Building a duplex

6 Replies

Hey all,

I've been presented with an opportunity to have a duplex built in a to-be neighborhood to have 24 new construction duplexes. The area is the best school district in town, and right next to the schools. I expect the properties to be valued at the same market value it will cost to build; approximately $116/sqft. Today I met with the developer. He will be carrying the notes with a large loan to build them. He is one of the biggest and longest standing builders in the area. Luckily for me, this means no construction loan. Just a $1000 lot selection fee, that will go toward closing, and then securing financing after the home is finished. As a landlord himself, he gave me a small break out on excel of cashflow. I'm excited for the opportunity. Also, I would be living in one side for 12 months minimum. Please take a look over the paperwork and let me know if I've missed anything; or if there are any questions I should be asking I haven't. I've never had a property built. Also; 2/10 warranty from the builder.

I don't see building permits or association dues (if there are any). Ask the energy code/building inspector; Some municipalities also require blower door test to prove energy efficiency.  

What will a 3/2 1350ft duplex apt in plex-ville rent for I wonder?  

What is the gross price?

Penalty for not refinancing within a certain amount of time after build?

When it's written as payment/mo it reminds me of a car lot sales pitch.  "For only $100 and $468/mo you too can drive one of these today!"  Too bad the car is 48 grand and 8 over actual value.

Big thing is the rents @Andrew Johnson .  Must have a strong handle on what they will be.  Discount for being among 23 other duplexes.  A duplex in a residential neighborhood will be higher.  

Interesting idea!  Please keep us posted. 

The income/expense break out is on the right. He added that to the price list because he knew why I was buying. I edited it to fit my financing.

@Steve Vaughan what is plex-ville? The 24 duplexes are being placed between two upcoming schools in the best school district in town. The new ones will be about 1000ft from each other and these 24 duplexes are going down between them. 

I will not need to refinance as there is no construction loan. I don't need any financing until the house is done being built.

The red writing is what I edited to the sheet he made me before I showed up. I edited it to fit my financing. Should cash flow about 150 per unit, with an extra 150 of cash flow per unit while I'm managing during the first 1-2 years.

Maybe I've misspoken. What I'd like input on is a look at the break out of costs from people with experience building. Is $117/sqft pretty typical for an investment build of a duplex? Do the margins seem good/bad for new construction investing? With 315k in the end and an estimated gross of 3k/month; is that better/worse than others have experienced with new builds? Thank you, Everyone.

If its all builder grade and meets all the codes then $117 isn't a terrible price. Most houses we see built are $110-$130/sq ft builder grade. I've seem em hit 90-100k but things get overlooked or are just really cheap. I'd say you're in BP's .9% category on rental income when the minimum should be 1%, your rent should be 3150 a month or the building should be 300k.

300 a month cash flow on a new property that should be problem free for 8-10 years is fine. Just budget a roof every 25 years and a water heater every 8. When that gets paid, is it worth it if you keep it?

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