All Forum Posts by: Kirt Sangha

I am located in Los Angeles, R3 would be considered multi-family. The neighbors complex which is 23 units is also R3. I just don't know the whole process of developing the land into units to see if it will be profitable. 

Hey guys, I have a quick question. I am a new investor who is looking at a possible development deal, something I have never done before. I want to be able to know the whole process and package the deal up so I can take it to my investor to fund. What I have no idea about is how much it will cost me to construct my whole project from start to finish including permits, plans, tax, fee's, etc. The deal costs $1.5 million for 3 adjacent homes with a total lot of 49,000 sqft (R3 zoning). I checked for comps in the area and the neighbor had a 23 unit apartment building that he sold for 4.7 million. The property was on a 23,000 sqft lot. His NOI was $215,516. He was charging $1,495 for each 2 bed/ 1 bath units. If my math is correct his complex has a 4.5 Cap Rate. I did some research on apartment buildings and found out that the value is determined by the cap rate. So based on his property and one more across the street with a 4.3 cap rate I should be able to build at least 46 units? And since it will be a newer constructed complex we should be able to get around $1,750 per 2/1 unit. So 1,750x46=80,500x12= 966K GROSS. I have no idea how much expenses would be so I'm using 375K as a random number which comes out to 591K. If I decide to hold the property and get it appraised in a year or two will it be valued at 14.0 million with a 4.2 Cap Rate?

Hey guys, I have a quick question. I am a new investor who is looking at a possible development deal, something I have never done before. I want to be able to know the whole process and package the deal up so I can take it to my investor to fund. What I have no idea about is how much it will cost me to construct my whole project from start to finish including permits, plans, tax, fee's, etc. The deal costs $1.5 million for 3 adjacent homes with a total lot of 49,000 sqft (R3 zoning). I checked for comps in the area and the neighbor had a 23 unit apartment building that he sold for 4.7 million. The property was on a 23,000 sqft lot. His NOI was $215,516. He was charging $1,495 for each 2 bed/ 1 bath units. If my math is correct his complex has a 4.5 Cap Rate. I did some research on apartment buildings and found out that the value is determined by the cap rate. So based on his property and one more across the street with a 4.3 cap rate I should be able to build at least 46 units? And since it will be a newer constructed complex we should be able to get around $1,750 per 2/1 unit. So 1,750x46=80,500x12= 966K GROSS. I have no idea how much expenses would be so I'm using 375K as a random number which comes out to 591K. If I decide to hold the property and get it appraised in a year or two will it be valued at 14.0 million with a 4.2 Cap Rate?