Tommy Dobczyk explains when to develop a property versus flip it. The deal works only if zoning allows higher density (like 8-12 townhomes in Chandler) and you have 3-5 qualified buyers lined up. He reverse-engineers the after-repair value from there, targeting $6 million on a 12-unit project at $500-600k per unit.
Chapters
Were you in the deal room today? Flip, unknown zoning limits and all that stuff. So let's look at what the go, no-go. No-go is a flip, period. And then as a go, it's only if zoning supports density and you have a buyer, a builder-buyer lined up. And so the action play here is that we pull the zoning and lot split rule, discover what we got, and then try to get 3 to 5 buyers lined up. So keep going down, keep going down. I said, what is the ARV percentage if we do the townhome? Townhome play, right? So scroll down to this. We got a lot that says we can probably do an 8 to 12 units conservatively in Chandler. So if we did this like that, what it would turn out to be is the ARV at $500,000 for the 12 unit, the ARV, future ARV needs to be about $600,000 or $6 million. So with the 12, this is how you reverse engineer the numbers. The 12-unit at $6 million means that an ARV divided by the purchase, right, comes out to a really high percentage, right? Like the percentage from what we paid to there is pretty extensive.