Having trouble analyzing this deal as there are so many variables and I do not have the experiencing analyzing deals to make me feel comfortable taking the risk.Purchase price of the land would be $250,000 not including closing cost or fees, and construction for a new 3/2 home with an attached 1/1 ADU is estimated to cost around $300,000 - $400,000 finished.

For further context, the borrower would be able to comfortably afford the mortgage with the rental income but not without it completely.I understand that potential rental income from the property may be considered for a loan amount, but I’m not sure how potential income affects the liquid amount that lenders want to see when issuing a loan.

Need a Co. very comfortable with assignments.

As such, we decided to include a fairly large island which can comfortably seat 10 people.

After you are comfortable becoming a landlord or renovating/hiring contractors, moving on to a BRRRR, fix and flip, value add apt complex, etc... may be your next step.

Tax wise no, the actual return is higher than 3% but if you're comfortable locking up funds for 6 months, 5% doesn't look terrible to me.

If you underwrote the deal according to your methodology and it netted 5-10%, you'd pull the trigger if the level of risk you're taking to achieve that result is within what you're comfortable with.

That should be the analysis you do in order to get comfortable with the deal.

Still, it might be the right fit if you’re comfortable with that and have no interest in returning to active real estate investing.

Just comfortable looking, and comfortable feeling.