What Number Matters Most Before You Start a Construction Project?

Question

When analyzing a new construction deal, what's the one number you pay the most attention to?

Purchase/land cost?

Total construction budget?

Expected ARV?

Monthly holding cost?

Projected profit?

Financing cost?

There's obviously more than one important number, but I'm curious which one experienced investors consider the biggest early warning sign.

Bryce Fairburn · Answer

This is a great question! My initial reaction is, "You need to pay attention to all those numbers"

I think the combo of construction budget and holding costs can quickly get away on you if you are not super dialed in with hitting the timelines correctly.

Bruce Woodruff · Answer

Final Sales Price (ARV) minus ALL costs = Net Profit

What Number Matters Most Before You Start a Construction Project?

When analyzing a new construction deal, what's the one number you pay the most attention to?

2 Replies