Don’t know your market, but around here you could probably buy existing units cheaper than you could build new right now. Material pricing and shortages of some items and lack of labor could be a problem. Quotes you get on both right now will be priced defensively. Arguably this is the highest prices the construction industry has ever seen. The size of the project probably determines whether or not a general contractor could do it or you need someone who specializes in apartments. The architect should be able to answer that.
I can’t buy the design I have in mind. It is something I want to try as I think it is unique but also will get a higher price per square foot. Though the pandemic may have changed the viability of the project.
The same is true near me, apartments often bring in undesirables. There is one apartment complex in town that’s older and the rents are lower than average for the area, 90% of police reports in town involve the complex from DUI’s and domestic battery to theft and assaults. No thank you, we don’t want more of that.
You can hire someone to represent you with the planners, but you will have to sign off on everything. My wife was once chair of the planning commission where we lived and she always wanted the property owner in front of her. If you need a zoning variance, good luck. The parrot is correct, home owners do not want rentals in their area. Zoning variances run with the land, so the owner has to request them and be present to answer any questions and agree with any other conditions on the variance. I once chaired a zoning appeals board and we would not approve a variance unless the owner was in front of us.
Like, as branchkin said, there has been a spike in construction materials thanks to a surge in Fed funny money + COVID affecting mill output. Not sure now is a good time. But you know your market. We do not.
Make sure you get a contractor who has commercial construction. You must familiarize yourself with the plans and watch him like a hawk. Do you have the time to do that?
I did exactly that with the Henry Building. The uniqueness of the architecture makes it easier to obtain tenants, but they are not willing to pay more rent per square foot just because it is a unique building.
We haven’t ventured into multi-family yet and probably won’t. We plan to do Self Storage as our next diversification of real estate investments.
I think construction costs are quite high now (look at lumber) and the build times will be much longer than you plan. Have you considered buying an underperforming Class B complex, renovating, improving the quality of tenant and transform into a Class A property ? I know several fellow investors doing that over the last couple years. If you can buy at a 10+ CAP and then sell at a 6 or better after improvement you can make some good money.
Not really my goal. We already have around 200 properties. This is a side thing I am doing outside my partnership.
Basically, it is integrated living but on a smaller scale. The trend is younger generations want more 'experiences" and to be socially conscious.
As such I want to design a place to maximize that experience. Small living areas but more social areas. Each person would have an area for a garden and the building is designed for green energy. Trying to retrofit a place for electrical cars is very expensive.
Just a thought. In light of the government’s new policy to not allow evictions for non payment of rent, I have a feeling there are going to be lot of foreclosures/REOs in the near future for income producing properties. This will give you an opportunity to buy an existing property at a greatly discounted price and enable you to have sufficient funds for recreating the space the way you would like it to be.
That’s a good idea, the green crowd are dopes. Just buy an existing building and put in a few solar panels, a rain barrel, a bike rack and say a portion of their rent will go to help black owned businesses. Call it Eco-Village and charge a few hundred dollars more a month than similar units in the area