Any one in the central florida build quadplexes

[Kerwin Montilla]

Hello BP I recently move to Orlando and have been searching for multi-family and have seen there is a shortage of duplexes , triplexes , and quadplexes has anyone built any in the last few years that can lead in the right direction 

[Russell Holmes]

@Kerwin Montilla great thread topic!  I have a few clients looking for multi family in the Apopka and surrounding area NW of Orlando. I just today mailed out 25 letters to owners of 40 different duplexes in my area to see if any are open to offers. Very few tend to hit the market but I know of so many perfect properties/locations that I have to find a tired landlord somewhere.  I'll be driving around to find other duplexes I don't know of around town as well.  There are a few that have just closed recently and a few are pending (not my buyer or listing) that fall within the 1% or greater rent to purchase ratio....none currently available.  Further analysis would have been required to be sure myself on each of those being a good deal, but all looked to be good investments with light rehab netting a decent market rent increase over current under-market month to month leases.  

I have talked to a few of these clients and a few other investors about the prospect of building duplexes or quads. I don't have the capital to do it myself (yet), so I haven't gone beyond the collecting of some rough numbers and running some approximate numbers. I've gotten a rough estimate from a GC of $80-90/sqft to build a concrete block duplex with 2/2 sides based on a pre-made plan signed off by an architect. There is then the land purchase, impact fees if unpaid, utilities, possible septic/well, site work, etc over and above the build cost (which of course could vary from that one estimate). Lots in my area are rather cheap while rent is fairly high, and depending on the deal and whether it's a small house with multiple vacant lots or just raw land. $20-30k for a buildable lot isn't unreasonable....before the other expenses. A recent deal I saw was a small 2/1 house on one of what was in fact 6 lots zoned R6 (urban residential I believe, does permit multis) for $135k. The house wasn't anything spectacular, maybe worth $85k on its own lot and could get $850/mo in rent. If kept or sold that way, each of the other 5 lots were basically $10k. The old existing house was built a few feet below the flood plain, so no major flip would be worth it and insurance may be expensive. I figured if held it could be rented until the other five lots developed, tearing it down to build a sixth at the end. A few feet of fill on the other lots for the new builds and no flood insurance would be required. FEMA flood map actually specifically avoids newer neighboring houses right up to their raised foundation. I know the listing broker on that property, and sadly (to us BP folks anyways) the buyer is a neighbors son and wants goats and chickens on the land :(. It is literally right in between brand new East and West legs of a new toll road that exit close by, development all around, ZONED FOR MULTI, six individual buildable lots, and he wants chickens and goats....

The one problem I have found is that it seems it would cost nearly the final value to build a duplex from rough numbers I have run. There are so few that are sold each year that finding comps to support value is often nearly impossible. Trying to show what a new or flipped duplex is worth compared to a more dated one is difficult because that dated one may be the only comp in 12 months and or 3 miles (and I hate even going a mile for comps). An appraiser wouldn't have much to go on and its too small to value based on NOI. There may be a 10-15% profit margin to build and sell a duplex, but again my numbers don't include specifics beyond best guesses and rough estimates. My thought, though, is that a brand new duplex would cash flow well beyond what an equally priced single family would as a hold, despite that building a single family would likely have more profit margin on build to sell scenario. With CapEx and Repairs so minimal after a new build and excellent cash flow, it seems the smaller forced equity would be worth it.

If I had $500k right now, I'd buy an acre and build two duplexes with 1100-1200sqft 3/2 units and single car garages.  I could rent those units for $1500-1700 quickly in the right Apopka areas. 2/2 would be cheaper to build and still good rent, but my feeling is since a 2/2 already has two bathrooms, building a third bedroom with no extra plumbing is a no brainer if already building new.  If $500k were to build two duplexes on one lot worth $550k that grossed $6800 in monthly rent, I'd be much happier with having the resulting cash flow after expenses and assets being paid down than trying to pull off a $500k worth of single family flips or having 2-3 separate rental houses worth a bit more, but also harder to manage and with less cash-flow.