Our third investment: New construction on an empty lot in Ossining, NY

[Sung Yang]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $120,000
Cash invested: $565,000

This is the third project of the year. We purchased an empty lot (5,120 sq ft) and are building a two-family unit from scratch. The lot offers a beautiful of the Hudson River. Each unit will be approximately 985 square feet, featuring three bedrooms and 1.5 bathrooms, with four designated parking spaces. This is a buy-and-hold. After the construction is completed, we believe the value of this home will be close to $ 800,000. We expect the rental income to be approximately $ 7,000 per month.

What made you interested in investing in this type of deal?

I have tried the heavy rehab and light cosmetic retouch project, but I always thought that if the lot is priced right, I'd rather build from scratch and avoid the painful and expensive renovation works. Especially here in the Westchester or Fairfield area, labor costs are extremely high.

How did you find this deal and how did you negotiate it?

Zillow and my builder, Westchester Modular Homes. It was for sale at $150,000, but the previous buyer was unable to secure the loan, so I made a cash offer, which was accepted.

How did you finance this deal?

Cash for now, we will finance it once completed.

How did you add value to the deal?

It is an empty lot where we are building a very nice two-family unit.

What was the outcome?

Work in progress.

Lessons learned? Challenges?

In some cases, building from scratch is often more financially sensible than rehabbing.
From the very beginning of my real estate investing: 1. I wanted to try the three ways: buy a good property that is in good shape, undervalued, and generating cash flow from the get-go. 2. I wanted to buy a rehab project, build my team, and give a second life to a beautiful building that deserves it. 3. I wanted to buy a vacant lot and build from scratch.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with Sony Huy from Raveis, I do recommend her.