The developer provides finished lots to homebuilders by acquiring raw or entitled land, completing the horizontal development (such as grading, roads, and utilities), and then sells those ready-to-build lots to national or regional homebuilders. This model supports builders who prefer to focus on vertical construction and outsource the land development phase. The developer adds value by entitling and improving the land, turning raw parcels into high-demand, build-ready inventory in growing housing markets.

The investment strategy benefits from predictable cash flows when structured with lot takedown agreements or rolling options, which reduce market exposure and allow phased absorption. While the model carries risk related to entitlement delays, cost overruns, or slow builder demand, those can be mitigated through diversified sales, proper phasing, and aligning with strong builder partners. The capital-intensive nature of land development is often supported by a mix of debt, equity, and builder deposits.

For developers, the advantages are substantial. This strategy enables significant value creation through land transformation without the complexity and risk of vertical construction. It also aligns with ongoing trends in the homebuilding industry, where many builders are seeking asset-light approaches and rely more heavily on third-party lot delivery. Developers can scale across multiple projects and markets, establish recurring relationships with builders, and even explore exit options with institutional BFR operators—making it an attractive, scalable, and strategically flexible model.