Please Take a Look at This New Construction Deal

[Jim Macedon]

Good morning.

I am respectfully requesting feedback from the Bigger Pockets community on this deal.  My area is Austin, TX (this particular deal is in a community about 30 minutes from Austin) and my deal involves potentially building a new duplex to hold for rental income.

Expected rent is $1500 per unit for a total of $3000.

I own a multifamily lot, for which I paid $22,500.

I have paid approximately $5,000 for plans and engineering designs.

I have been working with a realtor who I have promised to pay a 3% commission on construction costs.

After talking to what seems like just about every builder in the area, it seems like the best I can do for construction costs is about $325,000.  This is where the deal has become iffy for me and led me here.  My original (obviously overly optimistic) expectation was that I could find an "investor friendly builder" (I put in quotes because this experience has made me seriously question whether this mythical beast actually exists) to do this for $250,000-$275,000.  Now that the real number is $325,000, I'm questioning whether I should even consider going forward anymore.  The sunk costs of the lot and the plans makes me want to get it done, but I know that is throwing good money after bad.  Since this is a growing area, I think I can potentially get by money back by selling the lot in a couple years.

I know the deal doesn't even meet a 1% rule, but that is virtually impossible to find in Austin.  Well, I'll leave it at that and just let you analyze it based on the numbers.  Let me know if I left out any information you need.

[Jay Hinrichs]

There is NO such unicorn as an investor friendly builder.. LOL... .why would a builder charge less for an investor?  that makes zero logical sense..

one way to cut cost is to become your own general and sub everything out..   this is what we do.. then we pay a supervisor a flat fee.. especially in your state were contractors are not required to be licensed.