New Construction Multifamily / Apartment in Dallas

[Shital Thakkar]

Hi,

I am planning multifamily / apartment construction in Dallas Metroplex.

Here is my planning, let me know your suggestions and recommendations...

• Land : 2-3 acres
• Land Price: 200 - 300K
• Units: 30
• Construction: Around $80/SF

Please message me if you build similar project in past and like to discuss.

Thank you

[Greg Dickerson]

Originally posted by @Shital Thakkar:

@Greg Dickerson Thank you Greg for your insight. 

We have few lands sorted out. Need to decide best one based on other due diligence.

Yes, we need site work, permits, utilities etc.

We are planning Class B construction.

In that case here's a brief summary of the process. First step would be to get the property under contract contingent upon getting all entitlements for what you want to build. You do not want to close on the land until you have all your approvals to build what you want.

Once you have control of the property you begin the feasibility and due diligence process. You determine highest and best use by analyzing the market and by talking to realtors, property management companies, appraisers, builders and developers in the area.

Next step is to do a quick feasibility analysis to determine if the project will work financially. You do this by calculating the NOI to help determine value and work backwards. You also need to look at the comps as well to validate your assumptions. Start with the potential gross income then subtract the operating costs to determine NOI, divide that by the CAP rate in your area to give you the value, then subtract development costs, building costs, commissions and interest expense. You want at least a 30% margin above costs and the NOI needs to be enough to pay the debt service after stabilization and then some.

If the project looks feasible from a financial standpoint the next step is to check with the city or county planning and zoning department to get an idea if your concept will work, if you can build what you would like to build and what is required for all approvals including site plan, building permits, proffers, water/sewer tap fees, bonding requirements, inspections, setbacks, lot coverages, parking requirements, height restrictions, C/O process and time frame for all approvals.

You also need to check with the utility companies and get an idea of availability and cost estimates from them for water, sewer, power, gas, cable, installation and connection requirements, tap fees, hookup charges, transformer location and relocation, power line and power pole relocation issues. Check to see if you have to install any manholes, fire hydrants, curb, gutter, sidewalks, street signs, street lighting any specific street design or access requirements, Check DOT requirements for access, stop lights and permits, traffic studies, DWQ requirements for permits, permit fees and time frames.

Once you have an idea of what you can build and what is required in terms of permitting and infrastructure you want to talk to some civil engineers, architects and commercial general contractors that do the type of projects and build the type of buildings you want to build so you can get an idea of costs, time frame and requirements.

This is a brief and broad overview of how the development process works what's required before you get too far down the road or purchase a property.