Seeking architect and GC for new construction MFH

[Anthony S.]

Good afternoon BP.

I am looking to build a new construction MFH in the Broad and Erie neighborhood, on a lot that is already zoned RM1. Does anyone have recommendations on an architect and GCs? Also, I welcome any advice on this project as this will be my first new construction. 

Thank you! 

[Stuart Udis]

@Anthony S. In most cases the investor like yourself reach the conclusion I shared once they begin to price the project. For illustration purposes, the foundation, framing, rough mechanicals and related project management fees are fairly constant whether you are building the same structure at Broad and Erie or in Society Hill and ceilings on rent or resale values simply make ground up construction impossible in certain areas of Philadelphia at this time. 

Some of the same principles also extend to owning rehabs or even stabilized properties in C/D neighborhoods. This is something many fail to realize when they buy in C/D neighborhoods which may demonstrate good cash flow on an excel spreadsheet but those spread sheets rarely take into consideration an accurate reflection of cap ex improvements that are needed over time. Going back to the previous example, replacing the water service line in a single family house at Broad and Erie costs essentially the same as completing the same repair in Society Hill or any other more expensive Philadelphia neighborhood.  Same applies to recoating a flat roof, clearing gutters, fixing the leaking sink etc. Repairs and Cap ex disproportionately impacts lower valued real estate. Unfortunately very few realize this until they get into  owning these properties and if they are properties in neighborhoods that are slow to appreciate its like running in place where one year you may have the false perception you generated good cash flow only for 2-3 years of cash flow to be wiped away when the cap ex event occurs in the year that follows.