Funding a same day double close on a vacant lot. Holding what, exactly?

Ask what the lot is worth if you end up owning it, because that's the only number that protects you. Everything else is his optimism. If 88 is the real market number then a failed B to C closing leaves you whole and bored. If 88 is 88 because a builder was willing to pay 121, you've financed a spread, and the spread is what disappears when the builder walks.

The thing I like about land from where I sit is there's no scope to creep. No roof, no mold, no surprise knob and tube. Your downside is a carrying cost you can calculate on the back of an envelope, which is more than I can say for anything I've renovated.

I'd ask how he found the seller. If it came off a mail campaign to absentee owners then an 88 purchase on a 121 lot is normal and boring. If it came off the MLS at a 33k discount, something is wrong with the lot and nobody has told you what yet.

Blunt version of my question: if the deal is as good as he says, why not just buy the lot yourself at 88 and sell it at 121? You'd be doing the same underwriting either way. Either you believe the 121 or you don't.

On mechanics, ask his closer whether the second closing can actually fund off the first one's proceeds, because whether a title company will do a same day back to back at all varies by state and by underwriter, and some will only do it if your money sits in escrow for the A to B side outright. Get that answer from the closer in writing, not from him.

33k of spread on an 88k basis is 37 percent. That happens on land, I've seen it, and it also happens that the 121 is a number a builder said on the phone before his own lender looked at the site. Ask for the builder's signed agreement, the earnest money receipt from escrow, and whether the builder is paying cash. A hard 5,000 is only hard if escrow is holding it.

Studying for the license exam right now and this is the part I keep tripping on. Whether what he's doing needs a license depends on the state and on whether he's marketing the property or his contract position, and I'm not qualified to tell you where that line sits in yours. Ask him directly what he's marketing and to whom.

Read the B to C agreement, not just the numbers off it. I want to know who the named buyer is, whether the builder can assign it to an entity you've never heard of, what the default remedy is if he doesn't perform, and whether there's a financing contingency hiding under a heading that says something else. Then read the A to B agreement for a deed restriction or a right of first refusal on the seller's side, which is the thing that shows up on land and never on houses.

Also the 1,500 doc fee. Ask what document it's for. On a one day loan I want to see the note, the deed of trust or mortgage, and who prepares them, because in some states that recording and preparation work has to be done by a licensed attorney and the fee schedule looks nothing like it does elsewhere.