Hello fellow BPers,
I have a rental property with a single detached home on a lot that is zoned for up to three units. Highest and best use would suggest building one or two additional units. I've run the numbers and it looks like I could use the equity from the existing improvements to finance this caper. This includes a good deal of my own labor on tasks that I'm experienced in like working with directly with designers, structural engineers and contractors and doing finish work. Still there is not much room for error in the budget. On completion I expect to cash flow on rents and have more equity than I would have if I sold it today. I'm looking for any advice from folks with experience in this kind of situation. Thanks!
Sounds like you are on a path to a solid plan for your property. I like the developer /hacking game plan, but you may want to consider refinancing (brrrr strategy) once completed. I would talk to RE broker or appraiser you trust to learn actual costs per sq ft of what the proposed value would be once your done with construction. Having a set of floor plans drawn to get a good feel for contractors and construction costs in your area would be next. Having contractors over to bid without plans is a mistake, ideas are too vague. Best is to find a design-build company to ensure the design stays on budget. Good luck with your project.
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