I'm currently in the planning phase for a development project just outside of Santa Fe, NM. I own 20 acres of land valued at approximately $80,000, and I want to build two short-term rental (STR) units on it.

For context, my family already owns two long-term rental (LTR) units in the same general area. They have had 100% occupancy at market rates and currently bring in around $2,000 per month in cash flow. Because of that success, and the tourism of Santa Fe, I'm assuming a STR will likely out preform a LTR with modern amenities, design, etc in place.

I plan to act as the general contractor for these two new units, performing most of the work myself. I’ll bring in licensed electricians and plumbers for their sign-offs. The two existing LTR units (on my family’s property) were built 5–8 years ago at a cost of about $80,000 per unit, so I’m estimating a 20% increase in costs for the new builds.

My plan is to use the equity in the land as the down payment for the construction loan, which I expect will make closing costs the primary upfront expense. I'm thinking interest rates will sit at 6.25-7.5%, with total cost at roughly 210k. Unit size is 1000 SF with an assumed $105 SF cost to build, (Cheap considering there will be no GC costs).

Since this is my first project, I’m very open to any advice or suggestions—especially regarding potential obstacles I might not have considered. I’d appreciate any input you can offer on everything from financing to construction challenges. Thanks in advance for your help!

Additional Info

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Key Details:

Location: Outside Santa Fe, NM
Property Size: 20 acres (valued at $80,000)
Project: Two new STR units
Existing Experience: Family has two fully-occupied LTRs nearby, generating $2,000/month
Construction Approach: Self-contracted with licensed trades for electrical/plumbing
Cost Assumption: $80,000 per unit, plus ~20% for inflation (based on 5–8-year-old build costs)
Financing: Using land equity as down payment on construction loan (expecting closing costs to be major expense)
Request: Looking for feedback, potential pitfalls, and general guidance