New build opportunity

[Devan Mcclish]

I have a new build opportunity. This would be my first build so any feedback would be much appreciated.

Purchase price = 140k

Demo = 10k

Build a horizontal property regime, 2 homes on the same parcel. The city recognizes these as a duplex and have already given me the green light to tear down the existing home and build up 2 new units.

Build 2,200 square feet at $100 per square foot = $220,000 a unit = $440,000 total 

440,000 + 150,000 = $590,000 total investment

taxes = $2,000

insurance = $1,500

holding costs = $200,000 HELOC at a 4.25% interest only loan. The other $400,000 is from private money at 10% interest.

ARV for HPRs in my area are $180 a sqaure

2,200 x 180 = $396,000 x 2 = $792,000 

792,000 - 590,000 = 202,000 - 3,500 = 198,500 - 40,000 = 158,500 - (708.33 x 6 [mortage]) = 154,250.02 - 23,760 (realtor fee, I have a license so I will capture the other 3% back) = 130,490.02 - 23,000 in potential closing costs = 107,490.02 gross income.