Build Multi-Family House Instead of Buy?

Question

Hi All,

I am in the Charlotte, NC market and looking to invest in a 4 unit multi-family house. I'm curious if anyone has BUILT a 4-plex (or similar) instead of buying one? The plan would be for me to owner-occupy one of the units and rent the rest. Thanks for the feedback!

Simon Campbell · Answer

It is a funny reality that building small multi-family just is not cost effective as a cash flow generator. Now, if you focus on building a main home for yourself and 3 smaller basic apartments, the rental income could offset your mortgage but I still doubt the cash flow will cover your living expenses. It really depends on what is your focus: a nice place to live with a little extra income or a cash flow property.

Ben Leybovich · Answer

The cost of construction, if you skimp on everything, will run $80/sq.ft.  This translates to no less than $65,000/door.  That's if there are no mistakes, and does not include permits or land...

Jack Knochel · Answer

Hey Tim, how about 4 duplexes, 8 units in Charlotte?  They are turnkey so you'd have to get one of the tenants to move once you purchase.  I have them under contract, let me know.  THANKS

Michael Mies · Answer

Hello Tim,

I live and invest in the Charlotte area and have looked into building a 4plex (or larger), but can't justify the cost new-build given the current rents.  There are, however, many older multi-family properties coming to market (in prime/up-coming locations) that may be candidates for upscale rehab.  Are you currently living in Charlotte?

Philip Williams · Answer

Hey Tim how are you? So I have never personally built a 4plex or anything for that matter. We have however looked into it and in our market it just doesn't make sense. I'm not sure how your market it but unless it's incredibly hot you should be able to find something for sale that makes more sense. It may not be your ideal 4 unit perhaps but there are a lot of options that should be cheaper!