Developing Duplex on Raw Land

[Candace Hall]

I want to build a complex/duplex on my land and rent to tenants.

I've been researching and reaching out to see what all I'll need to do, who I'd need to speak with, etc.

Excuse my knowledge gap but I was in Healthcare for 14 years so this didn't matter until land and property were handed to me.

So, I own land and would like to collab with someone who can assist and potentially build their portfolio this year by genuinely showing me and telling me the process of it all.

Are there things on my end that I need to know, things to watch out for, credit, income, anything you can think of that would pertain to the development process will be greatly appreciated!!

[Mike Wood]

@Candace Hall First and foremost, building investment properties take a lot of capital.  Most banks require at least 25% cash/equity on the total build costs (NOT FINISHED HOUSE VALUATION), and could be more with no experience.  For example, if the land is worth $50k, and your building a 2000ft2 duplex at $110/ft2, and you have soft costs (design, surveys, permits, etc) of $10k, your total cost would be $280k, which most banks will be looking for 25% cash or equity = $70k, which means you will need the land (free and clear) and another $20k in cash.  If your land is worth less, than your cash required will be more.  Since you have no experience with new construction, its going to be hard to find a bank to loan to you for a construction loan, as they are taking a huge risk.

Your post says you want to build to rent, but then says you want to find someone to build "their" portfolio.  If you are not interested in building for yourself, than just sell the land.  Not sure why you would want to force involvement in a new construction project for someone else.  As someone that has built 5 new construction duplexes, I would never be interested in partnering up with a land owner, I would just buy another piece of land for myself.  The land is the cheap piece of the puzzle for 2-4 unit construction.

If you want to build for yourself, you need to find a builder that you can work with and is able to do the project.  Given material prices and labor shortages, right now is a tough time to start building new construction rentals.