Building a 2 family in westchester NY vs buying an existing one. Cost effective?

Question

My goal is to owner occupy a 2 family house in Yonkers, NY. I would live in the property myself for ~3 years give or take and the goal would be once I move out to have the property fully rented and cash flowing.

Ideally I would like a property with 2 3-bedroom apartments and an additional in law apartment . Prices on existing 2 families in this area range between 1-1.3M depending on the condition and neighborhood. Rents for each of the 3 bedroom apartments seem to be in the $3,000 range

I’ve gotten to thinking. With these high prices and competition for properties that are in great condition. How would the numbers look to buy a piece of land cash and pay a builder to build me a 2 family the way I want. I would be willing to put 20% down.

would this typically result in a Lower final cost since the builder doesn’t have to put up any of the initial investment or carry the loan for the build ?

also how would I go about finding vacant land for sale my city ? And how would I go about finding a reputable builder. There’s many recently built 2 families in my area that I can use an example of what I would like. Has anyone here done something like this ?

Roberto Rohann · Answer

Thank you Mohammed, part of the reason for creating this post was to kind of highlight A lot of those what ifs. it has definitely made me think about the topics some more. Appreciate your response.

Mohammed Rahman · Answer

Hey @Roberto Rohann - I think your post has a lot of what ifs and assumptions to consider.

Assuming you're able to buy the land at a good price and find the right builder that would take on the project while also assisting with ensuring all permitting and paperwork goes smoothly with the county/town.

If you're looking for a reputable builder you could simply walk into a new construction house/open-house and ask the agent to connect you with the builder - I'm sure they would love to bring a project to their client (the builder/seller).

Building a new house on paper may be less costly (depending on finishing and etc.) but ultimately requires time and patience - which you may value differently than others.

If you're still in the market for 2-fam homes in Yonkers let me know - I've brokered transactions there as well as have family based there too.

Jared W Smith · Answer

Yes, many things needs to be thought out.

Reach out when you are ready. DM me to exchange contact info.

Roberto Rohann · Answer

Jared, thank you very much for this response. I see that there are many steps involved and certain important factors to consider! I guess the first step would be to find that piece of land that is suitable. I suppose with so many variables commissioning a new build, is not necessarily cheaper than buying an existing one house

I will definitely reach out to you again, even if I go the route of renovating and existing property

Jared W Smith · Answer

Hello @Roberto Rohann

I appreciate the post as I am a native Westchester County resident with my office based in Yonkers so I know the City and surrounding areas well. I work with single and multi-family Owners & investors to rehab their properties for various exit strategies. I've dealt with the existing rehab as well as the new lot new development route. I am in the preliminary stages on one in Yonkers as we speak. However, the benefit to the Owner is they already own the lot as it's adjacent to their home. So the purchase of the home included the empty lot. So they only have to factor the build cost and other soft cost.

The problem at hand with a new build is finding the land, the cost of the land, clearing/prepping the land and bringing utilities in. This all comes at a cost. You want a desirable location plus with minimal sloping/grading issues and minimal trees. This will be difficult to find for cheap.

My most recent build cost I put together for a house build on an empty lot was at $300/SF as base cost. This will vary based on foundation type and cost and ALL finishes- interior and exterior.

Also, the builder is going to need periodic payment draws as the project progresses. Not sure of your avenue with questioning, when you (or someone) has to carry the construction loan. Additionally, you will have carrying cost from the purchase of land, approval of permits and time to construct.

DM me if you are looking for the necessary due diligence services with lot(s) in mind for the build.

-Jared W. Smith, RA - Principal Architect at Architect Owl PLLC (Licensed in NY & CT)

Building a 2 family in westchester NY vs buying an existing one. Cost effective?

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