Beginner seeking some advice and input on vacant land deal

Beginner seeking some advice and input on vacant land deal

Member since 2025 · 1 post · 1 vote

Hey everyone. Relatively new to real estate, and I've been lurking the BiggerPockets forums and learning material for quite some time now. I have some questions regarding vacant land and primarily infill lots. 

I have several builders/general contractors that are interested in building on properties. The biggest thing for me is I would not have the capital to buy the land outright, so I would still need to finance it. My initial thoughts after purchasing the land is to get it prepped for build, doing everything from perk test to septic permits, getting utilities and everything ran to the property to do a lot of the headache work that the general contractors and builders would have to do.

And this is where I get a little stuck - at what point in the deal would you receive your payment? Of course, at the end, when the property (the new-built property) has been sold, you would receive your initial investment and whatever profit you have made on top of that. But are there other ways to structure the deal where whenever the builder gets involved, you receive your initial investment back, and then you receive whatever profit at the end of the deal? 


These are my initial thoughts. I'm a course open to ideas. As I understand, there are several things you can do with vacant land and infill lots and how you can partner with builders. I'm trying to keep myself from being narrow-minded and think broader and larger regarding the real estate market.

I'd appreciate any feedback or recommendations on resources that I should check out, as well as understanding what has been successful for you all in the past and what are some things to watch out for. Again, I am new to real estate, and I'm looking forward to this journey.

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  • Investor · Willis, TX · Member since 2014 · 245 posts · 124 votes
    1y

    NOT saying you should do this but I have seen some investors slightly (some not-so-slightly) "inflate" the construction cost to recoup some of their money.

    The bigger challenge I think you face is getting with a General Contractor / Builder who has your same goals aligned with you. 

    Fee Builders will agree to a "Cost Plus" model of offering their services. The challenge in some cases is that the Fee Builder isn't necessarily aligned with your goal of making a profit. The Fee Builder will simply find their most trusted contractors and their fee on top. There is nothing wrong with that. However, it can lead to potentially a misaligned interest as the Fee Builder is going to make money whether he finds you the best deal or gets you a retail deal. In both scenarios, the Fee Builder gets paid. In a retail scenario, they might get paid more. 

    Juan- 

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