Any value in building new apartment complexes?

[Timothy Doenges]

Hey, I see posts every day for people looking for value add investments in multi family. I hear about it everywhere on the podcast as well. But it’s made me curious, is there any value in building new multi family? This could come out of a place of naïveté, not knowing cost of construction on larger buildings like that, but is it possible to build new complexes and still cash flow like you would in a value add situation?

[Ryan Hopkins]

@Timothy Doenges

Short answer...depends.

Long answer...really depends.

It depends on location, builder, debt/capital stack, absorption, build-out (construction type, materials, etc), lot impedance (watershed, topo/grading, utilities, etc), jurisdiction (entitlements, zoning, etc). If you do it right, in the right market, then yes it works. We haven't even touched on length of time of ownership or exit strategy.