Want to invest, How to Build a Multifamily Complex?

Member since 2022 · 4 posts · 1 vote

Hi all!

I'm pretty new here at bigger pockets, I read the book of rental property investing and it was great. But I wanted to ask for advice. I received a nice cash after selling my company and I want to use it to build a solid passive income source. I'm thinking about investing and building a mid-rise 5 story apartments building (50+ units) But I have no idea where to start. Can anyone tell me where can I learn what everybody should now to build and own a multifamily building? I'm thinking about south florida as a nice place to invest.

I'll appreciate just way too much if someone can share some advice.

BIG THANKS

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Michael Le

Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes

It's a pretty involved and complicated process, especially for your first investment. Why are you looking at doing this vs buying an existing property? No one will be able to tell you everything you need to know in a post that would take at least a book to answer. But at the very least you should start with an feasibility study on a specific piece of property and then engage a civil engineer and architect early on.

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Michael Le
Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
4y
It's a pretty involved and complicated process, especially for your first investment. Why are you looking at doing this vs buying an existing property? No one will be able to tell you everything you need to know in a post that would take at least a book to answer. But at the very least you should start with an feasibility study on a specific piece of property and then engage a civil engineer and architect early on.
3 Reply
Franco Ruben Vargas
OP
Member since 2022 · 4 posts · 1 vote
4y
Thanks a lot for your comments Michael, I really appreciate. Please let me know your thoughts if a have the wrong idea, but I believe when you buy an existing property you'll probably have to raise your budget for repairs and adaptations. I also think a new property have a better potential for future appreciation and to implement/build from the scratch the latest trends. Besides the construction cost per unit could be cheaper than the cost of buying something finished. In other words, more units for the same money.

I totally agree with You it'd be impossible to tell everything in one post, I'm indeed looking for the book, forum, study program or any other place to learn as much as possible.

I'll definitely engage a civil engineer and architect.

Again, thank you and best regads!
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Paul H.
Developer · Ottawa, Ontario · Member since 2019 · 105 posts · 58 votes
4y
Franco,

I 100% agree with Michael Le. It takes years of surrounding yourself with other developers and shadowing projects to try and run solo. I would offer similar advice to Michael, I would build a team with a track record that would accomplish the goal you're looking to accomplish. Donald Trump was a developer, not because he was knowledgeable about development but because he had the skills and negotiating power to put together a rock star team.

If you can put together a great potential project and put a strong team around it with a deep bench of expertise your chances of success go from near zero to reasonable amount of risk. I would look at a skilled Planner who can bring all the deliverables for a project together and help with the application process with the County/City. Strong engineering consulting (local tends to be better), Designer/Architect with a strong relationship with a Builder (ideally having completed projects like the one your proposing), Legal (To get your offering documents together or real estate transactions) and you'll be adding more and more as you go.

I started out as your traditional buy and hold landlord and have transitioned to development, but I did it by joining a team that already had a bit of motion behind it.

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Wesley Davis
Developer · Tampa, FL · Member since 2020 · 84 posts · 59 votes
4y
Hey there Franco,

I would have to agree with the previous comments that building a well versed team would be the way to go, especially just starting out. But as I am sure you are aware the market is going crazy right now and these licensed professional are swamped (call any survey company and see how soon they can you a survey) Speaking as an Architect/Developer in the Tampa area, Depending on what your property is currently zoned you are looking at at least an 8 months to a year to receive the approved rezoning (Or PUD approval) and engineered plans. Then about another year before your project is fully built, depending on the complexity and availability of required materials. Meaning you are out 2 years before you are even able to make $1 while paying all of your professional's cash for their services (upwards of $100-$200k). On an optimistic note, there are several ways to finance a project like this. One popular way is a 5/1 ARM (fixed 5-year loan then transfers to an adjustable rate) after five years you refinance. You are also correct in your take that if you build yourself you have the ability to make more money per unit also you have the ability to control the construction budget through material selection and design.

If you were to find an existing building you do not have to go through the rezoning process as it already exists. You may not be able to profit as much per unit after remodeling but you will be (hopefully) be making money from day 1. Both methods have their pros and cons. It really comes down to your timeline and cash reserve.

Hope this helps
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Franco Ruben Vargas
OP
Member since 2022 · 4 posts · 1 vote
4y
Quote from @Paul H.:
Franco,

I 100% agree with Michael Le. It takes years of surrounding yourself with other developers and shadowing projects to try and run solo. I would offer similar advice to Michael, I would build a team with a track record that would accomplish the goal you're looking to accomplish. Donald Trump was a developer, not because he was knowledgeable about development but because he had the skills and negotiating power to put together a rock star team.

If you can put together a great potential project and put a strong team around it with a deep bench of expertise your chances of success go from near zero to reasonable amount of risk. I would look at a skilled Planner who can bring all the deliverables for a project together and help with the application process with the County/City. Strong engineering consulting (local tends to be better), Designer/Architect with a strong relationship with a Builder (ideally having completed projects like the one your proposing), Legal (To get your offering documents together or real estate transactions) and you'll be adding more and more as you go.

I started out as your traditional buy and hold landlord and have transitioned to development, but I did it by joining a team that already had a bit of motion behind it.

Hi Paul, Thanks a lot for your input! it really helps me envision how long would it take to develop a project like this and the importance of the team. I'd definitely start building valuable relations with the professional profiles you mentioned above.

Tks a lot!
0 Reply
Franco Ruben Vargas
OP
Member since 2022 · 4 posts · 1 vote
4y
Quote from @Wesley Davis:
Hey there Franco,

I would have to agree with the previous comments that building a well versed team would be the way to go, especially just starting out. But as I am sure you are aware the market is going crazy right now and these licensed professional are swamped (call any survey company and see how soon they can you a survey) Speaking as an Architect/Developer in the Tampa area, Depending on what your property is currently zoned you are looking at at least an 8 months to a year to receive the approved rezoning (Or PUD approval) and engineered plans. Then about another year before your project is fully built, depending on the complexity and availability of required materials. Meaning you are out 2 years before you are even able to make $1 while paying all of your professional's cash for their services (upwards of $100-$200k). On an optimistic note, there are several ways to finance a project like this. One popular way is a 5/1 ARM (fixed 5-year loan then transfers to an adjustable rate) after five years you refinance. You are also correct in your take that if you build yourself you have the ability to make more money per unit also you have the ability to control the construction budget through material selection and design.

If you were to find an existing building you do not have to go through the rezoning process as it already exists. You may not be able to profit as much per unit after remodeling but you will be (hopefully) be making money from day 1. Both methods have their pros and cons. It really comes down to your timeline and cash reserve.

Hope this helps

Hi @Wesley Davis, Thanks a lot for your comments! I'll be mindful of those 2 years you mention for project completion. is good to understand how long it takes to not only buold a project like this, but also to understand the rezoning timing. I'll definitely look deep on the 5/1 loan, sounds convenient. I'll definitely compare thoroughly pros and cons on both building vs buying an existent property!

Best Regards!

0 Reply
Azizbek Rasulov
Member since 2021 · 12 posts · 2 votes
4y
@Franco Ruben Vargas
Hi Franco, I recently started investing in real estate but nowhere at the scale you have in mind (live and work in Connecticut, have couple of properties in Georgia and Florida). Reading your post and the responses from others, I just wanted to wish you the best of luck. I'd be curious to find out where this journey takes you as it looks like you already had success in your previous endeavor (ultimately selling your company).
Thanks,
Aziz
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Wesley Davis
Developer · Tampa, FL · Member since 2020 · 84 posts · 59 votes
4y
Not a problem Franco. If you have any more questions feel free to shoot me a message. I am a Florida Licensed Architect.
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