Re: New Construction - Posted by Kevin Subbert
Posted by Kevin Subbert on June 27, 2001 at 22:20:23:
There are easier ways to make money than to develop inner cities. You’re planning to make money based on speculation. Even though you may be sure the properties will double in value in a year, the possibility that they may not is something to consider. What is your plan if crime returns to the inner city and property values falls? Are you prepared to compete with other investors that are also building in that area? These may be large corporations that do this type of thing as a trade. Needless to say, this being your 1st investment, you will be buried.
Have you verified all of your information about the neighborhood development? Or is this just some things you heard? You might want to check with the city planners or the zoning board. Dont take the word of an agent or your buddies, its not their money.
How did you come about estimating the construction costs? What if your wrong? Have you spoke with a contractor? Have you ever dealt with a contractor before?
Are you sure you can build duplexes in the location your looking at? You may have to get the lot re-zoned. This can take a long time if the city allows you to do it at all. Does the lot have water, sewer, electric, gas for a duplex? If it had a SFH on it you will have to make accomidations for a duplex.
How long will the construction take? Are you prepared to pay the loan for 6 months or more while the duplex is being built and then longer while it sits vacant?
Just a few things to take into consideration before you go spending money. Try looking into buying houses that are already built in neighborhoods that are already are established. Lots of people make money doing this. There’s always room for 1 more.