Here are some ideas for building a home and selling for a profit or keeping as a rental
Build 1500 sq ft 2 bedroom ocean view home @ $100.00 per sq ft
(adjust prices up for bigger homes)
Scenario to sell in 2 years – 6 months build time + 1.5 years as rental while on the market for sale
Home Construction Cost $150,000
Land Value Cost $175,000
Total $325,000
Re-sale Value $450,000
1.5 year rental income +$20,000
Total Profit Potential $145,000
Scenario to build home and keep as rental
If you borrow the money to buy and build you will need about:
$325,000 @ 6.5 % = $1,760 Monthly payment
Rental Income per month
Year 1 - Rent 2 weeks per month @ $1,700 per week for 6 months = $20,400
minus yearly mortgage payment
$21,124
Year 1 Cash Flow [$724] Year 2 - Rent 3 weeks per months @ $1,700 per week for 6 months = $30,600
-$21,124 Year 2 Cash Flow + $9,748Year 3 Rent 4 weeks per month @ $1,700 per week for 6 months = $40,800
- $21,124
Year 3 Cash Flow + $19,678
all figures are only estimates based on current comparables
The above outline takes into account time to build up clientele for the rental – however you could be @ full capacity in year 2 or sooner – Also you may rent for more than just the 6 months. Often rentals are semi-occupied during the off season as well.
This does not take into account the fact you will have full use of the house when your not renting it.
Lastly, the weekly rate based on the comps is actually closer to $2,000 - $2,400 weekly !!