San Francisco, CA · Member since 2017 · 2 posts · 0 votes
Hi All,
I am interested to buy a piece of vacant land in Sonoma County (guerneville, Monte Rio area). I am considering lots that I can afford to buy with cash. Over time, my plan is to build a SFH and possibly sell it for a profit (or worst case, keep it for myself as vacation home + Airbnb if I can't sell for a good profit).
What are some of the key things to remember before jumping into a plan like this? What would be key things to look out for in guerneville real estate? How much money would I need to spend to build a small home (400-600 sq ft) that I can sell ? Once I acquire a lot, would I be looking at a 1 year construction project or more? (including permits approvals in sonoma county)
PS: I have dealt with few rental properties so far. But this is my first time considering vacant lot and construction.
Please share tips and suggestions and other articles that I could refer to educate myself on this topic. Thanks in advance!
Rental Property Investor · Las Vegas, NV · Member since 2014 · 137 posts · 118 votes
2y
I've had a similar dream for the last ~7 or so years, specifically Guerneville near the main village. Have swung and missed on half a dozen SFH's in the last couple years, the area really took off during COVID and I saw properties going $100k over list. I also considered the land idea and sticking a BOXABL or shipping containers on a plot and building that way.
Couple concerns.
That area, especially near the river, is pretty remote. Building from scratch will likely cost $$$$$ and then add ~20% for overage for materials, shipping, delays, permits, who knows what. Running power and water. It's CA, contractors are never on time or budget, and it is a hard to reach area. Nothing related to building there, will be cheap, IMHO. Could be wrong. But you're going to need to find contractors that probably have to drive out there every day and back, and there's a cost for that too. Hence the modular building idea to cut the time and cost down.
This area, like many, underwent a big STR license ordinance during COVID. Pretty sure there is still a moratorium, or the max limit of licenses has been hit. I stopped my buying search once that happened, as it would be tough to make a rental work in the area as an LTR or MTR at current prices, unless you really found a steal in a prime location. So your note about keeping it and using as an Airbnb is a risky option, depending on what happens with licenses in the future.
The only way to know what a hyper-local cost to build would be, is to interview local builders and GC's who service the area. None of us can answer that for you - could be $300 per SQFT or could be double. I would also call a few agents to get a feel for building, contractors, permits, timelines, etc. You might be sitting on land for a year waiting for permits, soil reports, inspections, etc. etc. before being cleared to build. I would also ask agents if they think a 400-600 sqft unit is worth building for the effort, or if you need at least 1000sqft etc. To go through all the hassle of hiring, permits, trucking stuff out there, for a 600sqft unit seems a bit foolish. I'm honestly not sure this is the right area for a new build / flip idea, because it will be super expensive, and unsure what the profit margin would be. It would need to be a spectacular property most likely, not a tiny home.
All I got. GL! Keeping my Guerneville dream alive, but on the backburner...