How to analyze a new construction project

A narrated walkthrough of REIzer's new construction analyzer: land, build cost and sale price in, then the score, every cost line, profit after taxes, a stress test and the build-to-rent path.

A spec home in Asheville, from the land to the finished house.

What the video covers

The new construction workbench starts from a spec home in Asheville. Type the address, the land price, the build cost per square foot and what the finished home will sell for. Analyze scores the project 81 out of 100 and compares the two ways out: build to sell, or build to rent.

The panels: Cost Breakdown adds up every line, from the land and the build to soft costs, the construction loan and the contingency; Profit Analysis shows the margin after taxes and the return over the length of the build; the Stress Test asks what happens if the build runs long, costs climb or the market softens; and the BTR Projection shows the rental path.

Why building to sell wins here

As a rental, this house wouldn't cover its loan for years: the cash flow bars stay red for most of the first two decades. Built to sell, it clears about $83,000 after taxes. Seeing both paths side by side is the whole point of the comparison.

Share X / Twitter LinkedIn

Keep reading