High end rehabs or tear downs

[Dustin H.]

I'm looking to get into rehabs and/or tear downs in very high end infills and was hoping to get feedback from anyone who has done this.

I'm a fairly experienced multi family owner but am looking for something fairly stable, repeatable, and scaleable to juice my returns. I'm in a lucky position to have a lot of cash and after doing some research, I thought this might be good. From what I've gathered, (blanket statement, obviously there are anecdotal exceptions) it isn't really that much more difficult to build an expensive house than a cheap house so if the roi spread is basically the same, why not go big for less aggregate work? With the amount of capital I have to use, it's very hard to make sense on small deals and all of the high quality commercial is trading at 5-6 cap or less, which is ridiculous.

Also, maybe there is less competition at the high end. I started looking around and see there are lots and lots of people chasing low end deals.

Anyway, my questions if anyone has some feedback...

* in my home town, high end half to one acre tear downs in top tier area go for 300k to 500k and new builds go for around 180-200 per foot, super exceptional for maybe 250 pf, usually around 6000-8000 feet... At these numbers is there any money there? Build cost is 100-120. I can do the math and it seems tight, yet lots of tear down specs are happening. Are my quoted build numbers too high? If not, how is this happening?

* anyone know what your average high end rehab would cost per foot.. Including raising ceiling height from 8 to 10, all new kitchen baths floor hardware and maybe extensions? Rehabs in same area go for around 150-180 per foot at about 4000 feet on average..

* any general thoughts on this strategy?

My goal with this would to do maybe 10 houses per year in this price range if i can make the numbers work..