I want to start developing apartments - who should I be talking to right now?

Question

I want to build my first apartment/condo building/complex and then continue doing that as my career. I currently have very little of my own money to put into a deal (<$50k), however, I know half of my town and expect that I could raise the required capital from investors. I currently live in Richmond, KY and the town is growing quickly, so I think it makes sense to plan to do the first project in Richmond.

If you were me, who would you be talking to right now and what questions would you be asking?

My BackgroundI have worked for a few years as a construction manager and a few years as a civil engineer, and I got my PhD in civil engineering by studying construction productivity. I have mostly worked on industrial projects, but some commercial. I have also been a landlord for over a decade and I've been studying real estate like it's my job for several years now. Learning is my greatest strength and I'm certain that I can figure this out if I can find the right people to work with.

Kristi Kandel · Answer

@Matt Sears You are definitely asking the right questions. It might make sense for you to get really clear on your vision and your why and then reverse engineer your next steps from there. Here's a tool we share with entrepreneurs who are starting out in their journey of becoming the local developer in their community. https://docs.google.com/document/d/11z9Og7PCw7UJSbugLq0ppWLB...

I've been a real estate developer for 17 years working nationwide. We are in the process of releasing education components to reduce the friction for people getting into development.

We empower local entrepreneurs to transform underutilized properties into dynamic community assets. It's completely feasible and we simplify the education to be a clear road map of the entire process.

I'm happy to jump on call to discuss more about your goals and vision if you'd like. Just shoot me a DM!

Scott Mac · Answer

Hi Matt,

Before going out and looking for partners on the deal, you might want to nail down your lenders.

You will probably need construction money, as well as a long term mortgage, unless you intend to bring in enough people to just pay cash for everything.

You you have two partners of the deal already, Uncle Sam for your taxes, and your a lender. Both of which are dictatorial.

Finding out what you need to have in place for both the construction loan and the main mortgage might help you to attract and choose your partners in the deal in a wise fashion.

Lender requirements will probably spill over onto the partners also on the GP side of the deal (Depending upon the percentage ownership as specified by the lender), but probably not on the LP side of the deal.

Good Luck;

Daniel Dobbs · Answer

Richmond is a nice place. It's nice to see you going after something you're passionate about. Working with another developer would be a good way to start as you will be able to learn a lot from them. As for money, you can always offer some sweat equity instead of money. Two books you can check out are; Land Development and Professional Real Estate Development. It would be good to get to know your local county clerk, city clerk, or planning/zoning office. Each city is different, and development goes beyond just real estate.

Depending on your concept you'd then be looking for a site, do your research on market trends, economic conditions, site opportunities, site constraints, regulatory factors, off-site conditions, etc.

You also have to know how much Richmond will allow to be built. For example, there for a while Lexington was limiting how much could be built as new construction. I would be talking to other developers, real estate agents, banks, investors, your local city government, and county clerk's office at the least.

After you build these places, you plan on keeping them or selling them? Or build them and sell it to other investors? Or stay partly invested sell the other part, and build others?

Scott Mac · Answer

Hi @Matt Sears

@Kristi Kandel 's tool looks like something that could help you break on through to the other side more easily.

I have used a similar tool in the past with great success.

Break on through to the other side.

Good Luck!

James Wilcox · Answer

Sounds like a great idea to me.

Matt Sears · Answer

Thanks. I bought a new duplex from a developer a few months ago, so it might make sense to try to work with that developer to build some more.

James Wilcox · Answer

Congratulations on reaching your current milestones. If you're considering diving into real estate development, I recommend beginning on a smaller scale, perhaps with a duplex or a small multi-family home. This approach allows you to familiarize yourself with the intricacies of the development process and provides a tangible proof of concept to present to potential investors. Jumping straight into the construction of a large apartment complex might pose risks. By starting smaller, you can efficiently scale up and expand your ventures over time.

Find a local developer and discuss with them and their journey. Be talking with local lenders as well once you have a good plan and where the builds will be.

I want to start developing apartments - who should I be talking to right now?

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