Multi-family development..LOST in the Sauce!🥴

[Johnny McKeon]

Hey BP 👋

I have 0.98 acres zoned for multi family in Apache Junction, AZ.
the city says up to 22 units on 1-acre can be built. i also own the adjacent 6-unit apartment building. One of the Principal Planners for the city said I could possibly combine the 2 parcels to get over 1 acre.

also, a local owner just Built a 10-unit apartment building across the street from me so that's a good sign.

I want to develop apartments but

1. Where do I even begin and start?

2. who do I go to 1st? An architect or a general contractor? or someone else?

I don't even know if this is financially feasible to develop.

3. How or who can I get a rough idea of what My total All-in costs will be?

my experience is buying existing apartment buildings and adding value thru renovations .
If you need me to clarify any questions let me know

Thank you for the help & guidance! i really appreciate it 🙏

[Paul H.]

Hey Johnny,

Congratulations!

First off the 1 acre parcel by land assembly is a fantastic starting point, but keep in mind just because the city says you can get up to 22 units doesn't mean it will actually be allowed.  The number one nemesis to projects like this will be parking ratios, you need to determine how big of a building you can build and to what height on the property.  This will give you a rough idea of how many units you have as a starting point.  Then you need to meet those parking ratios on the property, which may mean you need to dig below grade.  Once you start adding underground parking to meet the parking requirements, the cost may kill the projects profitability.

1. You need to underwrite the property proforma first.  You'll need to calculate the Soft Costs and the total cost of construction and sitework (Hard) for the property in it's by-right state generally aiming for a cost per sq ft.  (The maximum allowable in zoning) If you're uncomfortable doing this yourself, you can hire a consultant to do it for you on a fee. You generally want to determine if the project is profitable by understanding your cost per sqft to build vs your rentable sq/ft numbers. (If you're doing multifamily rentals)

A simple practice for this would be to draw your property line setbacks, determine your building footprint, and how many story's you're allowed. Then take an average apartment size (sq ft.) and divide it in the floor plate and multiple it by how many floors you have. This will give you an idea of unit count in the permissible footprint and height. I recommend going slightly oversized on your units because you'll need room for hallways / stairwells or columns etc.

Bonus Tip: Make sure you don't lose property at your property line to road allowances.  Some city can take up to 20ft for a road allowance, and that would be your new property line then add the setback distance.

2. If you have a viable project the next step would be to start the planning process with the city and the help of an experienced architect in the area.  Just be aware architects like to draw and draw and draw and can run up a huge bill if you don't go in with a relatively clear vision. Having a good consultant will save you money and mistakes during this process.

3. Make sure you have enough parking.

4.  When I ballpark my numbers I use the Altus Construction Guide 2021 (They email a PDF booklet for free). Depending on the demographic of the project I would use a comparable city for their suggested numbers and convert it to USD. I only do this as a starting point when I go in blind to a project, once things have a good profit margin as a development, and the project size meets my criteria I'll sharpen my pencils and value the work individually. Ideally you have a competent builder/GC who  has some skin in the project you're working on, that way he is invested in the success.

If you or anyone for that matter need some more detailed help feel free to reach in DM's

Paul