Advice on New Construction in Tempe, AZ

[Kyle Bambu]

Hey everyone! I'm a newbie in real estate investing. However, I started wholesaling in PA this year and have two deal closing at the end of this month. At the end of May, I'll be moving out to Phoenix for a job. Despite all the craziness happening in the world right now, I'm in the process of closing on a property very close to ASU in Tempe. I intend to house hack it for a bit, but the lot size is half an acre and it is currently zoned for up to 12 units. There is the possibility that it could be zoned for 32+ units in the near future.

I've done some research and it seems like a feasible option would be to start some new construction and sell the apartment complex after completion. Money would be a consideration, but I believe I would have the means to raise capital if the project had a sound argument for success. How much could I expect a 12 unit project to cost? I have been estimating $125/sqft. If each unit is 1100 sqft, our GBA would be 13.2k sqft, coming out to a cost of $1.65 mil. I'd suspect that is just hard costs. What ratio could I expect for hard costs / soft costs?

If I generously say 1700/mo rent, 40% expense ratio, and a cap rate of 5.5%, I could expect to sell the property for $2.9 mil. Obviously all very idealist numbers. 

Does anyone know any architects / commerical contractors that I could talk with about a project like this? I'm trying to explore my options here. I could also just potentially sell the lot, but if the return is there, it might be better to build. I'm open to suggestions and guidance. Looking forward to hearing everyone's thoughts!

[Ryan Swan]

I think ground up construction would be north of $200/foot. Exit CAP of 5.5% is accurate for new build in Tempe