The ability to generate more income for simply the cost of a building is another huge cost saving over buying an expensive commercial lot and developing it.

Another note on construction cost, going vertical is very expensive now and would require have a great connect with a developer and a builder in the area.See what rents are in the area and run the numbers to ensure the rents will cover your costs and give you a solid return—using the 1% rule can help.

I know that interest on the acquisition loan can be included in the cost basis since it’s inventory.

Once you’ve set up and marketed your rental, use the cash flow to scale your portfolio over time.

Figure out the state and federal capital gains tax and depreciation recapture after selling costs.

Travel costs to look at other properties.If you travel but have not identified the property that you want to buy yet, the cost is considered an investigating cost.

What costs/fees should I look out for?

I had few options so our cost doubled.  

Figuring out the true cost will heavily depend on the type of dig down, depth, and total square footage. 

He can't loan you any part of the 3.5% down and you can get seller contributions to cover closing costs, etc.Just food for thought...