Construct a MultiFamily in Houston?

5 Replies

Hi Guys,

I have been looking to find an existing multifamily in Houston and most of them that I see are either low quality and very old structures or they are not in the areas where I am looking for.

I was looking for a good quality structure that was constructed after 1990 atleast and looking at neighbourhoods that have people with incomes in 70k-150k range.

Is it economical to construct one? I am expecting rents of about 1100$ per unit for 2 Bed 2 Bath(Four Plex).


How do I go about it? Are there construction companies that specialize in multi family?

Are floorplans available on BP?

Do I need to jump through lot of hoops(permissions) to construct?

Also, Houston as a whole is overpriced and waiting for a correction. Even one of the biggest fracking companies posted a loss for the first time and its stock price fell by more than 10% in last 10 days.  If this continues for 3 more months, lot of smaller companies would burn out.

Are construction companies aware of this and are they offering good deals? Or is it better to wait it out?

Limiting it to post-1990 construction will cut down the number of available properties, but they are out there. Mostly in suburban areas like Montgomery County. Assuming you don't want to spend $1Million+, most of the small multifamilies in the city are considerably older construction than 1990.

I remember showing two really nice fourplexes in Humble that were next to each other. Both could have been had for $600,000.

@Rakesh R. - I'm very curious to see what others have to say. However, from my experience it's difficult to maintain a reasonable Cost Per Door for constructing multi-family. You need to have a lot of doors (100+ ??) to keep cost down. Curious to see what others say.

@Fred Heller

I am looking for good MF as I am planning to live in it atleast for a year and want to target quality tenant pool.

With my 8-6 job, it will be difficult for me to handle run down buildings or bad tenants on a regular basis.

@William Dampier

I just have Four plex in mind. Want to start small and don't have capital for such a big project anyways :)

We are currently renting and would have to buy a house anyways. This way, it would be beneficial. One thing I am little worried is the property taxes that takes a huge chunk out of the earnings.

I will have to talk to my CPA regarding that.

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I would  like to do the same thing. The difficulty is trying to find the right piece of land in an appreciating market. I think garages and parking spots are necessary for long term tenants. You need to be in the property right incase there is another bump in the market and you could end up competing with corporations that have bigger pockets. 

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