It is said that the bigger the project, the bigger the risk but the bigger the reward. While I can attest there is truth in that, the additional risk should make you pause to decide if you really want to go to the higher price points. While indeed the reward can be better, so can the headaches be to get there. In fact, there oftentimes is more headaches because of these very things.
Furthermore, you can build a nice house and still get ‘beat up’ for the smallest of things by Buyers and their Realtors. While this doesn’t make the situation negative, it is amazing to me how few Buyers ‘ask’ for tweaks to make a house theirs. Buying incentives can work. Location can have a significant impact, lot layout becomes a much bigger deal. And if you are in an urban environment, restrictions from city municipalities rarely make things easier. Another item not to ignore…generally speaking there are simply less Buyers as the houses get fancier.
So the reward could be great but is it worth it?
When you go with simple houses, they tend to be much less fancy. There won’t be many bells and whistles. The price points will be lower, sometimes much lower. However…
The projects go from faster to much, much faster.
There are less restrictions in most scenarios to contend with.
If you are doing private loans, your lenders money turns much faster.
There are less contractor issues to deal with.
There are just a lot less issues altogether. So yes, the big project can turn out nicely however in the time it takes to do it, you can oftentimes do 2,3,4+ smaller ones, get in and out of them quicker, make more people happy and have a lot more Buyers to pick from. As long as you buy right and don’t go too slim on your profit margin, it makes for a much leaner effort to accomplish the same thing financially.
So which is right? The answer is it depends on you. If you enjoy the fancier design work bringing out the artistic side of you and really being involved in the process, then the fancier houses may be your best bet. But if you are investing to make a better life for yourself, financial freedom and using real estate as a vehicle and not the end goal, then take a hard look at smaller, simpler projects. You will likely get a lot more mileage with a lot less stress.
Happy investing!