I want to start investing but I'm having trouble finding a great deal on multifamily properties. Everything is so expensive and the cheaper ones are in bad locations.
My dad can build a home from scratch so I was thinking in partnering with him and build one, occupy it, build a few more on the same lot and either sell or hold. Building one would cost me as much as an old ugly one. I know it's a huge step for my first move but is it worth it? Any input is would be great.
This is a question I wrestle with sometimes, and to be honest I'm not sure I have a good answer. However, I'll share my thought process:
It essentially boils down to the total cost of one over the other, in terms of actual out of pocket expense.
The biggest variables that would influence my decision would be:
-Financing - How well can you leverage when you compare building vs. buying
-Holding costs - How long will it take to complete a property? The costs associated with holding the property, and even to some extent the opportunity costs of holding the property until it was rent ready.
I hope this provides some food for thought. Let us know other things you identify as important and share your decision!
Thanks and good luck!
I have seen a lot of pre fab Multi units on the market now as well. It looks like the standards are very high. With the reduced construction time involved,I have wondered if this would be a way to go?
A few blocks down from my residence, someone built two duplexes on a small lot. I think they took about 6 months to do it but I felt like they were dragging it. I could be wrong, maybe building permit issues. However, it should take 4-6 months for the project to be complete.
And about leverage, some of these sellers are pretty motivated. Some are willing to seller finance, small down payment, or even partner up with you.
I'm just a little torn between building and buying. But Sam you brought up some good points.
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