Selling Land to Developer at a Discount
I own a piece of land that is worth $245,000 and is in a VERY desirable part of the city. It is the last buildable lot in the middle of 1.4 million dollar homes.
I would LOVE to develop this land myself and sell a house, I simply don't have the capital.
My strategy right now is to sell the land to a real estate developer to develop the home at a steep discount ($150,000) but make a claim on the stake of the overall project to get my remaining money back, plus the profit of the build.
Is this feasible? Or are there any other "creative" strategies somebody can think of for this?
#2 Contractors Contributor
- Severna Park, MD
I believe the term is called "subrugation " Where you cut a deal with a builder , he builds the house , when it sells you get paid for the lot .
Dont sell at any discount
This is an interesting concept! I like it a lot.
Any idea on where to find a builder like that?
#2 Contractors Contributor
- Severna Park, MD
Quote from @Daniel Pitner:
This is an interesting concept! I like it a lot.
Any idea on where to find a builder like that?
Contact a local civil engineering firm , they know all the players . Also try real estate agents .
Honestly raise your asking price , you can always go down
I love it! Thank you Matthew!
I actually work with a local developer here in the Tampa/St Petersburg area and we look for EXACTLY the situation you are in! Don't low ball. What you want, and what the Developer wants, is that you go in as an Equity Partner in the deal. Your lot has to be paid off so that the Developer can get a construction loan which usually has to be in lien position one. Then you you negotiate your share of the land. The Developers want this setup because they don't have to come up with capital to buy the land. Anyone who loans them for the land wants to be lien position one, then banks don't want to lend for construction as position 2.
Find out who built the most recent homes in that area and call them and say "I'm interested in being an equity partner on a vacant lot I own and it looks like you built a home in that neighborhood recently that sold for X?"
Quote from @Daniel Pitner:
This is an interesting concept! I like it a lot.
Any idea on where to find a builder like that?
Daniel, where is your lot located? If possible, please ping me offline, see if we can able to figure out.