Here's a 9 unit I recently completed in West Philly, it's part of a syndication I put together and it has 4 buildings total in that syndication. I sourced the vacant lots, got them permitted, got the financing lined up, built them as the GC, then my wife leases them up and property manages. She's a realtor as well and we find that no one cares about your properties as much as you, so over the years we've become GC/property manager/realtor.
Two doors down is a quadplex I built from the ground up at the same time and around the corner is also a quadplex and a duplex I just finished. I call this strategy "buy the block". It's important if you're going into a new area that doesn't have a ton of development yet, but you are very confident in, to purchase as much inexpensive land as possible before your plans become known but to also make sure you drive enough volume in that area to make it clear to tenants that they're not in a desert outpost all alone. When they see multiple new construction projects around the area they are more comfortable making their decision to rent your unit. When I bought these lots two years ago there wasn't any new construction in the area yet but here's where knowing your market and having a good idea of what drives development geographically, amongst other factors (jobs, amenities, public trans, etc.), is very important. I rode around and managed to find a few people working on rehabs and found out who they were renting to, rents they were getting, and one guy was kind enough to walk me through his rehab project. I liked the area geographically and for other reasons but once I had confirmation he was renting to nurses, meds and eds, grad students, university and hospital employees with good rent numbers, I was all in. We're getting great rents for the area so our research paid off.
Funny story, there is a rundown vacant building between my 9 unit and quadplex, you can just see it peeking out on the right side of the first picture. I tried to buy it two plus years ago and would have torn it down and combined it with the 9 unit and 4 unit lots to make one large 21 unit building! As it sat it was worth less than $100k but somehow the owner figured out I owned the lots on either side of him so he wanted $200k for it plus I had to tear it down for another $20k or so. It still made sense to purchase but unfortunately my investors got nervous at the last minute since we were in the midst of a pandemic and the stock market was doing funky things, so they pulled their cash to purchase it and all my cash was tied up elsewhere, so I had to move forward with the quad and 9 unit. Everything worked out fine but even two plus years later the building still sits vacant and I'm not going to lie, it still stings looking at that thing!
These projects are all in QOZ's and one of my investors was able to take advantage of that and we set up a QOF for two of the buildings for them. I'm headed out now for final inspections on the the quad and duplex and we'll start leasing up this weekend. Happy to answer questions if you have any and connect with anyone that's building new construction MFH. It's my favorite niche as you have equity the day you finish and you have a premium product that people want to rent. Also, maintenance costs are almost non-existent in the first few years as very little (generally) goes wrong in the first 5 years or so. My city also has a tax abatement program for new construction so I pay taxes on the land only for the first 10 years. My taxes on the 9 without the abatement would be around $6400 and with the abatement they're around $1800/year for 10 years. The city has recently stepped the abatement down so it's basically cut in half but all of these projects got in under the deadline and have the full 10 year abatement.
