Building vs buying rental properties

4 Replies

Me and a close friend are partnering up and wanting to start our rental portfolio .

We are considering two different strategies

1: buying a lot and building a new house that would be a long term rental

Or

2: buying a existing SF home below market value and doing some rehab to get it ready to rent

We both have extensive construction back grounds and can do all the work in house no subs or other GC’s needed

We know there is pros and cons either way

We are looking in the north central Florida market

My question is which of the strategies would be best to scale our operation ?

We both have an extensive construction back ground

You do have an advantage with construction experience, however, opportunity cost is a very powerful force that many new investors ignore. Doing things on your own still costs you money if it takes any time away from one of your other money making activities. Most cases it’s better to buy and rehab based on current building material costs.

Originally posted by @Austin Gainey :

Me and a close friend are partnering up and wanting to start our rental portfolio .

We are considering two different strategies

1: buying a lot and building a new house that would be a long term rental

Or

2: buying a existing SF home below market value and doing some rehab to get it ready to rent

We both have extensive construction back grounds and can do all the work in house no subs or other GC’s needed

We know there is pros and cons either way

We are looking in the north central Florida market

My question is which of the strategies would be best to scale our operation ?

We both have an extensive construction back ground

Really depends on your building experience. I know a building contractor that built homes for 50k back in 2010 but he had his own building crew that were professional builders. These were HUD homes and he built exactly 10 of them. Then he used that income to build RV parks in other parts of Texas and then commercial stuff.

If you hire it done you will pay retail. 

 Thanks for the feed back ,  we are leaning towards doing new construction for our rental properties only because we know we can keep our overhead very low by doing all the work ourselves the only thing we would have to sub out would be HVAC and plumbing the rest of the construction we would do ourselves for free . We will be doing the Brrrr method .

So my logic is telling me to do this for the first 3 or 4 and have some serious equity to  buy or build some multifamily units . Just trying to get some feed back from the BP family to see which direction would be fastest and still utilize our skill sets to get maximum amount of return ?! 

Thanks !!


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