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Did you get at least 3 quotes for the construction?
I’ve done 3 different projects where I buy land, go through all permitting, get construction loans, and have it built to either rent out or sell.
I’m in for about $85,000 in predevelopment cost. That’s capital out of my pocket. That amount got me 4 plots of land adjacent to each other. Full geotechnical reviews completed. Architectural designs (site plan, elevation, etc) done. Zoning and building permits filed and issued. All that’s left is to put a shovel in the ground and wouldn’t you know it, this contractor is charging me wayyy too much for this build. How can I squeeze him to get the costs down as much as possible?
Pro forma shows $5k loss per parcel with contingencies baked in. So not break even but close enough. Surely that loss will grow but all things considered, I’m feeling good about it.
Can you afford to build, rent out, wait for appreciation to bring a profit? Use as a tax reduction until then?
Certainly a possibility but not my primary option.
Out of curiosity, what is your build per sq ft cost?
3 bed 2 bath single family build 1300 sq ft
We recently bought a lot, did all the work. Took us two years (shadow studies, geo studies, neighbourhood meetings, plot plans, architectural drawings, zoning board reviews, etcetera). And then the build was way too much. We sold the lot shovel ready.