Turning Dirt Into Profit
Robert Woods & Tonio Bianca have been CFRI members for just over a year. Given the state of low inventory on new construction in September of 2015, they looked for vacant lots to build on in Orlando. They purchased a vacant lot on S. Fern Creek Ave. which was listed on MLS. The house had been hit by a dump truck and demolished, so they saved several thousands in impact fees by starting a new build where a house had already existed.
They felt that the new house comps were around $295,000 and were able to finance the construction to permanent loan to pay for the build through relationships at Trustco Bank. Robert paid $51,500 cash for the lot, and Tonio used his credit to get financing for $175,000.
They had a couple small hiccups along the way that involved the new TRID regulations (postponed securing the loan by about 2.5 months) and some personnel issues with the builder (postponed finishing the home by about 1.5 months). Once building began in March 2016, it took six months to complete.
After the brand new 4 bedroom, 2 bath, 2,066 sq ft home was listed on MLS by Tonio’s wife Christina, who is a Realtor®, things went quickly. They had three full price offers and went under contract in four days for $325,000. The market value had increased from the time they bought the vacant lot. Their back-up plan if the house did not sell was that they both would have gladly moved in and lived in the house themselves.
The process from the purchase of the lot to sale of the house took one year, resulting in a profit of $66,000 which is more than a 100% return on the initial investment and about $25,000 more than they originally expected!
Reprinted Courtesy of Central Florida Realty Investors. Visit www.CFRI.net From the February 2017 issue of the CFRI Newsletter