building a fourplex as my first deal. trial by fire.
Well, as the title says I am going to try an build a fourplex. And its my first deal. This will be my diary. Come hell or high water, you will have a front row seat.
Before we get into the deal, understand that I am going to consider this a diary so I will put almost all of my thoughts on what I am doing and it might get a little.. verbose. then again, maybe it won't! really, I have no idea since I have never done anything like this before,
Okay, so before everyone freaks out, I work in construction and have run crews before, I can read prints, and do layout but my experience lies in condo construction and I frame with steel as opposed to wood. I have done wood frame before and though I cant claim to be any good at it, I know enough that I know what I don't know, if that makes sense...
okay the property.
I live on Vancouver Island, in the city of Victoria, but am buying in Nanaimo, which is an hour and a half from where I live.
The property is zoned for a 4plex and currently has a little one bed one bath on it, the listed price was 199,000 with a city assessment of 151,100 (land value 134,000 and the house 17,100) . the lot is 9372 sq/ft and the house is 576sq/ft. super small.
I didn't think the property was worth anything close to what was being asked, but I called the agent anyway, and asked about the property. the agent said that the owner owed 180,000 and wasn't going to go any lower, but as the property had sat vacant for four months he wanted it gone. I know the property is not worth that now, but I think it might be in a year or two because of what is happening next year.
the downtown core in Nanaimo is starting to develop. they have broken ground on a new hotel tower and next spring a new walk on ferry service is starting that will travel between down Nanaimo and downtown Vancouver.
Vancouver is one of, if not the, most expensive place to live in Canada. the prices for a 3 bed 2 bath in Vancouver can easily reach a million dollars. there is currently a 3/2 listed for 2.9 mil. the average price for the same in Nanaimo is in the 250-300 range. the closest price point on the main land is a two hour drive in heavy traffic. the ferry will be an hour and it goes straight downtown.
I have 50,000 that was borrowed from people who believe in me and I not really willing to risk a large chunk of that to buy a currently overpriced property that the owner refuses to move on, but that isn't to say he wasn't motivated. it had sat vacant for four months, and the same before the last tenant was there. this guy did want it gone,
so I offered a lease with option to purchase. i offered the 180,00 that he owed with 10,000 down on a two year term, with a one year extension for 5000. both would be taken off the purchase price, bringing the price down to 165,000 in three years. I will also be covering all the costs for the property during the term, so the owner can basically wash his hands of it unless something catastrophic happens. along with the lease, the seller is giving me an appointment of agent for the property so that I can start talking with the city.
During the coming year, I am going to go through the steps and get everything ready in order for me to build.
one of the first things I plan on doing is approaching a private lender to ask where I would need to be or order for them to feel comfortable loaning the construction costs, so that I have a realistic goal I can work toward during the net year. I am also considering taking a GC course in the spring at the local uni. I would love to build this myself, I know that I could and I really think if this goes well I would like to repeat the process.
I have a few people in my life that I can ask for help or advise. the owner of the company I work for does development and I have made more then a few contacts through my work.
the research I have done has told me that I can expect the cost per foot to range between 95-130. I would like to narrow it down some, but I will get a more true number in time.
so that is where I currently stand. I can honestly say I have never been so excited. I am trying to keep in mind that things can still go south though. the ferry service could fail, and the development plan could fall by the wayside, but that is one of the reasons that I did a lease, if this deal goes in the pooper, I can walk away, slightly poorer in pocket but vastly richer in experience.
I will most likely post a lot of questions as thing start to progress for me, if not here, then in the forums. so stay tuned. im excited.
Joshua