$10,000 for 9 Lots - Zillow Land Development Deal - Part 2
The full cost and profit breakdown of the land deal in Freer, Texas.
The Final Numbers
We got the sewer lines installed on all lots, water and electric installed on 2 of the lots. We did decide to purchase a very old mobile home and move it onto one of the two lots with utilities. Intention was to fix it up a bit and owner finance it out. That idea was scrapped as we didn’t have the time so we cut our losses and sold it as-is for cash. We did take a small hit on it.
The land was marketed via the MLS, Zillow, Facebook Market Place Craigslist and a sign on the property itself. Here is a breakout of how each lot was sold.
Lot 49: Vacant Lot. Sold to neighbor. In-person lead for $5,000 cash.
Lot 48: This is the mobile home lot with utilities. Sold via sign in the yard for cash at $15,232.
Lot 46 & 47: Sold together to buyer off Facebook. Total Price $16,000 cash.
Lot 44 & 45: Active for sale at $6,500 each.
Lot 42 & 43: Sold together from buyer off of MLS with agent for $10,000 cash.
Lot 41: Sold owner finance from buyer off of Facebook. Sales price $6,000. $306 for 16 months.
Below is the full break out of everything from costs, gross profit and the true net profit. Obviously the lots to be sold are not yet reflected in the bottom line but overall this project is projected showing a 100%+ return. Percentage return is great but the actual amount made on the deal was low. Was it worth all the time and effort? Not really. Most of the work was done through the city for the utilities so we didn’t have to manage much of anything, it was more of a waiting game. Other than that, showing a piece of land requires no agent or anyone to be present, so for marketing purposes it didn’t require much time out of my day for prospective buyers to take a look at the property.
All in all I knowingly took a flyer on a land deal in an area I’ve never been to and still came out ahead. Learned quite a bit of the area and I will plan to farm this area for off market land deals that could pan out better in the future. There is a strategy that I am employing for one of the two remaining lots. The idea is to pre-sell a mobile home on one of the lots. I’ve already spoke with a mobile home reseller and I can get a 3 bed/2 bath, 900sqft single wide, brand new, transported and set up for just under $60,000. Utility lines and hook up will run around $7,000, lets round up to $10,000 for anything else miscellaneous.
I plan on marketing the full package at $99,900 for a brand new 3 bed / 2 bath. Buyers are able to purchase a mobile home separate from land with chattel financing via the reseller. Very similar to a car loan. I can then owner finance the land for the difference. The reseller can also roll in some of the development/hook up costs for the land into the chattel loan. This allows me to play with the difference of $29,000 of gross margin plus interest of owner financing the land.
The true value add for land development is right here, adding the housing. I am now almost 5x my net profit with a mobile home on top and I don’t even have to pay for it upfront. I’ll do an update down the line once I resell these final two plots.
Food For Thought
A big reason of why I purchased the land above was to test case the appetite for affordability despite the location. I would love to tap into this at a larger scale and I am looking at raising capital down the line to do so. If you want a larger proof of concept of the appetite for affordable housing and utilizing mobile homes to satisfy that demand, look no further than Colony Ridge in Cleveland, Texas. Proof of concept is there at scale.
Despite the political and legal issues surrounding the developer of this massive project, the company is satisfying the need for housing in the area and it doesn’t look like it’s slowing down at all.
It’s a great read to see the scale of it all. Click HERE.
Here is a snippet of the insane growth that this community has had in the past decade.
“In 2013, the district had fewer than 3,300 students. By the end of the 2023-2024 school year, enrollment reached more than 12,000 students. To keep up, the district built three additional elementary schools and a middle school.”
This is one of the bigger developments out there but there are smaller ones littered all around Texas. Immigration isn’t slowing down anytime soon, which means there is a big opportunity here to provide land and housing for all of southern Texas.
I’ve got a great owner finance case study coming up. I’m finalizing selling the note in the next week or so, and once that is finished, I’ll publish it all. I’ll also include a wholesale deal that I did earlier this year off a bank foreclosure found on the MLS.