Multi-family build to rent advice

[Jeff Efird Jr]

Looking to build a tri or fourplex as an investment property. I'm a general contractor myself so I will be building it. I've been trying to find all the literature and bigger pockets articles to help me with this new ventures. Any go to literature or anything of the sort or advice for me! Thanks in advance everyone.

[Chris Youssi]

Jeff good post. I'll do my best to share with you as a fellow GC/Developer. Huge fan of building new - renters love the shiny pennies and as your aware you build instant equity. We have a totalof 65 rentals about 50% mix of SFR and attached housing .At one time in 2013 we had over 100 and ended up selling 39 units to 1 investor . SFR B/C props and attached A. The attached we built 10-12 years ago and they are solid EZ to rent and sell / still very new in comparison. Our vacancy rate overall is under 1% YTD for all 65 props. Now to some of your ?'s

1.) 1% rule very realistic in new builds 2% I can't imagine how thats even a mention with new construction to be honest very very unrealistic.

2.) The $95 / SF I assume is your cost which IMHO is very realistic we are paying $75 for our current project - which is a duplex project and will be paying $95 on one we will be starting within 45-60 days.

3.)  Based upon the fact they are new - maintenance is a non issue for the first several years which is very very attractive to my objectives. The other bonus here is by the time you are required to do maintenance rents have increased enf so cash flow stays current. 

4.) Cash flow - lot of numbers - formulas opinions on here regarding ROI/IRR/ My favorite Cap rates. Heres mine : On a unit that rents for $1395 I will being home $300-350 depending on if I go with a 20-25 year ( 2 families ) amortized loan. On a unit that rents for an average of $1600 ( 4 families ) I will bring in on average $500 /month cash flow. This will be based upon a 20 year amortized loan.

5.) Equity - As I'm sure your aware based upon the fact you are a GC you will have instant equity and in fact both deals above I will be putting no additional money into the deals because I purchased the land from a bank for the duplex's and the 4 families another builder is purchasing all the SFR lots allowing me to pay down my debt.

Summary - as a fellow homebuilder a huge fan of building new . Interesting story that just happened  / a "friend" today in another State asked me if I would "share " my 4 family prints with him . I'm like Share no it took me 18 years to figure out a successful formula - I can finance and you can build if you want and we split it 50/50. Crickets. Point is this -it works and it can be very very profitable.

Best wishes Jeff