This is a semi-long preface before the question just so you understand the situation. Sorry guys!
So I've been seeking a flip property here in NWA and I'm having trouble with finding a cheap property that I can actually make a profit on. Most in my market are going for about 85K-95K and being bought by new home owners (not flippers); I'm thinking, and being told by my agent and GC. (Both with over 30 years experience in my market; so kinda take their word for it.)
I'm staying in my market for a month or so to see what I find and then headed back to NYC and having my GC analyze properties with me over Facetime whilst away.
My agent suggested that it might be more profitable for me to build a small new construction single family home on a semi-flat lot that I've already acquired about 4 years ago. Also, my agent said it might be cheaper starting on a clean slate (with no surprises from an old home) and the bonus is that I wouldn't have to use my own capital in the bank; I'm currently pre-qualifying for about a 100K conventional loan.
My GC (also, former builder) says we can build a spec home via a construction loan at a local bank he's good friends with. He has a great rapport with the city so he gets permits as soon as he asks for them and know's how to build where it's cost effective along with staying below the budget.
Side note:
He's a family friend, now trying to help me become successful in RE along with connecting me to his network. His daughter is a developer post 2008. He has invested some of my parents money a while back (still waiting on ROI) but is working on getting it back after he sells investment property. It's been 3 years so parents are getting impatient but now knowing how RE works; it's not always a fast turn around type of business. (Guessing he's waited for no capital gains tax and good time to sell. Also lives in the investment property. EKK! Parents are not happy about that.)
Anyway, that has made me a bit nervous investing money on his suggestion to build but I'm definitely seeing that the market supports it (Being that there is single family development going up everywhere in Northwest Arkansas.) and that my knowledgable agent suggests I think about that as an option since she sells new homes all the time that are only on the market for less than 3 weeks before sold.
So down to the question:
I know new development is a bigger undertaking and WAY more work (which I'm willing to fully commit to) but is it too much for a beginner to get started with? Or should I just keep looking for a flip? Getting a bit impatient but excited for maybe a different approach to getting into real estate investing. Thanks for the advice in advance!
