Spouse and I have an opportunity to buy a lot from a private seller. The price is fair according to comps. We own a condo on the other side of the same town, no plans to move.
The town is one of those Colorado mountain towns that is exploding with new folks like us moving in, tons of new construction, and affordable housing issues for moderate income people like teachers and hospital workers. Not much buildable land left due to public lands hemming us in on all sides. The location is great- bikeable to everything, near mountains and water.
We are mulling the idea of buying the lot and building a duplex and a garage with a smaller apartment over it. We have never been landlords. We could pay about 50% of the price of the lot and use a HEL for the remaining 60k. (Certain we can build a SFH and ADU/garage, have not confirmed whether a duplex conforms to neighborhood rules). This would be long term rentals; there is no shortage of renters in the area. 2 bedrooms would bring 1500 and a 1 bedroom apt 800/month (could probably charge more, but we have an interest in providing affordable housing).
The price of the land would be around 8% of our net worth.
Concerns: property doesn't cash flow, market crashes, difficulty finding contractor with availability to build. We have never been landlords. We are also considering buying the lot and paying it off over the next few months, then holding it as an investment and possibly giving/selling it to our son to build a home in the future (5+ years out).
Comments, suggestions, criticisms? Thanks in advance for sharing your thoughts.