Commercial Multi Family Due Dilligence Questions

[Justin Martin]

Hey Everyone, 

During our due diligence period, we found that we will most likely need to bring up an older building to code in order to build out an existing structure to multifamily in Tampa, FL. This includes four big-ticket items:

1. Water main for the whole street needs to be upgraded 

2. The roof will need to be changed out from old wood rafters to metal

3. The first-floor elevation would need to be raised by about 6"

4. The concrete block wall would need to be filled and possibly reinforced with rebar.  

We won't know if we can get waivers for these issues until we are at the permit process, but there are interior no prints to attempt to get permits. Currently, the property has been rezoned for multifamily but there was no actual feasibility study done on the actual structure on the property, it was based on civil engineering print, population density, and square footage to approve the number of units. 

Is this amount of risk normal for commercial development? 

Thanks!

[E. C. "Stony" Stonebraker]

@Justin Martin, more information would be needed to determine whether this is a reasonable investment.  These requirements can be normal for an older building or in an historic district.

If this is one of your first investments, you need to find a very experienced partner who has experience with the same issues you are facing.  Ask brokers, lenders, appraisers or others in the business to recommend a trustworthy partner.  This is not an investment to do without an experienced partner.

If you find a trustworthy, experienced partner, you should be sure to learn everything you can about each step of the project so you gain as much knowledge as you can yourself.  Each investment you make helps you learn more about the business that will help in future deals.

There's an old saying.  When a man with money meets a man with experience, the man with experience leaves with the money and the man with money leaves with experience.  Be sure your partner is well thought of by multiple people.

Good luck.