First of all , I am not sure if this post fits in the commercial RE.
I am thinking of investing in a house in a preffered area in my town but could not find any opportunities. I am looking hard for foreclosures but it is hard and rare to find in this area. But I want to move to this area to raise my family and also for the community and good schools.
I dont want to buy retail as they are expensive and doesn’t make sense to buy and work for the house, they are in the range of 230 and above. Right now I live in a house worth $110k and my payments are very comfortable, my PITI payment is less than the rents around here so I am happy with it.
Here is my plan, since it is getting hard to find opportunities in my preferred area, I am thinking of buying a lot and building a duplex and live in one unit and rent the other, so I can control 2 condos and the rent helps with my PITI payments.
My questons to you guys is, Is it better to use ny existing realtor or work directly with the builders. Is it good to buy a lot and build it or work with my realtor for the whole process, lot and building.
Sorry there are no numbers to share yet.
Please suggest. I dont have any experience shopping for lots. Thanks in advance.
You can use the Realtor to help facilitate the purchase of a lot, but I don’t see a real need for them after that. You’re going to want to have a bank already willing to work out this whole thing with you. I would pretty much get it worked out in the beginning that the bank will finance the construction once you find a lot. Talk to some different builders and see what you think. You should be able to find plenty of duplex plans online or in books. Show them what you’re wanting to build. There are plenty of trades people hungry for work now.
I think you will only need a realtor in terms of finding the best land and the process of getting through the property. After that, realtors do not have expertise anymore in terms of building - so you should also get in contact with home builders and contractors.
You need to find a good location. That is the single most important thing here. My favorite duplexes are higher end duplexes. Think 3br/2.5ba units with a 2 car and wood floors downstairs. In my area it needs a basement. In my area these rent for $950-$1100 depending on how they are laid out. I can expect to spend $80/square foot building them.
My favorite kind of duplex is one I don’t currently own. It is built on a corner lot with separate driveways and each unit facing different ways. I used to date a girl with something like this in college. I had been visiting her for months before I even realized that it was a duplex.
There’s two ways to do this:
What I did: buy as a primary residence and live there for a year. Seller paid closing costs and I paid 3.5% down with a FHA loan. I’ve got almost nothing into this and about $600 positive cash flow after expenses every month now. I bought a good deal and captured about $50k worth of equity also.
Build it with a commercial construction loan through a bank and refi into a conventional. If you do it right you should be able to build it and get your construction money back out of it (80% of value = your cost).
I don’t think I would do it unless it was one of these two situations.