Building an investing property good idea??

Question

I have been throwing the idea around about building a multi family unit. I’m in Indianapolis where 95% of multi units are in low grade D neighborhoods possibly F! I found nice size lots extremely cheap around 3-12k in decent neighborhoods. My question is it possible to build 4 unit 2/1 800-1000 square footage each side for under 160K with modest finishes? I am having trouble fIndIng a builder to ask questions to. Any advice bigger pockets on where to start?

J Scott · Answer

Seems unlikely that you'd be able to build new construction -- especially 4 units to code -- for $40/sf.

Owen Dashner · Answer

I agree with Karl above, you are likely going to be around $120 per sft in your area, give or take. You will not be able to build for less than buying existing product, unless it is a crazy expensive area with no available land.

Karl B. · Answer

Finding some cheap land that's already properly zoned for multi-family would be great. For a 4-unit you're likely looking at $120 sq.ft. If you've got a track record you could likely get an FHA loan for new construction (of course you'd have to live in a unit for a year).

Matt K. · Answer

There's so many costs that impact this, but chances are it's going to cost more then it would to do rehab. Construction is booming and materials are up all over. Although I think lumber just came down or was down for a bit.I bet for someone w/ no history or connections you'd be looking close to 100-150/ sqft all said and done... and probably some wild bids at like 200+ sqft

Richard Sherman · Answer

@Antoine Pippens I agre 100% with J Scott. No way you can build there for what you can buy for. Until those two lines of the graph cross (where cost to buy in-place and rehab) costs more than building new, you buy existing. Building will always cost more than you think...

Paul Bowers · Answer

You may also have issues being allowed to build multifamily in a lot of neighborhoods.

Alex Franks · Answer

Alright let's start first with building new construction Turn Key Rentals. We had a contract from a company in Utah at first it started at 150 and it went to 300 Doors Five Hundred Doors then a ridiculous contract that my ex partner signed for 3,000 doors in multiple States( fell apart by 450 doors ). Now keep in mind these are brand new construction rental or Turn Key Rentals. From day one the numbers never made sense to me. We were using track builder so we had the cost down to about $76 a square foot our Market is about $100 a square foot to build. We built 36 and the 52 most of the southern states we could not match that number . We were located on SC just on Charlotte NC border.Some market we could keep building cost close to it as we were dealing with big builders. Yet our normal Builders could not touch those numbers. Now a multitude of the projects in the Carolinas in and around Charlotte. Some as far as 60 miles outside of Charlotte. We had to go just to find land that would potentially zoned for duplex or multifamily projects. We built one project in Salisbury North Carolina it was one of the last projects(52) I was with the ex partners of mine. Again I'm a numbers guy and I did not agree with the numbers. We were the builders though not the sellers. Still the numbers never made sense to me. Getting back to the building the city of Salisbury which is a very small town. About 45 minutes outside of Charlotte. The city would not allow duplexs built. So we had to build a duplex style townhomes on each lot but separate units. Another project I was actually involved with these guys was a 97 unit project off Graham Street in Charlotte. We tried for almost 2 years. To get the zoning change keep in mind this was late 2015 ealry 16. I left and created my own company after that project.That project they still own land and trying to sell condo project. I recently found a piece of land that we're building 6 plexes on.@mindy Jensen. Mindy I'm not advertising please do not delete this post I'm just trying to explain to this gentleman risk and trouble he faces.It took me two and a half years to find that piece of land zoned to build this. We have multiple agents searching . We've done multiple projects. So it's just not something that comes available much. It's a great concept unfortunately the numbers just usually don't make sense or add up. Finding land with this zoning extremely hard.So for somebody new or somebody without the contacts. Lacking the experience it's definitely not the Avenue I would go.Please if I can ever help ask away.SincerelyAlexAgain bare with spelling and grammar typing this from my phone which makes it a bit difficult. I think it's time for the eyeglasses. Besides sitting in sonar at the gym

Mike Reynolds · Answer

Yeah 160 its not gonna work. I have one figured a one story 4 plex, 1000 ft each for 220k. But understand this is a rural 4 plex. Its a metal building with metal sides. I can get it installed for $30 ft including the slab (but not the pad). All that other money is for fire walls and finishes. That's with me using my guys to do it.

Antoine Pippens · Answer

What would you say be a realistic cost per square foot for building multi family? The area I was looking at there are 2 homes on same block that were built within last 2-3 years like this but I couldn’t find any info on it. But I did see Zillow had their value around 199k to 207k.