Why wouldn't I ? Build and sell or Build and rent?

[Curt Hoffart]

Why wouldn't I ? or Why Shouldn't I ?

I have worked hard in the construction industry most of my adult life. I am looking to get into REI with SFH or duplex. The thought of coordinating a new build is second nature to me. My wife and I have worked hard on Debt elimination and we are within 6 months of being debt free.

This is my thought process: Spec Property.

I can build at $125 sq ft, Land is approximately  $25-$30 per sq ft of home  and the average selling price for 3B3Ba is $215  - $230 Sq ft with the average rent in the same area of $1,790 mo.

With that in mind, 1,500 sq ft new home build = $225,000 with land

ARV for this home @ $224 Sq ft would be $336,000. if sold, I would stand to pocket just under $100k after closing. If held would cashflow at $100 - $110 mo after expenses with $100k equity in the property at a 70% @ 4% Refi, allowing me to recover my initial investment of $225k. Rinse and Repeat...

I can only afford to build one at a time, and crunching in approximately 1.5 - 2 builds per year.

My venture would be all self funded to avoid paying out undue interest to a Hard Money Lender. (not that that it is out of the question)

The market I am looking into is in dyer need to 3/2 rentals.  

My end game is to build a next egg of 400-500k, build my dream property and create positive cashflow with equity reserves.

My Plan - -#1 -Build 1 is a House Hack duplex, Using my VA benefit if needed, -- with similar numbers as the Spec above. My portion of the mortgage would be $600 mo, and cash flow at +900 mo after step 3. #2 -While living in the duplex, Build 4 -5 properties and sell - #3 - with the Nest egg now in place, build my dream property and start the Rental property STACK.. with my initial investment of $300K using the above "spec" property description.

I have read a lot of discussions on BRRRR and searching properties for rental income, and they are out there. But if I can build at 30% under retail, and I have the knowledge base and skill set to accomplish this... Why wouldn't I ? My wife and I will be working full time to cover our living expenses up to step 3, where we could cash out 1 build every year or 2 and continue building rental properties. I have spoke with Real-estate agents, Mortgage brokers and property managers in the area and they all seem to be onboard, but they all stand to gain from my risk, which is why I am reaching out to my fellow BiggerPockets members.

Thank you for entertaining my thought process, and I look forward to any advise or criticism.