Duplex construction oppurtunity

5 Replies

Twelve Duplexes

Property Information and Income Potential

Units

Description

Square Footage

Monthly Rent

Income

24

3 Bedroom, 2 Bath

1400

$ 1,400.00

$ 33,600.00

Total Income

$ 33,600.00

Development and Construction Cost

Quantity

Description

Unit Cost

Total Cost

12

Lots

$ 15,000.00

$ 180,000.00

33600

Construction

$ 89.00

$ 2,990,400.00

Total Cost

$ 3,170,400.00

Financing Details

Estimated Appraised Value

$ 3,588,000.00

Requested Loan to Value

80.00%

Total Loan

$ 2,870,400.00

Down Payment

$ 300,000.00

Term

20 Years

Rate

5.25%

Monthly Payment

$ 19,343.00

Property Expenses (Monthly)

Note Payment

$ 19,343.00

Vacancy Rate 2%

$ 672.00

Management 7%

$ 2,352.00

Maintenance 7%

$ 2,352.00

Property Taxes

$ 2,800.00

Insurance

$ 1,400.00

Total Expenses

$ 28,919.00

Perfomance

Caitalization Rate

9.09%

Net Monthly Income

$ 4,681.00

Annual Income

$ 56,172.00

Debt Coverage Ratio

1.73706250323114

As in my description, this is from a trustworthy acquaintance that has approached a friend and I about purchasing this property. It would be my first real estate deal so I'm a little hesitant to jump in on a project this large, however it will be in a very desirable location. A local banker says the numbers appear to be on par with the market I live in, so that's reassuring. These will be nicer furnishings and on the larger end up what's available in my market.

Whats the size of the units?

Where are they located?

They well and septic, or city water and sewer?  I would check tap fees, some places they run in the 10's of thousands to tap in the water and sewer.  This could kill your deal

Each side is 1400 soft. It'll be city and sewer but all that is included in the price. My friend will have the entire thing built out and leased before handing it over at the price shown.

Some general observations/questions/considerations: I’m assuming the $89.00 is hard costs/sq ft. Does that include soft costs? Permits? Are utilities on site? Is this a single close loan (const -> perm)? (1400sq ft)(24units)($89/sq ft)=$2.99MM….will there be garages?

Includes all costs including utility connects. Two car garages for each unit. As for the loan, it's a permanent. He will finance the construction and fully lease the units. At that point we will get a loan from the bank and take over the property.