This episode documents a Sunday morning strategy call after receiving a $125K list-price owner-finance offer within one week of listing an 8.5-acre Alabama property purchased for $26K. The developer buyer wants 90-day rezone contingency for higher-density housing (townhomes or multifamily) in an area surrounded by single-family homes, creating execution risk that required immediate tactical planning to either validate rezone probability through city contacts or negotiate contingency removal at reduced pricing.
Key Takeaways:
- Reverse Engineer Note Sale Terms Before Accepting Offers Target 10.9% interest, no prepayment penalty, 8-year max term, 20-30% down as baseline terms that active note buyers will accept at 80 cents on the dollar, then confirm specific deal parameters with note buyers before signing anything (pre-qualifying exit strategy prevents getting stuck holding paper).
- De-Risk Rezone Contingencies Through Decision-Maker Contact Rather than accepting 90-day rezone contingency at face value, immediately contact city officials or zoning board members (directly or through broker/buyer relationships) to get tacit approval or probability assessment before closing (replicates the Louisiana subdivide strategy where decision-maker sign-off happened pre-purchase).
- Trade Contingency Removal for Price Reduction on High-Margin Deals With 5X gross margin ($26K to $125K), offering to negotiate down to $100K in exchange for eliminating rezone contingency and accepting current zoning still produces favorable exit while removing execution risk and accelerating close timeline.
Operating on weekends when offers arrive demonstrates the urgency required in uncertain markets—speed of strategic response matters more than rigid schedules when capital deployment opportunities emerge.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, Vacant Land Funding Partner. So I always like to give you guys, you know, most kind of updated learnings and precisely how we’re navigating deals. So whenever there’s like a real tangible update and something that might have a couple of unique elements, we haven’t totally sorted out a deal in a particular way.
to give you our most updated thinking. in this case, and you should view this as a pretty positive sign, we had purchased a property in Alabama, about eight and a half acres, that had really significant development potential. was basically leftover acreage within an already developed major subdivision and had multiple.
street access points, sewer lines that were right at all of those kind of points of frontage for the various streets, water lines and power. And so it was just kind of ripe for further development. And we just got pretty
seemingly incredible on paper deal, like 25 ish, 26K of the initial purchase. And we thought, hey, we could probably list this one for north of a hundred K based on comps and have, you know, we’ve had a pretty superior property here and should have a lot of developer interests, maybe even, you know, just interest for somebody to live on a larger lot.
kind of outside of a more significant Metro within Alabama. so, you we listed this property and again, everybody knows, you know, economy is not in the best position at the moment here and already got, you know, significant interest within a week of listing and got a
owner financed offer from a developer who’s also purchased property through the broker that we’re utilizing within a week of listing. And like this offer came in, you know, Saturday, April 5th. So, you know, right in the midst of just absolute market chaos at our list price of $125,000. So, you know, right there is like a five X gross.
our initial spend on the property. So, you know, pretty encouraging result just to share where we’re at there. And so what we always have to consider again from a owner financed situation is that we try to reverse engineer the terms because we always are looking to sell notes once we acquire so we can keep
more routine cash turnover within our core business. So, you know, we’re usually expecting we can get 80 cents on the dollar for, you know, to go through the actual note sale process at table close as well.
And so typically we try to orient towards 10.9 % interest, no prepayment penalty, max eight year term, and at least 20 to 30 % down payment on the deal. And so we know we have active note buyers at those terms. And so we can just again reverse engineer so that any owner finance offer that comes in.
We’re already pre-qualifying them for possible exit on selling the note. Of course, we’re going to confirm before we accept any offer from our potential note buyers, hey, here’s the asset, here’s the situation, here’s the buyer profile, the exact terms of the offer, and make sure they’re comfortable with it before we sign anything, because I really don’t want to get stuck with a note.
particularly in a situation where we have a very fresh property that’s 5x gross. It’s a pretty encouraging market then. So if we could potentially get another cash offer if this one didn’t work out, great. That’s something else to consider. that’s…
And I know I’ve remarked on that before, but that’s how we would structure it from a note sale perspective and lining up how to deal with those owner finance offers. especially in this economy, too, with some of the other properties that we’re seeing, like owner financing is definitely getting some more attention. So it’s always great if you can offer that to potentially exit and cash out of these deals a bit sooner.
So that’s how we would orient there. But because again, like this property was going to be more developer builder friendly, just the way it was oriented. And that’s how we’re marketing it as well. It’s just a prime opportunity. And this particular buyer is a local developer who’s had success developing in this area before. yeah, he was looking to.
make this offer contingent on a rezone within 90 days prior to closing. And some areas can be quicker to fully rezone, others longer. 90 days usually to me is like pretty aggressive timeline. Our broker seemed to indicate that that was reasonable to get that done, but the rezone that the developer wants to do.
is for higher density housing units, which doesn’t really fit that exact area. Most of the area is just SFRs on the surrounding properties. And so he wanted to rezone to allow for either town homes or possibly even multifamily, which to me would be a little bit riskier. But again, I’m not on the zoning board in that area.
Yeah, with that in mind and us not being local, we’re not experts within that zoning area. I would try to figure out, okay, is there a way to de-risk this a little bit? So for other properties, similar to how we did that Louisiana deal, if you’re not familiar with that, look back on some of those podcasts I’ve done over the past few months, a much larger purchase in Louisiana, how we de-risk the subdivide process by having the actual decision maker at the parish.
tacitly sign off on our plan, even before we finish closing on the property. And so we could have like virtually a guarantee that our plan was going to move forward and be approved before we even purchased. And so that’s what I’m trying to line up with the brokers. Like, do you have any contacts at the city? Does the possible buyer have any contacts to understand like from the key decision-making perspective, even like back the napkin?
Can they indicate, based on what you’re looking at here, yes, this is like very likely it would go through or maybe it’s, there’s like a lot of issues here. This one might be trickier or like, is it a coin flip? Like percentage wise, what are we looking at here and how long is it gonna take to figure out what that situation is? And so, I was chatting with the broker earlier today. We’ll probably be able to figure that out later this week within a few days.
And pending that, can feel a lot better about where we’re at with the current offer. Or, and probably my preference would be, that, hey, can we potentially close this out faster and remove that zoning contingency if that buyer is okay leaving it at the current zoning or just figuring out the zoning on its own after?
when he’s already taking title and us being willing to entertain a possible lower offer in light of this, especially when we have so much margin that we’re working with. So like I was telling the broker, let the buyer throw out the numbers, of course, and figure out what his appetite is. Okay, first step is figure out what’s the current insight from the zoning side. Can we get an understanding of how likely it is to be approved?
If it seems a bit trickier or there’s some real hesitation there, what’s the likelihood that he would still move forward with an offer and keeping the same zoning and maybe figuring out on zone or just building at lower density housing units and let him throw out a different offer there and you already have like our approval on our end that you can negotiate down to like a hundred thousand and we would still have.
even if it was owner financing and that of a discount for a note sale, still a very favorable exit here. that’s the way that I just conveyed that. Hopefully we’ll have, and plus like this broker has dealt with this buyer before. I mean, he bought another similar property, owner financing, and there’s been no issues.
paying off, respected individual locally and so forth. So it seems like a very legit operator in the area. But that’s kind of how we structured our step-by-step thinking on, what are immediate next steps to figure out whether we should work with this offer or not and possibly adjust going forward. And all of this was done in a 10-minute call on a Sunday morning here.
You know, to me, so what on the weekends here and know, tough economy, like, anytime there’s an offer on the table, really, I don’t care what day it is. Like, yeah, I’m excited to make money. Like, let’s do it. Let’s figure out an offer. So, but you know, just to share with you how strategic and streamlined it was based on our experience, dispelling hundreds of properties and figuring out the patterns. Okay. What’s
way to de-risk this and still get as much money as we can at the point of sale. So hopefully this is helpful. If you have any other suggestions on how you’ve dealt with situations like this in the past or currently, I would always love to hear them in comments or
Yeah, even direct text, emails, whatever feedback is always welcome. And if you’re looking for funding, SeriousLand.Capital, Land Daily Diligence Facebook group for zero cost reviewer land deals. Remember, April 17th, we are doing unconference hot seat sessions live with Dave Denniston, myself and other million dollar land investors and landpricer.ai for the most simple and accurate way to
price, land, subscribe and share. Talk to you next time. Take care. Bye.
