How I Made $300K on This Lot Instead of $100K (Single Family vs Fourplex)

How we chose between a single family and a fourplex on the same lot, and the four variables that decided it.

You shouldn’t build a house, you should build a duplex. You shouldn’t build a duplex, you should build a house. Both are true, because it is never about the product, it is about the right product for the right area. Build the wrong one and you give up 20-50% of your upside. This video breaks down a lot where Arthur could have built a fourplex and chose a 3,500 sq ft single family instead, and made $300K instead of $100K.

The four variables that pick the product

Before committing to what goes on a lot, check four things: the rule of 20 on land price, comparables (what is actually selling), rental demand (what rents and how fast), and the depth of the buyer pool. You can build a great product and still sit on it for 6-12 months if nobody in that market is buying it.

The rule of 20 in action

Take the value of new construction sold in the neighborhood in the last 5 years. Here, homes sell around $1.5 million, so 20-25% of finished value caps the land at $300K to $350K. This lot closed at $312,500, right in the cushion. Some areas you can get land at 10% of finished value.

Comps decide, not preferences

Behind this build, one home sold at $1.2 million, another at $1.335 million, and new construction a few streets down sells at $1.5 to $1.7 million. The $1.35M comp went pending in 3 days. What sells here is 3,500 sq ft, five beds, three and a half baths, so that is what got built. Ten miles east the demand is townhomes, so that project got 27 of them. Different area, different product.

The fourplex math on this exact lot

A fourplex here would be worth about $400,000 a unit at roughly 1,500 sq ft each. That is 6,000 sq ft of building to reach $1.6 million, versus a 3,500 sq ft house worth $1.5 million. Nearly double the square footage means the build cost roughly doubles and the margin drops to about 10%, versus over 35% on the house. And as one tax lot it has to sell in a single $1.6M transaction instead of $400K a door.

Don’t put yourself in a box

The investor says “I only want duplexes” and then cannot find one. The developer looks at what is selling, runs the numbers, and takes any deal that clears the return floor, for us that is 25% ROI on any product type. Stick to one product and you leave 20-30% of profit on the table.

The zoning ladder most people miss

Most zoning codes now include a middle housing section, because the country is short over 3 million homes. In Arthur’s county a 10,000 sq ft lot allows a fourplex, 8,000 a triplex, 6,000 a duplex, and under 4,500 sq ft a single family plus an ADU. Call your city and county and ask what your lot allows.

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