a few months ago I wrote about it How my partner and I were trying to buy a cabin in our neighborhood as an investment property. Unfortunately, we lost it to another buyer who put in a higher bid than we were willing to pay.
We looked at other properties on the market, but everything was much more expensive than the house we lost. The cabin we wanted was $40,000, and we can’t seem to find another upper stabilizer for less than $70,000.
We don’t want to spend too much on a property that still needs tens of thousands of dollars of work. So we decided to save more money and build an investment property on our land instead.
How much will building rental property cost?
We are planning to buy a 650 sq ft manufactured home veneer and finish the interior ourselves to save money. Contractors need to make a profit and add profit margins 20% to 35% for their work. So we will save a good chunk of money by getting our hands dirty instead of outsourcing all the labor.
We also plan to use wood from our land for planks, wood floors, butcher block tables, and cabinets. We probably won’t have to buy a lot of lumber for this project, which will save us thousands.
Based on quotes we got from several construction companies, it would cost you about $30,000 to get a manufactured 650 square foot shell delivered to our land and put on a foundation. Adding a sewage system will cost about $5,000. There is already a well on the ground, and this will save us some money. As for energy, we haven’t decided if we’re going to connect the house to the grid or install a solar system yet.
Although we are still collecting bids, we expect the project to cost between $60,000 and $80,000. Considering problematic fastener uppers like rotting floor joists are $70,000 to $80,000 in our area, building the cabin ourselves is a much better and cheaper option.
Reasons why we should build a property to rent rather than buy
The main reason we build rental property rather than buy it is to save money. according to Realtor.comCurrently, buying an older home is more expensive than building a new one due to the hot resale market. On average, it costs $332,524 to build a home. The median sale price for existing homes is $447,000, so the purchase cost is much greater than the cost to build.
Since purchasing an overhead installation home costs much more than purchasing an unfinished home structure, we will need to obtain another mortgage to purchase an existing home. Now the average rate of A 30 year mortgage rate 5.78%. Rates could rise even higher later this year.
By building our cabin in phases over a few years, we can avoid incurring any debt. We will be able to finance it out of pocket without getting a construction loan at a high interest rate.
Our plan for this property once built is to list it on Airbnb and see how it performs. But if that doesn’t work, we’ll try to rent it out to a long-term tenant or move in ourselves and rent out the larger 2,000 square foot home we’re currently living in. Willing to do whatever is most profitable to accelerate our progress toward our financial goals such as early retirement.
Have you ever built a house to live in or to rent? If you’ve never built a house before, would you consider doing so as a way to save money? Share your thoughts in the comments section below!
11 ways we save on gas
7 Companies That Don’t Need Employees
The 10 countries with the highest gas prices right now
Go back to what you love! Dollardig.com is the most trusted cashback site on the web. Just ParticipationClick, shop, and get full cashback!
Vicki Munro is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money-saving or fiddling with her budget spreadsheets, she loves traveling, gardening, and cooking healthy vegetarian meals.