Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
Land & New Construction
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 5 years ago on . Most recent reply

User Stats

344
Posts
258
Votes
Mikael Winkler
  • Rental Property Investor
  • Columbus, OH
258
Votes |
344
Posts

Value of a New Build More Than Cost to Build?

Mikael Winkler
  • Rental Property Investor
  • Columbus, OH
Posted

Hello BP!

I have a general question about building single family. Theoretically, as long as one is buying in an appreciating area, would the after-build value of a new build single family generally be higher than cost to build?

Reason being, my family is at the point, in which, we want to put down roots long term. But whatever home we buy, I want to have enough equity in, with the intention of taking out a HELOC to continue investing in rentals.

My initial thought was to buy a fixer upper to force that appreciation and HELOC after rehab. But, I'm now wondering the feasibility of buying land and building, with the value of the finished home being enough to HELOC after completion. I know it depends on area, cost to build, etc, but more generally, is that a viable way to think about it? Does anyone potentially have experience with that?

Thanks!

Most Popular Reply

User Stats

43,600
Posts
64,383
Votes
Jay Hinrichs
#1 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
64,383
Votes |
43,600
Posts
Jay Hinrichs
#1 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
Replied
at todays build cost and in most areas that are cash flow area's  the price of existing in less than replacement value even if the land was free.
folks build new homes to live in.. not for investments or to use as equity at least out of the gate.

right now builders in areas were new construction is viable.. usually have a 25% to maybe 30% equity when they are done if they did not get the land super duper cheap..  Paid market for land and going rate for construction.. so when they sell after holding costs and sales costs net profits are 10 to 20% of gross..
business profile image
JLH Capital Partners

Loading replies...