This episode illustrates how casual conversations during pickup basketball led to a potential $5 million bridge financing opportunity for a subdivide deal requiring gap funding between seller close and national homebuilder acquisition. The deal allows participation as a minor limited partner ($100K-$150K) to learn major subdivision processes while institutional capital handles primary financing.
Key Takeaways:
- Constant deal structuring creates unexpected opportunities. Every conversation becomes potential partnership exploration when operators actively think about creative structures, capital sources, and mutual benefit scenarios.
- Follow deals outside your purview to build capabilities. Minor capital participation ($100K-$150K) in larger transactions provides real-world education on major subdivisions without requiring full underwriting responsibility or capital deployment.
- Bridge financing fills gaps institutional players create. Nine to twelve month holds covering eminent domain resolution for sewer extensions offer transactional-style returns when national builders are committed but timelines misalign.
Listen to the full episode for insights on positioning for larger deal participation through relationship cultivation and creative thinking.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, Vacant Land Funding Partner. Today wanted to share kind of unexpected and encouraging update, a deal that is outside of our purview that we might be able to have a small participation in, in order to increase the understanding and capability of our own firm, learn along the way.
So I know that I’ve remarked on this in brief. know I was mentioning in a previous podcast how a couple of folks that I know and trust deeply within the land industry, they’ll oftentimes work as a middleman for national home builders and kind of manage a seller.
relationship and handle a lot of the entitlement process but have the actual builder cover the entitlement costs. So money out of pocket is significantly decreased, probably only having to pay for various earnest money deposits, extensions and so forth. So it is a pretty interesting
model and then you know pocketing the margin between the home builder purchase and you know what the Actual purchase price is for the seller So, you know the returns can be pretty significant from a de-risk position. So there was a deal that’s you still being worked on you know for
almost a couple of years here. there’s one final entitlement related to a sewer extension that eminent domain is going to be required for this in order for the home builder to close on the deal. I’m cagey about all of that kind of
deeper details about this, obviously confidentiality and so forth, but I’m giving you enough to understand just the overall situation where this SUI ratio was expected to be resolved much earlier. The sellers are just adamant, hey, this thing needs to close, no more extensions. This was supposed to be done within this two year period. There’s also like some deaths within the seller’s family and so forth. So it’s just changing the dynamic a bit.
But there’s still I can expect it another you know, nine to twelve months Likely required for the Seminant domain to be completed. So the paper lots will be ready for the homebuilders acquisition so there’s this gap period where the Roughly five million dollars are needed to close on the land Prior to
to that eminent domain being solved and then the national home builder closing on the actual deal. So, you know, being able to provide that gap funding is the crux of this particular deal, but, know, it basically turns into a transactional deal. That’s, know, a nine to 12 month hold. Like it’s heavily, heavily derisked. The home builder is, you know.
as close to a hundred percent committed as you possibly could be. They’ve invested huge sums of cash and deeply invested in that area. The whole city is behind the project. So all incentives are aligned here. It’s just, you you got to cover that bridge in the meantime. And, you know, $5 million is significant sum. So, you know, even if
our firm here at Sirius Land Capital, like for a more typical deal that we look at, know, potentially we could put that type of money together at the moment, but we wouldn’t feel necessarily as comfortable not having done a service capital in relation to such a major subdivision project, even if it is just like setting up paper lots.
Uh, it’s a bit outside of our purview. So, um, we were hoping, Hey, we can maybe make a connection and possibly serve as like a, a very minor, uh, limited partner, you know, small minor capital participation. My partners and I, we don’t need a raise outside, but you know, can we throw in like a hundred, 150 grand just to follow the deal. Um, understand the process along the way and, uh, um, you know, potentially be able to.
you know, take the lead on one of these or a similar one of these that come up in the future here. So interestingly was playing basketball with one of my land investor friends over this last weekend. And, he started working at a larger capital partner within the real estate space, oftentimes doing construction lending and roundabouts, debt equity, et cetera.
And, thought, okay, that this is actually kind of in their purview. So it made the introduction. There was actually a really productive call earlier today. possible structure being proposed next week. so all of this actually moved really quickly. I didn’t have any, preconceptions that, this is going to line up perfectly. was just kind of, you know, random conversation and I’m just playing basketball and, there, there might actually be a possible intro here and.
Yeah, because they kind of know both parties. yeah, we obviously can’t dictate terms here, but you know, if there is a possibility for us to participate, know, 100, 150 K out of that five mil, follow whatever terms you guys kind of arrive at, just for us to understand the underlying deal. Plus, you know, we trust the operators very deeply. Yeah, that would be something that we can set up and.
You know, at the moment it looks like it’s trending in that direction. So, um, kind of bottom line here, just in terms of what you might be able to take out of this for your own business is just. constant, know, the, more time you spend in the business, the more creative avenues you’ll find, or, you know, even be able to kind of spur the moment, think of what can be additional avenues.
for growth and conversations that might not typically lead somewhere can actually turn into a major boon here. to me, we’re in such a groove recently and pretty much every single conversation I have or anybody I’m chatting with, I’m just constantly in this deal structuring.
type of mode here. just like, yeah, could like cut and deal. So that’s just, it’s, it’s given me a lot of joy and satisfaction at the moment finding, is there possible partnership here? You know, if not immediately, you know, at least start a conversation, maybe down the line. There could be some can, uh, you know, kind of manifest themselves, um, in more tangible formats, uh, sooner rather than, than later here, but you don’t know unless you, you’re kind of open to it and
Um, you know, thinking actively about how to partner with others or at least putting yourself out there for something to come back, uh, to you later on. And even if you’re not able to participate, at least, you know, it’s something that’s, uh, could be reciprocated in, in the future. Um, uh, or, know, just at least, um, you know, kind of boosting your relationships with, with other folks who might be benefiting more, uh, from a monetary or, uh,
Yeah, primarily from a monetary perspective. mean, it’s business, right? It’s capitalism. That it might come back to you later in a different way. But, you know, that to me was just kind of encouraging to see where it’s just, know, like all these constant conversations, just cutting deals, thinking about deals, talking about deals all the time.
pretty much everybody chat with at the moment is really just kind of coming to fruition in a consistently more tangible way, like week after week here. So, yeah, and now we might be able to participate in a $5 million deal. You know, the anchor investor here, they can stroke a check like that by themselves. It’s not an easy thing to do.
multiple relationships with family offices, debt, equity structures and so forth. we imagine that’s kind of the future direction of our firm as well here. you know, learning, okay, what’s the next step in our journey and keeping one foot in front of the other. Not getting distracted with avenues that aren’t in service of that.
you know, step by step direction for our vision of our company. You know, that’s always something to keep in mind, but this one is along that pathway. So wanted to share that. Hopefully that helps you in your growth for your own business, too. I’ll keep you updated where this goes. Maybe it doesn’t turn out, but you either way, the conversation was productive. Again, was not.
Basically zero expectations it was going to go anywhere. And sometimes you’re just, you know, surprised pleasantly and things might actually work out and yeah, we’ll see where it goes. But beyond that, if you’re looking for funding, serious land dot capital, landpricer.ai. If you want to see a demo for that, I actually just did a short one on my land daily diligence, Facebook live earlier today.
This is February 27th. I’m gonna be sending out email updates to everybody who follows us with some demo videos here shortly as well. I’m very excited about that. yeah, check out land daily diligence, Facebook group or landpricer.ai for the most simple and accurate way to price land. Looking forward to next time. Take care everybody, subscribe and share. Bye.
