Start of Project 3.5% interest... End of Project 8%?!?!?!

[Andrew Westlund]

We purchased a small lot in 2020. We changed the zoning from Low density to medium density, which allowed us to build a duplex. Construction is going excellent, we are ahead of schedule and under "budget". We will be done at the end of November. We will have total cost into the build of about $498k. Forecasting a $700k appraisal and with current interest rates im not sure how much to leave in the deal... 

Option 1) Leave 25% (175k) in the deal. We get all the build money back out plus 25k (525K total). This option negative cash flows about 6k annually when you account for taxes, interest, maintenance, vacancy, cap ex, ect. 

Option 2) Leave 35% (245) in the deal. We only get back 455k of the 500k it took to build... Barely breaks even on annual cash flow... 

Id love to hear what you would do in this situation... Next time I think we need to find a little better of a deal I guess... I do think there is a lot of value in the experience we are getting going through the process :-) 

... but experience alone doesnt buy the next rental property. Thank you!