATION…things may be different where you are at though…just my 2 cents,
There’s a whole lot of stuff you need to do before you go running off to the seller with an offer. The first thing is get yourself a “real” RE attorney who’s experienced with subdivision and land development. Your attorney should be preparing whatever offer contract you decide to submit. You also need to check the existing zoning for the property–such as permitted uses, min. lot size, lot width, etc. Essentially, you don’t want to have to close on the property with the owner unless you can use the property as you want–ie, be able to subdivide into X # of lots on which Y type of housing can be constructed. You’ll also need a civil engineer & surveyor to prepare the plans, collect data that has to be shown on the plans submitted to the municipality.
Your purchase contract, subject to your attorney’s recommendations of course, should contain contingencies–upfront feasibility period, zoning approvals (if necessary), and subdivision/land development approvals.
This is a major undertaking and you need to assemble the right team of experts.
Keep in mind as well…Subdivisions are usually long term investments…A few years ago we paid $120,000 cash for a subdivision…We havent seen anything by negative cash flow situation due to all the things to be done, until the last two years…BTW, we have now netted near to $2 million. Developing is not for everyone, to say the least, but there is definitely money to be had, especially up here.
Cut down some trees and sell the mature lumber to a logging company if this is possible. My family received $40,000 in one deal. I wish I had gotten part of that deal. It might be worth checking into unless you would ruin the property value. Selective cutting of the larger trees was used in our case in Georgia. There are logging deals there every day