First timer diving into a High End Condominium Development, any advice?

Question

I am diving into a High End Waterfront Condominium Development Project. So far I've been approved by the City for a little over 6000 Sq Ft, so the plan is to build four 1500 Sq Ft Condo's, 3 Bed, 2 Bath, High End across the board. I've never been involved in a project of this scope before, any advice for coming up with a rough ARV on a project of this magnitude? Or is that a question only my Builder and Architect can answer?

To be honest, I've just got the ball rolling on this project. Any advice for someone who is a relative newbie to a project of this scope? Steps to take? Pitfalls to avoid?

Thanks,

Jody

To be honest, I've just got the ball rolling on this project.  Any advice for someone who is a relative newbie to a project of this scope? Steps to take? Pitfalls to avoid?

Thanks,

Jody

Karen Margrave · Answer

@Jody James  First off, welcome to BP! You've come to the right place to learn about all the various niches. In answer to your question, I don't know where to begin. Jumping into a high end condo project without any experience is definitely a high risk endeavor. The first thing you want to do is begin mitigating that risk. How?

• Find an experienced builder or developer that will work with you (check references, etc., make sure they brought project in on time and within budget) 
• Ask if they have an architect, and engineers they work with (once again, check references) 
• Make sure you understand the process from beginning to end, and stay on top of everything. 
• Once you have a preliminary plan, you can pay an appraiser to give you an opinion of value. Before that, you might want to talk to an appraiser or real estate broker to get their ideas on future values.

That's a good start. The questions I have for you:

• What is your experience with construction and real estate? 
• Did you get a good buy on the land?
• Is the land in a high demand, high valued area?
• What is the local market, and economy like?

You can go on to the forum Investor Deal Diaries and read some of the posts by people building projects, and be sure to do some searches on BP for various topics in relation to new construction. Good luck!

Jon Klaus · Answer

Another option is to sell out earlier in the process to another developer. You can still watch from the sidelines and learn a lot without the risk.

Tom Yung · Answer

@Jody James

I second @Karen Margrave suggestion working with the developer next door.

They probably have a lot more info available from both the construction side & the buyer side; than a new team going in. Best of luck.

Congratulation on securing the lots. You're in a very good position.

Karen Margrave · Answer

@Jody James  It sounds like a really exciting project! The price on the property is unbelievable. Wish we were closer, and I'd jump on partnering, just because it sounds fun. The obvious person to approach about partnering up would be the developer of the properties next door. However; be sure to talk to a few people.

Defiitely talk to the architect they used. It's the obvious choice, and they know the lay of the land so to speak, and costs involved probably. Also engineers.

Once you have the land, you are in a pretty good position, so make a good deal, not necessarily the first deal on partners.

What is the cost per square foot to build, do you know?

Look here on BP, do a search, and see if there's any BP members with solid experience in your area that might be able to look at your deal too. Keep me posted. Message me if I can be of any help.

Also, when you @mention someone, do the @thenthe name when it comes up in the menu to the lower left, click on the name, it should insert it, hightlighed into the post, if not do it again.

Jody James · Answer

Hi Karen,

Thanks for the insight, very helpful!  To answer your questions, yes the property is in extremely high demand for my area.  Its located on the waterfront in a desirable location in our most popular City.  To be honest I have very little experience on the construction side of the business, up until now I have been strictly buy and hold with rental properties. I managed to secure two rental properties side by side which I intend to demo and according to my broker the City has re-zoned for a little over 6200 sq ft.  The purchase price is still being negotiated, but will be between $250k -$275k when all is said and done. The intention is to build 4 high end Condo's.  The whole Street is currently undergoing a major re-development right now, in the last 3 months there have been 2 major Condominium Developments one block from me on the same Street.  The Condo's are listed between $420k and $560k and are selling so fast that I have yet to secure a broker showing before its under contract.  Right now I am in the process of searching for a partner who has experience in this type of project and has some financing they can bring to the table as well.  And because my next door neighbors Condo Development was absolutely gorgeous I was thinking about approaching the same and Architect for my project.  As far as first steps are concerned I was planning to hire a Real Estate Attorney to make sure the project has been officially sanctioned with the City, just to cross my T's and dot my I's so to speak.  Any Thought's? Your advice is really appreciated!

Manolo D. · Answer

Buy the land, till the land, plant the seeds, grow the plant and not reap the rewards?

Jody James · Answer

@Manolo D, thanks for the breakdown, very helpful!

I'm meeting with several potential partners this weekend, any last words of wisdom? I'll keep you all posted!

Manolo D. · Answer

Pretty good deal, 275 land, 225 soft costs, 6200 * 130 = 806, 1.3M more or less, easy 500. And yeah, I don't want to use 700.

Barbara G. · Answer

"The purchase price is still being negotiated, but will be between $250k -$275k when all is said and done. The intention is to build 4 high end Condo's."

How much do you estimate your profit to be?  How much will each condo cost to build?

I imagine the  Architect next

door is the Go to Guy here.  Also the General Contractor next door. They must have learned a lot building that condo on the same site.

I wonder what they paid for the property?  I imagine if you know that number it would help

Let us know.  It's really interesting

First timer diving into a High End Condominium Development, any advice?

Most Popular Reply