New build opportunity

8 Replies

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.

Congratulations on your find.  I hope it works out for you.  How much time did you factor in from start to finish/sale?

Im not sure about this, but if you would be selling each property at 396000 your realtor fee/closing cost est. should be doubled?

@Derrick R.

 I outlined in there that I'm a realtor and I save the other half. The closing fee is 3% because buyers are actually paying the majority of closing costs on new builds. My time frame is 6 months total from close to close, which could go either way depending on if we hit any snags 

@Devan Mcclish

Ok, I understand. I'm new, trying to grasp as much information as possible . I just thought if each property sold seperately, they would require seperate fees.

you are correct, my numbers are combined

Just wonder what is the processto get fro
SFH to multi housing, did you ask for a rezone? Or is it still in SFH but just be re-platted? How long is the process? Thanks

In my area, a HPR is considered a duplex, it's already zoned for a duplex. The zoning is RS7.5. I spoke to zoning and planning and both cleared within 5 minutes that I can tear it down and put up two units on the same lot. It is technically two single family houses but they are attached as one structure. The zoning prohibits more than one structure. Because it's only one structure it's not in violation, and I don't have to rezone anything

I see, yep my math was off.  Lesson learned.


Will you be keeping updated here?

Whenever we get going on the project and push it through, I will put the final numbers on here. 

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.