1st Time RE Development in Texas (RGV)

[Pete Torres]

First off, I would like to state that I welcome any comments and advice. This is my first go at investing in real estate, let alone development, and it seems to be everything from exciting to nerve wrecking.

I recently purchased a small lot in texas and would like to develop a small 4 unit apartment building. (2488 SF)

Cost of lot: 9K, of which I put down 3K, seller carried the rest with 2yrs no interest.

Currently the lot is zoned residential, so I am at the moment trying to get it rezoned. The lot is in a small town, but is part of a small metro area. The rents here go for about .65 per SF on average, for an avg. unit.

There is a 1 yr old 4 (1 bed rm.) unit bldg. one block away from the lot I purchased, each of the units rent for 600 (each unit = 618 SF) which is HIGH imo

Each unit in my proposed plan would be 1 bed rm. w/ about 622 SF where I would like to start rents at 450.

The est. cost of constructing is around 85K, bringing the total cost to 94k.

I have contacted a few banks and the best deal I could find was:

10% down, 20 yrs (My quesiton here is...will banks negotiate? Can I find a better deal?)

[David Jacques]

if the neighbor building is leased at $600 per unit, undercutting them by $150 is leaving money on the table and gives the impression that you have an inferior building to prospective tenants. Why did you purchase the land outright before securing the entitlements/ zoning? I realize you only have 3000 in it but depending on the jurisdiction, a rezone could take a considerable amount of time.