First Spec
Please give me your opinions.
I'm working towards my first spec build. The first few are going to be hard to fund so my plan is to start small. I have purchased two vacant lots, one with cash for $19k and the other is seller financed for $21k w/ 30% down. The lot I paid cash for is a nice lot w/ a great view that I felt deserved a larger home so that is why I bought the second lot. Both lots are held in the same LLC.
I had plans drawn up on a 1500 sq ft home and got bids to build. Construction cost is going to be $130k so I will be into this project for about $100/ sqft. Comps in the neighbor hood are all over the place $90-$150/ sq ft with the new construction homes right around $140/ sq ft. The house next door to the lot I am planning on building on is for sale for $143/ sqft with a pool and has been on the market for 45 days. I want to sell my spec as fast as possible since I will be paying high interest so I'm thinking I should shoot for $120/ sqft. That would net me about a $20k profit. Tight margin but would hopefully help sell quickly but at the same time I don't want to hurt the comps and make my next project worth less.
Feel free to share your opinions or advice for a new developer.