Building 20+ Unit Apartment Complex

Multi-Family and Apartment Investing
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Building 20+ Unit Apartment Complex

John Barry
Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes

Looking for any ideas, feedback, concerns on the building of a 17-31 (there were 3 options given by surveyor on building layout on the property and that would be reason for the vary in unit amounts. The option with more units would include parking underneath the building) unit building.

Land is already acquired, surveyor has come and plot out property lines and also has drawn building, parking and green space out. They have also done what they are calling a “utility test” as well as a “soil sample”

We are meeting this week with a local well known construction company for the building side of the project. (I plan on getting guidance from them)

What I am looking for is any advice on breakdown of units: all 2 bed, divide it up make some different size units? Ideas on how to generate the most income from the property: coin op. Any feedback on “tax breaks” for affordable housing.

Also if you have knowledge and experience I would like to hear about the actual building options: brick exterior vs vinyl, amenities that are of value in each unit. High end vs builder grade finishes.

Location is in the 01905 area

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Nik Moushon
Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
7y

I second Kyles call to get in touch with an architect. Personally I would not trust a surveyor to do my site design on a project like this. I seriously doubt he know the code very well. Theres a lot more to laying out an apt complex than just getting your densities to max out. 

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  • Matthew Baltzell
    Rental Property Investor · Denver, CO · Member since 2018 · 183 posts · 172 votes
    7y

    @John Barry I would look into the following metrics:

    1. Supply: Research how many new units are coming onto the market in this particular submarket and the surrounding area.
    2. Demand: I would look at the absorption rates as well as the historical occupancy. Last thing you would want to do is to build 30 units and only be able to fill 1/3rd of them
    3. Labor and Supples: I would get several quotes to see what the best option is for you. 
    4. Comps- Look at properties surrounding your area. What are people building? What is the unit mix?
    5. Path of progress: How are jobs in this submarket? Are there any major employers in a 1,3, and 5 mile radius. 

    *These are a few metrics I could think of. I've never built an apartment complex, but I don't think it could hurt to know them.

    Best of luck to you:)

    3Reply
  • Kyle Jean
    Bedford, NH · Member since 2018 · 77 posts · 49 votes
    7y

    John,

    If you don't already have an architect or designer (sounds like your surveyor is just doing civil / site), I'd recommend having a chat with Dan Skolski at DMS Design out of Beverly, MA. We have worked with Dan on a number of multifamily buildings and he is currently working on a large project in Lynn. He'd be a good one to run by finish options, style, design and layout in that market. One of the few architects I've met who thinks from a development perspective (best ROI) versus fanciest building that can be designed.

    For unit mix and ancillary income, I also find it helpful to run by management companies in the area who have a decent sized portfolio, as they're generally willing to share what is working in the market. 

    I think a tax abatement could be feasible as Lynn is aggressively courting development, but I would caution against LIHTC (if thinking of that route) as it's not for the feint of heart and doesn't scale well for smaller projects. Too many soft costs and too much regulatory burden.

    We'd also be happy to meet sometime if helpful, our office is in Southern, NH. Best of luck with the project.

    2Reply
  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Matthew Baltzell appreciate the reply

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  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Kyle Jean thank you for the reply. I should know more in the coming weeks after meeting with the construction side of the project. Thank you

    0Reply
  • Seth Williams
    Real Estate Broker · Winthrop, MA · Member since 2014 · 260 posts · 199 votes
    7y

    @John Barry, grew up in Lynn, now right down the street in Winthrop. I sent you a PM. 

    As far as the unit mix goes, I think different size / scale / layouts of the 2 beds would be best. I think some could be for families, with rooms closer together and more living space, and then some could be more room mate style, with the bedrooms further apart. Look up HighPoint in Quincy Ma, they had some really intriguing layouts, some might spark some interest. Some should be 2/1 beds, some 2/2, and Id even put in a few studios too, if possible, vs just the 2 beds. Lynn will continue to blow up with commuter line expansion too, just a few things to think about. Let me know if there is anything I can do to help out, I'm just around the corner, and wouldn't mind staying close to the project! 

    0Reply
  • Nik Moushon
    Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    7y

    I second Kyles call to get in touch with an architect. Personally I would not trust a surveyor to do my site design on a project like this. I seriously doubt he know the code very well. Theres a lot more to laying out an apt complex than just getting your densities to max out. 

    4Reply
  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Nik Moushon this surveyor is quite versed (as far as I know) in code but we will certainly be getting an architect involved soon. Thanks for the reply

    1Reply
  • Nik Moushon
    Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    7y
    Originally posted by @John Barry:

    @Nik Moushon this surveyor is quite versed (as far as I know) in code but we will certainly be getting an architect involved soon. Thanks for the reply

    I wasn't trying to bash the surveyor, sorry, it probably came off a little that way. I'm sure he has the years of experience and just the general knowledge of knowing some of the more common codes. Laying out and doing planning just isnt his job nor is it even in the description of being a surveyor. Knowing codes and doing code research isn't either. Glad to hear you are getting an architect. If this was just a SFH or duplex then I wouldnt be worried. But at this scale and project cost you want to pay the bit extra for the insurance of knowing its done right and knowing you got, not only the most out of your lot, but the best solution. For example, I can tell you right now that putting the required parking under your building is going be VERY expensive. Going just by the surveyors suggestion to max out your lot might not actually be your best option. Actually I would wager money that its not, for 99% of the locations(since I dont know where you are at).

    Think of it this way. You could walk up to any realtor and ask them if they know how to buy/sell small apt buildings. Almost all of them will say yes they can. Almost all of them could find you one to buy/sell. But unless they specialize in apt buildings the odds of them getting you the best possible one is slim. More than likely none of them were trying to purposefully get you a lesser deal but they just didnt have the knowledge to get you the best deal. Then what happens if something goes wrong or they miss a key paragraph in the contract that totally screws you over? They didn't do it on purpose but they didnt know what to look for and they sure as hell dont know how to get you out of it. This is the situation you are in. 

    1Reply
  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Nik Moushon appreciate the reply. Due diligence will be done on all aspects. Thank you for the response.

    1Reply
  • Leonardo A Afanador
    Flipper/Rehabber · Hamilton Township, NJ · Member since 2018 · 8 posts · 24 votes
    7y

    @John Barry

    I am an Architect and can attest to the importance of having one as part of your team. Good luck in the project!

    2Reply
  • Matt Stein
    Developer · Cincinnati, OH · Member since 2017 · 2 posts · 1 vote
    7y

    John,

    pm me and I can send you a development checklist that I have used in the past on new developments if of interest.

    My $0.02

    1) I would get multiple bids on the drawings from 3 different contractors for new construction, it will help keep the contractors honest with their costs.

    2) I would set up a meeting with the local municipal economic development representative(s). They should be of help with any additional incentives that may help your proforma. I think at least you should try for a tax abatement especially if the property is vacant ground Also they may be able to provide grants for demo if the property has any existing structures.

    3) I would also suggest reaching out to the local electrical/gas provider to see if they have any programs or grants available. I know here in Cincinnati, Duke energy has programs available that may help keep costs down, but they typically have to get involved early in the development process.

    1Reply
  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Kyle Jean past 2 weeks have had increased traction on most fronts.

    Have acquired and architect and have also spoken to 2 gcs that work hand in hand that both me and my father are beyond comfortable/familiar/ and trust more importantly.

    We have also spoken with a local bank that we have used in the past and currently to purchase investments thru and it appears have there green light for any needed funding.

    The architect said it will take about 1-2 weeks to come back with some drawing and options to get the ball rolling.

    Just wanted to check back in. Thanks

    0Reply
  • Kyle Jean
    Bedford, NH · Member since 2018 · 77 posts · 49 votes
    7y
    Originally posted by @John Barry:

    @Kyle Jean past 2 weeks have had increased traction on most fronts.

    Have acquired and architect and have also spoken to 2 gcs that work hand in hand that both me and my father are beyond comfortable/familiar/ and trust more importantly.

    We have also spoken with a local bank that we have used in the past and currently to purchase investments thru and it appears have there green light for any needed funding.

    The architect said it will take about 1-2 weeks to come back with some drawing and options to get the ball rolling.

    Just wanted to check back in. Thanks

    Hi John, congrats, looks like it's taking shape. Best of luck with the project, Lynn is a strong area for sure.

    0Reply
  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Kyle Jean thanks. I will keep this thread posted with any updates. Thank you

    0Reply
  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @John Barry

    Just an update on the status. We have met with the architect today and he provided us with the first schematic set of drawings. There are few minor tweaks we are going to do to them as far as layout goes but at this point they seem to visually what we are looking for.

    One dilemma we are pondering is whether we want to build the building using gas for heating or do we want to go all electric. (Something like the Mitsubishi in wall units)

    Any feedback would be appreciated

    0Reply
  • Troy Sheets
    Developer · Philadelphia, PA · Member since 2013 · 1k+ posts · 902 votes
    7y
    Originally posted by @John Barry:

    @John Barry

    Just an update on the status. We have met with the architect today and he provided us with the first schematic set of drawings. There are few minor tweaks we are going to do to them as far as layout goes but at this point they seem to visually what we are looking for.

    One dilemma we are pondering is whether we want to build the building using gas for heating or do we want to go all electric. (Something like the Mitsubishi in wall units)

    I generally go all electric using mini-splits for MFH. On a building that size look into vertical stack fan coil units also. 

    0Reply
  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Troy S. Will do. Thanks for the reply

    0Reply
  • Chris K.
    Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @John Barry

    Now that you hired an architect you will want to get a few GCs to bid on the project. If you have like the two GCs you have, you can skip the bidding process. For example, the GCs that work with typically never need to "bid" on a job because they get hired for their ability to finish a complicated, large-scale job. 

    Regardless of how you handle the GC, you can then ask the GC to get "value engineering" type bids from their subcontractors. For example, our company does glass and glazing work for big projects. When we bid on the project with the GC, we often let them know that there are possible ways for them to save money (e.g. switching between storefront and curtainwall system, reducing glass sizes for certain portions, etc.). The point of working with a good subcontractor that specialized in a certain trade is that they have "trade secret" type knowledge that allows them to reduce the costs further. 

    Now a 31 unit building is not particularly large so you may not have the benefit of working with a world-class GC. But the basic concept is the same. 

    I would say one of the key factors you need to consider on a new construction project is how you intend to exit. Some developers build with the idea that they will sell within a short period of time. Others build with the understanding that they will hold on to it for 10 years or more. You will also need to do a lot of research on the local market and see where this new property will fit in the market. For example, are you aiming to become one of the nicer apartments in the area? If so, you need to finish it accordingly. 

    For what it's worth, virtually all projects that we work on uses a lot of glass/glazing elements with ACM or Dryvit finish for the exterior. You end up with a "trendy" look that is commonplace in metropolitan areas. 

    Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

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  • John Barry
    OP
    Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
    7y

    @Chris K.

    Thank you for the reply.

    As far as the GC goes its someone who is greatly experienced in this type of work and also someone we trust

    As far as planning goes: the plan is to keep the building for years to come. Our current portfolio includes other multi family (smaller all single, 2 and 3 unit properties). The goal with this is to add to the overall unit total and build and hold. With that being said we are (as a backup) keeping in mind “converting to condos” as we work Thru the build side of things

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  • Chris BlackburnPro Member
    Developer · Salem, OR · Member since 2014 · 193 posts · 110 votes
    7y

    Find a architect team who works well with an engineer.  Get some estimates on the engineering costs- new rules with water detention/retention can really impact costs.  Meet with the City (Pre-App) and find out what off site requirements are needed (If any)  This can kill a project quick.   Put a spread sheet together with your unit mix.  1/1's will rent out very fast-  I would not build 2/1's.  In a room mate situation- no one wants to share a bathroom anymore.   Find a good/GREAT management company today!  Ask them what the demand is?  Ask them what they would do differently to make your property more appealing to renters.  Make sure you are marketing this project for reservations as soon as you break ground.  We have had local projects 100% full 1/2 through construction.  Keep learning!  Keep reading! Keep asking questions!  And Thank you! Your project will create jobs- add value to the community and teach you a lot about the business of development.  This is what makes America great.  People like you willing to take risks!  (and yes- the risks are significant!)

    1Reply
  • Troy Sheets
    Developer · Philadelphia, PA · Member since 2013 · 1k+ posts · 902 votes
    7y
    Originally posted by @John Barry:

    @Chris K.

    Thank you for the reply.

    As far as the GC goes its someone who is greatly experienced in this type of work and also someone we trust

    As far as planning goes: the plan is to keep the building for years to come. Our current portfolio includes other multi family (smaller all single, 2 and 3 unit properties). The goal with this is to add to the overall unit total and build and hold. With that being said we are (as a backup) keeping in mind “converting to condos” as we work Thru the build side of things

    Most of the apartments I build I try and build to condo quality layouts and finishes so I can easily pivot to sales if necessary or desirable. It's not always the case in heavy student rental areas but keep it in mind. Great advice on the 2/1's, that's a last resort. I model using all 2/2's as they're good for small families or roommates. 

    On the build side, make sure you learn about/supervise anything that has to do with water infiltration. It's the number one enemy of builders/developers. I've dealt with water in basements, in walls, etc. and have learned a lot of hard lessons around water infiltration. Don't assume your GC knows what he's doing, learn about how to flash around different openings and penetrations so you can keep an eye on them during construction. I see some great GC's that still mess up window flashing. Learn about rain screens behind siding. Learn about waterproofing basements and foundations. HVAC penetrations are a biggie. Also, pipes outside of the envelope or too close to the exterior have been an issue a few times as they end up freezing eventually. 

    Also, not sure what your code requires for sound transmission but in my area, minimum code isn't enough. A typical ceiling might be double 5/8" drywall, resilient channel, fiberglass insulation between joist bays with 3/4" ply subfloor. I've done that and glued down vinyl plank for a finish floor and you could hear everything between units. See what your GC and/or architect recommend but again, they don't alway know these things sadly enough. The above scenario was me relying on an architect and GC to spec and build and it was an awful finished product as far as sound transmission. The glued down vinyl didn't help either. Look into gypcrete on the floors between finish floor and subfloor. Look into isolation clips for resilient channel. I'd say water and sound are two of the biggest issues I see on builds besides just overall poor finish quality. 

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