New build opportunity
I have a new build opportunity. This would be my first build so any feedback would be much appreciated.
Purchase price = 140k
Demo = 10k
Build a horizontal property regime, 2 homes on the same parcel. The city recognizes these as a duplex and have already given me the green light to tear down the existing home and build up 2 new units.
Build 2,200 square feet at $100 per square foot = $220,000 a unit = $440,000 total
440,000 + 150,000 = $590,000 total investment
taxes = $2,000
insurance = $1,500
holding costs = $200,000 HELOC at a 4.25% interest only loan. The other $400,000 is from private money at 10% interest.
ARV for HPRs in my area are $180 a sqaure
2,200 x 180 = $396,000 x 2 = $792,000
792,000 - 590,000 = 202,000 - 3,500 = 198,500 - 40,000 = 158,500 - (708.33 x 6 [mortage]) = 154,250.02 - 23,760 (realtor fee, I have a license so I will capture the other 3% back) = 130,490.02 - 23,000 in potential closing costs = 107,490.02 gross income.