Effect of multifamily being built next to my potential 4plex?

4 Replies

I'm considering purchasing an older 4plex and just found out a 30 unit apt building along with 20 condos are going in right next door. Plans approved but they have yet to break ground. Looks like it might dwarf my building. 

Obviously it adds tenant competition but I suspect those apts will be in a much higher price range. And there's a very low vacancy rate in the city. The development is just one of many being considered nearby. And not just multi family development - retail, restaurants, city improvements, etc. 

Is this a potential positive for the value of the 4 plex? Or could it be a negative? 

Thanks in advance. 

Huge positive!  When investors want to build where you are and the lenders will finance it, you are in a very good location.  The term is progression.  Under the principle of progression, the value of a property increases when it is surrounded by or in close proximity to higher valued properties.  You just have to maintain it and make upgrades over time because the location will warrant the investment.

I agree w/ Robert, however you'll have a short term negative due the fact that people don't like living near construction sites. So it might mean a little more vacancy and/or lower rents while that project gets completed. Which might be worth putting up with for the longer term positives- you'll have to decide!

Thanks @Robert Leonard and @Jean Bolger . I thought that was the case but just wanted to be sure as it's my first time in this situation. Think the construction will be worth the long term positive. 

Depending on the size of your property and if it is adjacent to that property , you may get an offer  to buy it from the developer 

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