Duplex build vs buy

[Andrew Creel]

Interested in different opinions on building vs buying in the current RE market?

I am looking at either purchasing an existing “value add” duplex vs finding a correctly zoned vacant lot to build on. In both circumstances I would occupy one side and rent out the other. From most of my research it seems existing duplexes are priced @ $240 a sqft. This seems to be about the market rate to purchase a lot and build new! Opportunity cost while the vertical construction is being complete does give existing an advantage, but can you make up for this quickly with higher rents from new construction? 

Please give all opinions and let me know the details I have not thought out completely. 

[Paul Pratt]

@Andrew Creel I'd say time would be the bigger deciding factor. If it takes you a year plus to get permitting and build vs a renovation in a few months then in the course of a year you would potentially let 6 months or more cashflow slide. Totally up to you, but if the cost to build is similar, I'd just renovate and start your house hack sooner than later!

[Andrew Creel]

Quote from @Paul Pratt:

@Andrew Creel I'd say time would be the bigger deciding factor. If it takes you a year plus to get permitting and build vs a renovation in a few months then in the course of a year you would potentially let 6 months or more cashflow slide. Totally up to you, but if the cost to build is similar, I'd just renovate and start your house hack sooner than later!

Paul, thank you for the response. Would the 6 month head start in rental payments outweigh the probable differed maintenance on an existing Duplex? 

[Paul Pratt]

Quote from @Andrew Creel:

Quote from @Paul Pratt:

@Andrew Creel I'd say time would be the bigger deciding factor. If it takes you a year plus to get permitting and build vs a renovation in a few months then in the course of a year you would potentially let 6 months or more cashflow slide. Totally up to you, but if the cost to build is similar, I'd just renovate and start your house hack sooner than later!

Paul, thank you for the response. Would the 6 month head start in rental payments outweigh the probable differed maintenance on an existing Duplex? 

I think it depends on a few things. In my area of Florida for example, concrete block construction is much lower maintenance than frame. So If I found a block duplex, even if it's older, I'd prefer that over a brand new one made of frame/wood. I'm sure your climate is similar.

Swap out a roof, cabinets and flooring and paint and you're good to go. Building can be a hassle even when builders promise you it won't be lol So the more specific we get the better and will help make your decision easier. 

At least what I've seen is rents/prices for multifamily units aren't impacted as much by the year of construction.