"Luxury" Apartments?

[Brandon Schlichter]

Wanted to pose a quick question and see what everyone here thinks, and if anyone has expirance with something of this topic.

In my area, the rental market seems to be pretty good, area-wide vacancy rate is around 6%. Several of the apartment complexes are in VERY poor condition, one complex currently has a 40% occupancy rate, they're asking about 20% over fair market rent, for a very poor rental (No updates since it's construction in the early 70s).

Anyways, several of the rental companies that do keep care of rentals, meaning updates every 10 years or so are seeing occupancy in the 97-98% range. I'm not having any problem with renting properties (I work for a real estate office that doesn't handle rentals, yet we get a TON of calls every week for people wanting rentals).

Anyways, i have my eye on a piece of property, total of 9.8ac zoned for apartments. The school district is rated rather high, and we have few multi-family properties in this school district (I think about 3% are duplexes, and no 3+ units).

So, i was thinking about a "Luxury Apartment Complex", i was thinking, is it feasable to have 1br,2br,3br and even 4br units in the same area? There hasn't been a complex built in the town for quite some time, yet our area is growing quite rapidly. The last apartment complex (55+ Community) was built 2 years ago, total of 8 4-unit homes, they were rented out BEFORE the complex was finished, as as of my last checking there was a 30-40 group waiting list for the property.

The land cost isn't too bad, $22.5k/acre , needs some grading work, and the utilities are available. I was talking with a few people that I work with and they thought it was a good idea, the city requires so many square feet of green space per unit, and we were thinking a playground type green space (Only 1 complex has any sort of green space, and it's the one with the 100% occupancy rate).

Any thoughts/ideas ? I'm going to a builder today to get a quote on the construction, i have a modular builder that my company works with, the unit cost from them is only $40k/unit for the 3br homes.

Avg rental rates in my area are $400/1br, 550/2br , $650/3br and $800/4br. These are all for basic units, without garages , one complex has garages, and they see a $100 premium per month for those who want a 1-car garage.

Any insight would be appreciated!