Tiny homes for sale and build and hold

[Dwayne Jones]

I’m a builder in Memphis, Tennessee with two 480 sq. ft. one bedroom one bath single family homes built on concrete slabs. I have one 480 sq. ft. permitted and two 280 sq. ft. homes permitted and ready for construction. My goal is to sell these homes but no new construction has occurred in years and the size makes it difficult to get comps. The goal is to sell the 480 sq. ft. homes for $65k and the 280 sq. ft. for $45k. Currently, I have several people interested but none are qualifying for local bank financing with downpayment assistance. Needless to say I have a lot of interest in renting but I need to get my cash out of the two houses under construction and create comps for future sales. Any deal structure advice would be appreciated. *note: the Memphis real estate market is still low so our values are behind other values nationwide including nearby Nashvillle. Also, plenty of inner city lots but few investors/developers/contractors are willing to build new homes.

[Andrew Postell]

@Dwayne Jones welcome to becoming a developer!  This is a common problem for ANY developer of new properties.  That's why most developers have their first sale lined up BEFORE they start building....and that buyer is a CASH buyer.  Once that CASH buyer makes that purchase...that is now the comp for the rest of your development.  That's how all the big companies do it.  I hope this makes sense how I describe it but if you are targeting buyers that will occupy the property then their financing will require comparable SALES property value.  If you are targeting investors, then it's different.  Feel free to ask anything additional if you need. Thanks!