Turning my SFH to multifamily/apartment building

[Rachel Murray]

Hey there BiggerPockets Peeps! Thanks in advance for any help/guidance. Here's our situation. We got lucky and bought a SFH in North Park right before things went wild, so we've got a great interest rate and a steal of a mortgage, considering what folks are dealing with right now. Our property is zoned for 6 stories because we're very close to a commercial street with great public transportation. 99 walk score! I've been toying with the idea of scrapping the building and starting fresh, creating a six-story building with at least six units, one per floor to rent out. Here's the thing. I'm not a developer. And while we have a nice chunk of cash in the bank and can get more with home equity, we certainly don't have enough to pay for the whole thing. So here are my questions. Is this something worth pursuing? Would it be smart to bring in a partner/investor? A friend even suggested friends/family raise for the investment, but since I've never done anything to this scale, it seems like a lot to take on on my own. Though, tbh, it's kind of thrilling. I'd want to hire a design-build firm at the very least, but beyond that, would it make sense to bring in a developer who's done this before? If the latter, who to trust? I'm curious if anyone's done this before and has any thoughts on how to start/move forward. Thanks again!

[Benjamin Aaker]

Sounds like a good problem to have! I'm not a developer either, but I have a few general recommendations. Developing is a high upfront cost business. To do well, you need a great plan. To get a great plan, you'll need to front multiple thousands of dollars to design. You'll need city approval even though it sounds like the zoning is favorable. Your first one might even lose money. If you plan on doing more, then maybe take the risk. Otherwise, consider selling it to a developer. You won't make as much but you have a lot less risk. Also, do the math - does demoing your current house + paying off the current mortgage immediately, then getting a construction loan make sense?
If you insist on DIYing it, I'd recommend first calling a few general contractors that you see on the sides of buildings under construction in the area. Tell them your situation and they might be willing to tell you about the process in exchange for a shot at doing the work.