Please Take a Look at This New Construction Deal
Good morning.
I am respectfully requesting feedback from the Bigger Pockets community on this deal. My area is Austin, TX (this particular deal is in a community about 30 minutes from Austin) and my deal involves potentially building a new duplex to hold for rental income.
Expected rent is $1500 per unit for a total of $3000.
I own a multifamily lot, for which I paid $22,500.
I have paid approximately $5,000 for plans and engineering designs.
I have been working with a realtor who I have promised to pay a 3% commission on construction costs.
After talking to what seems like just about every builder in the area, it seems like the best I can do for construction costs is about $325,000. This is where the deal has become iffy for me and led me here. My original (obviously overly optimistic) expectation was that I could find an "investor friendly builder" (I put in quotes because this experience has made me seriously question whether this mythical beast actually exists) to do this for $250,000-$275,000. Now that the real number is $325,000, I'm questioning whether I should even consider going forward anymore. The sunk costs of the lot and the plans makes me want to get it done, but I know that is throwing good money after bad. Since this is a growing area, I think I can potentially get by money back by selling the lot in a couple years.
I know the deal doesn't even meet a 1% rule, but that is virtually impossible to find in Austin. Well, I'll leave it at that and just let you analyze it based on the numbers. Let me know if I left out any information you need.