Offered $75k of a $900k raise on a 120 acre split, no preliminary approval yet, closing isn't contingent on it

$135,000 for a 10 acre lot means $13,500 an acre retail against $6,800 bulk. That's a 2x spread and it's on the high side of anything I've put on my list this year. Are the $145,000 comps road frontage lots? Because eight of your twelve lots are going to be interior lots hanging off whatever access gets built, and interior lots in the same county are not the same product. If the interior eight are really $118,000, your gross is $1.48 million, not $1.62 million.

Read the fee schedule before the waterfall. On deals this size the fees are usually where the sponsor's actual return lives. Acquisition fee on $816,000, a management or development fee on total costs, and then the lot sales commission. Ask whether an affiliated brokerage is listing the lots and at what rate, because a 6 percent commission on $1.62 million is $97,200 and if it goes to the sponsor's own entity that's a second fee in the same transaction. It isn't wrong for them to charge it. It's wrong for you not to know it's there.

Also find the clause on what happens if approvals fail. Does the sponsor have the right to hold and sell as bulk land, and if they sell at $6,800 an acre minus costs, where does that leave the pref?

The $95,000 site work line is the number I'd get a real bid on. I've built road for a living. An internal gravel road to county standard, meaning subgrade prep, base stone, ditching, and culverts at the crossings, runs by the linear foot and it adds up fast. For twelve lots on 120 acres you're likely talking half a mile or more of road plus a turnaround the fire marshal will have opinions about.

Ask the sponsor whether $95,000 is a contractor quote or a per lot allowance somebody wrote down. If it's an allowance and the county requires paved and accepted road, that line can double or worse. That doesn't kill the deal. It kills the two year timeline, because you can't sell lot 1 until access exists.

On your tranche question. Milestone funding exists, most often as a capital commitment where you subscribe for the full amount and the sponsor calls it in stages against defined events, first close, then approval, then improvements. What I'd expect from a sponsor is resistance to any structure where an LP can decline a call, because they can't sign a construction contract against money that might not show. So the usual compromise is a full commitment with hard consequences for a default on a call rather than an option to walk.

If the sponsor won't do staged calls at all, that tells you they need every dollar at closing to buy the land, which is its own piece of information about how thin the capital stack is.

Sources and uses, please. $900,000 raised against $816,000 of land plus $95,000 of site work plus survey, engineering, plat fees, and two years of carry. That's already past $900,000 before a single closing cost. So either there's debt in this that you haven't mentioned, or the pro forma assumes early lot sales fund later costs, which means the timeline depends on absorption they haven't proven.

On absorption. Twelve 10 acre lots at $135,000 in one rural county, all listed at once, competing with each other. If that market absorbs two lots a quarter you need eighteen months of selling after approvals and access are done. Add the approval and construction time in front of that and the two year plan looks like it was written backwards from a target rather than forwards from a schedule.

Run their two prior closing statements for actual months from acquisition to final lot sale. That single number is worth more than the pro forma.

Basic question from the trades side. Who pays for septic and well on these lots, the buyer or the project? Because if the county makes you prove each lot can support a system before they'll approve the plat, that's twelve soil evaluations and possibly twelve engineered designs, and I've watched a job stall for months on one failed test pit. Is that inside the $95,000 too?

Two document items. First, the amendment provision in the operating agreement. If the sponsor can amend the LLC agreement with a majority of member interests and they hold a majority, your economics can change without you. Look for a list of protected items that need unanimous or supermajority consent, fees and the waterfall being the ones I'd want in there.

Second, the reserve. A twelve lot plat that goes through county review is likely to get comments and a second engineering round, and someone has to pay for it. If there's no line item reserve, the mechanism for finding that money is either a capital call or a sponsor loan to the company at whatever rate the agreement lets them charge. Read the affiliate loan section. A sponsor loan that sits senior to the pref changes your position materially, and that clause is usually four pages away from the waterfall so it reads as harmless.

@fathom's point about the bulk sale fallback is the one I'd ask about first, since it's the only scenario in the document where you lose money and it's usually described in one sentence.