I Have Questions About Real Estate Developemnt

[Josef G.]

Hello so I am 19 and I plan to begin investing in real estate development within a few years.. i have come to gain a good amount of knowldge reading forums online but I have a few questions... 

I will be developing in the Bronx and Newark NJ 

Questions: 

1. What is the average cost per square feet to build in these to locations?

2. Roughly how much of the gross income should I calculate for taxes and other expenses.

3. On average what percentages do banks loan.. so my scores is a 725.. let's say it cost 800,000 to build what percent will they loan to me?

4. Any good books you recommend I read that will increase my knowledge in real estate development

THANKS FOR ALL WHO REPLY :)

[Jorge Borges]

Taxes are a matter of public record. In Newark NJ you can go here to find property taxes.

http://tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?&ms...

Find a house that meets your criteria and enter the address there. You can do the same for the Bronx but I don't have that link handy.

[Josef G.]

Awesome I will check out the website.. thanks

[Ryan Goldfarb]

Originally posted by @Josef G.:

Hello so I am 19 and I plan to begin investing in real estate development within a few years.. i have come to gain a good amount of knowldge reading forums online but I have a few questions... 

I will be developing in the Bronx and Newark NJ 

Questions: 

1. What is the average cost per square feet to build in these to locations?

2. Roughly how much of the gross income should I calculate for taxes and other expenses.

3. On average what percentages do banks loan.. so my scores is a 725.. let's say it cost 800,000 to build what percent will they loan to me?

4. Any good books you recommend I read that will increase my knowledge in real estate development

THANKS FOR ALL WHO REPLY :)

There is no better way to set yourself up for success than to start young. Remember to play the long game; shortcuts aren't worth it if they jeopardize your long-term vision.

Regarding your questions:

1. Impossible to say as it varies greatly, but your cost per SF will be higher in this part of the country than most others (higher labor costs due to high cost-of-living, etc.). The nature of the building will also dictate your costs -- a 2-story, 2-family home will have a different cost structure than a 16-story high-rise apartment building (which requires a different type of construction, elevators, etc.). For hard costs (note that this doesn't include soft costs) on a no-frills 2-family on a standard lot in a place like Newark, your starting point could be somewhere in the $150-200/SF range. Again, note that this doesn't account for the cost of the land, soft costs, site cleanup, or anything out of the ordinary that may pertain to a specific deal.
2. As was mentioned above, property taxes are public record. If you're developing, your tax assessment will change post-construction, which will, in all likelihood, increase your tax bill.
3. If you're seeking a loan for development (i.e., new construction), a bank will look at your loan as a commercial mortgage rather than a residential mortgage. As such, your credit score won't affect the pricing or terms of the loan all that much, though it still behooves you to keep your credit strong as banks will scrutinize your deal harder without good credit. The LTV will depend on whether you own the land or are seeking a loan to purchase that as well. Commercial lenders will have different loan programs with different terms. Rates will vary a lot, too, and your options will depend on the economic climate (for example, your financing options as a developer are vastly different today in 2016 than they were in 2008-2009). Nowadays, if you own the land, you can typically find a lender who will loan 70-75% of the construction costs, sometimes on an interest-only basis. YMMV here.
4. (Not all real estate related) Rich Dad, Poor Dad, The Millionaire Real Estate Investor, The ABC's of Real Estate Investing. J Scott's books (search Amazon for them). There are many good ones.

[Tyler Brown-Lewis]

If you're truly serious then I advise to work for a developer in your area. Google top real estate developers and call them. Believe it or not, you will get responses. Just have money ready to pay for some free lunch.

[Gilbert Dominguez]

You want information specific to your area of course but finding typical construction cost in your area is something you should be able to research readily. One thing you can do it get estimates from contractors over the phone for cost per square foot. No one can give you truly reliable quotes unless you have developed and approved plans for construction but you can get ball park figures.

If you are anticipating a cost of $800,000.00 You can try telling contractors your budget is somewhat less and you may find some that will prepare a quote for you which is ball park based on the amount you are willing to spend compared to the gain you want to obtain either in equity or in rental income.

Typically licensed architects will know your area and can quote you on cost per square foot depending of several factors such as the finishes you intend to select or desire. foundation cost and whether there are existing utility services available near by which they will know as well.

If you know the location you want you can also research that location through the local planning, building, and county assessor offices at you local. They can also tell you what the existing property taxes are and what the future property taxes might be on your build out. Your local city or county departments is usually the best place to start your research before you contact contractors.

[Josef G.]

Tyler Brown-Lewis Gilbert Dominguez Ryan Goldfarb

THANK YOU FOR SLL THE IMPUT.. you guys have been a great help and and provided me with much useful information. I'm sorry for the late response I was busy with school.

[Mark Creason]

Josef,

I always liked "Winning through Intimidation" by Robert Ringer.  Was written in the 70s, but still has relevancy today.

Mark 

[Gilbert Dominguez]

Malaria is a one cell organism. Being one celled it might not even qualify as an organism but it has killed more people than any nuclear weapon has. Can winning through intimidation truly be winning if you are against your own kind? It also suggest this would be your attitude toward all of life. If you desire to win through intimidation it suggest you do not feel related to anything or anyone in life. Examine what the meaning of relationship is.

In life there is the desire for power, an instinct toward self preservation at the cost of others yet we know we are temporary. No one get to live forever. You give way and you commit yourself to the pursuit of pleasure. We feel pleasure when we can control others, when we can threaten them, when we can fully exercise and impose our will. If you acted to intimidate me that would awaken my instinct to want to kill you. Would you want to create a world in which everyone would want to kill you? What kind of environment would you be committing yourself to creating?

The universe itself would want you dead, want to destroy you as you would represent anti-matter to it and lets face it you are a dependent being by the fact you are a mere human being made of the very essence of the material in the universe in a very limited fashion, meant to come and go, serve and meet your end but you do not understand this so you feel you can be your all independent of the world around you and in fact you are against your very essence. We call such things deceases and we do everything we can to end them, destroy them, like cancer.

The pursuit of pleasure is no substitute for true intelligence. So many commit to it without a true understanding of the mechanics and dynamics of the pursuit of pleasure like Hitler. He won through intimidation and forced the world to come together and kill  him. Yes he made it hard but the world killed him at all cost. Would you really want to force the world to kill you at all cost?

[Wayne Brooks]

@Gilbert Dominguez  Not that your post is relevant, but had you read the book you'd realize the book is not about "winning through intimidation", but more about "not losing by being intimidated", just so you know.

[Gilbert Dominguez]

Yes ok, thank you for clarifying that. Sorry if I have not read to book yet.  For now I am terribly busy but perhaps its worth taking the time to read the book and expose myself to what you have in mind as well as anyone else who might have an interest in it. I do admit I assumed you valued and recommended using intimidation to gain advantage in real estate dealings, sorry.