4 red flags I look for when a builder brings me a new project

Added: 2026-05-28

When evaluating new construction projects, four critical red flags indicate potential problems: (1) a budget with no contingency, which is unrealistic since construction projects always encounter unexpected issues; (2) an After-Repair Value (ARV) that doesn't support the loan amount plus profit margin, meaning the deal fails before construction begins; (3) a neighborhood with excessive competing inventory, suggesting market saturation; and (4) no genuine buyer demand for the specific product type in that area, risking building a white elephant. These indicators help identify projects that are unlikely to succeed before any investment is made.