I'm pretty new to the whole Real Estate investment game, so I'd very much appreciate your acumen regarding land development.
This is an idea I've had and would like to see if it could actually work.
It involves this:
Buy a piece of land (5-10 acres; or more in a non-city area).
Subdivide and get prefabs onto the land; set up utilities, fences, roses & aesthetics, paving, et cetera. Build a gate around the community (ideally 50-100 homes) and create a sign in the front, and make it into a "gated community"; one entrance, and hire a security officer (this would be AFTER it actually got up on its feet).
Finance each home, no money down, across 10-15 years; target market: lower-income, blue market workers who may not be able to secure a mortgage and would like to own a home. I'd aim for a $50,000 profit per home across 10-15 years. (Would I need to create a contract for this?)
Collect rental "land fees" since I would finance the home to the buyer and not the land underneath the home. ($175/mnth).
Challenges would be: finding a good area to build (would need to be near/within a city in a decent enough location); permits & legal issues; and finding buyers if I ever do this (though I'm hoping that the no-money down 10-year financing will be enticing; I would check for proof of income instead of credit history). I know that there are prefab homes in the $40-$50,000 range; across 12 years, I could finance each home for $700/mnth. This should be attractive because it's a) a low monthly payment b) for only 12 years vs 30 years and c) no money down, and easy approval. Also, it isn't rent: the person would be buying a home, and I'm sure that there are many people out there that dream of home ownership but may not be able to find a deal.
Depending on the area, my project costs would be in the $2,000,000-$3,000,000 for 100 prefab homes + development costs. A $50,000 profit per home across 10-12 years would be a $5,000,000 profit total (across 100 units) + land fees income.
Is this a good idea? I'd very much appreciate your input.
Basically: buy land, put prefabs onto it and develop a "gated community"; sell the prefabs via financing, instant approval no-money down, collect a decent profit margin across time while also collecting rental income for the land underneath.
Is that doable?
