Price Range For Building Apartments

2 Replies

First, I should point out that I am in no way venturing into the world of commercial real estate development.......at least not yet. But my area is expanding and one area in particular is seeing a lot of growth from large lot single family to commercial/ high density residential. As a result a lot of property is going up for sale in the area and I started to wonder how much it costs to build a basic apartment building. How does one estimate such a cost? Is there a rough price per square foot cost one can use or is one of those each case is different situations. 

Of course every project would be unique, but I think it's a fun mental exercise to run the numbers on big deals like this to see what the possibilities are. Who knows, maybe one day it will come in handy. 

Tom

I should also point out that the area would only support basic apartment complexes, nothing too high end. I'd say 1000 sq ft max blue collar /  young professional type units. 

Tom

the sad part is that you may not be able to build at all, and if you had the cash to build, you might not have a great investment. 

How about this scenario:

You build with your own money and have to rent the units for $1200/month for a decent return.

The dudes down the street get government grants to pay for 1/3 of their building cost and then the government subsidizes the rent for the renters. Renters pay $550/month and the government pays $650 to the owner group. 

Tough to compete when you charge $1200 and the apt down the street charges $550.

It is a bad deal when the market is skewed by federal govt. involvement. I have seen the above scenario in our town, along with similar deals on groups of single family homes.

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