Am I Crazy to consider new construction now?

[Adriel Hsu]

I came across a deal for 2 adjacent lots, one with a dilapidated house on it, just 10 minutes from Downtown Houston.

I'm thinking about knocking it down, building a driveway down the middle and building 12 townhomes (6 on each side)(Very common in Houston). 

Numbers look lucrative, come out to $97k profit per townhome if I sell at $275,000 and $47k profit per if I sell for $225,000. just not sure the market will respond.  If I get it under contract today, it still won't be until end of 2020 before the first set comes online for sale. Given the unknown circumstances and effects of coronavirus and all the talk of an even worse 2nd wave hitting November/December, am I crazy to consider this?

I would only build 4 first and see how the market responds and make 1 as a show home to pre-sell the new ones.

Also, will people be deterred to buy the first batch if they know there will be on-going construction right in front of them for another year? 

My play is to build smaller homes (1300-1500 sq ft)(2 bed / 2.5 bath / 1 car garage) with nicer and unique finishes while still undercutting the zip code's pricing (New townhomes are $300k-$450k and I would sell mine $250k-$275k).

The concept is supported with a unique 1360 sq ft 2/2.5/0 townhome currently pending at $300k and back in September, a 1/1/1 at 545 sq ft (Yes, 545 sq ft for the ENTIRE house) in the neighborhood sold for $220k. 

I do see some older townhomes that are larger (4 years old, not as nice finishes) sitting around the $275-$295k mark and not moving.

I'm targeting working professional millennials who want to be close to downtown, in something affordable but nice and don't need a huge house.

Thanks