All Forum Posts by: Ross Sib

@Andrew Beauchemin

Thanks for detailed numbers!

So from a bank (commercial lender) perspective can they do the following? 

1. Bank issues to me a 280K loan to buy out my mortgage in exchange for lien on my property; I owe them 280K now; Bank is secured by primary lien; property equity potential went down 1M - 280K=$700K

2. Bank issues the construction loan at $1.8M; I owe them now 1.8M +280K=2.08M; lot equity potential is now $0; LTV =1M (lot cost)/ 2.08M(total)=~50%?; Is this reasonable?

3. I pay interest during construction. 

4. At the conclusion of the construction and after getting the occupancy permit, the construction loan in converted to conventional 30year mortgage. 

Please let me know if the my understanding of the construction lending is valid. 

Thanks!

Hi, 

How would go about financing multi-family construction project (10x 1BR units) given the following starting conditions:

- I own a lot with an existing duplex standing on the lot 

- Lot is mortgaged, remaining mortgage balance around $280K

- Market value of the lot with existing structure is around $0.9M-1M (based on comparable recent sales in the area)

- Estimated architectural fees, approved construction documents set cost: $80-100K

- Available cash reserves (savings): ~$200K

- Estimated new construction cost: $1.8M

- Estimated new property value after construction: $2.5-3M

- About me (first-time developer, 800 credit score, annual income before tax around $200K)

I am pretty sure that I have to pay off my existing mortgage ($280K) before being allowed any construction activities on the lot. Given the facts above, is it feasible for me to get a construction loan that will allow me to cover existing mortgage, architectural/MEP fee, construction cost minus my savings? I would appreciate any advice. 

Thanks!

How would one go about estimating the cost for the new multi-family  construction? I hear of rule of thumb type of numbers of $150k-180k. Do I have to have a complete construction document from architect to get a reasonable estimate of the materials+ construction cost (minus appliances, cabinets)? 

Thanks!

Thanks @Manolo D.

@Scott Choppin, I plan to hold these units long term. Thanks for the sound advice! I will look around at the apartment composition in other projects that are being completed in the area. 

I am now drafting the Scope portion of the RFP and I have the following content so far. What other information if critical to include in RFP to help Architect to provide a good bid/response? 

@Seth Holmen nice idea! Thanks!

@Jared W Smith 

@Seth Holmen

Thanks for the valuable advice! I started drafting a RFP based on the examples that I found online.

Another question that encountered during RFP drafting is the specification of the number of units and their size, eg. 1bd vs 2bd. How are apartment developers are usually deciding on the ratios of 1br and 2br units in the upcoming complex? For example, if I can build 10x 1br apartments or 8x 1br with 1x 2br apartment, which would be a more optimal combo? The project in question will be located in Koreatown area of Los Angeles. It is an area with high population density.

@Scott Choppin

Thanks! I am from LA also (Koreatown)! What do you normally expect in a bid from an architect in terms of content? I understood that stuct/MEP/civil design work will be RFPed after the architect's bids. Is that correct?