Building a duplex in an existing neighborhood

[Eric Kluth]

The neighborhood consists of a mix of single family homes and duplexes. According to Zillow the median listing price is around $250k in that neighborhood. Properties range between $250k-$320k. There is a lot for sale for $169k. Median rent for a 3 bedroom is $1,350.

I've never had anything built before, but a builder emailed me a estimate price of $156k for their basic duplex plan which includes foundation and kitchen appliances. 

I don't know all the Do's and Don'ts, but is it correct that you shouldn't build something that cost significantly more than the average priced home in the neighborhood? I figure I can have a decent rental yield if I can keep total cost of completion of the duplex to no more than $324k.

If there's anything I should be looking at in my analysis, please advise. 

Thanks