Does anybody have a ballpark figure of what a 4 plex would cost to build new in the midwest? Any price/sqft. figures? I've seen some new 4 plexes going up in my area lately. I think the key is getting the land at a low price.
I'm not a contractor but it all depends on many factors. I find in my area it has been consistently $55 to $65 per sq ft. That can be different depending on the area of the mid-west
David's numbers of $55-65 a square foot are possible in an area with cheap labor and low beaurocracy. Not including the land of course. I've kicked around the idea of building a 4 plex in my area, but the numbers just don't support it yet. The main thing is existing units are too cheap to compete with.
The exception would be for a great location. But then the price of the land kills it. That's my area. However, there are definately places that would support new 4-plexes.
I'm with Jon, at least for my area... I can buy rentals for $35k a unit and those are generally 600 - 1,000 square feet. Not sure how anyone could build new in this climate in my area. Even in Salt Lake county units are $45 - 60k. You'd have to get an absolute steal on the land, not that there is much, and would still be incurring a big risk just to hit the market price for existing... why bother?
Just a follow up to this then. What kind of down payment would you be looking at for a fourplex at 250k? Could you do 2 fourplexes at once for 500k and qualify for a commercial loan? I know 1-4 units are typically considered residential.
What kind of down payment would you be looking at for an 8 plex? 20% More? Any creative programs to get in at 10%?
I imagine the risk building a new 4 plex in a developed location would be much less than taking over a 50 year old building. Less money spent on repairs, it would attract the highest rents in the area and have the lowest vacancies. Who doesn't want to live in a new, modern building? The lower risk tends to push the return down and therefore the price up.
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