Can't Find Good Investments - Build Instead?

[Andrew Merritt]

I've been looking for good investments in my area (charleston, SC) since January and can't seem to find anything that will cash flow that 1) are in a decent/safe area or 2) cash flow according to my formula.  I feel pretty confident in my formula (which is conservative but not too conservative), so I don't think that's the problem. 

I've also considered flipping, but I just don't have the experience to feel comfortable w/ that.

Have any of you given up on finding something and decided to just build instead?  There is a ton of growth potential around here w/ Boeing, SPAWAR, and soon the Volvo plant and I want to take advantage of this.  If I were to build,  I'd probably want to do at least a duplex to get nice cash flow going.

Any recommendations? 

[Scott Person]

@Andrew Merritt - sorry was out of town, but to answer your question. "How do your returns look w/ the new construction property?" If you use your formula - "cash flow = rent - (mortgage + taxes + insurance + HOA + vacancy (1/12 rent) + PM (10% rent) + repairs (5% rent) + capex (5% rent))". I (and this is me) would get rid of PM (10%) & repairs (5%) & capex (5%). Save yourself 20%. The new construction is obviously not going to need any repairs, better not need any capital expenditures (except a fridge if the new house doesn't come with one, but Best Buy offers extended warranties if you buy one). The new home warranty is going to cover all parts of the home for varying timeframes for the different systems. Use a preferred lender and most of your closing costs are paid for. Best part is the company you buy from usually does a 12 month touch-up to fix nail pops, wall cracks, repaint, etc. So your 1st year rental gets "fixed" if anything needs fixing.

The New Construction SFR I just sold ~3 years after I bought it got me 5.5x what I originally put in, made me a few hundred a month x 3 years, and helped with taxes. Same tenants for 3 years, no problems ever. The New Construction SFR I have a signed contract for should get me ~$600/month, I'm not going to expect the same appreciation (but some), and will help with taxes.

You said you're looking to buy your 1st one. Do you have a primary? If you don't buy a new one. The model I just bought has both a 1st and 2nd floor master. Then you could house hack. I'm sure someone out in Summerville is looking for a roomie. If you have a Primary you could upgrade, or side-grade. and move into a new Primary. You keep the low interest rate where you were (instead of the crappy investment rate). And you wouldn't need the 20% down. That opens more options.

@Jay Hinrichs - That's the good thing about the Peninsula, there are a ton of old warped wood sideways leaning fixer uppers down there. The problem is the primo prices they are wanting for those 1800s rebuilds. It sounds like you have a good system and people in place, that is way out of my comfort zone right now.