All Forum Posts by: Mohammed S.

@Michael Dang @Jacob Ayers : Thank you for the feedback. My comment about building Class C may have thrown us off-topic. My reference to Class C implied a construction that provided affordable yet comfortable housing - so devoid of any high-end amenities. I realize from your posts that the use of Class C was misplaced.

As per the recommendation, I will run the IRR on the investment but wanted to know if there was a back of the envelope/rule-based approach to evaluating the feasibility of the construction.

Thank you again for the education and your feedback,

Regards

Mo

@Michael Dang @Jacob Ayers : Thank you for the feedback. My comment about building Class C may have thrown us off-topic. My reference to Class C implied a construction that provided affordable yet comfortable housing - so devoid of any high-end amenities. I realize from your posts that the use of Class C was misplaced.

As per the recommendation, I will run the IRR on the investment but wanted to know if there was a back of the envelope/rule-based approach to evaluating the feasibility of the construction.

Thank you again for the education and your feedback,

Regards

Mo

Hi all,  

I am interested in constructing a 6 plex, class C apartment in Houston in place of the house that currently stands on the lot. The contractor has given a bid for 630 K for a turn key (including the development of a retention pond). Each unit will likely fetch 1200 in monthly rent. I figure the payback is a 10 year period. Is that the right way to determine the feasibility of the project? Please advise

Hi, 

I am considering gutting my 3-bdrm rental house and building a 6-plex Class C that caters to the working families in South East Houston. 

Couple of questions:

- can you recommend names of contractors/companies who specialize in this small-scale Class C construction?

- Any tips or lessons learned for this type of project: I am typically a buy-and-hold kind of person and this is my first construction project.

Thank you

Mo

 Thank you Jerry - i will reach out to Waylon shortly. 

 Hi Nathan - thank you for your inquiry. These banks were recommended in Houston Business Journal as being friendly to small business owners. Plus I prefer to work with those available locally and understand the market. 

Hi BP Family,  

We are looking at a 30+ units deal in Houston Texas and I wanted your help in connecting with a few RE investor-friendly contacts at the following or additional small REI-friendly banks:

AMEGY BANK
WALLIS STATE BANK
Green Bank
Live Oak Bank
Texan Bank
Texas Citizens Bank

Thank you in advance for your help,

Regards,

Mo

@Brent Coombs, @Manolo D. - thank you for your posts. 

@Mike Wood - I want to thank you for the comprehensive feedback and appreciate you taking the time to do so. It was well thought out and the assumptions you made were spot on. I ran the model with your assumptions and am coming up with a 8 -9% expected return. Currently I am making 5-6% return C-on-Cash on buy and hold property which is a cash flow play mainly. So with your input I am wondering if the extra 3% return premium justifies the effort and investment in a build out. I was hoping it would be in at least in the mid-teens IRR but it would be good to calibrate those expectations with what you typically expect from your build outs?

I am considering buying a 11250 sf (0.26) lot for C+/B- construction of a 4 plex in Greater Houston area.  I am valuing the lot to place an offer in the next few days. Couple of questions that will help me in the valuation:

- How many units/plexes can a 11250 sf accommodate legally and from business stand point? Any rules of thumb.
- What is the construction cost in the Houston for a B-/C+?
- What other costs shall I factor in (beyond closing costs, etc) - any city/permitting costs?

Once I have these costs, I will model the revenue stream at 650 per unit per month for rental income over a 5 year period.

I have looked at a few comps and the asking price is clearly out of line and so wanted to understand what this property is worth to me

Please let me know your thoughts or direct me to a thread/post or an Excel template available

Thank you,

Mo

Thank you all for your input - very useful. I am exploring paynearme and paylease.com. Will keep you posted on my experience.