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Cliffrose Meadows
40 acres on West Lone Mountain
Wittmann, AZ
Project Summary: The project known as Cliffrose Meadows consists of 2 identical side-by-side 20 acre parcels in the unincorporated area between Surprise and Wittmann, Arizona. Both parcels were purchased in September of 2005 by BDD 102, LLC; an Arizona LLC. The LLC was able to acquire the land at an extremely low price of $55,000 per acre ($2,200,000 total), but had to work quickly and close the escrow under extreme time-pressure. Due to the time constraints, the LLC sought funding from a private lender which has a one year due date. The strategy for this particular project is to “flip” the eastern 20 acre parcel after dividing it into four parcels of 5 acres each. As current zoning is one home per acre, a buyer of a five acre parcel can easily divide it again into 5 lots so this arrangement provides the LLC with the highest and best value. After selling the four parcels, the loan would be paid off and the LLC would own the western 20 acres without any debt and can then develop it to meet current market demands without the pressure of loan payments or refinancing.
Current Status: Just prior to executing a contract for survey and engineering services, the County Flood Control District informed the LLC that due to pressure from FEMA after Hurricane Katrina, all undeveloped land in the area was being reassigned to new levels of floodplain and floodway designations. While this delayed the awarding of the contract as it needed to be modified to accommodate the new designations, solutions are apparent at a reasonable cost so survey and engineering work will continue.
Financial Profile: The loan from the private lender is in the amount of $1,350,000 (approximately 61% of the purchase price). Once the survey is at or near completion, the four 5 acre parcels that make up the eastern 20 acre parcel will be placed on the market at current comparable prices. Currently, on-market comparable 5 acre properties are listed at asking prices of $480,000 to $505,000 ($96,000 to $101,000 per acre). However, these parcels have been listed for some time, reflecting the area’s slowdown from the frenetic pace of last year. As the LLC’s goal is to pay off the land loan with minimal impact on interest and/or balloon payments, the LLC will price the parcels in a manner to ensure a quick sale and close. While the sale is underway, plans for development of the western 20 acres will proceed.
LLC Investors Click Here for Cliffrose Meadows Management Reports
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