Quote from @Devin James: Gross Margin is an important calculation for developers/builders.Gross Margin = Gross Profit / RevenueWe shoot for a 20% gross margin on our New Construction HomesReal #’s:Home Sales Price: $374KClosing Cost: $18,700Cost of Construction: $258KLand Cost: $30KGross Profit = $67K$67K/$374K = 17.9% Gross MarginCame slightly short of our goal of 20%Homes Values and Build Costs are constantly fluctuatingI wish we had a crystal ball build larger homes. average new build in our market is 2200 square feet, 4 beds, 3 baths, 2 car garage and sells for 515k. construction costs lower if design is good and find the median or average home sale price and push that up. my guess is you built too small. 347k is cheap. we target 429-479k price range in columbus ohio for single family homes and also only purchase close to urban core where premiums are 20% higher and we build smaller like 1500 sq ft where price per square foot goes up. 

Return:Finishing the basement and adding bedrooms can add significant value, especially if your local market places a premium on additional living space.

You would need to comp them out (I use AirDNA premium) and underwrite each individually.

Buying a large new build home can also work well as a house hack as you can charge a premium rent, and generally most bedrooms built now a days have en suites (at least in my market).  

As mentioned before too, newer construction tends to sell at a premium too. 

They beat my existing premium by over 30% without sacrificing coverage (I did choose a slightly higher deductible though to get some extra savings here).

They get a higher return since they are covering housing cost, have the $250k per spouse primary residence deduction in gains, is a savings account, higher leverage position, lower interest rate possible, will pay more premium for location, etc.House might be overpriced for REITs but not for home owners.  

We have an amazing realtor who helped us find the property and helped us run numbers on possible ARV, @KiKi Wood. 

It snapped off vertically down the middle when he went to the kitchen in the dark in the middle of the night and when he turned to walk back, he walked into a little cupboard door which pushed it back against an edge of the wall, which caused the wood to snap.

California owners, should we increase our coverage, which should result in higher premiums?