First Deal: Build from Scratch or Flip an Existing Home?

[Karla Garcia]

I’m about to dive into my first real estate deal in Central Florida, and instead of flipping an existing home, I’m considering building a new house from scratch. I've been working as a construction manager for years, as well as my partner, so we are not completely unfamiliar with construction, subcontractors, etc. However, we've never thought about real estate investing but until now. I’d love to get your thoughts on this approach!

[Ben Fernandez]

I think it depends on the deal that comes your way.

If you can find a cheap plot of land that's buildable and the profits exceed a potential flip's (you could also acquire), go for the build.

Vice versa. If the flip is more efficient, and delivers a better profit, go for the flip.

Notice, I made hence to efficiency. That is a thought that's in the back of my mind regarding all the red tape you may encounter on the building side. Keep in mind, time costs. So a flip and a build with the same profit margin, but one is less time arriving to the goal, the shorter time span option is the better deal.