Building small apartment instead of buying - Good or bad idea?

[Frank S.]

I live in Houston, TX. I've been looking for a small apartment (5-20 units), under $500K, not in section 8 areas, with room for improvements. Does not have to be in Houston but I know Houston the best. I have saved $150K and have family and friends willing to put in more. I also have a complex spreadsheet I run the number through and if I can get over 10% cash on cash, I'd try to go after it. But I have not been able to see anything that makes sense in the last year or so. I have experience in construction so I wonder how difficult would it be to find some land and build something like 10 units (1/1, 5K sq. ft. building on 10K sq. ft. lot)? Are we currently in a real estate cycle where it may be cheaper to build than buy? Any thoughts?