All Forum Posts by: Ben G.

I would be interested as well.

- Ben Gelston

Amy,

Your GC is probably closer to reality than the engineer. $90/sf is not a bad number for slab on grade new construction with some pretty generic finishes and an efficient floor plan, but if you're building a pier foundation to match existing and avoid fill, it may be more expensive.

Also, your GC may be adding a fudge factor based on no plans, he has no idea what upper-middle class finish selections would look like. or any number of other reasons. I know when people ask me for an estimate without a plan for a tie-in to existing, the number is going to be on the high side. A better comparison would be between two general contractor's estimates, with a well articulated idea of what your finishes are (carpet vs. hardwood).

Bottom line is there is a lot that goes into these estimates, and the more you get, the better you are. But I would stick to contractors, since they are closer to the marketplace.

Hope this helps.

Ben

It depends on how this condo complex fits in to the larger development, especially when it comes to maintenance of the infrastructure. The PUD will have these details. You may be dealing with a Condo and Homeowner's association, so be careful.

It looks like there are very few rooftops built to maintain the roads already built, and if the builder has bailed, its the responsibility of the owners of the existing condos to make up any shortfall in the master association (assuming there is one). This means that the real association dues can be much more than the monthly dues, as there may be special assessments at year's end. You will really need to dig into the HOA / COA financials and agreements to find that out, as well as the details of the agreement with the "country club."

That being said, the nearby comps are .60 to .80/sf which would put these units at around $700-900/ mo range gross. That doesn't leave a lot of room for condo fees, etc. Its not a terrible area, but caveat emptor. Best of luck,

Ben

Kennys Roofing

They are the best around and reasonably priced.

Welcome Joe,

I am in the bay area as well and would certainly echo Jon Klaus' advice.

If you meant multifamily for-sale (either fee simple or condo) I only see very specific neighborhoods where fee-simple is working (including stacked-flats), but it IS working right now in our area. If no one could convince you otherwise and you are hell-bent on jumping into a ground-up project, I would focus on this product type but again, only very specific neighborhoods, and only with an experienced contractor.

If you meant apartments, I would just point out that in our area rents are the highest they have ever been, which you might want to take into account when running the numbers (especially if you are building apartments that can take a long time to build then lease-up).

Commercial can be great, but I haven't seen any non-tenant driven projects in quite some time here. If you have a tenant with good credit ready to build, and you have the ability and connections to hold the paper or sell it (among other things), then that's a special case.

To answer your question about when it makes sense to build new with regard to multifamily, I would begin by asking myself the following question: Is anyone else building anything like this right now in this neighborhood that is proving my pro forma. If not, there is probably a reason why - whether its lack of financing, lack of demand, building costs, zoning, whatever. Maybe you have the skill, connections, knowledge or talent that allows you to overcome all of these things - people have done it before and have been very successful. But consider the possibility that at this stage, you do not. I would just caution you not to be a pioneer on your first project - that's how it can easily become your last.

The best advice I ever got (and often repeated on this board and elsewhere) was to find a partner or mentor with proven ability to teach you the ropes. It is certainly worth repeating again.

Hope this helps,

Ben

Hi John Conner , welcome to BP - I'm in St. Pete, but looking for deals throughout the bay area. You picked a great place to start your investment career!

Check out our local TBREIA - a lot of good value there, but also of course, on this site.

Best,
Ben

Also, as Tom Goans suggests, part of the rezoning process could involve the county requiring you to extend utilities, build or improve roads, and face the ire of neighbors that are used to living next to a single home on 8 acres instead of 5 homes. This can be very expensive and expertise is crucial to navigate it - you may want to find a partner that has been thru the process before to find out what you are getting into.

Carlos Rosado - Well, that changes things - a PD designation means that in order to develop the property, you'll need to change the zoning to PD, and you can't "develop by right" which is the 4 units per acre that your current zoning allows.

This means that you will have to go through the public hearing process (most likely) in order to change the zoning. Its a long and potentially expensive process, but it sounds like what you are looking for in the medium term is really not related to the future development. Just be aware that when you do decide to subdivide, it will be much more complicated and expensive than you might expect. It also might be more lucrative too.

Good luck!

Ben

No problem Carlos Rosado! For the uses that you mentioned it sounds ideal for your purposes and may be an excellent purchase. The Future Land Use Map shows it as low density residential which is 4 units per acre allowed. That area has tremendous potential for future development especially given what's happening to the east and south, but I do want to point you to a small phrase in Orange County's land development regulations:

[i]"It is permissible to impose a more restrictive zoning district classification as an interim
use until such time as the property is found through an administrative decision-making process to be suitable and ready for ultimate development." [/i]

That means the county will tell you when the world is ready for your townhomes, which is dependent upon a lot of things, including politics, or even somebody's dog, as Tom Goans mentions. I will tell you that there are community activists in that area that are not friendly to development, but those voices might die down as the area continues to develop.

Best of luck with your purchase - and hopefully someone will answer your original questions!

BG

Hi Carlos,

I will let the folks more versed than I in the finance world answer your questions, but I thought I would offer a few hopefully helpful hints from a former master planned community developer that has worked in Orlando:

Just because the lot next door is subdivided the way you intend to subdivide yours, doesn't mean that you can do it now. Especially in Orlando, zoning changes over time, although the City of Orlando is more flexible than Orange County. You'll need to make sure that the zoning supports what you want to do (the unit type - multifamily or commercial storage for RVs - as well as the new density - units per acre). If it doesn't, you'll need to check the underlying land use (or comprehensive plan) to see if you can even change the zoning.

Additionally, some areas have a specific area plan (Horizons West comes to mind) that have a number of obligations placed on the existing land that are enforced when the zoning is changed or development begins, namely infrastructure improvement. You may be obligated to build roads even a few miles away from your property.

Depending on your layout and the property's neighbors, community groups, etc., there are all kinds of risks involved, especially if you have to change the zoning, as that usually requires a public hearing. I would tread very carefully before proceeding - and as suggested elsewhere on this website numerous times, have a few back up plans.

Development can be very profitable, but it is has a lot of risk, a lot of which can be beyond your control. Best of luck, and glad to see someone is making some moves in Orlando!

BG