All Forum Posts by: Sabi Const

Hi everyone, I would like to ask your opinion about constructing multifamily buildings. 

I have been presented with an opportunity in a town where builders are buying lots or properties and demolishing them and putting up 12-15 unit rental apartments. Then renting them for approximately $1,700 (2 bd/ 1bth) to $2,100 (3bd / 1bth). The total cost of the construction project is approximately $1,000,000. 

A few questions / thoughts... I was told that as long as the land is in contract to be purchased, the construction loan could be approved by showing renderings to local banks. I have been given requirements from 20-30% down payment and the rest financed through completion. 

If my numbers are correct, at the low end of 1700/month x 15 units x 12 months = $306k

Discounting 5% for vacancy, 10% for management company, 25% for expenses and debt servicing PITI, it seems that the return is approximately 18% per year.

Please chime in and let me know what I am not taking into consideration beyond what I mentioned above and what your thoughts might be on this type of investment 'opportunity'. 

Thanks!

@Richard Balsam thank you so much for your detailed post. Excellent information as I am looking to pick up a property tomorrow at auction. 

I'll have to check out the laws in the NY/NJ area but I am sure that your method is the cleanest and safest for us as investors. 

Thanks again!

Richard Balsam so just to be clear, you hire a company to serve eviction papers or visit the property and gain access? What is the process? How long after this company do you actually have possession?

How can one know what taxes are owed on a perspective property and how do you go about paying it once you win the auction?

Rocky V. Can you please advise how you do the title searches yourself? Thanks!

Hi everyone - thanks for taking the time to read my post. I am interested in your thoughts about multifamily investment properties. I believe that cap rates are important and cash flow is king. My thought is that constructing a new multifamily property will be more attractive to renters rather than offering an existing 'older' unit. Also, the expected overhead should be less because of using new materials. Is there another way to think about this? Also, regarding the financing aspect - what is the most effective and efficient way to go about it? I have contacted the bigger banks and spoke to independent mortgage brokers for lending options and have heard down payment requirements of anywhere between 25-30% Thank you for your time and look forward to your comments.

@John K. thanks for the link. Interested if it helps getting it as a real estate investor for finding deals and then for selling. 

Look forward to hearing that you passed :)

The agent is really acting against the best interest of the owner if it isn't being marketed. These types of situations are stressful for everyone involved and usually play out to the last moment. I offered cash to the seller to move out and purchased a couple of the items in the house which were very nice. That gave her enough to start over. Good luck and keep us posted!

Looks great, love the kitchen color scheme.