Cold feet or bad deal?

[Stephen Kiser]

2 properties for $130,000 

1) Single family home

- 1,000 sq. ft.

- 2/1

- Unfinished basement

- Acre lot 

- Could use new roof & HVAC unit (duct work is good) 

- Two car detached garage with city water tap connected 

2) Vacant lot 

- Can be subdivided into 2 lots according to city planning and zoning

- One tap fee already there 

My plan was to separate the garage and the home, sell the home for $119,900 (I am an active agent in this market) tear down the garage and build a 1,400 sq. ft. home at roughly $80/sq. ft. and sell for $125/sq. ft. 

My plan for the vacant lot is to build two 1,400 sq. ft. homes and sell at $125/sq. ft.

My numbers are $130,000 (total package) -$110,000 (sale of home) = $20,000 for 3 lots 

2 lots already have taps in place which saves $9,000 total. 

My father would be the builder and with construction costs rising we are around $80/sq. ft. to build right now. Which would put a 1,400 sq. ft. home at $112,000. 

Lot cost per lot = $11,500 (added in cost for building tear dow, grading, one tap)

3 (homes) x $112,000 = $336,000 to build homes

Sale price $169,900 x 3 = $510,000

Commissions x 3 = $21,000 

Private money cost = ? 

Total profit (not including cost of private money) = $117,000 

I have done a few minor flips, wholesale deals and a new construction before using private money but nothing that seems as big as this. I do not have private money lined up at the moment but want to make sure I am not missing anything or looking at this property through rose colored glasses!