First-time Homebuyer turned First-Time Developer??

[DeShawna Travillion]

I have never purchased a home. I have Excellent credit and roughly 15k in savings. I make a decent wage. Ideally, I would like to purchase a duplex or MF, live in one unit and rent the other(s) out.

But then I had the idea, that since I'm already applying for a loan, why NOT purchase some affordable land and develop my own MF (Duplex or 4-plex) from the ground up!?

...Any thoughts or ideas on this, Pro's? What kind of loan would this be and is it even possible?

[Jonathan Taylor Smith]

@DeShawna Travillion - That would be a construction loan; however, they most often want you to have already purchased the land. Getting a construction loan that includes the purchase of the land is difficult - but I guess not impossible. And construction loans are going to want a larger down-payment (i.e. 20%) versus only needing maybe as little as 3.5% to purchase an existing MF property where you will live in one unit and rent out the other(s).

And a construction loan to build a MF property may be considered commercial development (even at 4 units) versus building a SF home to live in yourself - and if so, they may want you to have prior rehab / development experience to some degree. Also consider that the cost of construction is currently inflated due to materials and labor shortages. Existing housing prices are also inflated, but I'd imagine you can buy an existing 4-unit MF property for less than building 4 new units... But that's just my guess.

My $0.02... I'd look for a slightly distressed 2/3/4-Plex as your first property to live in - and you'll learn a ton in rehabbing and renting the other unit(s), while also making connections in the local area - that will all help you develop a future property from the ground up.

J.T.