Real estate investing isn’t just about what you buy—it’s about what you build. And when you understand how to unlock the true potential of a property, a single purchase can turn into a multimillion-dollar opportunity.
That’s exactly what one of our clients did with this ground-up construction project. By recognizing the highest and best use of a 7,000 square foot lot in a desirable urban market, they were able to transform a modest single-family home into six standalone units—and are now on track to earn over $1 million in profit.
Let’s break down the numbers and the strategy.
The Opportunity: A Lot with More Potential
Our client acquired this property off-market for $950,000. At the time, it was a relatively small single-family home—just 1,000 square feet, two bedrooms, and one bathroom. In most markets, that might be the end of the story.
But not here.
Rather than settling for a light renovation and a quick flip, the investor saw what others didn’t: the lot was underutilized. With the right zoning, design, and financing, the land could support a significantly more profitable development.
The Strategy: Build Six Standalone Units
After working through the permitting process, the investor committed to building six standalone units on the site. Each unit was thoughtfully designed to meet market demand, offering approximately 1,100 square feet with two bedrooms and two and a half bathrooms—a highly appealing layout for modern buyers.
Here’s how the economics of the project came together:
- Acquisition Price: $950,000
- Construction Costs: $1.9 million
- All-in Cost Basis: $2.85 million
- Projected Sale Value (Total): $4.6 million
- Projected Profit: $1.75 million
By taking on a more complex project and thinking bigger than a traditional flip, the investor created tremendous upside—all on a single 7,000 square foot lot.
Why This Worked: Highest and Best Use
The success of this deal came down to one core principle in real estate development: maximizing the highest and best use of a property.
Too often, investors focus narrowly on what already exists—a house, a duplex, a building with some cosmetic flaws—without considering what could be built instead. In this case, the original home was functional, but it didn't fully utilize the value of the land beneath it.
By recognizing that the site could legally and economically support a small community of standalone homes, the investor unlocked a level of profitability that would never have been possible with a simple renovation.
This type of thinking requires creativity, local market knowledge, and a willingness to take on larger projects—but the rewards speak for themselves.
The Role of Financing
Projects like this don’t happen without capital—and we were excited to support this investor with a flexible, high-leverage ground-up construction loan, tailored for experienced developers looking to take on projects of this scope.
Certain Lending can offer:
- Up to 95% Loan-to-Cost on construction loans for qualified clients
- Fast funding to secure the off-market deal before it becomes public
- Construction draw management tools that help streamline cash flow throughout the build
- Hands-on support to navigate the complexity of multi-unit permitting and construction
Because we specialize in working with real estate investors, we understand the importance of speed, flexibility, and creativity. Our financing allows clients to act quickly on off-market opportunities and scale their projects with confidence.
The Outcome: A $1M+ Payday on a Single Site
By the time construction wraps and units hit the market, this investor is expected to walk away with over $1.75 million in profit.
But perhaps more importantly, they’ve created six high-quality housing units in a city that needs more inventory, increased property values in the neighborhood, and built long-term equity through smart development.
For seasoned real estate investors, this kind of project represents the next evolution: moving beyond flips into the world of value-add development, where land use, zoning, and design all work together to maximize returns.
Check out the full story in Israel Lopez’s Instagram below:
