Can a new construction duplex be an good idea for househacking?

Question

Hey All,

I have some opportunities for new construction duplexes and wanted to get some insight on investors or homeowners that has experience with this type of investment.

What have been some of your experiences?

Are you currently in the market for Duplexes?

Did you buy new or built ground-up?

How did you source the opportunity?

Your feedback is appreciate

Ron Dancy · Answer

@Benjamin Sulka Haha I'm not a novice but learning everyday. Looking to engage with the community.

Generally which funding partner will dictate your involvement. Some lenders would required 50% towards the project and there are some lenders I work with that would require 10% towards.

In this market climate (Houston Texas is the area I am working) some lenders want you to have skin the game and be at a certain point in the project before they fund the deal and then the lender will reimburse you. Construction and investing experience affects the terms as well.

Initially the startup cost would be; secure the land lot, get arch & structural plans completed, professional services ie survey, soil test, elevation certificate, RESCheck (Energy Compliance Report), building permit, Impact fees, Clear lot, Pour foundation and go into framing.

So you would need your own cash to get started. Probably 10% - 25% contribution.

Wale Lawal · Answer

New construction is the way to go if you are looking to reduce your risk exposure as a new investor or busy professional.Everything is new so your cash flow is more certain and you will also get high quality tenants and which reduces a lot of stress and turnover as a landlord.Houston has a lot of duplex and small multifamily to acquire.Goodluck my friend @Ron Dancy

Jay Thomas · Answer

Investing in new construction duplexes in Houston is an excellent opportunity. With a growing demand for affordable housing and various ways to source properties, it's vital to consider factors like location, builder reputation, floor plans, amenities, and purchase price. This investment can provide low-maintenance, energy-efficient rental properties, but careful research and choice of the right opportunity are key to success in this promising market.

Benjamin Sulka · Answer

Ron,

I have a question for you as a novice. When you do a construction project, what do you pay for up front?

Do you take out a loan after the project is completed or do you need to pay for things along the way?

Ron Dancy · Answer

Awesome man! That's my goal moving forward. There has been a lot of activity in the Houston area.

A lot of value in the new construction space.

Andrew Davis · Answer

Hey @Ron Dancy - a new construction duplex, provided the numbers work, would be a great first househack.

Positives:

- you can live in one side and rent out the other, avoiding housemates.

- new construction should mitigate any major repairs for 10+ years (roof, hvac, electrical, etc...)

- new construction is more appealing to renters.

Ron Dancy · Answer

@Benjamin Sulka Oh lol my apologizes. No problem. That's why we're here to assist.

Joseph Amin · Answer

Hey @Ron Dancy, great question.To answer your initial question, Absolutely. If given the choice, all seasoned investors I've worked with prefer new construction. As you know interest rates are high right now, so in order to combat that, developers are giving out great incentives such as free property management, vetted tenant placement, and offering to buy down points. Duplexes in my area have been sprouting up quickly due to high demand. New construction also will give you equity from day 1, not to mention all the years of cost segregation you will report every year. I'm currently in the process of closing and moving into my 2nd Duplex in which I will be living for free.

V.G Jason · Answer

If you're buying in a good area in Houston, you won't be able to weather a new construction duplex if you're trying to househack to save costs. It's heavily out of the money even in gentrifying areas, and absolutely out of the money in primo areas. If you're searching in greater Houston, maybe you'll be able to get by.

Can a new construction duplex be an good idea for househacking?

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