Big Profits from New Construction SFR Build in Cape Coral, FL
Investment Info:
New Construction - Single Family Residential
Purchase price: $238,000
Cash invested: $23,800
I worked with Rent to Retirement (RTR) to identify a builder, purchase a lot, and construct a 4 bed/2 bath, 1,536 sq ft SFR home in Cape Coral, FL. I purchased the canal lot in NW Cape Coral in February of 2021 for $11,500 and the actual construction cost was $226,500 at the time. My construction contract was signed April 1, 2021. Certificate of Occupancy was received 14 1/2 months later around June 15th. I listed the property and have it under contract for $377,500.
What made you interested in investing in this type of deal?
The combination of cash flow (if I chose to rent), high likelihood of appreciation, and instant equity since RTR was able to use their client volume to negotiate construction costs far below what an individual investor could find on the market. I also liked the idea of virtually no maintenance and a higher likelihood of attracting a good tenant.
How did you find this deal and how did you negotiate it?
Through Rent to Retirement's team
How did you finance this deal?
Private Loan with 10% down
How did you add value to the deal?
By leveraging RTR's network and financing the construction costs for the builder, I was able to construct for well below market build costs and walk away with over 6 figures in equity.
What was the outcome?
I had an enviable choice of renting at roughly $2,600/month (I had initially expected $1,800 when construction started over a year ago) or sell and walk away with over $100k. I took the cash and grossed nearly $140k that I'll 1031 into more RTR opportunities!
Lessons learned? Challenges?
New construction can be challenging - especially given supply chain issues, materials price volatility, labor shortages, and local/state government permitting delays caused by COVID 19. The rewards are absolutely worth it, but investors looking at new construction should know there will be delays these days no matter where they invest.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
As always, Zach Lemaster and the team at RTR provided an incredible investment opportunity along with ongoing support and strategic planning. I'm light years ahead of where I would be otherwise in my real estate financial independence journey thanks to them. My realtor, Peter Davis with John R Wood properties has also been a joy to work with. I highly recommend!