Build to Sell Spec Home Calculator: To Acquire & Build

  • Tags: Calculators, New Construction, Spec Homes

If you’re looking to tear down and rebuild a property as a speculative investment, knowing your numbers before you commit is critical. This strategy—Purchase, Teardown, Build, and Sell—can produce excellent returns, especially in hot markets with strong buyer demand. But profit margins disappear quickly without a clear understanding of your capital outlay, timeline, and sale projections.

That’s where our Build to Sell Spec Home Calculator comes in. This tool gives you a full breakdown of your:

  • Total project costs (including permits, materials, and contingencies)
  • Cash required to close
  • Prepaid interest during construction
  • Monthly qualifying income needed
  • Estimated profit and ROI (with or without partners)

Let’s walk through an example.

Sample Spec Build Project

Land Purchase Price (Teardown): $500,000
 Soft Costs: $50,000 (permits, architectural, engineering)
 Hard Costs: $1,000,000 (labor and materials)
 Down Payment: 25% minimum
 Sales Price / After Repair Value (ARV): $3,000,000
 Hold Time (Construction + Sale): 12 months
 Partners: 5
 Estimated Exit Costs: 8% (commissions and seller fees)
 Annual Insurance: $6,000
 Annual Property Taxes: $12,000
 Monthly HOA: $0
 Estimated Interest Rate After Construction: 9.99%
 Estimated Construction Interest Rate: 12.99% (interest-only)

Projected Costs and Loan Summary

Total Property and Build Costs (Including Contingency): $1,650,000
 12-Month Interest Reserve (Prepaid): $123,626
 Total Financeable Project Cost (Incl. Est. Closing): $1,826,835
 Maximum Allowable Loan Amount (Based on 75% ARV): $1,330,220
 Cash Required at Closing: $443,407

This figure includes down payment, prepaid interest, and closing costs. Note: Always obtain a formal Loan Estimate before making any financial commitments.

Profit Estimate Breakdown

Holding Costs (Interest, Taxes, Insurance, HOA): $141,626
 Exit Costs (Commissions, Transfer Taxes, Closing Fees): $240,000
 Initial Capital Investment: $500,000
 Total Project Spend: $2,531,626
 Expected Sale Price: $3,000,000
 Net Profit Before Taxes or Exchange: $468,374
 Cash-on-Cash ROI: 105.6%
 Profit Per Partner (5 Partners): $93,675

This is your profit after selling the property, repaying all project costs, and dividing earnings among partners (if applicable).

Monthly Income Needed to Qualify

For this project, the estimated monthly income needed to qualify for financing is approximately $29,242. Final numbers depend on your credit, reserves, and debt-to-income ratio.

When This Strategy Makes Sense

This Purchase + Teardown + Build + Sell strategy is ideal when:

  • You’re working in a high-demand neighborhood with limited new construction

  • The lot holds more value than the existing structure

  • You have a strong build team and tight cost controls

  • You want to roll all financing into one loan with prepaid reserves

Start Your Spec Build Journey

Whether you’re funding your first build or expanding your development business, preapproval is the key to moving fast and executing confidently.

With this calculator, you now know your:

  • Cash to close
  • Interest reserves
  • Holding period costs
  • Sales strategy
  • Profit potential

Let’s take it further. We’ll help you structure the right loan, connect with experienced underwriters, and guide your build-to-sell investment from blueprint to closing table.

Request Your Spec Build Preapproval Today

Ready to Take Your First Step?

Skip the guesswork. Take our quick Discovery Quiz to uncover your top financial priorities, so we can guide you toward the wealth-building strategies that fit your life.

  • 💡 Takes just 5 minutes
  • 📊 Tailored results based on your answers
  • 🔒 No credit check required
Take the Discovery Quiz

Need a Pre-Approval Letter—Fast?

Buying a home soon? Complete our short form and we’ll connect you with the best loan options for your target property and financial situation—fast.

  • 💡 Only 2 minutes to complete
  • 📊 Quick turnaround on pre-approval
  • 🔒 No credit score impact
Get Pre-Approved Now

Got a Few Questions First?

Let’s talk it through. Book a call and one of our friendly advisors will be in touch to guide you personally.

Schedule a Call

Important Disclaimer

This calculator is for illustrative purposes only and does not constitute financial, legal, or investment advice. Results are based on general assumptions and may not reflect actual performance or eligibility. This is not a loan estimate or approval. Please consult with a licensed mortgage advisor before making financial decisions.

Share
Categories
Related