Investor · Whitefish, MT · Member since 2015 · 62 posts · 18 votes
Hello Biggerpockets Members,
My wife and I just moved to a new area and we would like to house hack with a duplex or 4plex. However, we moved to a small town and there really isn't very many duplexes or 4plexes in the area let alone for sale. However, there are some that have been built in the downtown area amongst the single-family homes that are quite nice and seem to be rented. Zoning is flexible within the town (it's a tourist/resort town and the city encourages additional units on lots). My question is basically, what's the math on constructing a new duplex, etc in which to house hack? What's the math, does it make sense, etc? Thank you for the help!
Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
9y
@Justin Holley The first thing to do is determine whether the area can support new construction multifamily (2-4 unit buildings). 2-4 unit building are valued based on sales comps, so if a typically 2-4unit building is selling for $75/ft2 and your costs is $110/ft2, there is no reason to consider building. A realtor can determine the average sales prices. There would be a premium for new construction, and your realtor can help with that.
If there appears to be good enough sales comps to justify new construction, the next step would be to better estimate your total costs to build (land, soft costs, permit/impact fee costs, construction costs, etc). Using your total cost, you can determine if the rental makes sense, assuming all units are rented at market rate, using an analysis similar to buying a property.