I want to have a home constructed on Plot of land
Hey BiggerPockets Community !
I have about $180k in equity in one of my investment properties and I have a nice amount of cash on hand and I have an idea that I would like your thoughts on. I want to build a home on a plot of land and I need your advice to confirm the process.
1. Find a purchase plot of land
2. Get approved for construction loan (This is normally a loan at an 80% LTV, right)
3. Hire land use attorney to confirm what home type I can build
4. Obtain permits and approval from neighbors to build
5.Hire GC to build home
6. Obtain certificate of occupancy to sell home (from county or city)
7. Refi loan from construction to owner occupied loan (preferably conventional)
8. Sell home on MLS
My logic is that that price at which I will construct the home will be considerably less than the price at which I will sell, thereby giving me nice profit margin . I plan to do this in D.C or in a suburb of D.C. Is my logic/approach here correct?
Most Popular Reply
Save the money and don’t do it. Development is the notorious part of real estate which looks really clean on paper and process but is seldom profitable when you need it to be. Invest your money elsewhere and go at it when you have enough money to control a neighborhood and the comps.
BTW, 100 homes built in 8 years.