new construction costs for apartment buildings in LA county

38 Replies

Hello All,

i'm interested in the construction business and am shopping around to get $/sqft costs 

for new wood frame modern apartment buildings in mid class neighborhoods in LA county.

I only have experience in rehabilitation 

As example i take a 8000 sqft, 10 units, 2bd / 1bath, 2 story apartment building, wood frame, modern design, built on a 7000sqft flat lot with available utilities, in a mid class area in Los Angeles. Project would also include 8 covered parking spots, driveway, gate, and landscaping on 3000sqft. 

What would be the all included (engineering, permits, materials, labor,...)sqft construction cost on a $/sqft basis for the such a project excluding land? what about the time frame?

I was thinking about somewhere around $100/sqft for the building and 1 year to complete the project, but i might be wrong

thanks for any input!

Try $200-220 per sq ft

1 year is probably about right

Moses, i'm skeptical about your numbers; i was told that investors build high end LEED houses in west hollywood for $200/sqft so i would expect something closer to $100 for a cheaper type 3 apartment building using SIP and other prefabricated design elements 

@Account Closed  May I ask what your plan is?  To do GC work for apartments?  Or are you planning to develope?  FYI $180/sf is a decent cost model for the residential you explained above.

Originally posted by @Min K. :

@Cedric Ballet May I ask what your plan is?  To do GC work for apartments?  Or are you planning to develope?  FYI $180/sf is a decent cost model for the residential you explained above.

 I'm planning to develop and am looking at the construction costs for now

but assuming your development costs are right, there is no profit to make in construction

It would mean then that the investors who have invested in these properties below have lost money:

sold for $193/sqft including land 

http://guests.themls.com/Details/CA/LOS-ANGELES/15...

for sale at $136/sqft including land

http://guests.themls.com/Details/CA/LOS-ANGELES/13...

sold for $202/sqft including land

http://guests.themls.com/Details/CA/Los-Angeles/18...

Hello,

I would ask the local lumber supply companies what the going rate per sq. ft. is. They are bidding things for contractors all the time and usually have a good ear to the ground for what the going rate is. I'm in Northern CA and we're at about $150 sq. ft. for homes permits not included so I'm sure you're going to be higher down there. If you're using SIPS count on quite a bit more.

Welcome to BP.

Can't speak for Los Angles, CA, however $100 per square foot is a very good number to go by. 

Hope it helps.

Originally posted by @Greg Palmer:

Hello,

I would ask the local lumber supply companies what the going rate per sq. ft. is. They are bidding things for contractors all the time and usually have a good ear to the ground for what the going rate is. I'm in Northern CA and we're at about $150 sq. ft. for homes permits not included so I'm sure you're going to be higher down there. If you're using SIPS count on quite a bit more.

 Hello Greg,

just at checking the sales records of new constructions on the MLS, you can tell that there are many new houses and multi units built in los angeles built for less than a $100/sqft in low income areas

You can find 3500sqft new duplexes on 6000sqft lots selling for 500k in LA county or Sale price reflecting the land, construction costs and profit/risks, they must have an actual construction cost not exceeding $100 

Large new modern LEED houses are built in west hollywood for around $200/sqft

i see more and more are hybrid constructions, sort of mix of stick built and modular builds which probably save a lot on time and soft costs 

@Account Closed  

with the examples you're showing you're not taking into consideration at least two things...

Some of these properties were build 5 years ago, and some are technically not new construction but sort of like "addition" (new constr. on top of tear down).  I'm just starting my new construction adventure and I think I'll be at $185 per SF. But I'm building on a steep slope and that's a big difference.

I heard from my architect that if there was a structure before on the lot the cost can come down to $75 per SF even though. 

Originally posted by @Ewa Reza :

@Cedric Ballet 

with the examples you're showing you're not taking into consideration at least two things...

Some of these properties were build 5 years ago, and some are technically not new construction but sort of like "addition" (new constr. on top of tear down).  I'm just starting my new construction adventure and I think I'll be at $185 per SF. But I'm building on a steep slope and that's a big difference.

I heard from my architect that if there was a structure before on the lot the cost can come down to $75 per SF even though. 

 Hello Ewa,

i probably didn't pick the best examples but look at this one:

http://guests.themls.com/Details/CA/LOS-ANGELES/41...

it was built from scratch; it is a spec home that i have seen few times for low income families; decent quality (compared to what you see around LA) sold for 500k

thus $148/sqft including construction, land, permitting, landscaping, driveway, gate and marketing, overhead and general expenses taxes and fees and their margin. So they must have built for no more than $100/sqft.

I've read that some developers build for $65/sqft in Florida and Texas conventional homes energy efficient with solar panels...

Building on a steep lot is way more expensive indeed because of the grading, excavation and foundation works especially. If you're building a nice custom home on a hillside for 185/sqft, it sounds like a good deal. Does it include land?

I have no experience yet in construction from scratch but i'm watching closely what others do these days and have found several prosperous niche markets 

may i ask you more details about your project?

@Account Closed  you're off by at least half.

I'm not clear what you consider to be mid class neighborhoods, but for apartments, by this I mean 5+ units, we underwrite hard costs at $135 psf.  When you add in permits/fees and soft costs (engineering, arch. etc) we underwrite another $75-$90 psf.

This is assuming flat land and parking on ground level.  If you have to go subterranean for your parking you can assume about $25k per spot.

The examples on the MLS you pointed to are 2-4 units which can be done less expensively and are in neighborhoods where more cost effective materials and finishes could be used and still sell. I'd expect all in costs (again SFR and 2-4 not larger apartments) at $135-$150 psf.

Several of my clients who build/sell 50-100 2-4 unit properties a year in the neighborhoods you've given as examples could build at $80-$100 psf only because they use the same architectural drawings have crews on salary and don't bid out via General Contractors and buy materials in bulk and at wholesale trade prices.

The markets we consider Mid Class would be Culver City, Palms, Mar Vista, Silverlake, Echo Park, etc. In those areas we expect all in costs for SFR and 2-4 units at $250 psf.

Best of luck

A

Originally posted by @Allan Glass :

@Cedric Ballet you're off by at least half.

I'm not clear what you consider to be mid class neighborhoods, but for apartments, by this I mean 5+ units, we underwrite hard costs at $135 psf.  When you add in permits/fees and soft costs (engineering, arch. etc) we underwrite another $75-$90 psf.

This is assuming flat land and parking on ground level.  If you have to go subterranean for your parking you can assume about $25k per spot.

The examples on the MLS you pointed to are 2-4 units which can be done less expensively and are in neighborhoods where more cost effective materials and finishes could be used and still sell. I'd expect all in costs (again SFR and 2-4 not larger apartments) at $135-$150 psf.

Several of my clients who build/sell 50-100 2-4 unit properties a year in the neighborhoods you've given as examples could build at $80-$100 psf only because they use the same architectural drawings have crews on salary and don't bid out via General Contractors and buy materials in bulk and at wholesale trade prices.

The markets we consider Mid Class would be Culver City, Palms, Mar Vista, Silverlake, Echo Park, etc. In those areas we expect all in costs for SFR and 2-4 units at $250 psf.

Best of luck

A

 Hello Allan, Thank you for the feedback, i'm going to contact builders to get exact numbers and will share them. 

As investment product, i wouldn't build custom houses anyway, i would built spec type modern sfr ou multifamily buildings using common architectural patterns. To be honest, i don't see much difference in build quality between low income areas and mid class areas like the valley or mar vista. I live in Malibu near the palisades and many apartment buildings here are the same type of build than what you could find in mid city and south central. 

@Account Closed  

I builded my single family home in Arcadia. High end custom homes for 220/sq ft. Though I think 200/ sq ft would do for high end. 

As regards to not high end I would take 150/sq ft to build. In the range from 30-80/sq ft for rehab depends on the condition of the house.

Best of luck 

@Allan Glass  has very good points here! These developers do not use general contractors and often they actually are contractors themselves. Often they don't use designer either. Architect for my project will be costing me $20K-$25K for example...

And again @Account Closed  your example shows "new" construction on top of existing real estate. Even if they demo 100% of the existing structure (which I doubt) all the utilities are already there / connected. That's probably another $20K in savings (I may be wrong here).

Originally posted by @Ewa Reza :

@Allan Glass  has very good points here! These developers do not use general contractors and often they actually are contractors themselves. Often they don't use designer either. Architect for my project will be costing me $20K-$25K for example...

And again @Cedric Ballet your example shows "new" construction on top of existing real estate. Even if they demo 100% of the existing structure (which I doubt) all the utilities are already there / connected. That's probably another $20K in savings (I may be wrong here).

This is actually what i 'm looking into; buying lots with worthless buildings, tear them off and build on top of  it production homes. As an investor i don't see the point in building custom homes when you have so many pre designed quality homes on the market offering an infinity of customizations for a much cheaper price and a shorter construction time. You also waste way less time since you deal with a Production builder who know what to do because they have done the same things for hundred times. I'd rather work directly with the builder than with the GC and the architect who are two unnecessary middle men on small construction projects. As for an architect i've never seen the point in hiring one unless i build one day a multimillion dollars property; i've always preferred dealing with engineers and contractors. 

@Account Closed  

I think Allan glass is giving you the best information.  While I'm across the country in Miami we have similar costs of construction as LA market.  I'm a contractor, developer and real estate investor.. I can build for $80 - $100 per sq ft here in Miami.. that is acting as the G.C. and keeping tight control  on all the costs.  The typical G.C. markup in Miami is 30% but they don't car about keeping your costs down as the more it costs the more they make.. You really couldn't find a G.C. here to build mid level construction for less than $150 per sq ft.. Most charge $180+ for basic finishes.  Also the price per sq ft is only a rough estimate.. If you have a 5000 sq 3/2 duplex it's going to be a lot cheaper than a 5,000 sq ft apartment building with 10 studios. So, you need to look at more than p.p sq ft.  Also, if LA contractors are anything like South Florida ones expect them to go over budget by 20-30%. Regardless of what you put in the contract.

Originally posted by @Ray Slack :

@Cedric Ballet 

I think Allan glass is giving you the best information.  While I'm across the country in Miami we have similar costs of construction as LA market.  I'm a contractor, developer and real estate investor.. I can build for $80 - $100 per sq ft here in Miami.. that is acting as the G.C. and keeping tight control  on all the costs.  The typical G.C. markup in Miami is 30% but they don't car about keeping your costs down as the more it costs the more they make.. You really couldn't find a G.C. here to build mid level construction for less than $150 per sq ft.. Most charge $180+ for basic finishes.  Also the price per sq ft is only a rough estimate.. If you have a 5000 sq 3/2 duplex it's going to be a lot cheaper than a 5,000 sq ft apartment building with 10 studios. So, you need to look at more than p.p sq ft.  Also, if LA contractors are anything like South Florida ones expect them to go over budget by 20-30%. Regardless of what you put in the contract.

 thanks for the input; at $180/sqft it couldn't work for the vast majority of La real county real estate since average people expect to buy homes around 500k including land. I'm discussing now with several builders from east LA; i'll let you know what i come up with in the end

@Account Closed  Any news you can share from the East LA builders?

We're looking at a few lots and are trying to decide what (if anything) to do with them.

@Account Closed  is correct, I do have 40% discount on my plumbing and electricals from list price, sometimes more. Since I dont do much lumber, my lumber order only gets me 25% from published price. Accounting those, thats a big cut. Whenever I do everything myself and dont have subs, I pay 12-18/hr for my guys depending on experience, then 20-25/hr for state certified, then a little more for the working foreman/superintendent, so thats a big help too , but i add +35% indirect cost for my work comp, employer share and office overhead. And these builders are the same rates as me, they could get it done at 130-150, but would never sell you at that rate, just being its their direct cost.

Whats best for you is demo the existing worthless building then hire a developer to put the building there.

Originally posted by @Bruce Olsen :

@Cedric Ballet Any news you can share from the East LA builders?

We're looking at a few lots and are trying to decide what (if anything) to do with them.

 Hi Bruce,

as you know new construction is a tricky business, especially the land development part. Construction costs are to consider but the land itself and the planning are more important. I don't know if you are looking at undeveloped land or developed properties, but it is easier to tear off and build over existing buildings than develop the land from scratch. On my end, i've finally aimed at the architectural high end homes market which is not the typical investment scheme. If you plan on developing land in LA county, you are looking at a 2 years project minimum; if you build over an existing structure, a bit over a year if you already have your plans. The problem with building on developed land is that you need more capital to cover the property acquisition than just raw land. There are many aspects to consider when buying land like parcel legality, deed of easements, road access, fire dpt requirements, geology, soil, slope stability, drainage, sanitation, utilities, zoning, specific ordinances, specific commissions to satisfy etc; you must hire a geologist and an architect or planning expert to make sure your project is feasible before closing. Construction costs themselves vary greatly depending on the nature of your project, the land specifications and how much you want to be involved; they can range from $130 if you act as the builder yourself to $300 per sqft for a single family home

Thanks, @Account Closed  

One lot is suitable for a SFR and we'd partner with an established contractor if we go ahead, so they'd handle the entitlements and we'd provide capital. We just need to have an idea whether we can afford it and for how long.

There are also a couple of R-3 lots that we'd likely wholesale to a builder specializing in multi-family. Our big question is understanding how many units can be built per SF of lot, so we know whether it's worth pursuing even as a wholesale. If you have any guidance on that (class B or maybe C area) we'd appreciate it!

I just almost closed a deal after rendering estimates on a tear-down project in san diego, the lot was 7000 sq ft, with existing utilities, and not to have dig it from scratch, gives in savings enormous amount of money. This is probably what you are looking at. But the numbers look like this:

Plans 2k (off shelf, pre-made, bought and modified), Permits not identified, Demo 5k (600 sq ft tear down house), building 130/sq ft (finish material on roof and flooring not to exceed $2/sq ft). We are looking at around 140/sqft considering permits and other things have 5k allowance, those are just direct costs.

But the owner had problems and cancelled the sale. I signed non-disclosure, so I cant give out the address.

Hello,

Do you have any good contractors to recommend? I have a R-3 lot with an old duplex in Alhambra, CA. i would love to find out the cost and the architecture plan to build a 4 units apartment. Thanks!

Hello Guys, i am also from Los Angeles, We are in process of buying a 20000 sq ft lot, @Account Closed can you get in touch with me and let me know what happened with your plan and if you did pursue, if yes is it worth developing from scartch as compared to buying an exisiting building

more then 5 units in parts of Los Angeles and you might find Rent Control and ADA compliance cost on top of Standard Building cost. 4 units and under are exempt in most Los Angeles areas. The cost of an elevator for 10 units should be considered as part of ADA compliance. We have some 4 plex'es where I could add a 5th unit but have not do to the additional restrictions and cost of Elevators. But if rents keep going up I may. 

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