Development Opportunity - Would Love Feedback

[Kevin Dickson]

Hey guys! I am a newer BiggerPockets poster but I came across a potentially AWESOME deal that I wanted to share with you guys to see what you all think/if anybody has any experience and can help me out.

I was looking online and I found a house that is severely distressed in my city for $175,000 on a 0.45 acre lot. AS SOON as I saw this, my eyes got big! Single family homes here go for at least $400,000. I have never purchased a home so I reached out to a lender to see if I could get an FHA 203k loan. He let me know that I most definitely could and asked what I wanted to buy. I told him I wanted to buy this property, tear it down and build a small multi-family on it (duplex/triplex/fourplex). He said that he thinks the 203k would cover it but I should call the county and see what it is zoned.

I checked and the zoning will allow for me to build up to four units so my thought is that I want to ideally build two duplexes on the lot OR build a fourplex. I am hoping that the whole project would be around $650,000 - $700,000 ($170,000 for the initial purchase, $80,000 for the site prep work, $200,000 for each duplex OR $400,000 for the fourplex build). Mortgage would be about $3,300 and I think I could get at least $1,600 for each unit ($4,800 in gross rents - I would live in one unit) leaving me with a cashflow of $1,500 a month (before I set aside money for maintenance, possible property management, vacancy).

 One thing that KIND OF worries me is that there aren't that many multifamily homes in the area so how will that affect my exit? In ten years, if I want to sell, will someone want to buy a duplex or a fourplex? Another thing I am thinking about is, will a 203k loan cover two duplex since I will TECHNICALLY only live in one of the building since they are detached?

I am trying to get in touch with some builders so I can get some sketches/designs for small multifamily buildings so I can get an estimate on the costs. Do any of you know any contacts nationally that build small multifamily homes? If so, I would REALLY appreciate it if you shot me a personal message with a link to their site so I can check them out.

What do you guys think about this? Is my logic flawed? I am new and would love, and appreciate, your feedback. Has anyone undertaken a project like this? Is it worth it?