Build new appartments 16-20 units

2 Replies

In a market where there is little supply of older multi family unit. They are alot of people building new multi family units. The number make sense for me to jump in and build. ( I own a construction company which drive my cost to build down.) My concern is the constant increase in supply should ultimately drive the rent prices down as we all start to compete for tenants. Population grow is good for now 12% agr. Does anyone have experience in building new multifamily?

@Ryan Webster I have done plenty of multifamily ground up as well as adaptive reuse and mixed use.

Your concern regarding supply is valid. You really need to research inventory in the pipeline and overall demand to make a sound decision whether or not to move forward. 

Smaller buildings are usually a safer bet than the big ones if you have a location that is in high demand. Also quicker to build and quicker to deliver units to market so you can beat the new supply coming online. 

@Greg Dickerson is right that smaller multis are usually safer because you have fewer units to lease. 

If you're concerned about supply, you can go to town/city hall and pull a list of all approved multifamily developments and compare them to your proposed development. 

If you can build cheaper, you should also be able to charge lower rents if a downturn occurs. The negative to building smaller buildings is that, depending on the market, you often have no amenities. So you'll have to charge lower rents than the larger, class A complexes that are being built. If you adjust accordingly, you should be fine.

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