Spec home deal analysis

[Justin Marsh]

Hey all!  I'm a huge fan of BP... been reading posts for months and finally decided to move forward with a new investment strategy and looking for advice from the BP community.  I currently have 2 rental properties that I plan to sell and use the proceeds to build a spec home in the SF Bay Area.  Please review the notes below and let me know how you would structure a deal...

$150k cash once current rentals are sold

Looking to build in an area where land is approx $450k

Average house size in this area is 3500sf

Average sale price of houses in this area is $500/SF

I have a day job in the construction industry and would build this house in addition to my day job.  I have my contractors license and would hire out most of the work.  I would self preform approx 20% of the build.  

So, how can I use my $150k cash to build and sell a approx $1.5mil house?  Any and all advice is greatly appreciated!!  Let me know if you need any more info.  

[Karen Margrave]

@Justin Marsh First off, welcome to BP. This is a great place to learn. As to your question, we don't have enough information to really help you. 

What is your experience?

The biggest question you haven't answered is, what will it cost to build? 

• Design, and engineering
• Permits, fees, utility hook ups, etc.
• Materials and labor
• Financing costs
• Title and escrow fees
• Marketing costs (real estate commissions, etc.) 

These are just a few of the things you will need to know in order to begin formulating a plan. Good luck