New construction on an acre lot. How do I do this?!

[Marc Estepa]

Hello BP fam!  Question for you.  I live in the Tacoma, Washington area and looking primarily for buy and hold properties.  Anyhoo...as I’ve been looking, a coworker of mine mentioned a one acre plot of land for sale in his subdivision for $100,000.  It was subdivided in 2008 with plans to build a home that never came to fruition.

This peaked my interest, so I simply decided to contact the listing agent to ask about the history on this property and why it’s being sold.  

The owner apparently had plans to build a custom built home on this land, but after the housing market crash of 2008 he lost interest.  His kids are all grown and he has no use for the land.  He has the blueprints for the home still.  Additionally, it is a challenge to build on that lot because of the slope of the terrain.

I asked the listening Argentina to see the blueprints and was given a copy.  I know that the median price of homes in that particular neighborhood are going for about $500,000, with some of the higher end homes selling in the high $600,000 range.

Running some rough numbers, I see that the price of the land is $100,000.  If I am able to find a builder to build a home for $300,000, I’d be all in at $400K.  If I sell it on the backend of the project for $500,000 conservatively, I estimate that I could get my money back for the purchase of the land ($100K), pay back the building costs on a construction loan ($300k) and potentially profit $100K.  

This is uncharted territory for me and I have no idea what I’m doing. But does this sound feasible?  I know I am probably oversimplifying this, but what other costs do I need to account for?  Am I off base or am I on the right track?  My coworker is willing to partner with me on the price of the lot.  

Our other coworker did something similar and bought land for approximately $40K.  He went to Lexar homes, picked out a floorplan he liked for about $240K, got a construction loan and is literally doing this right now.  All in, he is at about $280K and the house is apparently worth $430K in the area it is being built.  

What are your collective thoughts?