First Development Deal... Am I being overly ambitious?

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So, I’m considering buying about 3 acres of land for $1.6 million. The seller is open to seller financing for less than a year, but would want at least $500k down and non-refundable. Demolition would be about $100k and $200k for street/utilities/etc. We could fit about 10 lots at about 0.3 acres each, which would probably sell for $200-250k. I’m thinking of looking for a hard money lender to try and make the deal work. Do you think the potential profits are worth that added risk of getting an expensive loan like that? Also, do hard money lenders go for those types of deals?

@Jordon March there are a lot of things to consider when developing property. First you do not want to purchase the property until you get all the approvals. You should not put $500k down that’s too much. You do not use hard money It will be too expensive and can eat up your profits quick. You can get cheap bank financing easily for a project like this.

What am I missing? 200K x 10 = $2,000,000

1.6M + 100K = 200K + 1.9M 

This gives you a 100k profit which is absurd - other ? is if its such a good deal why does the seller not do it themselves?

Your ROI gives you a paltry 5% which does not even cover your interest expenses . Do not Run SPRINT from this deal. I only do Development deals if I can make a minimum of a 50% ROI

Land cost seems wayyyy to high, and development cost seems wayy to low. Even if they are accurate numbers, the deal doesn't pencil at the low end of your projected sales price.

Hire the right team, AND have entitlements in place before close on the land.

Consider more traditional A&D lending, 500k down with the seller seems steep. 1 year max is asking for trouble, especially if the clock starts ticking before entitlements and permits are complete.

100% return of all my costs must be inside 18 months or I walk . Once that happens the 50% is the sweet spot and becomes all profit. I am rare n that I never take any profit from any project until 100% of all my debt is paid off ie ... land cost - infrastructure / engineering etc.. .the other comment you made above " not worth sellers time " is a;;you need to know in that they are trying to wack an investor so they can make all their profit selling someone the land.As I said earlier do not run sprint from this deal.

You are looking at min 1 year just for land development engineering and zoning approvals.  If you are a newbie without connections it could be 2-3 years.    Are you doing streets or water/sewer lines?   Will the highway department require road improvements or highway entrances to approve the subdivision?