Are there buyers for newly constructed Nevada 10 CAP 4 plex's?

[Tiger M.]

Can I bounce a possible project off you all? I need objective opinions and any comments will be appreciated.

The Newer Nevada State Prison is 2.5 hours north of Vegas. There is no decent rental housing in the town area of about 10,000 population. I spoke to the Warden and she asked that we do an 40 unit apartment complex, 10-4plex buildng project for the guards to rent. She is confident they would absorb all 40 units as there are units being rented now that only have wood heat they are so old. There are other employment sources with this being predominately a gold, silver and rare earth mining and ranching area. The only traditional multi family is a 7 unit building.

Sounds as if the lenders will finance only a portion of the project, unless some of the buildings are pre sold to take them out, then they will commit to the entire project.

Because of the rural area, do you think the tenant base would be strong enough for investors to be interested in buying a few of the individual 4-plexes once they were rented or rent guaranteed at a 10 CAP? We crunched numbers with a contractor and due to the development costs, it doesn't pencil to build a smaller number of units. I am struggling with the rural issue the most.

[Jon Klaus]

Have you considered developing a mobile home park instead?