LR or NC here in Seattle.
Research highest and best use of the land.
We like land use consultant over architect.
* See where they are experts.
Have a deal analyzer for land deals.
What’s the cost per square foot
* $200 per square foot in Seattle.
* Find out what builders are paying where you are.
How much can you build on the lot…
Hard costs
Fees
Purchase price plus construction costs.
4 units at $500k equals $2 million.
Land cost as a percentage of a gross sales price.
It all depends on where you are…
The closers you are to the city the higher percent you can use.
Profit potential
Net profit margin
Contract terms that you should be going for
Developer terms
* Don’t have to close until the city issuing the permits that you need.
* Push out as far as you can.
* Drill down, and call out specifics in contract.
Feasibility period of 60-90 days
* If it’s super competitive, just get what you can get.
* Builder will want to do a soils test.
* One recently cost us $2400.
* Soils test is done during this time.
Earnest money is due upon buyers acceptance of the
* At least $10,000.
You can assign the contract if you’re a wholesaler.
A seller might want to know a specific date (outside closing date).
* They just want to know the furthest out it could be.
Seller will grant buyer an extension for some amount of extra earnest money that applies to purchase price. Builders like to see this!
Know what is going to be built…
* Town homes
* Detached houses
* Etc.
Know your permit fees, or entitlements.
Prep the seller that you might have to ask for a price reduction based on what you find during the feasibility period.
A good strategy is just to get the permits in place, then sell to a builder.
Money making strategies
Sell contract for quickest money
* Get assignment fee upfront.
* Get favorable terms for the builder.
Middle money way
* Get paid an assignment fee at closing.
Major player way
* Get assignment fee.
* Get portion at closing.
* Get listings on backend. BIG MONEY.
Super tip – Find land use consultant!
* Study up on glossary of development terms.
MUST MAKE SURE YOU KNOW IF THERE’S WATER ON THE PROPERTY
Detached or attached dwelling unit for some extra income.
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