The cost to purchase our land, tear down the existing house, and construct a new home costs us around $350,000. We typically secure a loan for 80% of the property’s appraised value. We employ our own contractors, which saves us approximately 20% on construction costs. The cost to build per square foot is typically between $60-$70. In addition, we allocate 5% of rental fees to cover maintenance costs.
Our marketing strategy involves utilizing our website to show available rental properties. We also depend on word-of-mouth from pleased tenants. If necessary, we are willing to advertise in our local newspaper, but we have been successful without newspaper advertisements.
We understand the risks involved in residential construction, but we have protected ourselves by analyzing potential problems and monitoring all stages of the process. We contract the construction for all of our properties, so we can limit construction issues.
We manage our investment projects from start to finish, and we have been doing this for years. Our experience in scheduling and managing projects benefits us in that we know how minimize errors and be efficient with our time.
AgShacks viewed this investment as another good opportunity to add value to our portfolio. The property had great potential, but was in need of a more updated house. After calculating tear down and construction costs, along with loan payments, we determined that potential long-term profit for this individual property is $8,800/year.
Overall, we believe that this property is a good investment and it will continue to add capital to our company. This will enable us to continue to grow and further saturate the market.
