This is my first BP post, just wanted to preface this post with that fact. I'll give you a little insight into my personal situation so you have a better idea of what I'll be dealing with.
I am 18, currently a licensed mortgage broker, my stepmother is building a beachfront neighborhood in Ecuador, South America, and I'm looking to invest.
What I'm hoping someone can answer for me is as follows: Should I buy and hold, or build and sell? I sincerely want to build a duplex after purchasing a small lot in my stepmother's developing neighborhood, and house hack. However, on the other hand, I feel as though the rents will be too low and my potential profits will be far greater by simply building a single family home and selling it right off the bat. I'll go into the numbers below so you can offer a clearer opinion.
If I build a duplex, it will likely cost $60,000 for the land, construction, furniture, and everything. Each unit would be 1000-1500 square feet, and the lot is about 7000 square feet. I will have this capital readily available in its entirety within a matter of about 6 months. The rent will be about $800 each unit, though only one will be rented out until I build a new property or find somewhere else to live and have both units rented, in that case, it would be $1600. Seeing as the property will be brand new and managed by myself, CapX and other expenses won't be necessary, but I will still be putting about 50% of the cash flow into reserve funds. So, to summarize, if I go with the Duplex House Hacking option I will be making $4800-$9600 in cash flow a year, with the same amount of reserves, which likely won't be touched much for at least 3 years. With this method, I would be buying and holding. So, based on your opinion, is this a good deal? Let's see which one you think will be better after you read the second option.
My second option involves roughly the same expenses, but I would be building a single-family home (for 60k). The same lot and square footage (3000 home and 7000 lot). Here's the first problem. My area has very little information about pricing, because it's such a small market, though from what I've gathered I could estimate the property selling for 150-300k, realistically. Homes are far cheaper to build in Ecuador than to buy, and my builder is world-class. The benefit of having an insider relationship with the owner of the neighborhood is I would know exactly how much all similar properties are going for, be able to see all of them in person, and know how fast the lots and homes are selling for.
I really want to go with the first option, as my ultimate goal is to be making 5k a month from passive real estate investments, therefore I'd need 12 units just like the first. This would require a lot of working capital, and obtaining a loan is out of the question as Ecuador has very high rates compared to the US, and I'm quite averse to debt. That being said, if I were to go with option 2, then use that profit to then go for option 1, that seems like a better option to me.
I'm conflicted because I want to have my own home, I'll be 19 or 20 when the entire process is complete. But, making 100k on a real estate deal in just a year sounds incredible.
Any thoughts, suggestions, etc. are very welcomed. This would be my first ever real estate deal so any help you can give me would be much appreciated.
Note* I forgot to mention that I already have a contractor and architect lined up, as well as the exact lot, the only thing I need to proceed is the capital and to figure out what I am going to build.
