Short Plat with Duplexes

[Isaac Schlittenhart]

Hey guys,

Been a long time follower and lurker here at BiggerPockets and I am finally pulling the trigger on my first deal. In my area, Spokane WA, the market is very tight and difficult to get a property that pencils that doesn't need a ton of work. Since I built my own home 10 years ago, I am not afraid of construction projects so started exploring that as an option. 

We found a lot to build on but I didn't care for the numbers because of the land cost and duplex zoned property is very hard to find in the area so we kept looking.

I am now under contract for a house with 1.3 acres that is zoned multifamily or 22 dwellings per acre. I have thought of going high density as the plan allows but I like the idea of a community of duplexes. I can lay it out so I have 8 duplex lots that will cost roughly $20k each on the high side after short plat is finished and the existing house is sold off. Total cost of brand new duplex and it's parcel will be ~$270k. Rent in the area is $1100-$1250 for similar sized units. 

I could put 4 quad plexes and a triplex on the parcel and get 19 units instead of 16 but rent would be more like $1000 per unit per month and it doesn't seem like it would have the same feel as a duplex community.

I'd appreciate any thoughts or tips! What do you think of the final numbers? I realize considering 50% expenses it doesn't look as favorable but it is brand new so would expenses be that high initially? Taxes here are quite low (<$1000 a year). 

Thanks,

Isaac

[Isaac Schlittenhart]

Hey guys!

Unfortunately the video log and the journal didn't materialize but the development certainly has! It has been a wild ride with getting everything lined up but we are super excited to have the flat work nearly complete and super thankful for how smooth the construction has gone.

After studying layouts and working with our engineer, we settled on a 9 lot sub division with one of the lots having the existing house on it. We have two different sized lots but all 8 are zoned for duplexes and will fit a 1500+ sq ft per side 2 level duplex. It was quite a journey getting the horizontal built out. We hounded contractors for months and finally ended up becoming contractors ourselves and hiring a project manager and crew to build it out. At this point we have everything in required for development. The street frontage improvements the city required like curb and concrete approaches are waiting until next year because of the cold weather. Within a month or so the plat should be complete and we'll be ready to move to the next stage!

Initially I was planning on doing buy and hold and that is still my long term goal but this project has gone over budget significantly and each step costs more money than I realized. To build out 8 duplexes is not feasible with the capital that we have so we have decided to sell the lots when the plat is finalized and use that equity to bootstrap our long term strategy.   Because of the footwork we have done, we have plans that we are thinking of including with the lots for folks that are interested. The larger lots will also fit a duplex from Reality Homes which is a turn key construction company that is very high value. If we don't sell all 8 lots together, we might consider building on one or two for ourselves but since we have pivoted so much in this project, we for sure are not locking ourselves into anything at the moment.

Lot layout

Checking out the manhole for sewer, we ended up having to add two additional manholes than drawn because the sewer stub was at an angle.

Extra manhole :(

My wife running the job :D

My son has loved the big equipment!

At some point I'll post a followup with the rehab we also did on the house interior. We are going to be renting it out as a short term rental while the subdivision moves through the city processes.

Cheers!

Isaac