San Antonio - New Constuction Quadplex

[Kent Agill]

Hi, I am Kent and I am first time out of state investor trying to get into RE in San Antonio.  I have been researching the market for a while and want to move forward with a smaller endeavor - to start construction on a quadplex closer to W Poplar St and Ojeda park (78207) 

From what I have gathered from Zillow, surveying similar units, most layouts are 1bed/1bath, 650 Sq Ft renting for $600-$650 or 2bed/2bath, 900 Sq Ft renting for $850-$900.   However, these units have been sitting on the market for a while.

https://www.zillow.com/homes/for_sale/2086746023_z....  

https://www.zillow.com/homes/for_sale/2087953329_z...

What do you think about - 
1.  The rental potential for this area - Do the numbers posted above sound accurate?
2.  What is the layout that makes most sense for the demographic there?  I have been advised not to go with 3bed/2bath and prefer smaller units (1b/1b or 2b/1b or 2b/2b) given the lower rental prices.
3.  I hear that fire sprinkler system is mandatory for newer builds of more than 3 units.  Given that this is expensive and renters don't exactly care about this, would you recommend I do two duplexes rather than a quadplex, meeting the fire safety regulations?
4.  Any lenders that finance these kind of projects locally.  

I have heard about REI groups from this great post - https://www.biggerpockets.com/forums/757/topics/64..., are there any that are broadcast to investors not staying in SA?  Thank you!

[Lluis Bacardi]

Hi Kent,

I do have some rentals in that area and I also started doing new builds in other areas.

As others mentioned, this is not the nicest area of SA, and I would only do a project like this if you plan to hold it for a few years. If you plan for a quick exit, you may end up losing money.

Be ready to have rough tenants and be flexible with screening conditions, low credit scores, etc.

For your reference, we have a 600 sqft 1/1 rented at $700 and a 700 sqft 2/1 rented at $825. I honestly think the premium for new build in that area wouldn't be much more.

Construction costs have gone significantly, and being out of state I guess you will hire a GC for it? That's another cut.

If you don't have previous experience building, it will be difficult to find a local bank for it, so you may need to look into HML.

If interested, I can give you some contacts for construction and can help with the lending portion.

Also, keep in mind there could be a few "hidden"costs that you should check before finalizing budget: are there utilities in the lot? Connecting water/sewer to city lines will cost you 10-15k minimum.

Feel free to PM me if you have questions.