All Forum Posts by: Billy W.

@Ben Gold

In this neighborhood you are looking at absolute rents of $2400 for new 2 bed 2 bath and $1800 for 1 bed 1 baths.  If this site is located next to the Vermont / Wilshire metro stop, bump these up $100-$200 a month.  A building this size is 'boutique' and wont allow for amenities that the bigger buildings are giving.  These rents are really ball park without me spending much time on it and not having the exact location.  You should assume about 30-35% of gross rents for expenses. 

This site allows 400 SF per unit.  That means if the site is 9,200 SF you can have 23 unit 'by right'.  The problem with a site this size is that you will be constrained by not only the size but parking.  Each subterranean garage you add makes the project more expensive and more complicated.  With one subterranean garage and on grade parking, I would assume $225 / RSF for Hard costs and $80,000 a door for soft costs.  These can get lower if you are an individual who can build yourself, but if I were getting a GC I would ball park these numbers for now.  

How many units can you fit on this site? Probably end up looking at about 20 for a mix of 1 and 2 beds.  

What kind of return does a developer needs for a ground up development in this market? About 200 basis points above current market cap rates.  That means you need to build for 6-6.5% cap to cost.  Without doing more homework, I would not touch this site unless it was in the $50,000 a unit range.  Now, you can look on the market and see a ton of stuff out there for a lot more... but that stuff is not selling. You can talk to a broker, they will probably tell you that you can take the 23 units by right add an additional 8 units with the density bonus and they will put it on the market for $100K a door, they dont understand development.  If anyone sees this and disagrees, feel free to chime in.

Let me know if you have any questions. 

Good luck! 

@Ben Gold

Nope, doesn't update me without tagging.  Thanks, otherwise I would not have seen it.  What are the lot dimensions and what are the cross streets so I know which area of K town it is (K town can be very block to block)? We have built a lot in Koreatown in the past. If you tell me the above information, I will do a quick and dirty underwriting and let you know how I got to that number.  

What neighborhood is the site in and what is the zoning? The site is small at 9,000 SF, so you most likely wont be able to put max density on the site, but if the site has an alley or is on a corner that will help out a bit.  

It will be very neighborhood based on how much you can get. We are actively purchasing and developing all over LA right now.  Let me know the above and I would be happy to let you know what I would pay.  

In most Joint Ventures, the land owner will add the land into the deal as his equity share.  Typically, the land owner does not have the experience or the balance sheet to develop a property themselves and thus why they are willing to give their land as their equity percentage into the deal. You (or partners) as the Sponsor will guarantee the loan or put up enough money where you can get a non recourse or limited recourse loan.  More then likely you will be responsible for hiring the consultants, getting permits, finding the financing, construction, management, etc.  There are 1000 different ways to structure a joint venture.... who is the manager, who is making the development decisions during the project, who is guaranteeing, who is putting up the rest of the money after the land, are you going to allow the land owner to step up his land basis, what are your splits going to be, etc. 

 Land use consultants are able to tell you what you can build there, pending changes in the zoning or or codes that can cause you any issues, general and specific plan requirements, any easement issues with the land, etc.  

In regards to the rooms, typically you will provide 1 parking space for 1 beds, and 2 parking spaces for 2 bed and 3 beds. You can get incentives to decrease the number of parking spaces.  Most of your sites that you look at will be constrained by parking requirements. 

We are an infill developer of multifamily and small lot ground up construction. 

You can get a zoning summary here:

http://planning.lacity.org/zone_code/Appendices/su...

You will be looking for RD 1.5, RD2, R3, R4, R5, C2, C4. And etc. 

You can talk with planning in Downtown or Van Nuys to get some more preliminary information. There are a number of items that can seriously effect the economics of each lot in Los Angeles.  You will want to get with an experienced developer, land use consultant, and / or architect if you are not familiar with Los Angeles.  If you do not have experience developing infill, you will want to talk with a developer who knows infill.  Really a book of information can be written about infill development in LA, it can be a very complicated, tedious and risky project without someone knowledgeable about LA  development on board. 

Let me know if you have any specific questions. Good luck! 

How far along are you in the entitlement process? We finished up an 18 small lot subdivision earlier this year. You will need a very good attorney for your entitlements, CCRs, etc.  I can PM you a name later.  Let me know if you have any questions about the process, I would be happy to help. 

 Is this a small lot? 

You really need to be discussing this with your real estate attorney and insurance agent(s).  The liability on a for sale product in the city of Los Angeles is very real and not something you want to be getting advice from on a site like Biggerpockets for.  

Hi All,

Equity partner wants to start placing his money into net lease build to suit opportunities for strong national retail or office tenants.  I am only experienced with multi family development.

Does anyone have any experience in finding these opportunities or suggestions?

Thanks