Value of a New Build More Than Cost to Build?

[Mikael Winkler]

Hello BP!

I have a general question about building single family. Theoretically, as long as one is buying in an appreciating area, would the after-build value of a new build single family generally be higher than cost to build?

Reason being, my family is at the point, in which, we want to put down roots long term. But whatever home we buy, I want to have enough equity in, with the intention of taking out a HELOC to continue investing in rentals.

My initial thought was to buy a fixer upper to force that appreciation and HELOC after rehab. But, I'm now wondering the feasibility of buying land and building, with the value of the finished home being enough to HELOC after completion. I know it depends on area, cost to build, etc, but more generally, is that a viable way to think about it? Does anyone potentially have experience with that?

Thanks!

[Jay Hinrichs]

at todays build cost and in most areas that are cash flow area's  the price of existing in less than replacement value even if the land was free.
folks build new homes to live in.. not for investments or to use as equity at least out of the gate.

right now builders in areas were new construction is viable.. usually have a 25% to maybe 30% equity when they are done if they did not get the land super duper cheap..  Paid market for land and going rate for construction.. so when they sell after holding costs and sales costs net profits are 10 to 20% of gross..