I am a real estate agent new to the Denver area. My wife and I live down in Castle Rock and we have been thinking through some different ways that we can jump into real estate investing. The housing market in the Denver area is red hot and has been that way for the last 5+ years. It will take us a little while to save up enough to buy a multi-family unit here in Denver. I had another idea I wanted to run past y'all. I know there are several plots of vacant land in Denver and the surrounding areas. My idea was to buy a plot of vacant land for around 80-100k and then purchase one of the Menards or Lowes duplex plans and build that on the property. I can purchase all the materials and the land for around 200k. The cheapest duplexes in the Denver area are selling for around 400k. We would like to build the duplex and live in one side and rent out the other side. We would do this for a year or two until we could borrow against our equity to purchase a single-family home. Then we would rent out both sides of the duplex and use that as our launching pad. I know there are additional expenses of tying into city water, electricity, and sewage. I'm not sure how much those expenses would be. If I could keep all of the costs under 400k I feel like that would be a worthwhile investment because I would end up with a brand new duplex for less than the cost of purchasing a very low end duplex. I would be able to save quite a bit on the building side as I could do close to 60% of myself. I'm open to hearing other thoughts about my idea? What am I missing? What are some additional expenses I'm not thinking about? Has anyone ever tried something like this with success or failure? Thank you in advance for your input. 

Blessings, 

Jay Young

There is a reason why you don't see 100s of people doing this already. There is a lot more to it than you think. I looked into modular building, but even it was too close to pencil out to make sense. Just look at the cost for water... Lumber 3xed in price in 6 months.  

assuming full basement and 1800 sf above ground on each side... it takes a pro framing crew of 4 guys, 3-4 weeks to frame the house... which translates into one pro framing the house in 12-16 weeks... not sure what 60% you're planning on doing yourself, but building a house/duplex = 1000s of man hours. 

@Jay Young You should talk to @Daniel Haberkost about what it truly costs to build a property from ground up. He's doing it in Pueblo where the land is much cheaper so if you are open to moving more South, it may be worth it. I think the land is too expensive around the Denver metro to make it worth while. 

Thanks for the mention @Stuart Grazier , you're spot on. I am not building new construction up north where you are @Jay Young , but several of my general contractors are and it's very difficult to make the numbers work. We're building duplexes on lots bought for $10k-$15k with all utilities in place and that's the only reason it's viable. 

I think you're also underestimating the other costs involved. If my memory serves me correctly, tap fees for water/sewer on a duplex we're doing now ran $40k.

Dan