Building New to Rent

[Keith Everette Smith]

Hello! I'm new to the forum. I'm considering the pros and cons of building new constructions for the purpose of renting. Kind of a BRRRR strategy but without the renovation. It'd kinda go like this... Build (with cash), Rent, Refinance, Repeat.

I can build a 1400sqft single-family house for $135k that will appraise for $175k.  77% ABV (after build value).  The homes are in an area with great schools, low rental inventory, growing market, etc.

What do you think?  What should I also be thinking about in this?  Should this work?  Have others tried it?  

I'd love to strike up a conversation and talk this out. 

Keith

[Greg Dickerson]

Originally posted by @Keith Everette Smith:

Hello! I'm new to the forum. I'm considering the pros and cons of building new constructions for the purpose of renting. Kind of a BRRRR strategy but without the renovation. It'd kinda go like this... Build (with cash), Rent, Refinance, Repeat.

I can build a 1400sqft single-family house for $135k that will appraise for $175k.  77% ABV (after build value).  The homes are in an area with great schools, low rental inventory, growing market, etc.

What do you think?  What should I also be thinking about in this?  Should this work?  Have others tried it?  

I'd love to strike up a conversation and talk this out. 

Keith

 This is a great strategy and is going popularity as inventory levels decline nationwide. In face many developers are building entire "for rent" subdivisions. It really comes down to the numbers and inventory. You mentioned paying cash. You can get greta terms from banks right now so I would not tie up your cash in one deal when you could do a couple at a time. The key is to make sure you have a solid experienced GC that builds these types of homes at scale everyday. You do not want some who says "I can do that" you want the one who says "thats what I do" The GC will make or break the deal and you can loose money fast if you hire the wrong contractor.