How to optimize land value for multi-unit rental property development after demolition of current house?

[David P.]

Situation:
Two old houses have been demolished. We have enough land for a 25-unit apartment. The costs have already accrued for the demolition and permit for the new apartment is approved. The improvement cost includes items like WAC and SAC, park dedication, trunk charges, architectural charges, demolition cost, purchase cost, etc,. My work has increased the assessed value of the land to 8.4k per unit compared to the initial purchase appraisal of 3k per unit. A comparison of multi-unit sale prices values the land in my area at 14k-18k per unit. I believe there is a discrepancy in my appraisal value compared to the open market's value for multi-unit buildings.

I am owner-operator but lack specific experience in mortgage writing. If this is possible, I want to leverage the cost of improving the land into the mortgage. Simply, how do development costs get added to land values so a bank honors that cost my down payment amount of 20% loan to value?

[Joel Owens]

I am trying to follow your post but it is a little confusing for me.

There is land where two old house were torn down.Did you own this land as the current owner tearing down the buildings OR you are buying this under contract??

How many units are allowed per acre?? You say 25 units but do not list the size of the parcel.

When building out a new apartment building you will project rents for the income approach.

Will your apartment building have a pool,in suite laundry,small clubhouse,what kind of parking,gated??

All of these things along with unit mix and being multi level or one one level and location can affect what rent rates you will get and how long to lease up the new building (absorption).

For instance usually a 200 to 300 unit apartment building is constructed in phases and takes a few years to fill up.