Financial Advisor · Hingham, MA · Member since 2015 · 36 posts · 15 votes
I went to an open house in a very posh coastal down south of Boston because the home was listed at a very competitive rate. Turns out the seller (an older woman with an accepted offer elsewhere) is VERY motivated but also has the two adjoining lots and is eager to unload those as well.
I'm pretty sure I could lock up one of these other buildable lots for under $200k. I have a builder that quotes about $160 sq/ft new construction--so If I built a 2500 sq/ft home that's around $400k. All in I would be $600k, but say $650k to be safe.
2500 sq/ft homes in this town go for $750 - $1mm+ depending on location. Seems like there's some room to run here.
Here's my question--I can probably swing the land purchase but have no funds to do construction, nor am I experienced enough to oversee something like this. Would people suggest that I just lock up the land, get it planned and permitted, and sell to a builder or other investor for a quick buck?
@Bob D. I could be interested in participating in this deal if the numbers work. I think you need to do a little more digging on the comps. At $750k it's not worth it, at 1MM per you are onto something. Shoot me a DM if you want to discuss.
I agree with @Ricky Beliveau where there's not much meat on the bone at $750K - an executable deal I'd put at $925K+, soft costs for MY biz (with overhead, etc) run roughly 9-10% ARV, if held for 6-10 months.
Both are very viable strategies - I find that builders / GCs are able to get these projects done way more cost effective than I could - and if I hire them to do it for me, then I'm paying for it ($160 / sq is about right... although many are quoting $180-200 in the higher end markets these days).
We currently have a lot in Hingham we've worked to get permitted, but most likely will be trying to sell to a local builder down that way - it will be more profitable for them, (A) but primarily (B), we just don't want to have to drive South of Boston every week for 6-8 months. (hehe)
Ricky - if you're interested in our Hingham teardown, let me know, we can send you the Dropbox link to all the figures as we've gathered them.
Bob - I'd go the resale route, for no other reason than for less headaches for you, but you know what's your best use of $$ and time.