New build comparison question

[Chris Isaacson]

In your opinion is it better to build in an area that is more expensive to build (i.e. permits, labor, etc.) yet yields a larger profit margin per unit or a market that is less expensive to build with a lower profit margin per unit?

Let’s say for this example that both markets have the same level of market liquidity, however, Market A (expensive) has a longer time frame from start to finish (due to city/county) than Market B (less expensive).

[Jay Hinrichs]

really kind of personal choice.. I look at builders doing starter homes in say texas and making 10 to 15k a door. and wonder WHY ?  but they throw em up and they sell quick.. so little risk and entitlements are easy and quick.

then I look at my market here in PDX and it can take a year to get permits and cost a ton... but profits on one project that sells in the 700 800 range may be 100k or better...

I think it comes down to where your at physically and playing the cards your dealt..

I am going to try my first lower end sub in OK with smaller margins but its only 25 homes.. and the risk is not huge.. and if they don't work then I just build 25 rentals..