I recently bought a house in the Sugar House area and a developer (I'm guessing) build 4 townhouses in the lot next door. Last year all 4 were sold for around $550K. I'm wondering how I do that myself.
The property is clearly zoned for townhomes and is in a great location.
So considering...
I owe $380K on the property.
I think it would cost about $250K - $300K per unit (this needs to be varified). Total $1,580,000 (assuming $300k per unit). I think it would take 12 mth to complete.
If units all sell for $550k Total gross = $2,200,000
Net = $620K this would be about 39% return.
I'm my head this is a good deal but I have no idea how to structure this. The math makes sense but I don't know what I don't know. I've been doing this mental exercise for a while hoping to get some thoughts on this.
If you haven't built before, this would be a trial by fire, and you could lose your shirt. Everything costs more for a single person than a developer, and you don't know the good new construction GCs and tradesmen. On a scale of 1-10 difficulty, this is a 10. Much harder than rehabbing and flipping.
@Genny Li very true. I'm in the process of figuring out an ADU and it has been a learning curve.
Do think there's a way to structure a deal with a developer so it's a win win for me and them?
I would recommend that you complete the ADU first. I've done every PART of building a house now except foundation, and I would still not be comfortable with that multi-unit project.