All Forum Posts by: Victor Menasce

The key depends on the underlying substrate. You will want to hire a civil engineer to assess the drainage and a geotechnical engineer to sample the soil stability. Usually a gravel or crushed concrete surface is good, depending on the substrate. You will have to worry about the drainage design particularly in Houston. If the site isn't well drained, you will need to raise the grade and design a drainage system. 

Our team might be able to help you with a hard construction cost estimate, if you have a set of plans. We would need to charge as well, but it would be less than you were quoted. Part of the reason for charging is that it takes a lot of time to produce a good estimate. We use construction management software (Procore costs us several thousand per month) with a built-in material takeoff software called Esticom. Our in-house team has built thousands of units in the Houston market. We can quickly check individual line items within the bid to determine if the GC is being reasonable or not. Let me know if you'd like to set up a call. 

Chris Picciurro is in Franklin Tenn. He's been a guest on my podcast and I've met him at real estate events in Nashville. 

https://www.linkedin.com/in/picciuro/

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $135,000
Cash invested: $915,000

10 unit new construction apartment building in North Philadelphia.

What made you interested in investing in this type of deal?

We increased our zoning density by 20% by appealing the zoning.

How did you find this deal and how did you negotiate it?

The property was a distressed two lot assembly and is only 33 feet wide.

How did you finance this deal?

We borrowed $200,000 in private funds and the balance in bank debt that we refinanced upon stabilization. Initial investment was $1.05M. Appraised value was $1.8M upon stabilization and the refinance recovered 100% of the initial investment.

How did you add value to the deal?

By increasing the entitled density and by constructing the project at $92 per square foot in hard cost.

Lessons learned? Challenges?

We nearly collapsed the neighboring house which shared a party wall. We needed to have a better shoring plan. We ended up underpinning the neighbor's foundation with new concrete footings in three foot sections over the span of several weeks. The neighbor's back yard collapsed into the excavation hole. We built a concrete dam to properly hold the neighbor's back yard on their property.

Atisha, I'm sorry to hear about your troubles. I've done a lot of multi-family construction in Philadelphia and am very familiar with the zoning code. The zoning information is readily and publicly available and should be a due diligence item checked on the purchase of any property. Building permit checks should also be a due diligence item. Whether you have any recourse would depend on the what the terms were in your agreement of purchase and sale. If the agreement warranted anything about the property, you may have some recourse. If the agreement was purchased as-is, where-is, then you may be out of luck getting any compensation for damages. What is the address of the property? I can make a few introductions to lawyers in Philly who I am confident can help. But before contacting a lawyer, I would try and figure out whether a retroactive permit can be achieved with minimal cost. That may be as simple as visiting the L&I office and having a conversation. Try calling the law office of Alan Nochumson in Philadelphia. Feel free to mention that I referred you. 

Atisha, I'm sorry to hear about your troubles. I've done a lot of multi-family construction in Philadelphia and am very familiar with the zoning code. The zoning information is readily and publicly available and should be a due diligence item checked on the purchase of any property. Building permit checks should also be a due diligence item. Whether you have any recourse would depend on the what the terms were in your agreement of purchase and sale. If the agreement warranted anything about the property, you may have some recourse. If the agreement was purchased as-is, where-is, then you may be out of luck getting any compensation for damages. What is the address of the property?

Where is the property located? You need to read the specific zoning code for that municipality. Some quote a floor area ratio. Others use maximum land coverage. Still others quote an area calculation based on square feet of land per residential unit. 

Kendrick, the cost of the design will depend on what your building department requires for permits. Sites that provide low cost schematics are generally not shovel ready plans. In my experience, I've had many 4-plex buildings designed for about $25-30k. But the engineering will dominate the cost. Some areas require a civil engineering plan for the site. You might be required to provide an energy efficiency plan, a noise study, mechanical design, SWPPP, traffic, landscape plan, etc. Where are you looking to build?

James, sorry for the slow reply. When a property goes to tax sale, it's usually vacant at that point. At least, that's been our experience. Others may experience otherwise. 

My partner and I own a sizeable rental portfolio around the Fairmount, near Temple, Brewerytown, etc. You could call Fifth Realty and ask to speak with Fran Popek. I'm going to be traveling in the next few weeks, but am happy to jump on a call and share what I know about the areas.