Need help evaluating an investment opportunity - sub-divided lots
I've been presented with an opportunity to invest in a 7 acre parcel on a mountain in NC, and need some help evaluating it. 10% annual return on the $175k initial investment, and 50% of the net proceeds of each lot sale (12-14 lots).
See below for pro-forma returns
- 300,000 12 lots average sales price of 25,000
- -175,000 payoff of principle
- 125,000 after principle payoff
- -10,000 Less expenses
- 115,000 Balance of net proceeds
- 57,500 net proceeds (lot sales)split 50/50
- 17,500 175,000 @10% for 12 months
- 75,000 projected Investor proceeds
- This is an estimated cash on cash return is 43%
Where would you begin in evaluating this deal?