Building A New Duplex in NJ?

[Marc Seidenstein]

I've recently began studying and reading up on REI. I've gone through the Beginners Guide here on BP, made a few contacts on the site, and am continuing to read more daily. As it will be about a year before I am ready to make any real moves into investing, I'll be taking the time to consider many different investment strategies to see what works best for me.

Currently the best fit for my situation seems to be to buy a duplex or triplex, live in one unit while I rent out the others, until I am able to purchase a second property and repeat the process. Searching MLS, I've found many two-family houses in central/south NJ under $200K which would fit my needs.

While taking these first steps into learning about REI, I've rediscovered a love of design and architecture I've long held. Searching through the MLS listings, my eye is constantly diverted away from searching for profitable properties to admire a Second Empire Victorian with a beautiful Mansard roof, a stately Greek Revival, or the sleek lines of a Mid Century Modern. The more I think about it, the more I think I'd like to incorporate my interest in this area into a possible investment strategy.

While I am flexible in my early goings as to what type of property I buy, putting chance of success in investing before fulfilling my interest in beautiful architecture, I've begun to thing of ways to incorporate both. Modern style prefab homes, such as those offered for sale by companies such as Blu Homes, Rocio Romero, and especially Shelter-Kit seem to offer ways of building 2 bedroom units for under $130 per square foot. Homes from Shelter-Kit seem especially cost-effective for the owner/builder who is able to do much of the finish work themselves.

Now, I know that these building projects often end up costing a lot more than anticipated at first. I've seen builds priced out on some of these homes which would put me way over my budget of $200K for my first investment property. I suppose my question comes down to this: How viable is a buy and hold strategy, using brand new prefab construction of units of 1000 sq. ft. or less, where the investor is willing and able to do much of the finish work on units himself?

My preliminary idea consists of two of these: Shelter-Kit Barn House, around 750 sq. ft. each (two bedroom), on about an acre of property. The kits are basically weather-tight shells costing about $38K for each unit. I'm sure the range is huge, but what could one expect to budget fully (ball park figure) for a project consisting of two units, building the exterior and finishing the interior themselves?