Deal Analysis help new construction

[Michael Ketchen]

Hi All,

Looking for input on potential deal I am having a hard time evaluating if the numbers work or not. Any and all help appreciated. 

Two 1+ acres lots already approved to build (All docs have been reviewed by my attorney)

Asking 195K (Selling Agent believes bank will let go for 160k)

Two new construction colonials ARV is $430k a piece so $860k total

Construction cost is $225K per home

Have not been through the New construction process yet, so looking for any information or helpful tips that I may be overlooking in evaluating this deal.

[Mike Garrett]

Don't forget your soft costs! Design, engineering, permitting, construction administration are all costs that will need to be accounted for, even if you are looking at stock plans. Many jurisdictions today are asking for structural engineering, site drainage calculations and geotechnical engineering reports on these smaller projects. Stop by your permitting office and have a discussion with them about what all they want to see. Make their job easy and they will support your project, and city support is priceless!