Duplex Development/Construction Chicago Suburbs

[Rob Blumenstein]

Evening all, 

Hope this post finds you well, feels like we have been running in circles for the last few months with no clear path in site. To which I turn to the most trusted community in RE.

Myself and two of my business partners are looking to start our journey in Real Estate development and am looking for some advice, we have experience in owning and managing rentals so none of that is new to us...just building the thing is.

We are looking to start developing duplex homes across the Chicagoland Suburbs but cannot find the right person to talk to that can give us a clear idea of where to start. We talked to a few builders and got quotes for $250+/sqft... nice :/ As well as some architects, to which we still have no clear vision. 

Really we are just looking for a place to start and the type of people to talk to. We feel like a GC is going to be the best place for us to start as we can get a ballpark on "reasonable" pricing as well as other referrals needed from there.

All in all any feedback, help, ideas, guidance, referrals or just anything else would be greatly appreciated.

Looking forward to hearing from some of you and your knowledge/ expertise is greatly appreciated.

-Rob,Greg, and Al

[Robert Ellis]

Quote from @Rob Blumenstein:

Evening all, 

Hope this post finds you well, feels like we have been running in circles for the last few months with no clear path in site. To which I turn to the most trusted community in RE.

Myself and two of my business partners are looking to start our journey in Real Estate development and am looking for some advice, we have experience in owning and managing rentals so none of that is new to us...just building the thing is.

We are looking to start developing duplex homes across the Chicagoland Suburbs but cannot find the right person to talk to that can give us a clear idea of where to start. We talked to a few builders and got quotes for $250+/sqft... nice :/ As well as some architects, to which we still have no clear vision. 

Really we are just looking for a place to start and the type of people to talk to. We feel like a GC is going to be the best place for us to start as we can get a ballpark on "reasonable" pricing as well as other referrals needed from there.

All in all any feedback, help, ideas, guidance, referrals or just anything else would be greatly appreciated.

Looking forward to hearing from some of you and your knowledge/ expertise is greatly appreciated.

-Rob,Greg, and Al

 I'd start with a real estate agent sending you all the new construction 2-4 family styles that have sold and pick one that is small and compact and sells for a premium. I designed a 2 bed 1 bath stacked triplex that fits on a 30' wide lot with 3' side yards and we can build it for $174 a sq ft hard cost. we do them where the land is 10% of after repaired asset value which in our market is 50k approx. we study multifamily trends and stay with it. I'd recommend pushing density to 3 or 4 they all finance the same. we picked 3 because of the 35' height allowance in our area. here is a rendering to help paint the picture. our target appraisal value is 550k on the first few and pushing them to more than 600k as we sell some or keep them but if you are the only one building multifamily it's important to highlight the importance of appraisal and selling or disposing of some assets to create comparable to be used. our market has very little 2-4 units built because of economies of scale we are the only builder doing this style and we control the full process and it is a high barrier to entry where we are at. we are able to build at a lower cost now than almost buying a duplex because they are so small. each one is 668 sq ft total of 2004 sq ft. 

[Robert Ellis]

Quote from @Rob Blumenstein:

Evening all, 

Hope this post finds you well, feels like we have been running in circles for the last few months with no clear path in site. To which I turn to the most trusted community in RE.

Myself and two of my business partners are looking to start our journey in Real Estate development and am looking for some advice, we have experience in owning and managing rentals so none of that is new to us...just building the thing is.

We are looking to start developing duplex homes across the Chicagoland Suburbs but cannot find the right person to talk to that can give us a clear idea of where to start. We talked to a few builders and got quotes for $250+/sqft... nice :/ As well as some architects, to which we still have no clear vision. 

Really we are just looking for a place to start and the type of people to talk to. We feel like a GC is going to be the best place for us to start as we can get a ballpark on "reasonable" pricing as well as other referrals needed from there.

All in all any feedback, help, ideas, guidance, referrals or just anything else would be greatly appreciated.

Looking forward to hearing from some of you and your knowledge/ expertise is greatly appreciated.

-Rob,Greg, and Al

 I'd start with a real estate agent sending you all the new construction 2-4 family styles that have sold and pick one that is small and compact and sells for a premium. I designed a 2 bed 1 bath stacked triplex that fits on a 30' wide lot with 3' side yards and we can build it for $174 a sq ft hard cost. we do them where the land is 10% of after repaired asset value which in our market is 50k approx. we study multifamily trends and stay with it. I'd recommend pushing density to 3 or 4 they all finance the same. we picked 3 because of the 35' height allowance in our area. here is a rendering to help paint the picture. our target appraisal value is 550k on the first few and pushing them to more than 600k as we sell some or keep them but if you are the only one building multifamily it's important to highlight the importance of appraisal and selling or disposing of some assets to create comparable to be used. our market has very little 2-4 units built because of economies of scale we are the only builder doing this style and we control the full process and it is a high barrier to entry where we are at. we are able to build at a lower cost now than almost buying a duplex because they are so small. each one is 668 sq ft total of 2004 sq ft. 

[Tom Casey]

Hey Rob! Sounds like an exciting route to take!

I agree with Robert that it'll be a good idea to determine the type of build you'll want to pursue and also the locations where you'll get the best bang for your buck. You'll want to run some comps (I can help with that if you'd like) to determine which areas/suburbs you'll want to target. 

I know that @Jennie Berger has a ton of great experience with new construction in Chicago. It would be really smart to connect with her.

Would love to connect with you guys and discuss further!

-Tom

[Rob Blumenstein]

Quote from @Robert Ellis:

Quote from @Rob Blumenstein:

Evening all, 

Hope this post finds you well, feels like we have been running in circles for the last few months with no clear path in site. To which I turn to the most trusted community in RE.

Myself and two of my business partners are looking to start our journey in Real Estate development and am looking for some advice, we have experience in owning and managing rentals so none of that is new to us...just building the thing is.

We are looking to start developing duplex homes across the Chicagoland Suburbs but cannot find the right person to talk to that can give us a clear idea of where to start. We talked to a few builders and got quotes for $250+/sqft... nice :/ As well as some architects, to which we still have no clear vision. 

Really we are just looking for a place to start and the type of people to talk to. We feel like a GC is going to be the best place for us to start as we can get a ballpark on "reasonable" pricing as well as other referrals needed from there.

All in all any feedback, help, ideas, guidance, referrals or just anything else would be greatly appreciated.

Looking forward to hearing from some of you and your knowledge/ expertise is greatly appreciated.

-Rob,Greg, and Al

 I'd start with a real estate agent sending you all the new construction 2-4 family styles that have sold and pick one that is small and compact and sells for a premium. I designed a 2 bed 1 bath stacked triplex that fits on a 30' wide lot with 3' side yards and we can build it for $174 a sq ft hard cost. we do them where the land is 10% of after repaired asset value which in our market is 50k approx. we study multifamily trends and stay with it. I'd recommend pushing density to 3 or 4 they all finance the same. we picked 3 because of the 35' height allowance in our area. here is a rendering to help paint the picture. our target appraisal value is 550k on the first few and pushing them to more than 600k as we sell some or keep them but if you are the only one building multifamily it's important to highlight the importance of appraisal and selling or disposing of some assets to create comparable to be used. our market has very little 2-4 units built because of economies of scale we are the only builder doing this style and we control the full process and it is a high barrier to entry where we are at. we are able to build at a lower cost now than almost buying a duplex because they are so small. each one is 668 sq ft total of 2004 sq ft. 

 Thanks for the feedback, I come from a family of realtors so I will grab some lists from them to see comps in the area. The 3 unit is very interesting, kind of along the same lines here not seeing a lot of new dev in our area.

Thanks! 

[Rob Blumenstein]

Quote from @Tom Casey:

Hey Rob! Sounds like an exciting route to take!

I agree with Robert that it'll be a good idea to determine the type of build you'll want to pursue and also the locations where you'll get the best bang for your buck. You'll want to run some comps (I can help with that if you'd like) to determine which areas/suburbs you'll want to target. 

I know that @Jennie Berger has a ton of great experience with new construction in Chicago. It would be really smart to connect with her.

Would love to connect with you guys and discuss further!

-Tom

 Tom we appreciate this! Since myself And another partner are local we plan to live in the first one while we understand the process of what it takes to build and get some experience under our belt then the plan is to scale from there, really just need to get our feet in the door to which I appreciate the connect with Jennie. I will reach out further when we start to discuss land acquisition as we will need help with that since I am currently a licensed realtor but not actively selling.

cheers 

[Mark Ainley]

@Rob Blumenstein I would talk with @Prashanth Mahakali who is an architect but also been doing new builds the last 4 years himself.  I will send you a podcast episode via DM with the interview where we spoke exactly about this topic.

[Rob Blumenstein]

Quote from @Mark Ainley:

@Rob Blumenstein I would talk with @Prashanth Mahakali who is an architect but also been doing new builds the last 4 years himself.  I will send you a podcast episode via DM with the interview where we spoke exactly about this topic.

 Greatly appreciated sir, please do send the podcast id love to listen to it! Thanks 

[Prashanth Mahakali]

Thank you, @Mark Ainley. Always appreciate the mentions! 

@Rob Blumenstein I hear your pain about finding the right Architect / Builder team. It is something a lot of people in the industry are frustrated about. The '$/sf'  phenomenon is probably the next frustration. It is usually a way for selling one into or out of a job. 

From reading your post, it looks like you have a team already. So the more diligence you are able to do the better. It also looks like you are a few jobs away from GC'ing projects yourself. So I would definitely treat the first few projects as a "Shadow-GC". 

Next, if your aim is to do development, I think its very important to start off with a vision. Why are you getting into development? What will be your market advantage or differentiator? I am in the development world and our pitch is "a dream team of Architect & builder" building quality homes. So we stand out a bit in the market. The work should really shine since its what everyone is going to judge you with. We set out 8 years ago to do only new construction residential projects. So we were able to avoid the pitfalls of taking every rehab project that came our way. This has cost us some great deals but we stuck to the vision. We are now about to hit our 100th home this year! So think about what is unique about your team and really make sure everyone is aligned with that vision and your team. Start interviewing GC's at their job sites instead of a coffee shop. Look at their job site cleanliness and observe other things to make your decision about them. Architects are a difficult bunch! I have tried to bring a sense of pragmatism to accepting projects. They need to make financial sense or there is no project to begin with. 

With your development idea, start the discussion with a lender since they will have ultimate control. If you are doing it with all cash, I would not disclose that to anyone and still use a lender. In most cases, having a trusted lender protects the project from going sideways. Second, reach out to an Architect who is familiar with the location that you are planning to build at and get their recommendations for GCs. Its best if the architect and GC have a prior working relationship so it will make your life easier.

I could do a whole session on this but hopefully this gives you and others who read this some ideas to start with. Happy to chat further and all the best! 

[Rob Blumenstein]

Prashanth,

Exactly what I was looking for thank you my friend, great write up! I will reach out to you directly to discuss drawings and site plans if you are ok with that after we speak with a lender, as that is a great place to start.

Congrats on the 100th home build, and growth, huge milestones :) To many more and great success.

Cheers

[Robert Ellis]

Quote from @Rob Blumenstein:

Quote from @Robert Ellis:

Quote from @Rob Blumenstein:

Evening all, 

Hope this post finds you well, feels like we have been running in circles for the last few months with no clear path in site. To which I turn to the most trusted community in RE.

Myself and two of my business partners are looking to start our journey in Real Estate development and am looking for some advice, we have experience in owning and managing rentals so none of that is new to us...just building the thing is.

We are looking to start developing duplex homes across the Chicagoland Suburbs but cannot find the right person to talk to that can give us a clear idea of where to start. We talked to a few builders and got quotes for $250+/sqft... nice :/ As well as some architects, to which we still have no clear vision. 

Really we are just looking for a place to start and the type of people to talk to. We feel like a GC is going to be the best place for us to start as we can get a ballpark on "reasonable" pricing as well as other referrals needed from there.

All in all any feedback, help, ideas, guidance, referrals or just anything else would be greatly appreciated.

Looking forward to hearing from some of you and your knowledge/ expertise is greatly appreciated.

-Rob,Greg, and Al

 I'd start with a real estate agent sending you all the new construction 2-4 family styles that have sold and pick one that is small and compact and sells for a premium. I designed a 2 bed 1 bath stacked triplex that fits on a 30' wide lot with 3' side yards and we can build it for $174 a sq ft hard cost. we do them where the land is 10% of after repaired asset value which in our market is 50k approx. we study multifamily trends and stay with it. I'd recommend pushing density to 3 or 4 they all finance the same. we picked 3 because of the 35' height allowance in our area. here is a rendering to help paint the picture. our target appraisal value is 550k on the first few and pushing them to more than 600k as we sell some or keep them but if you are the only one building multifamily it's important to highlight the importance of appraisal and selling or disposing of some assets to create comparable to be used. our market has very little 2-4 units built because of economies of scale we are the only builder doing this style and we control the full process and it is a high barrier to entry where we are at. we are able to build at a lower cost now than almost buying a duplex because they are so small. each one is 668 sq ft total of 2004 sq ft. 

 Thanks for the feedback, I come from a family of realtors so I will grab some lists from them to see comps in the area. The 3 unit is very interesting, kind of along the same lines here not seeing a lot of new dev in our area.

Thanks! 

 neither are we, so we are pushing volume we want a lot of people doing it so there are transactions and established values for the product we are building. it is economies of scale. If I build the same thing for multiple investors in downtown adjacent neighborhoods it helps spread the risk. not one person is local to my market doing this because we aren't a capital market. all are from high price point areas like New York, Texas, California, etc 

[Rob Blumenstein]

Quote from @Robert Ellis:

Quote from @Rob Blumenstein:

Quote from @Robert Ellis:

Quote from @Rob Blumenstein:

Evening all, 

Hope this post finds you well, feels like we have been running in circles for the last few months with no clear path in site. To which I turn to the most trusted community in RE.

Myself and two of my business partners are looking to start our journey in Real Estate development and am looking for some advice, we have experience in owning and managing rentals so none of that is new to us...just building the thing is.

We are looking to start developing duplex homes across the Chicagoland Suburbs but cannot find the right person to talk to that can give us a clear idea of where to start. We talked to a few builders and got quotes for $250+/sqft... nice :/ As well as some architects, to which we still have no clear vision. 

Really we are just looking for a place to start and the type of people to talk to. We feel like a GC is going to be the best place for us to start as we can get a ballpark on "reasonable" pricing as well as other referrals needed from there.

All in all any feedback, help, ideas, guidance, referrals or just anything else would be greatly appreciated.

Looking forward to hearing from some of you and your knowledge/ expertise is greatly appreciated.

-Rob,Greg, and Al

 I'd start with a real estate agent sending you all the new construction 2-4 family styles that have sold and pick one that is small and compact and sells for a premium. I designed a 2 bed 1 bath stacked triplex that fits on a 30' wide lot with 3' side yards and we can build it for $174 a sq ft hard cost. we do them where the land is 10% of after repaired asset value which in our market is 50k approx. we study multifamily trends and stay with it. I'd recommend pushing density to 3 or 4 they all finance the same. we picked 3 because of the 35' height allowance in our area. here is a rendering to help paint the picture. our target appraisal value is 550k on the first few and pushing them to more than 600k as we sell some or keep them but if you are the only one building multifamily it's important to highlight the importance of appraisal and selling or disposing of some assets to create comparable to be used. our market has very little 2-4 units built because of economies of scale we are the only builder doing this style and we control the full process and it is a high barrier to entry where we are at. we are able to build at a lower cost now than almost buying a duplex because they are so small. each one is 668 sq ft total of 2004 sq ft. 

 Thanks for the feedback, I come from a family of realtors so I will grab some lists from them to see comps in the area. The 3 unit is very interesting, kind of along the same lines here not seeing a lot of new dev in our area.

Thanks! 

 neither are we, so we are pushing volume we want a lot of people doing it so there are transactions and established values for the product we are building. it is economies of scale. If I build the same thing for multiple investors in downtown adjacent neighborhoods it helps spread the risk. not one person is local to my market doing this because we aren't a capital market. all are from high price point areas like New York, Texas, California, etc 

 That is a very good point, more dev, more comps, more lending. I’ll keep this in mind as we go talk to lenders/partners. 

[Jennie Berger]

Quote from @Tom Casey:

Hey Rob! Sounds like an exciting route to take!

I agree with Robert that it'll be a good idea to determine the type of build you'll want to pursue and also the locations where you'll get the best bang for your buck. You'll want to run some comps (I can help with that if you'd like) to determine which areas/suburbs you'll want to target. 

I know that @Jennie Berger has a ton of great experience with new construction in Chicago. It would be really smart to connect with her.

Would love to connect with you guys and discuss further!

-Tom

I really appreciate the shout out @Tom Casey! And yes, I'd be happy to talk through this with you, @Rob Blumenstein. We've been working on new construction development in the city of Chicago (North and NW side mainly) since 2020 and may be able to shed some light on the process from start to finish. Looking forward to connecting with you and diving in!

-Jennie Berger

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