Skip to content
Multi-Family and Apartment Investing

User Stats

3
Posts
6
Votes

Building multi family on land I already own

Posted Nov 27 2022, 19:16

Hello all! 

So I'll hop into it - my grandmother left my brother and me five properties throughout the city of Seattle. Two of the houses are currently on corner lots in the Central area and zoned as Low rise multifamily. My brother and I are brand new to real estate investing but have already renovated two of the houses, with varying success. We want to build on each of the lots in the next 5-10 years. We understand that new construction is approx $400sq ft (estimating high), and the lots are big enough to build 5 units each. (we're thinking 5 townhomes, at approx $1600 sq ft); we're also hoping to hold and avoid selling (with the caveat that this makes financial sense). My questions are: 

1) Since the lots are owned free and clear how scared should we be of financing 100% of the project with a construction loan? Our worry is that since we're inexperienced this could be a huge risk. We've considered selling some of our properties to leverage the building and reduce our total loan amount but would love to hear your thoughts on this strategy. 

2) Should we opt for a small apartment building - thinking economy of scale? 

3) Does anyone have resources/builders or connections they would recommend? Always open to mentorship. 


Appreciate the guidance, 

Kyla

User Stats

2,061
Posts
894
Votes
Percy N.
  • Developer
  • Philadelphia, PA
894
Votes |
2,061
Posts
Percy N.
  • Developer
  • Philadelphia, PA
Replied Nov 28 2022, 07:30


@Kyla Nicole Nickerson Jones, assuming these will be investment properties once built? Are you then looking to sell them or hang on?

One option you can look into is partnering with an experienced developer where your contribution to the partnership would be the property.

Once completed the partnership would sell the property and the investors would split the profits (60/40?) with the sponsors.

User Stats

942
Posts
255
Votes
Jared Rine
Lender
  • Lender
  • Sacramento, CA
255
Votes |
942
Posts
Jared Rine
Lender
  • Lender
  • Sacramento, CA
Replied Nov 28 2022, 17:10

@Kyla Nicole Nickerson Jones..I agree with the last poster.  My suggestion would be to partner with an experienced builder/developer who you can build a relationship with, and trust. I'd do some research on builders who are building what you want to build and then just start to have conversations, see their past record, etc., and then hopefully you could make your decision from there.  Assuming the equity is good enough on the back end, you would cash out the partner/builder when they're done, so you can hold the properties, or you come to an agreement regarding the income and then do the refinance/cash-out at a later date.  

  • Lender California (#01915324) and California (#893462)

United Lending Partners Logo
BiggerPockets logo
BiggerPockets
|
Sponsored
Find an investor-friendly agent in your market TODAY Get matched with our network of trusted, local, investor friendly agents in under 2 minutes