80 Acres for Under Million (HOW DO I FIND AN INVESTOR)))

80 Acres for Under Million (HOW DO I FIND AN INVESTOR)))

Member since 2021 · 5 posts · 1 vote

I have found a property in Idaho that has a house and 80 acres. My goal is to in the end own the house and 20 acres and do so by subdividing and selling 60 of those acres. The land is already divided into 20 acre parcels and can be taken down to 5 acre parcels. I have called the local land surveyors to confirm this, local fire department to check fire requirements, and county planning to confirm this would work. All checks out. Just needs surveyed and a new plat made for the 5 acre minor subdivisions of each 20 acre lot with 20 foot wide dirt roads going off the main property road to the individual 5 acre parcels. So there'd be 12 5 acre parcels when done and each should sell for an average of about $300,000 and I think some can sell for more. The main property has 270 degree lake views and is located about 40 min from one of the most moved to places in the country. If each 5 acre parcel sold for $300,000 that'd bring $3,600,000, providing good profit to the investor after paying the original cost. I am self employed, determined, passionate, and hard at it, I'd be willing to do all work needed to subdivide this property. My hurdle is I'm 22 and though I have done excellent in my stock and crypto investing I do not have 3 million to buy the property. The property is listed for $2,970,000. Sounds like I could have all the lots sold in about 2 years but hard to say.

How do I find an investor before this place sells?

What do you guys think?

Much appreciated,

Dan

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Jamie Derasmo:

Hi Dan, it’s good that you did your due diligence with the town about those issues. Did you also make sure they are all buildable lots? I don’t know a your specific codes but if wetlands are present on the property, there are setbacks and other rules to follow which could make some lots lose their value. I also was not sure about the prices you wrote. In your title it says under million, but at the end it says about 3 million. I guess I assumed it would be under 1 million. It doesn’t hurt to have a conversation with an investor, find out what their criteria is, but make sure you get all the information about the suitability of each lot before making any hasty decisions. Sorry not much help in recommending to find an investor.  Are you part of a local investors group? I’m in a few for my area on Facebook and it’s a great place to meet investors, vendors, and lenders.

3 mil purchase to make 3.6 over time is a money loser all day long.  U need to buy this for 1.5 to max 2 to make any money if your going to bring on debt.

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  • Real Estate Agent · RI · Member since 2020 · 73 posts · 86 votes
    5y

    Hi Dan, it’s good that you did your due diligence with the town about those issues. Did you also make sure they are all buildable lots? I don’t know a your specific codes but if wetlands are present on the property, there are setbacks and other rules to follow which could make some lots lose their value. I also was not sure about the prices you wrote. In your title it says under million, but at the end it says about 3 million. I guess I assumed it would be under 1 million. It doesn’t hurt to have a conversation with an investor, find out what their criteria is, but make sure you get all the information about the suitability of each lot before making any hasty decisions. Sorry not much help in recommending to find an investor.  Are you part of a local investors group? I’m in a few for my area on Facebook and it’s a great place to meet investors, vendors, and lenders.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Jamie Derasmo:

    Hi Dan, it’s good that you did your due diligence with the town about those issues. Did you also make sure they are all buildable lots? I don’t know a your specific codes but if wetlands are present on the property, there are setbacks and other rules to follow which could make some lots lose their value. I also was not sure about the prices you wrote. In your title it says under million, but at the end it says about 3 million. I guess I assumed it would be under 1 million. It doesn’t hurt to have a conversation with an investor, find out what their criteria is, but make sure you get all the information about the suitability of each lot before making any hasty decisions. Sorry not much help in recommending to find an investor.  Are you part of a local investors group? I’m in a few for my area on Facebook and it’s a great place to meet investors, vendors, and lenders.

    3 mil purchase to make 3.6 over time is a money loser all day long.  U need to buy this for 1.5 to max 2 to make any money if your going to bring on debt.

  • Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Jamie Derasmo:

    Hi Dan, it’s good that you did your due diligence with the town about those issues. Did you also make sure they are all buildable lots? I don’t know a your specific codes but if wetlands are present on the property, there are setbacks and other rules to follow which could make some lots lose their value. I also was not sure about the prices you wrote. In your title it says under million, but at the end it says about 3 million. I guess I assumed it would be under 1 million. It doesn’t hurt to have a conversation with an investor, find out what their criteria is, but make sure you get all the information about the suitability of each lot before making any hasty decisions. Sorry not much help in recommending to find an investor.  Are you part of a local investors group? I’m in a few for my area on Facebook and it’s a great place to meet investors, vendors, and lenders.

    3 mil purchase to make 3.6 over time is a money loser all day long.  U need to buy this for 1.5 to max 2 to make any money if your going to bring on debt.

     He would also have the house and 20 acres 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Michael Plante:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Jamie Derasmo:

    Hi Dan, it’s good that you did your due diligence with the town about those issues. Did you also make sure they are all buildable lots? I don’t know a your specific codes but if wetlands are present on the property, there are setbacks and other rules to follow which could make some lots lose their value. I also was not sure about the prices you wrote. In your title it says under million, but at the end it says about 3 million. I guess I assumed it would be under 1 million. It doesn’t hurt to have a conversation with an investor, find out what their criteria is, but make sure you get all the information about the suitability of each lot before making any hasty decisions. Sorry not much help in recommending to find an investor.  Are you part of a local investors group? I’m in a few for my area on Facebook and it’s a great place to meet investors, vendors, and lenders.

    3 mil purchase to make 3.6 over time is a money loser all day long.  U need to buy this for 1.5 to max 2 to make any money if your going to bring on debt.

     He would also have the house and 20 acres 

    Understood but I deciphered this as he wanted to end up with the house and 20 acres free and clear for putting the deal together.  So for investors are not going to put up 3 mil to make 3.6 over 3 to 5 years.. was kind of my point.

  • Eric GiovannucciBusiness Member
    Investor · Boise, ID · Member since 2014 · 172 posts · 99 votes
    5y

    I want to know more, what town is this located in? Numbers don't make sense at this point, but may depending on where we are talking. 

  • Member since 2021 · 5 posts · 1 vote
    5y
  • Member since 2021 · 5 posts · 1 vote
    5y

    Thank you Jay and Michael, so most big investors are looking for closer to 50-100% profit when investing for a 2 year or so time frame? 

  • Member since 2021 · 5 posts · 1 vote
    5y

    Hi Eric, the property is located in Hayden Idaho. Hayden is like 10 min from Couer d'alene. The property is up on the hill and has 270 degree lake views. 

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    @Dan Thow you are going to buy this for $2,970,000 and sink $100K+ into surveying and developing roads. You are going to pay taxes on this land. Let's say that is 1%, so your annual tax bill will be $297,000. If you put 20% down, you will need $600,000 for the down payment. Assuming 20 year amortization at 5%, which is unlikely, your payment would be $188,000 per year. 

    At the end of year one, you will have paid $1,294,000 out of pocket (if you have that) and you will still owe around $2,300,000. Assuming you can sell every lot exactly at exactly the end of year one, you would have $3,594,000 invested and get paid out $3,600,000, so you would net $6,000 and you own a house with 20 acres. 

    You will never find an investor to sponsor this project with these kind of numbers given the risk and low return. If it takes 3-4 years to sell the lots, you will go bankrupt paying taxes and land maintenance. 

    The numbers improve if you only keep 5 acres with the house and sell the other 15 acres for an added $900,000. Still there is a lot of risk here. 

    One other caution, when you say "I'm 22 and I have done excellent in my stock and crypto investing", don't confuse luck for skill. All you have seen is market up movement since you started investing. There is an old saying that high tide lifts all boats. In other words, ANYONE investing the last four years has done excellent.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Joe Splitrock:

    @Dan Thow you are going to buy this for $2,970,000 and sink $100K+ into surveying and developing roads. You are going to pay taxes on this land. Let's say that is 1%, so your annual tax bill will be $297,000. If you put 20% down, you will need $600,000 for the down payment. Assuming 20 year amortization at 5%, which is unlikely, your payment would be $188,000 per year. 

    At the end of year one, you will have paid $1,294,000 out of pocket (if you have that) and you will still owe around $2,300,000. Assuming you can sell every lot exactly at exactly the end of year one, you would have $3,594,000 invested and get paid out $3,600,000, so you would net $6,000 and you own a house with 20 acres. 

    You will never find an investor to sponsor this project with these kind of numbers given the risk and low return. If it takes 3-4 years to sell the lots, you will go bankrupt paying taxes and land maintenance. 

    The numbers improve if you only keep 5 acres with the house and sell the other 15 acres for an added $900,000. Still there is a lot of risk here. 

    One other caution, when you say "I'm 22 and I have done excellent in my stock and crypto investing", don't confuse luck for skill. All you have seen is market up movement since you started investing. There is an old saying that high tide lifts all boats. In other words, ANYONE investing the last four years has done excellent.

    I bought stocks that went down LOL  but thank god for Tesla !!!

  • Member since 2021 · 5 posts · 1 vote
    5y
    Originally posted by @Joe Splitrock:

    @Dan Thow you are going to buy this for $2,970,000 and sink $100K+ into surveying and developing roads. You are going to pay taxes on this land. Let's say that is 1%, so your annual tax bill will be $297,000. If you put 20% down, you will need $600,000 for the down payment. Assuming 20 year amortization at 5%, which is unlikely, your payment would be $188,000 per year. 

    At the end of year one, you will have paid $1,294,000 out of pocket (if you have that) and you will still owe around $2,300,000. Assuming you can sell every lot exactly at exactly the end of year one, you would have $3,594,000 invested and get paid out $3,600,000, so you would net $6,000 and you own a house with 20 acres. 

    You will never find an investor to sponsor this project with these kind of numbers given the risk and low return. If it takes 3-4 years to sell the lots, you will go bankrupt paying taxes and land maintenance. 

    The numbers improve if you only keep 5 acres with the house and sell the other 15 acres for an added $900,000. Still there is a lot of risk here. 

    One other caution, when you say "I'm 22 and I have done excellent in my stock and crypto investing", don't confuse luck for skill. All you have seen is market up movement since you started investing. There is an old saying that high tide lifts all boats. In other words, ANYONE investing the last four years has done excellent.

     I appreciate the break down Joe. 

  • Real Estate Agent · Sandpoint, ID · Member since 2016 · 25 posts · 20 votes
    5y

    Hey @Dan Throw, I think you are on the right track but I think you are looking at a rather expensive piece of land near Hayden. Developing, surveying, splitting, and recording is no easy task right now in Kootenai County with everything backed up with long delays. I have some other ideas where you might be able to do this easier and for way less money. I will send you a couple options and we have some private money lenders you might be interested. 
    Thanks, 
    Tyler Wagner 

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