This episode updates the 50-acre Dallas property under contract at $863K ($17.5K/acre) where buyers have spent $50K on engineering only to discover flat topography requires retention ponds that eliminate four lots from the development plan, threatening deal viability with 60 days remaining until close and contingency strategies now including price reduction offers.
Key Takeaways:
- Retention ponds destroy lot counts and developer margins Four eliminated lots from the original plan significantly compress the $1M profit target buyers needed to justify the purchase.
- $50K sunk costs create negotiation leverage Buyers already committed five figures to engineering, making termination psychologically difficult and opening room for seller price concessions.
- Broker permission granted for emergency price cuts Standing approval to reduce contract price preserves deal momentum if termination discussions emerge, protecting against total deal collapse.
Listen to the full episode for real-time uncertainty management when six-figure profits hang in the balance of engineering solutions.
(Podcast transcript below)
Hi, Chris over at Serious Land Capital, vacant land funding partners. So today I wanted to go over some updates regarding one of the more prized assets within our portfolio. It was this 50 acre piece just south of the Dallas Fort Worth area, roughly within 45 minutes of
Alice downtown and you know we had purchased this one a few months ago for those of you who weren’t as familiar just to catch you all up is roughly a four hundred thousand dollar close
So the total price per acre was right around 8,000 ish approximately. And we thought there was a reasonable expectation if we chopped it up into three child parcels that we could get between 20 to 25 K per acre. And even if we sold it as a parent parcel, it was likely we could get a double. So when we had listed this one,
while back and we were getting offers every week roughly though much less action on the child parcel so that was a surprise to us and It was much more interest for the whole parent parcel mainly from various developers And so we went under contract about two months ago with local Developer group they had completed several other projects within the area
had relationships with the county really knew what they were doing and It was for more than double our purchase price So it’s like just under I think we got it under contract at 17 five per acre And I have to check the original Docs to double check that and they were moving very quickly through their process and they bought
120 days to actually close just given, you know, various county and city approvals. And, you know, that’s just always the issue. If you’re going to be working with the developer, usually going to have longer closing timelines, plus, you know, very big purchase, but, know, it’s going to be, effectively cash transaction for us. And he thought, okay, this is a de-risked, contract to sign here.
favorable outcome for us, you know, both ourselves and the land investor who brought us the deal, assuming it closed as anticipated, you know, we would both net around 200K each. things have been progressing really quickly. The development team had been ordering all our various engineering,
had initial meetings with the county and the city and it was all looking good. And about a couple of weeks ago, some complications arose where the land was just so flat that there wasn’t, or their initial engineering plans were not conducive for where the water runoff needed to be accounted for.
Um, I realized now I’m kind of stumbling about this. I’m not sure what their initial plans were. didn’t see their engineering. Uh, first, maybe they thought there was enough of a grade on the property that all the water from the various developments that they were doing, then they were planning on doing a residential, um, single family units, maybe an acre to two acres, a piece roughly. Um, and it turns out that the land was just so perfectly flat.
that their original plans were just not going to work. And so I think they tried to consult a neighbor initially, see if they could work out a deal where they could run some of the water off or most of it through the back of his land. He was not enthused about that idea, can’t blame them about that. And so their engineering team has been working.
Constantly to try to figure out. Okay, what do we need to do here more than likely? It’s going to be some type of retention pond That they’re going to have to you build into the development to account for you know, where is this excess water going to go once the parcel is fully developed out and
You know, we were starting to get a bit more concerned here because they were supposed to have the final 30 day approval process meeting with the county, almost exactly two weeks ago. And that got pushed off and another one hasn’t been set until then. didn’t hear from these guys for a few days. I guess they work with a lot of property tax, some type of business surrounding that. I’m not exactly sure what.
But, May 15th is, you know, for most states where property taxes do and so they were really busy that week, but it’s all like, okay, what’s going on with this deal? Then we didn’t really have much of an update last week. I only got an update today from the broker where, yes, they are trying to figure all of this out.
but if they need to do some type of retention pond here, that’s probably going to eliminate four of the lots that were part of their initial plan. And so obviously that reduces the total possible revenue and associated profit they would have on this development and can change their numbers significantly. I’m not sure how many lots were actually part of their plan at the moment.
But you know, this is throwing more hair onto this deal where it seemed like, this is streamlined. We’re to be able to close on this even faster. They’re all set to go here to where it’s like, okay, there’s some real complications. Very fortunately, they’re heavily incentivized to figure this out and through their own words, I mean, they’ve already sunk 50K in expenses like that. That money is gone. So, you know.
significant funds thrown into this deal already. And so, you know, by that fact alone, they’re like, okay, if we can figure this out one way or another, let’s do it. So they are hard at work with their civil engineers, what’s the process going to be? You know, they want to make roughly a million dollars profit on the deal. So again, I’m not fully privy to what their exact
plans are, but like that is what they want to either gross or net out. one of the two there, and, know, buying this property from us is, you know, just like a little sub under 900 K roughly plus that 50 ish that they’ve thrown in. don’t know what their development expenses will be either. in terms of, various other hard costs. So.
You obviously, this is not the best news here. We still have another two months to change before the closing date is actually set. But, you know, time is running out because whenever they need to set another meeting with the county, and I’m not sure if that happens on a weekly frequency, biweekly, monthly frequency.
that’s an automatic 30 day approval process that’s gonna have to be undertaken. So there’s half that remaining closing time taken up right there plus lender is gonna need to do final approval on it. So we’re rapidly running out of time.
And and yeah, and there are some poison pills associated with the deal if they don’t close out on this one so With all this in mind when I was talking to the broker like alright, you know Clearly these guys are working on it. Even if they wanted to terminate on this one You know, we’re gonna get all the diligence that they did but you know from
the type of buyer activity that we were getting initially. Like they tend to be more developer oriented anyway and these guys are really experienced. So somebody else is gonna run into these problems regardless. We thought this one was going like one of the best parcels that we’ve ever picked up. And so far it’s still playing out to be that way, but almost everything ends up being more complex than initially imagined, especially within.
real estate. And so I told the broker, okay, you you don’t need to present this now to the buyers. There’s no reason to, but we have in our back pocket, if these guys start talking about termination, hey, like, try and make sure they get back in the table here. You know, they’ve already sunk funds into this. You you have my permission to let them know, hey, there’s room for us to lower
price we’re understanding of the situation to still make this deal happen. And so we have that in our back pocket here, but not mentioning that until there may be talk about, these numbers are just not going to work for us as development team, you know, may have to terminate accordingly. Again, that would be a huge decision. It’s not like they threw down a thousand dollar EMD.
Like some of the larger or smaller closes you might take part in You know 50k is a whole nother story here plus the time and opportunity cost as well so We’ll see What the further progress is here obviously I would rather not take an additional haircut On the anticipated profits that we have lined up
because this one would really help us feel better about this year. again, through the various topics I’ve gone over throughout 2025, like we started just very, very solid. And then, this last quarter or so has been, it’s been tougher. It has been a tougher year. Projections have changed a bit as far as where we’re heading.
where we just had to be, okay, really double check on some of these other closes that we’re trying to nail down. You know, it’s this property in Louisiana property that we have could really like just make our year, even if that was it and all the other ones broke even.
But it’s also setting us up a lot more for the future that if these two particular properties perform, there’s a lot of other larger assets that we think we would stand a really great chance at with performing well on, but also trying to remove some of these smaller ones. So there’s a lot of balls up in the air at the moment, now both with this property, which I was hoping was not gonna be the case, but again, everything is a little bit more complex.
or sometimes a lot more complex than than you might ever wish. And you just have to kind of deal with it as it comes up. you know, but at the same time, I just signed some closing docs for another deal that basically breaks us even on a two parcel portfolio purchase. And it sounds like we’re about to get an offer on the other parcel there. So that’s going to be all gravy profit. And then we still have that Tennessee auction property up.
that, actually I’ll, I’ll save that one for another, another podcast to comment on. Needless to say these next, these next few weeks are going to, really, really inform how I’m feeling about the remainder of this year. So I wanted to share some updates on where we’re at and what can come up as far as our, and our strategy around some of the decision-making here. Hopefully it helps you as well.
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