25k lot build a 4plex?

Question

I am thinking of purchasing a $25k lot that i can fit for sure a small 4plex on in a city that is surrounded by heavy industrial plants

My plan is building a 4 plex with 1 room, 1 restroom, small living room, tiny kitchen, and tiny utility room roughly 775 sqft a piece

I know for a fact i can get contractors in here rented out paid water and trash @ 950$ a month (possibly more if weekly and if i do all utilities)

Why should i  OR should i not pull trigger

Roughly 25k for lot + 200-250k to build  = a 225-275k loan

@ 15 years

@ 5.59%

275k loan

25% down

1695 note payment

Lets say 400 taxes 400 insurance (over estimating)

2540 payment - 3800 rent = 1260 cash flow minus water and trash

Basiclly 200-250 a door @ 15 years (trying to build equity fast)

Im doing 15 years cuz i know i can walk in to my favorite bank and they’ll Loan this out to me fast basicly pre approved

Never done this before but already getting bids on contractors and this is what they told me roughly building cost wise (im more experienced in SFR’s)

Jared W Smith · Answer

@Jorge Leon Jr Forget the numbers and financing. Your first step should be to check the Zoning. Typically cities are broken up by various zones allowing different uses. High/Heavy Industrial is almost always a no no for residential use. Like always. It's just hazardous for you to live there. Industrial facilities are bound by more stringent building codes restrictions for fire safety. Before you do anything further you need to see if the City will allow your 4plex to be built on the lot. And if you do not know how to do this, check with the Building Department or retain an Architect.

Wyatt Franta · Answer

Hi Jorge,

@Jared W Smith has the most correct response to this post so far.

Heavy industrial and residential do not mix. You need to check with the city zoning department before getting too involved in this deal.

Seth Holmen · Answer

Here is a nice little fourplex new build. It has a small mixed-use component that works with FHA funding.

Chris Youssi · Answer

I would be all over it and forgo the partner idea if you have the financials. Not a fan of partners especially when not needed. My only concern is the month to month concept as that could prove to be a management time hog.

>>>> in the process of building 12 new duplex's tenants love the shiny penny!

Go get em!

Jared W Smith · Answer

Please take a look at my previous post from about a year ago. It remains valid for this project type in a heavy industrial area.

I see you’re in NY. Send me a message if you need assistance with your project specifically.

Jared W. Smith, RA

Principal Architect - Architect Owl

Jonathan Singletary · Answer

Hey @Jorge Leon Jr! What'd you end up doing here?? Looking at a similar investment opp.

Anand S. · Answer

As Dan said, check if you can AirBnB in the area. You can potentially increase your income by multiples and temporary workers are a solid niche for this.

Dan Handford · Answer

@Jorge Leon Jr I would highly recommend trying to get a 30 year amort instead of a 15 year. It will reduce your debt service and allow the asset to cash flow better.

I would also make sure to do long term rentals with 12 month commitments minimum. If you do month-to-month it will definitely take too much time to turn them over and you will lose all of your profits upon turning too many times throughout the year. It would also make it hard to refi out any equity in the future.

The other option is to consider using these as airbnb but these would be fully furnished and charged by the night. You will still need to check with the city and HOA to make sure these are allowed.

Shahriar Khan · Answer

@Jorge Leon Jr Congrats on the decision. I just started to build our first duplex with City of Houston. I would suggest you do a bit of additional homework prior to taking on New Development projects. It sounds awesome but "being first time" would cost you a lot

Process Breakout

1) Put the land under contract for 45-60 days to close. Review title commitment and survey to make sure to deed restriction and/or HOA in place that would stop you from doing 4 plex

2) Meet up with City/County planning office to make sure 4 plex can be build and lot has enough parking spot .

3) Talk to an architect to get an initial foot print, layout and foundation type (i.e. pier beam or post tension slab)

4) Bid out to get estimate for both soft cost (survey + construction drawings + Permit) and hard cost (cost of building)  Without #3 you really cant get hard estimate

Problem is that you may not enough time to hash out #2-4.. prior to closing the land ..

Wish you the best.

Jorge Leon Jr · Answer

Its in a town we have a restaurant in i do mainly restaurant business, and have 1 sfr ( manage 3 srf including my own) at the moment but just recently discovered this lot off market someone trying to get rid of it yes new construction is possible yes i know contractors that will jump on it right away

Just mainly want to hear if bulding a brand new 4plex i can rent out to out of town workers on a month to month basis is worth while at a cost of 275k for 200-250 cashflow a door a month at a 15 year loan is worth it?

most 4 plexes that pop up on market need alot of repairs and are pretty outdated and i can build one probably cheaper then buy and repair and have reduced Capex in the first few years, well in this town anyways.

25k lot build a 4plex?

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