New 60 unit construction approved by city and bank!

1 Reply

Just received word that my 60 unit apartment complex construction is approved! Have been meeting with the city planning commission since about December. City approved it a few weeks back and my bank approved loans TODAY! Numbers aren't as good as my other deals (I currently have 60 other units). But it still cash flow's about 150k per year. Of my 60 units that I currently own I have 27 units that are condos with roughly 50% LTV from a combination of paying them down with 15 year loans, market going up, putting 15k per unit into updates, and raising rents. Bank is using these 27 units as collateral in a sort of line of credit so I won't have to put the full 20 or 25% down.

New construction is 7 buildings of 8 units each and 1 building with 4 units. Bank is requiring 100k in cash from me per building, so I have some skin in the game, and is not letting me start the next building until I am 100% filled with the buildings I have already built. Assuming it will take 4-5 years to finish project.

Land Cost 200k

8 unit building cost 695k

4 unit building cost 350k

Total Project cost 5.415 Million

These numbers will be adjusted 60 days before each building (exact bids) but are based on builders previous builds of exact same buildings recently.

I try to look at investments more with Cash on Cash return versus cap rates. So if a building costs me 100k out of pocket and cash flowing 20k. Assuming the buildings cost increasing some over 5 yearish project, interest rates going up, and some "oh sh*t's". I should still be good to recoup my cash within 10 years (my other deals I shot for 5 years, but have not been purchasing much lately, simply not finding good deals in my area).

Bought the land off market, cold call :), and is with 1/4 mile of my other 60 units. Each unit will be 2 bed 2bath. Which I need more of. Of my 60 units I only have 3 two bedrooms, mostly being 4-5 bedroom college rentals.

My town has a 25k population and has a university with about 25k (undergrad, grad school, and other programs). My other units are geared towards college students but the new construction will be geared towards grad students, general population or college students that want to be away from the noise. Land where they will be build is next to a nicer apartment complex geared towards non college renters.

For every one call I get for a 4-5 bedroom I get 4 calls for 2 bedrooms so I am in desperate need for two bedrooms!

Haven't posted in a while (mostly because I haven't had any deals!) Tried to give hard numbers.

Thanks all!

@Mike Henkel congrats on getting the city and bank approvals. Sounds like a cool project!

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