Best First time home buyers strategy

[Desmond Dunn]

I am a First time home buyer.  I am looking to put my self in the best positions in terms of equity.  I live in Raleigh, NC.  I have two ideas.  

First option is to purchase a distressed Property and use a FHA 203k loan to fix it up.

Second options is to buy some land for around $45k and do a custom build.

Need a house between 1,800-2200sqft

Looking to spend between $210-$230k

Which scenario do y'all think would provide more equity? 

[Nicholas Lohr]

I would definitely steer you away from a custom build if you are new. Unless you are a builder yourself, have a lot of great contractor connections, or have a GC that you really know and trust it's a very difficult undertaking.  I am speaking from first hand knowledge. I just built 2 townhouses from the ground up and it was WAY harder than any remodel I have done. 

And then concerning your numbers there. (and ill even take the more generous extremes of your numbers) You said you have $230,000 to spend. 230,000 - 45,000 for the land = 185,000 left to work with. 

185,000 / 1800 square feet = $103 per square foot to build this new house!  (unless you are planning on getting a loan. are you planning on a loan?)

I'll tell you that my all in cost of to build from the ground up was $250 per square foot.  (and it took 2.5 years)

I know costs vary from state to state but they are definitely not that different.