Buying land then building a 4plex in fresno ca

25 Replies

Ive came across a lot for sale $214k its 1/3 acre lot that has approved but expired plans for a 4plex. Each unit is about 1400sf with 3bedrooms 2baths and a garage. It states that 80k in development fees are included in the price for the lot. Also states that the city of fresno will honor all fees paid. Only school fees need to be repaid. So my question is does this seem like a feasible idea as i came to think its about $140 per square feet for this area to build..(could be wrong) so would a construction to perm loan be a good idea?

if i did my math right it looks like you'd be all in for 784k after construction is done, is that right?  that comes out to $196k per unit.  its on the high side but if all units are 3/2 they could rent for up to $2300/month depending on the area.  I think it's possible to get a high valuation on the property which would pay for your entire construction loan and then some, you may be able to get in without any money out of your pocket.  what area is it in? 

Its in fresno ca. In the north side of town near river park area. I believe the lot is in a historic community which i dont know if that has a affect on the lot. But the lot is listed for 214,995. I spoke to a realtor and she believed i could get the price down even lower since its been listed at 600k and been dropping since 2015.

Im currently trying to find out from the city if they will truly honor the fees paid and that i only need to repay the school fees since it would be right across the street froma elementary school.

I was currently looking at a 1 time close fha construction to perm loan. As i believe to have about 14k saved up at the moment. And if i could get into this with little money out of pocket that would be great...again thanks for the help

Originally posted by @Jeff Zimmerman :

if i did my math right it looks like you'd be all in for 784k after construction is done, is that right?  that comes out to $196k per unit.  its on the high side but if all units are 3/2 they could rent for up to $2300/month depending on the area.  I think it's possible to get a high valuation on the property which would pay for your entire construction loan and then some, you may be able to get in without any money out of your pocket.  what area is it in? 

^^continuing from last message

I believe your math is correct as well...

 

I'm following, I grew up in Fresno, family still live there. Considering investing there.

Interesting opportunity, it could chance the evaluation if its in Pinedale. Yet that could also make it in an Opportunity Zone. 

Originally posted by @Kenneth Donaghy :

I'm following, I grew up in Fresno, family still live there. Considering investing there.

Interesting opportunity, it could chance the evaluation if its in Pinedale. Yet that could also make it in an Opportunity Zone. 

 What do u mean it could chance the evaluation or opportunity zone if i may ask?

From my understanding, now I haven't lived in Fresno for over 20 years. But, most of North Fresno is a relative nicer area of Fresno. Pinedale is an older area within North Fresno, so the value of property could be worth less in that area than the rest of North Fresno. 

Opportunity Zones are new, and have big tax advantages to for developments deals held over longer periods of time. 
  

is it in pinedale?  if so that would drop the value quite a bit.  130 spruce?  be careful in that area, it's a bit rough.  i havne't looked at rent comps in a bit for pinedale but i can't imagine you'd go much higher than 1200/month/unit even in a 3 bed, but maybe. 

Originally posted by @Kenneth Donaghy :

From my understanding, now I haven't lived in Fresno for over 20 years. But, most of North Fresno is a relative nicer area of Fresno. Pinedale is an older area within North Fresno, so the value of property could be worth less in that area than the rest of North Fresno. 

Opportunity Zones are new, and have big tax advantages to for developments deals held over longer periods of time. 
  

Well considering it was listed for 1million before 2015. Then dropped to 600k and fell all the way to 214,995. Realtor thinks i can get it for cheaper.. again doing some research and asking for more help. And it would be the pinedale area. I currently grew up their and know its a good area near the freeway and shopping centers. If the 4plex goes through i plan to live in one unit and rent the rest out. 2500 sounds good. I was thinking around 1500 but would have to do more research to whats the price around my area. But seems reasonable at least.

 

Originally posted by @Jeff Zimmerman :

is it in pinedale?  if so that would drop the value quite a bit.  130 spruce?  be careful in that area, it's a bit rough.  i havne't looked at rent comps in a bit for pinedale but i can't imagine you'd go much higher than 1200/month/unit even in a 3 bed, but maybe. 

 Raised in pinedale so i dont see it as "rough" lol although it does have some bad moments. But fresno its self is a rough city lol so cant really complain since its in the north part of town. But yes i didnt know that it could lower the value since it was listed for 600k back in 2015. And it is on spruce


I was wondering if it was in Pinedale also ... that would make a difference-  I have always maintained that it could be a great location if enough investors got behind it and started to rehab the area .. I've even seen a few projects already started .... if you want to build in opportunity zones - take a look at the Better Blackstone Project - they are proposing to provide  incentives for investors willing to build high density housing in the area
Originally posted by @Jay Orlauski :

I was wondering if it was in Pinedale also ... that would make a difference-  I have always maintained that it could be a great location if enough investors got behind it and started to rehab the area .. I've even seen a few projects already started .... if you want to build in opportunity zones - take a look at the Better Blackstone Project - they are proposing to provide  incentives for investors willing to build high density housing in the area

 Yea few homes being rehabed or build. Just recently a apartment building went up on ingram near the walmart and i thought that was a awseome idea to invest in. I seen a smaller lot only 1300sf cause some one split their lot. Its listed for 43k so if this 4plex doesnt pan out i would look into somthing smaller for that lot. 

@Jay Orlauski So i spoke to better blackstone association and they will contact me back about the incentives for that area or if they do it for pinedale.i imagine they could but ima wait and see what they say. Also looking into a construction loan while i wait for for association to contact me back. If i can get the property lower lets say 189k or somthing around there i believe it would be worth it. I assumed off the top of my head with no research think 1500k for the rented units is a good start. Someone mentioned 2500k a month for a 3/2 unit. I believ somwhere in the middle maybe sounds about right(again have to dig a bit more to see what the area is like) but riverpark area seems like a prime location.

If its been on the market for 5 years, dropped in price by 70%, has approved plans and permit fees paid and its STILL on the market there is something big you are missing or are not being told. This is too good a market for something like that to sit that long. Call the city and talk with someone there about this specific property. There could be a whole number of things that you are being required that ended up making this development sit for so long. I would be very cautious about this and DEFINITELY not take anything that realtor says as fact....or that they are telling you everything. It might be that the owner hasnt told the realtor everything too. 

Originally posted by @Nik Moushon :

If its been on the market for 5 years, dropped in price by 70%, has approved plans and permit fees paid and its STILL on the market there is something big you are missing or are not being told. This is too good a market for something like that to sit that long. Call the city and talk with someone there about this specific property. There could be a whole number of things that you are being required that ended up making this development sit for so long. I would be very cautious about this and DEFINITELY not take anything that realtor says as fact....or that they are telling you everything. It might be that the owner hasnt told the realtor everything too. 

 This has crossed my mind. And i was currently waiting to hear back from the city about just that...but i also found out from a lender that supposedly i cant get a construction loan for a multi family unit which is news to me...so i guess i have to look for a plan b which is single family home

Originally posted by @Steven Navarro :
Originally posted by @Nik Moushon:

If its been on the market for 5 years, dropped in price by 70%, has approved plans and permit fees paid and its STILL on the market there is something big you are missing or are not being told. This is too good a market for something like that to sit that long. Call the city and talk with someone there about this specific property. There could be a whole number of things that you are being required that ended up making this development sit for so long. I would be very cautious about this and DEFINITELY not take anything that realtor says as fact....or that they are telling you everything. It might be that the owner hasnt told the realtor everything too. 

 This has crossed my mind. And i was currently waiting to hear back from the city about just that...but i also found out from a lender that supposedly i cant get a construction loan for a multi family unit which is news to me...so i guess i have to look for a plan b which is single family home

 And the lenders reasoning behind that claim is? 

Just remember banks/lenders set their own rules (as long as they follow the federal law of course). So just because one says you cant doesnt mean another wont say you can.

I will say FHA owner-occupied construction loan CAN be used for up to a 4-plex. But there are a lot of rules on what applies and construction time is one of them. If i remember right it has to be done within a year.

Another thing to note is that construction documents cant be "sold" with a lot unless the person selling the lot also did the construction documents themselves. The CDs are owned by the person who drew them, usually an architect, so you will have to work with them on this. Usually their isnt a bug issue here but there could be. So be aware of that. 

Originally posted by @Nik Moushon :
Originally posted by @Steven Navarro:
Originally posted by @Nik Moushon:

If its been on the market for 5 years, dropped in price by 70%, has approved plans and permit fees paid and its STILL on the market there is something big you are missing or are not being told. This is too good a market for something like that to sit that long. Call the city and talk with someone there about this specific property. There could be a whole number of things that you are being required that ended up making this development sit for so long. I would be very cautious about this and DEFINITELY not take anything that realtor says as fact....or that they are telling you everything. It might be that the owner hasnt told the realtor everything too. 

 This has crossed my mind. And i was currently waiting to hear back from the city about just that...but i also found out from a lender that supposedly i cant get a construction loan for a multi family unit which is news to me...so i guess i have to look for a plan b which is single family home

 And the lenders reasoning behind that claim is? 

Just remember banks/lenders set their own rules (as long as they follow the federal law of course). So just because one says you cant doesnt mean another wont say you can.

I will say FHA owner-occupied construction loan CAN be used for up to a 4-plex. But there are a lot of rules on what applies and construction time is one of them. If i remember right it has to be done within a year.

Another thing to note is that construction documents cant be "sold" with a lot unless the person selling the lot also did the construction documents themselves. The CDs are owned by the person who drew them, usually an architect, so you will have to work with them on this. Usually their isnt a bug issue here but there could be. So be aware of that. 

From what i can remember from the call while i was commuting back home (usually take notes)

That she can do single family home construction. But multifamily units are something or other not being touched as in something about the rules changing... again i got the point she was making just cant remember exactly how she said it. 

I did specifically ask if they do construction loans for a "4 plex". She responded yes. we talk more and she comes to find out that she couldnt do the 4plex. So is she not on the up and up? Or did the rules change about fha construction loans for 4 plexs in my area? Like i said she was saying they can work with a single family build but multifamily couldnt. 

Originally posted by @Nik Moushon :
Originally posted by @Steven Navarro:
Originally posted by @Nik Moushon:

If its been on the market for 5 years, dropped in price by 70%, has approved plans and permit fees paid and its STILL on the market there is something big you are missing or are not being told. This is too good a market for something like that to sit that long. Call the city and talk with someone there about this specific property. There could be a whole number of things that you are being required that ended up making this development sit for so long. I would be very cautious about this and DEFINITELY not take anything that realtor says as fact....or that they are telling you everything. It might be that the owner hasnt told the realtor everything too. 

 This has crossed my mind. And i was currently waiting to hear back from the city about just that...but i also found out from a lender that supposedly i cant get a construction loan for a multi family unit which is news to me...so i guess i have to look for a plan b which is single family home

 And the lenders reasoning behind that claim is? 

Just remember banks/lenders set their own rules (as long as they follow the federal law of course). So just because one says you cant doesnt mean another wont say you can.

I will say FHA owner-occupied construction loan CAN be used for up to a 4-plex. But there are a lot of rules on what applies and construction time is one of them. If i remember right it has to be done within a year.

Another thing to note is that construction documents cant be "sold" with a lot unless the person selling the lot also did the construction documents themselves. The CDs are owned by the person who drew them, usually an architect, so you will have to work with them on this. Usually their isnt a bug issue here but there could be. So be aware of that. 

 Also continuing from my other response to you. I could  Theoretically still build in the lot i originally spoke of just not the 4plex. So plan b if she is truthful in her response and i know they can make their own rules.

Also In that same area pinedale has a smaller lot 1350sf for 43k. It would be a small build but a build nonthe less. Also a regular corner lot for 79k and its a 6000sf lot. So i could still build as i am thinking location is good a newer house is good 

Originally posted by @Caleb Heimsoth :

@Steven Navarro I doubt you can do thins with only 14k..

 I agree i need to save more but that doesnt stop me frim continuing to search for information regarding this. I plan to have 22k from my incometax. I realized a 4plex could be a bigger bite then i can chew but if not i planed for a single family and plan to save for that

Originally posted by @Nik Moushon :
Originally posted by @Steven Navarro:
Originally posted by @Nik Moushon:

If its been on the market for 5 years, dropped in price by 70%, has approved plans and permit fees paid and its STILL on the market there is something big you are missing or are not being told. This is too good a market for something like that to sit that long. Call the city and talk with someone there about this specific property. There could be a whole number of things that you are being required that ended up making this development sit for so long. I would be very cautious about this and DEFINITELY not take anything that realtor says as fact....or that they are telling you everything. It might be that the owner hasnt told the realtor everything too. 

 This has crossed my mind. And i was currently waiting to hear back from the city about just that...but i also found out from a lender that supposedly i cant get a construction loan for a multi family unit which is news to me...so i guess i have to look for a plan b which is single family home

 And the lenders reasoning behind that claim is? 

Just remember banks/lenders set their own rules (as long as they follow the federal law of course). So just because one says you cant doesnt mean another wont say you can.

I will say FHA owner-occupied construction loan CAN be used for up to a 4-plex. But there are a lot of rules on what applies and construction time is one of them. If i remember right it has to be done within a year.

Another thing to note is that construction documents cant be "sold" with a lot unless the person selling the lot also did the construction documents themselves. The CDs are owned by the person who drew them, usually an architect, so you will have to work with them on this. Usually their isnt a bug issue here but there could be. So be aware of that. 

 So i found out the lenders reasoning. So they have investors and supposedly the investors changed the rules about 4plex builds but single family builds is ok with them. So like u said they have their own rules. I suppose i could consider single family build rather then a 4plex. But again i plan on building a house just need to make sure all my ducks are in order...

Originally posted by @Steven Navarro :
Originally posted by @Nik Moushon:
Originally posted by @Steven Navarro:
Originally posted by @Nik Moushon:

If its been on the market for 5 years, dropped in price by 70%, has approved plans and permit fees paid and its STILL on the market there is something big you are missing or are not being told. This is too good a market for something like that to sit that long. Call the city and talk with someone there about this specific property. There could be a whole number of things that you are being required that ended up making this development sit for so long. I would be very cautious about this and DEFINITELY not take anything that realtor says as fact....or that they are telling you everything. It might be that the owner hasnt told the realtor everything too. 

 This has crossed my mind. And i was currently waiting to hear back from the city about just that...but i also found out from a lender that supposedly i cant get a construction loan for a multi family unit which is news to me...so i guess i have to look for a plan b which is single family home

 And the lenders reasoning behind that claim is? 

Just remember banks/lenders set their own rules (as long as they follow the federal law of course). So just because one says you cant doesnt mean another wont say you can.

I will say FHA owner-occupied construction loan CAN be used for up to a 4-plex. But there are a lot of rules on what applies and construction time is one of them. If i remember right it has to be done within a year.

Another thing to note is that construction documents cant be "sold" with a lot unless the person selling the lot also did the construction documents themselves. The CDs are owned by the person who drew them, usually an architect, so you will have to work with them on this. Usually their isnt a bug issue here but there could be. So be aware of that. 

 So i found out the lenders reasoning. So they have investors and supposedly the investors changed the rules about 4plex builds but single family builds is ok with them. So like u said they have their own rules. I suppose i could consider single family build rather then a 4plex. But again i plan on building a house just need to make sure all my ducks are in order...

Yep they make their own rules. My suggestion would be to just start shopping around for lenders. You will need anywhere from 20-30% downpayment for a standard construction loan. If you can find a lender that does FHA loans for a 4-plex then its much cheaper then that. But they will add together the cost to build and the value of the land to come up with your total loan amount and that is what the DP will be based off of. i.e. $500k (build cost) + $100k (valuation of land) = $600k loan amount. That $600k is what your DP will be based on. That also doesnt include other soft costs such as the survey and permit fees and any fees youll have to do for the architect plans.

If you can not build a 4-plex on this lot then I would not even consider buying it. Its way to expensive for a SFH.

@Steven Navarro   based on 9 other 3 bedroom units within 1 mile - they are getting on average $1400 - $1500 / month per unit - you may be able to go up a little for a brand new build - but the chances of $2400 per unit are slim to none - you can rent out a mini mansion in Clovis for less than that. I have looked into building a 4 plex previously but got caught up in all the regulations and school fees - in the end it was not going to profitable so we shelved it for another project. At the time we going to buy the land for a great discount but even at a discount the construction costs put us way over budget. Not saying it can't be done - but be sure to do all your due diligence and understand all the costs involved.   Sounds like you've done a lot of legwork already so your starting to get your beak whet - feel free to reach out to me if you ever want to discuss anything. I'm always happy to provide a some perspective.  

Originally posted by @Nik Moushon

Yep they make their own rules. My suggestion would be to just start shopping around for lenders. You will need anywhere from 20-30% downpayment for a standard construction loan. If you can find a lender that does FHA loans for a 4-plex then its much cheaper then that. But they will add together the cost to build and the value of the land to come up with your total loan amount and that is what the DP will be based off of. i.e. $500k (build cost) + $100k (valuation of land) = $600k loan amount. That $600k is what your DP will be based on. That also doesnt include other soft costs such as the survey and permit fees and any fees youll have to do for the architect plans.

If you can not build a 4-plex on this lot then I would not even consider buying it. Its way to expensive for a SFH.

i spoke to the city zoning dept. They could see info on it back in 2002. So im starting to think the 130 spruce lot is out of reach. I also found out that the Blackstone project covers upto barstow or bullard and it goes down south Blackstone.

so im still trying to find out if pinedale is a opportunity zone still trying to figure that out. 

im looking at 261 W Spruce Ave, Pinedale, CA 93650 which is 3125sqft lot. Alot smaller then the one i mentioned previously. Its listed for 43k.  So this single family build seems in reach for this. But it takes away my renting potential while living in the property.(have a family so renting a room wont work). It did cross my mind to continue renting my apartment and then rent the new single family house when its done being built...itll be a small house 1400sqft with small yard and garage i hope lol. I believe this is my plan b...

Now in that same area for around 1500 in rent a month might work depending on the cost of the build ofcourse 

 

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