Multi family or single family

[Vladimir Oursou]

Hi guys/gals if I find land for $5000 or less in a decent area with comps around $160,000. Would I be worth building a duplex? Or SF ?

[Spencer Gray]

I would say neither.

Is $160k for new construction in the area? I'm going to assume not since that's well below the cost of replacement.  That is too low of a price point to justify development. I don't see where your profit comes from between carrying costs and the costs of construction.

My spec home developer friends are trying to build homes that will sell in the $450k-$600k range. Are you seeing those in your area where you can buy land for $5k? That would be surprising if so, it sounds more like a C/D sub-market.

With comps that low I would look at acquiring existing assets if you are set on that market. If you want to develop, I would look for stronger markets and not be the first one there.