All Forum Posts by: Alfred Derrick

@Alfred Derrick the downside or risk if that if you haven't done either a house hack or new build it is a lot to bite off. I would suggest that you continue to scour the mls and create relationships with wholesalers to find off-market opportunities. Turn over enough stone and don't be in a rush to buy. This will give you the best opportunity to see deals clearly and make a strong investment. 

@Alfred Derrick

Theres a lot to consider when building new. Financing is actually going to be your first hurdle to over come (IMO) because that will dictate how much money you need for a DP (and how big a duplex you can build) and when you can start. Most will want at least 20% DP and some up to 30%. Now some will have lower DP bc you are planning to live there but some still view duplexs differently and thus require a larger DP. Construction loans typically will last between 10-12months so you don't want to pull that too early. So you will need to find a lender that you can approve for a total amount of the land + the construction cost. Talk to several lenders and get that ball rolling to find out at least a rough number of where your max lending is going to be. 

Once you have a number then you can start shopping for a lot. No use doing that first if you cant afford to buy it and build on it. When building any rental location is everything. Even if its in a neighborhood of SFH, if the location is right it wont matter. And really Duplexs are viewed much better the 3+ unit build in SF neighborhoods. And if zoning allows then I wouldn't care about what the neighbors have to say. Its your right. No need to be rude about it but just because they would prefer a wealthy neighbor that can boost their property values a lot doesn't mean you can't build there. The important thing is to design it so it doesn't look like a typical developer duplex that looks cheap and that every corner possible was cut. Spend the little extra money to make the outside look nicer and feel more like a SFH and that will go a lot farther. Plus you living there will ease their minds a lot too. I'll be breaking ground on a Duplex in the spring and its in a SF neighborhood. But its location is prime real estate, just across the street from the hospital, so I know it is going to be a great investment. But since I'm an architect I have the ability and knowledge of how to design a duplex that has a much better looking front facade than most. Plus one of my units is going to be larger than most the houses on the block.

At the same time you are looking for a lot you will want to be looking for an architect to design your duplex (a little bias here since I am one). I will say in most jurisdictions an architect is not required for a duplex so you dont have to go to one. There will be GC and builders out there that have plans to sell you. But just remember you get what you pay for. GC and builders will have designs that look like a developer house. They will be cookie cutter and bland. Any changes will cost you extra and it will be expensive. The advantage of an  architect is they are more design conscience and if you are trying to fit a duplex into a SF neighborhood AND be mindful of that neighborhood this is the route to go. Plus a lot of architects will have plans from duplexs that they can re-use. With todays market everyone is SUPER busy. If you go to them and are willing to use plans they already have done they will be much more willing to work with you and will be more willing to tweak (very minor changes) the plans for you without charging more. It saves everyone time and money in the end. GCs and builders are going to be re-using plans they have anyways. So if you are open to having re-used plans and not a custom plan done from scratch you can save a lot of time and money. BUT what ever you do....DO NOT buy plans online. DO. NOT. DO. IT. It is never worth it. Its  never cheaper in the end. 

Once you have plans then you can start shopping around for a GC and getting bids. Then once you pick a GC and get a full cost estimate THEN you get to circle back to the lender to finalize your loan. So you can see that you have to do a lot all at the same time if you dont want this dragging out for a year. Because if you don't do this then you will have to buy the land first and have it as a separate loan and then get a second construction loan then refinance everything again to one final loan. All that time really adds up fast and next thing you know you are a year out from when you started and you havent even start construction yet. All the while paying for an empty lot. Now maybe you can afford that. And not that its wrong to do it that way...its just not ideal. 

I can get into greater detail if you want but I've already rambled more than I planned to lol. Hope this helps. 

I househacked a SFH for 3 years. It's do-able.

@Alfred Derrick : looking at the prices now, it’s good idea to build new, unless you buy the dirt/ land at right price. I am building( hired GC) couple of homes in Cumming, GA . Can PM me I will help you to analyze .

Thanks, Trin

The decision comes down the numbers and available inventory. If you can build cheaper than you can buy or buy and renovate that’s the way to go. New will generally rent faster and for more if it’s a good location.