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Updated over 6 years ago on . Most recent reply

User Stats

17
Posts
8
Votes
Al Mac
  • Santa Maria, CA
8
Votes |
17
Posts

Building vs buying units

Al Mac
  • Santa Maria, CA
Posted

Hi all,

I'd like to get some advice on the following.

I own a couple of properties in central California with potential for building up additional units on each one of them.

The first one is a tiny single family home (~800 sf) on a big R3 lot where I can get a permit to build 2 or 3 additional units (although the cost of the permit per unit is much higher if I build 3 or more units, so I might stick with 2)

The second one is a duplex, 2 1-bed small homes on a big R2 lot where I can build at least 1 more unit.  For the existing units I could also convert the garage (legally) into a second bedroom to make each unit 2bed/1bath and increase the rent in addition to the 1 new unit.

I haven't run the numbers yet, and I know without numbers is hard for anybody to provide advise, but I was just wondering if experienced investors would generally lean more towards using the existing funds to build the new units, or forgetting about building and use all the funds to purchase more properties. I have rehabbed a couple of my rentals in the past, and although I have not built anything from scratch yet, I have general contractors in the family and I'm very familiar with the whole building process.

Could anyone advise please?

Thank you. 

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