So I have a distant family member who was sitting on a massive block of land a few years ago. Didn’t have the money to develop or sub-divide, so somehow found a developer/cash cow who was willing to help out with all the ins and outs. Not sure how that worked exactly, but said developer probably kept a lot or two for himself “for free”. Distant family member then managed to sell all sub-divided blocks and retire on a nice lump sum amount and annual income from interest.
Question is – how do these things actually work? Where does one find a fairy godmother willing to put their hard earned cash into a project like this, when you yourself don’t have the means to get the ball rolling? Suppose I have the land, but not the means to finance construction, yet want to sell said land with finished properties on it. Now what?
Most likely, your family member contributed the land as equity or their “contribution” to the deal and the developer put forward the cash for the upfront costs.
What part of the construction finance are you not able to come up with, the equity (you might have it in your land you already own) or the servicing ?
So where’s the developer’s benefit in all this? Aside from a block or two as a “Thanks for everything”? They would’ve paid for all the sub-division costs, which would’ve been significant, considering the land size.
Servicing would be an issue for me. The alternative would be to just go small – remove house, sub-divide, sell, albeit for a smaller profit. Build on from that. Rinse and repeat.
Hi Ms Trump,
Your first post indicated that your family member didn’t build – just had a developer divvy up the blocks, pay all fees for subdivision, and take “one or two lots for free” as payment. Your situation sounds like it could be similar, but that you might want to build as well. Would you perhaps clarify a few more things for us?So where’s the developer’s benefit in all this?
It would be beneficial if you were able to call on more detail – like, how big the land was, and how many lots were created, where said lots were located, approx year of subdivision, approx value of each lot after subdivision, etc. Were the “one or two lots” given to the developer really more like “four or five lots”, etc.
And then, more importantly, how does your situation compare? Are you also holding a “massive block of land”, or are you looking to make some $$ by subdividing a suburban block (what size, and where?). I am sure many things change over the years – so any costs you have today are likely to be way more than costs from many years back. In essence, what you might be able to do today might bear little resemblance to yesteryear.
I am sure there will be similar developers “out there” today who may be able to assist you in a similar fashion. And, who knows, they might be reading this right now. Why not add a tad more detail (without giving too much away just yet) so that their interest might be piqued. Perhaps provide a few answers to those earlier questions re your situation, and let’s see where that might lead.
Benny
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