New construction/6 units/hiring a GC insights?

[Jennifer Stradtman]

One of my bankers referred me to a GC she has built spec homes with successfully. We’ve been talking about replicating that model. He finds land, gets it zoned, handles site prep and construction. He approached me about a lot that is off market and in a zone good for multifamily. I reached out to a friend to invest with me. Is this a good deal? What else do I need to know going into contract?

$365k land purchase price.

$140-145/ft. Construction including site grading, tree removal, current house removal, fencing around perimeter, 6 build with 2/2.5 1250 sq. Ft.  Located in East Nashville, TN and 5 minutes from downtown Nashville.  Street has several new construction multifamily units.  Anticipated conservative sales price $300k each.  

My friend and I will buy the land. We will set up a construction loan at 85%LTV or 100% construction cost, whichever is lower. Banker will let us do 20% down which land purchase will cover.

Contractor says we can structure the loan to include interest payments and marketing money - creatively. Assuming 7% sales commission worst case.  12-14 month project.

Would you do it?

Is this a good deal?

All responses appreciated as we have to pay for the land by Friday if we proceed.  

Jennifer

[Devan Mcclish]

Sounds like a lot of work for very little money. Without holding costs, engineering, surveying, etc. I am calculating about a 35k margin per home. If you build it for more or sell it for less, you spent a year and a half of your life improving a neighborhood. I would really try to hit 50k margin per door or more