Investment Info:
Single-family residence fix & flip investment.
Purchase price: $98,000
Cash invested: $316,000
Sale price: $555,000
This was my very first new construction house. Found this substandard lot on the MLS and maximized the use and square footage. I was still in the middle of developing my first small subdivision, so I had a money partner that provided cash and the construction loan. I designed the house and floorplan, built it, and sold it for about a $105k return after all expenses.
What made you interested in investing in this type of deal?
I was transitioning from flips to new construction/development, as the flipping market in Boise was becoming so competitive it was hard to find deals. I found a niche in small infill development, and this lot was build ready, so it was actually my first completed new build even though I had my first small subdivision I had got entitled and land development done already.
How did you find this deal and how did you negotiate it?
It had been sitting on the market for about 6 months, but the floorplan advertised with it was for a 2 bedroom house, not maximizing the design and square footage. I familiarized myself with the Planning and Zoning code for substandard lots previously, so I knew how to maximize the home that we could build, and saw value where others had passed up. We ended up paying almost full price, but it was below the market value because of how it was advertised.
How did you finance this deal?
Cash and hard money construction loan with a business partner.
How did you add value to the deal?
Built a brand new home of about 1800 sf, 3 bed, 2.5 bath.
What was the outcome?
Build and sold the home for $105k profit after all purchase, build, interest, and sales costs.
Lessons learned? Challenges?
This was my first time partnering on a project and it worked out great! I was able to do a deal that I wouldn't have been able to do otherwise, and I walked away with half of the profit.
