Building New Construction in Canoga Park CA

[Sarah Purdum]

Hello BP,

I have been learning tons about buy and hold real estate and have been using most of my effort to find out of state properties that have a high rent ratio. However, lately I’ve been thinking about investing closer to my area in Los Angeles County.

I live in Canoga Park and have seen some homes that could be split into two lots and I’ve seen vacant lots. The price of homes in my area go for around 550,000-600,000. It seems to me that new construction couldn’t cost more than 300,000 or 350,000 which brings a single new construction sale to 250-300k in profit. I’m thinking this is the best way for me to invest in Los Angeles where rent doesn’t even cover the cost of the mortgage, taxes and insurance.

Am I missing something here? It sounds too good to be true.