My last deal update I mentioned that it turned out to be a land deal on 1/4 acre lot that I planned to build a 3bed/2bath single-family home as a buy and hold. Let me add some additional context to the story. I had been looking for duplexes for quite a while when I finally started seeing how cheap some of the lots were in the area I was looking to purchase. Plots going for $4,000 up to $10,000 that were zoned either residential or residential/small multi-family (to clarify buildings that are between 2-4 units are considered small multi-family).
I am in Southwest Florida in the Fort Myers area and after the crash of 2008 development all but stopped because of the large number of foreclosures and inability for anyone to purchase all of these vacant homes. Slowly things turned around over the next 5 years or so, but almost no construction was really taking place at this time for affordable and basic housing. As such there is currently a boom in construction as the economy has improved tremendously since that time.
With the market improving and prices starting to creep up to the 2007 levels new construction is just about cheaper (depending on land acquisition, location, financing, & builders) which is why I started looking at land. I talked to a few builders and got an idea of what they were building new construction for in the area and assuming I could acquire the land right then it made more sense to build a brand new property than buy a rundown overpriced property.
Now a lot of investors have networks of wholesalers and brokers that will help them find off market deals or bargains. The issues is I don’t have that network at this point nor do I have the cash to buy a rundown property outright. It’s challenging to get bank financing on a rundown property as a new investor. This left me with a few choices, but finally I found a piece of land in a nicer area that once had a home on it. Based on my calculations from builders, I moved forward.
At this point I have narrowed it down to one builder and am working out the contract piece. I’ve also identified lenders that will non-owner occupied new constructions (this is a challenge to find currently, but they do exist!) and have narrowed that list down to 1 I like. At this point I am waiting for the contract from the builder to start moving the process forward.