New Duplex/Triplex/Fourplease Design & Build - Metro Portland
Kevin DicksonPro Member
Investor · Portland, OR · Member since 2016 · 54 posts · 24 votesHey guys! I am trying to get estimates on how much it will cost for me to build either two duplexes or a fourplex in the Metro Portland area. Do any of you have any experience building small multi-families? I don't REALLY have any designs in mind because I am not sure how flat roof/vs non flat roof affects cost. So what I am looking for is someone that has done more than a few of these to talk me through some of the costs.
I already have the financing ready to go if the numbers on the project work out I am going to pull the trigger.
@Neal Collins Thanks for the response Neal! I just don't think they have multi-families like that in the area I am looking to live. I feel like a duplex would cost about $450-500K and the rehab to get it renovated/updated would easily be another $100k. I am pre-approved for a lot of money on the construction loan so I figured it would make more sense to just build something I like.
As @Neal Collins Is nicely trying to tell you, it's more than likely you are aiming for the wrong project, at the wrong time, in the wrong market. The biggest consideration you are ignoring is your lack of development experience. I highly suggest you start small and scale up. Obviously I don't have the polite tact Neal has is stating my opinion.
Pm me... Go with 2 plexs so you don't have to do sprinklers.
Send me some info
@Neal Collins I am looking to build in the Tigard/Beaverton area. I am very comfortable with the holding costs. I live at home and have zero debt so I am okay with having to pay the note for the first 6/9/12 months while the project is being completed.
I have my eye on a property that is cheap on a nice sized lot so I will have the land free and clear.
Essentially, my budget is $700k and I am trying to get in contact with small multi-family builders but it's hard to find people that have build something bigger than a duplex. Do you know any builders in the area you can put me in contact with?
@Derrick Aragon Hey Derrick. I was browsing through the forums and came across your profile the other day. Check you inbox.
Just wanted to update anybody that happened to be following this thread (I see a lot of threads that start with someone doing something and they never really provide a conclusion after the build up lol).
So I partnered with a real estate agent and did some research on the property's history. We found out that there was seller paid cash for the property ($162,500) about five months ago. The seller had purchased several lots/houses in the suburbs of Portland and listed a few and was starting rehabbing a few.
I was preapproved for a 203K loan for $690,000 and I got a few rough estimates of $130-170 per square foot. My idea was to build a fourplex on it. The property had been on the market for several months so I wanted to make the seller a little bit of money while still leaving me enough money to demo the house and build a fourplex within my budget so I offered $170,000. ($690,000 - $170,000 = $520,000; $520,000/$140/sq ft = 3,714 square feet/ 4 units = 928 sq/ft per unit).
The seller's agent came back and said that the seller is deciding to take the property off the market and will take on the project him/herself.
I am kind of bummed, but at least I took some kind of action. I submitted my first offer and I am excited to find some more properties. I am going to try the direct mail route and hope that I can get some leads.
@Aaron Holloway Hey man! I just found my old post and saw that you replied. send me a PM and let's connect.
I am resurrecting this thread because a few life events have reignited my desire to build a house. My girlfriend FINALLY got a job in Portland (we had been doing the long-distance thing for a few years. We moved to the Pearl and absolutely love the city.
We want to buy a house in the city but don't really like any of the ones for sale and want to build custom. I know that everyone is saying that a tear down shouldn't be my first deal, but I am not looking at this as a deal or something that I want to flip anymore. I want this to be our home for at least 5 years. And with a lot of higher end rentals coming on the market in Portland I think that we could at least live for almost free if we build a multi-family.
One thing I notice when I listen to the podcast and see forum posts is that people ask questions without providing enough details for people to answer so I will provide some details and I would love you guys' feedback based upon the information I am presenting.
My lady and I make around $300K combined and are 100% debt free. We also have about $100K saved up that are not in retirement accounts. We also current rent in the city but are both 100% down to move back into my parents house should we decide to build a home so that we don't have to pay rent while paying the mortgage on the new build.
With all of that being said, if I budgeted for $225/sq ft, and I bought a large lot (probably with a house on it) and wanted to build a 3200 sq ft duplex on it in North/Northwest Portland, why would that be a bad idea?
$225 x 3200 = $720,000
Financing on $725,000 would be around $3,500 and I am sure I could rent out a 3br/2.5ba in Portland proper for $3,000.
Multi-family homes are going for well over $1M in Portland so I am not REALLY seeing the downside in this idea.
Here is a 4-plex for $1.5M:
https://www.redfin.com/OR/Portland/2416-SE-Morrison-St-97214/unit-A/home/109514983
Here is a triplex for $1.25M:
https://www.redfin.com/OR/Portland/1106-SE-Lincoln-St-97214/home/25889348
Hey Kevin, Congratulations on not having to do the long-distance relationship anymore. I know that puts a huge amount of stress on both people. It's gotta be a relief to have one less thing to worry about.
I'm just down the road from your old stomping grounds, in Tualatin (we lived in Tigard for awhile too). Your flexibility with being able to move back in with your parents will be a great asset as you get your project off the ground.
I know people will come on here and tell you not to do it, but you've obviously been thinking about this for awhile, have been doing your research (did you account for tear-down costs?), and know this is what you want to do to help propel yourself forward. So, I'd say go for it. It sounds like you've got a really stable financial situation, so really you're risking money and time. You can make more money, but letting more time slip away isn't going to get you closer to your goal. Having multi-family property in (or near) a city like Portland, in the grips of a housing shortage, isn't a bad thing.
PM me if you're still looking for contractors, construction lenders, etc. I'd be happy to help.
Best of luck!
Mathew
Hey Kevin, Congratulations on not having to do the long-distance relationship anymore. I know that puts a huge amount of stress on both people. It's gotta be a relief to have one less thing to worry about.
I'm just down the road from your old stomping grounds, in Tualatin (we lived in Tigard for awhile too). Your flexibility with being able to move back in with your parents will be a great asset as you get your project off the ground.
I know people will come on here and tell you not to do it, but you've obviously been thinking about this for awhile, have been doing your research (did you account for tear-down costs?), and know this is what you want to do to help propel yourself forward. So, I'd say go for it. It sounds like you've got a really stable financial situation, so really you're risking money and time. You can make more money, but letting more time slip away isn't going to get you closer to your goal. Having multi-family property in (or near) a city like Portland, in the grips of a housing shortage, isn't a bad thing.
PM me if you're still looking for contractors, construction lenders, etc. I'd be happy to help.
Best of luck!
Mathew
Appreciate the response!
I am trying to do find some posts here from people that have successfully built a multi-family to see what they went through, how long it took, how much it costs, and the overall process. If anybody has seen any threads PLEASE feel free to share here.
Kevin, congrats on being debt free and having a girlfriend that is also willing to move in with family to realize your vision for the future. I like your idea in principle, yet I have a few thoughts.
1) The examples you listed are Actives, not actual Sales. - It would be useful to pull some Sold comps to what you are proposing to build.
2) At $225/ sq ft you are proposing higher end finishes. Is that necessary? A tenant won't always demand the same levels that you do for your personal residence.
3) At the finished price point, you would live in one side and a tenant in the other. It sounds like you can cover a vacancy, but that risk would be diminished with 3 or more units.
4) With your budget, it might be worth looking in to a 5+ unit to qualify for commercial financing.
5) While we know rents have gone crazy in Portland, $3,000 may be pushing it. Not saying you won't get it, but you will have a reduced renter pool and the renter pool you will have has options if they can afford $3k/Month.
6) Markets run in cycles and while Portland has great economic fundamentals, it has potential volatility. The city seems to have very little idea how to manage the exorbitant permitting fees, homeless, crime, traffic, etc aside from higher taxes of which you will be a target if your are renting out $3k/Month units. However, if you really love Portland, it is the cost of business.
7) Is rehabbing an existing building out of the question? You could focus on rehabbing one unit, get it rented, then rehab the next unit for you to move in to, then rehab or add on additional units/ ADU's/ etc.
Good luck to you in your venture!
Kevin, congrats on being debt free and having a girlfriend that is also willing to move in with family to realize your vision for the future. I like your idea in principle, yet I have a few thoughts.
1) The examples you listed are Actives, not actual Sales. - It would be useful to pull some Sold comps to what you are proposing to build.
2) At $225/ sq ft you are proposing higher end finishes. Is that necessary? A tenant won't always demand the same levels that you do for your personal residence.
3) At the finished price point, you would live in one side and a tenant in the other. It sounds like you can cover a vacancy, but that risk would be diminished with 3 or more units.
4) With your budget, it might be worth looking in to a 5+ unit to qualify for commercial financing.
5) While we know rents have gone crazy in Portland, $3,000 may be pushing it. Not saying you won't get it, but you will have a reduced renter pool and the renter pool you will have has options if they can afford $3k/Month.
6) Markets run in cycles and while Portland has great economic fundamentals, it has potential volatility. The city seems to have very little idea how to manage the exorbitant permitting fees, homeless, crime, traffic, etc aside from higher taxes of which you will be a target if your are renting out $3k/Month units. However, if you really love Portland, it is the cost of business.
7) Is rehabbing an existing building out of the question? You could focus on rehabbing one unit, get it rented, then rehab the next unit for you to move in to, then rehab or add on additional units/ ADU's/ etc.
Good luck to you in your venture!
Thanks for the response Michael.
1. You are 100% right that the ones I listed are on the market. I haven't done enough research to see what multifmaily has gone for in recent years. But my sister purchased a 3br/2.5ba 1500 sq/ft home in North Portland for $320K in 2013 that is valued at $450K. She rents out the non master bedrooms for I think $800 each and hasn't had a vacancy longer than 3 weeks since. Noticing the trends in millenials not wanting to own homes and even myself, being 30 years and coming from outside of Oregon. I want to live in luxury without owning. I also work in HR at Nike so I see how were are hiring, and assuming other companies in the area are doing the same, there are younger millenials coming to the area and they are renting and they are doing fairly decent for themselves.
2. I am proposing higher end finishes because I think this place will be home for my lady and I for at least 3-5 years minimum and we thoroughly enjoy modern and high end style homes. So we at least want the unit that we occupy to be higher end.
3. I have STRONGLY considered, and am still considered, a triplex/fourplex. My only apprehension comes when I talk to folks that say that properties that are SUPER atypical are hard to exit. So if I were to find a lot that was 0.6 acres or something and I build a 4plex and I wanted to sell it in 5/6/7 years, I don't REALLY know how easy it would be to sell. I am still doing research and scouring BP to find threads on this.
4. I have also thought about commercial, but I want to hold off until my second deal. I am treating this as a proof of concept. I have family and friends that have some money stashed away in banks and CDs that would more than likely invest if they were sold on real estate being as simple as I have been telling them. So if this project goes well and I get a tenant(s) in my multi-family, I should be able to get some funds and get a larger project going.
5. I completely agree that using $3,000 as rent may not be sustainable, I am not really TOO worried because I have spoken to some folks in our Mobility department about that interns, expats pay when they work here at headquarters and A LOT of families are paying close to $3,000 for 3/4 bedroom homes in Beaverton/Tigard/Portland. And those homes are not that nice at all. So I am very confident that a higher end home in Portland proper could command $3,000 even in a not so hot market.
6. After living in my parents house for 3.5 years and swearing that I would NEVER live in Portland proper. My lady moved here in September and we got an apartment in the Pearl and we absolutely love it. The commute to and from work is MUCH better. Getting to and from the airport is MUCH better. We love it. Another thing my lady brought up is that if we really are doing a high end multi in north portland, we MIGHT be able to airbnb it and make just as much, if not more, than just having a traditional tenant.
7. I would prefer to rehab an existing building. I am trying to find a larger multifamily so that they can work on one unit and get it rented while they work on the one that I will occupy. But I am VERY early in all of this. I am trying to meet and speak with lenders and contractors and investors that have done this before to see their experiences and get their suggestions.
Not familiar with the numbers up there but does the $225/sf cost include hard and soft costs?
Materials, labor, GC overhead, drawings, engineered calcs, permits, planning, infrastructure, etc?
@Paul Choi I am not sure about that at all. I am trying to research architects/designers/contractors and see what it would all cost in different scenarios. If I find just a lot, how much does it cost to prep the land. If I find an existing home on a lot, how much does it cost for the demo and build.
What kind of numbers are you seeing in your neck of the woods?
@Paul Choi I am not sure about that at all. I am trying to research architects/designers/contractors and see what it would all cost in different scenarios. If I find just a lot, how much does it cost to prep the land. If I find an existing home on a lot, how much does it cost for the demo and build.
What kind of numbers are you seeing in your neck of the woods?
Not sure about the costs for ground up here but I'd imagine it is more expensive than demo an existing home and rebuild. With a empty lot, you have the additional costs of running all the pipes and connections for the water, sewer, electricity and gas as well as phone and cable, which could add up. But then again, with an existing house, you have the costs of demo, including demo and removal of foundation and footings.
In any case, because costs vary so widely depending on scope, your best bet is to talk to contractors. Architects and designers know less about the cost to build since they do not deal with pricing labor and materials. ie: I'm a project architect/designer LOL!
You might consider taking @Derrick Aragon up on his offer to get in touch. He develops and manages multifamily in Portland.
Also 3 units and up puts you in the commercial building code, which is more expensive. 2 duplexes on one lot is still considered a fourplex by banking standards.
The other advantage to that is, you may be able to divide the lot and later sell each duplex separately, if you sell. Also, duplex feels more like a house and commands higher rents than 4 Plex.
Lastly, you might consider building in Beaverton, Tigard, West Linn, Tualatin, etc. Anywhere but Portland proper. Permitting will be quicker/easier and landlord/tenant laws not as onerous. Portland city council is unpredictable and can reduce your property value in one single council session. Rent control may be on the horizon in Portland. Schools are better in most areas around Portland. Suburbs seem to be where it's at right now.
Hugely helpful thread. I have a piece of land in Tigard that currently holds four units on .37 acres. Had some advice to consider tear down to build 7 townhomes or 10+ unit apt. complexes on the property, as adjacent & nearby lots have done. Concurrently, my foster brother has single family in Portland (Albina/Mississippi) that he wants help in considering developing into multifamily. I don’t wanna hijack your thread, but I’ll follow with great interest, since I’m wrestling with similar questions.
Kevin, would love to connect with you about what you learn, and with a some of the local folks here who shared such helpful comments. (I also have a potential referral source for you—Maurice Rahming. He and his wife run O’Neill Electric (met him on the Governor’s transition team focused on DEI), and he’s a helluva dude. He would have a good sense of the contractors in town who build quality stuff, and he wouldn’t pitch you. He typically does larger scale projects. Tell him Jeff said hi.)
@Jefferson Smith Hey Jefferson! I appreciate the reply in the thread! I honestly haven't gotten any definitive answers mostly becuase I wasn't ALL IN at the time I made the thread but since then, I have connected with a realtor and a couple mortgage brokers to get the financing lined up. I have gotten in touch with and had preliminary conversations with designers/architects.
I hope to meet some GREAT people at the meetup next week (Check out the events section for info) so I can get some answers and get one step closer to my frist deal.
In regards to your project, I would LOVE to partner with you on a development deal if you need any financial help or want a partner at all. When I lock down a property for myself, I will most definitely reach out to you so you can connect me with Maurice.
@Kevin Dickson pinging you with a DM so we can connect.
@Kevin Dickson Can we get a status update? I'm curious to see what came of this. I'm in a similar boat right now, looking into multifamily development costs for a plot near my house.
@Kevin Dickson I own a one acre property in Tualatin that is zoned medium low density, that i'm looking to develop this year. Give me a shout if you're still searching for a site. @Caleb Webster I would be interested in knowing what you're looking to accomplish as well?
@Kurt Clark I'm gathering information about highest and best use. Looking into condos or building a 20 unit.