New Construction 2 Familiy Home Massachusetts

[Dina Onur]

Investment Info:

Large multi-family (5+ units) other investment.

Purchase price: $740,000
Cash invested: $1,300,000
Sale price: $3,850,000

I refer to this project as a new construction house hack, as I secured a primary residence construction loan for a two-family home. This impressive 7,000 square foot property is situated in an upscale Boston neighborhood. With a purchase price of $740,000 and construction budget of about $1.3 million, a future appraisal estimates its value at $3.75 million. My family will occupy one unit, while the other will be available for rent starting in the spring of 2025.

What made you interested in investing in this type of deal?

I have completed multiple BRRRR (Buy, Rehab, Rent, Refinance, Repeat) projects, and this latest deal unexpectedly came my way. Initially, my husband and I were searching for a single-family home. However, at the closing table, we discovered it was zoned as a two-family residence. Rather than renovating the single-family home, we decided to pursue new construction to unlock the property's full value potential.

How did you find this deal and how did you negotiate it?

We were collaborating with a local real estate agent who presented us with this MLS listing. The deal attracted multiple offers, and we initially got outbid. However, when the first buyers failed to come through with cash as specified in their terms, the seller pulled out and offered us the opportunity to purchase the property at the asking price, and we did.

How did you finance this deal?

We successfully closed the deal with just 5% down as a primary residence.

How did you add value to the deal?

We demolished a 900 square-foot home and constructed a new 7,000 square-foot 2-family residence.

What was the outcome?

1.5ML in equity and we are house hacking this property.

Lessons learned? Challenges?

I've completed extensive rehab projects but had never ventured into ground-up construction before this experience, and I can honestly say it was a lot of fun. As the project manager, I learned a tremendous amount throughout the process. I’m excited about the possibilities and am eager to continue growing and developing more homes in Massachusetts.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

To be honest, there are countless real estate agents out there, and often you need to do your own research and schedule appointments to find the right fit. Many agents won’t analyze your numbers for you, so it’s essential to be creative and understand how to add value to a property or land. There are many great professionals available; I recommend interviewing several to ensure they have an investor-friendly approach.