How to get started with built to rent multi-family

Question

I am in the Fayetteville area looking to build my first multifamily property to rent. I have no experience with building and I am looking for some insight on how to get started.

Mohammed Rahman · Answer

If you’re starting from zero experience, you’ll want to break this into three main steps: planning, assembling the right team, and securing financing.

First, start with research and feasibility. Look at zoning rules in Fayetteville to make sure your lot allows multifamily.

You can check the city’s zoning map online or call the planning department. While you’re doing that, run some basic numbers — what rents in the area look like, your projected construction costs, and what your mortgage and operating expenses might be — to see if the deal makes sense.

Second, build your team early. At minimum you’ll need an architect (to design plans that meet code), a general contractor (to build), and potentially a civil engineer (if there’s grading, utilities, or drainage work).

If you’ve never built before, finding a GC with multifamily experience is huge — they can help navigate permitting and inspections.

Third, line up financing. This could be a construction loan from a local bank or credit union, possibly combined with permanent financing once the building is leased up.

Lenders will want detailed plans, permits, and a budget before approval, so having your design and cost estimates ready is key.

In short — confirm zoning and feasibility, get an architect and experienced GC on board, and work with a lender familiar with new construction in Fayetteville. From there, you’ll go through design, permitting, construction, lease-up, and then either refinance or hold.

Brannon Potts · Answer

You should find a trusted small builder in the area.  You need to know costs.  So you can determine what you can pay for the lots.They may ask for a plan to get the exact hard numbers.  Sometimes they will give a you close general number.  You would also need to start a search for multifamily zoned lots.  I use the metric of $15-20K per door. That has worked for me when building small multifamily.  Each community has costs for Lot and Lot development with impact and utility fees.  You would want to know what they are in your area.  My lot and lot development is below 15% and sometimes closer to 10% of total completed construction of a project. That includes both the lot purchase, closing cost for the purchase, impact fees, clearing the lot for the pad for construction, and any things need to prep the lot to start the foundation.  I have taught a video series with this on one of my single family builds recently and also have built several small multifamily construction with a new one coming in the next 9 months where I will do a video series with costs. My channel is B2R Investing and Financial talk if you are interested.Build to Rent Build Series

Todd Anderson · Answer

@Caleb Kight,

Welcome to the BP community.  I should be able to find many ways to learn here.

With having no experience in this space the best way to start is to partner with someone with the experience.  When I talk with other investors that are looking into this for the first time most get stopped by the financing requirements.  Most lenders that i have worked with will not look at the project if you haven't done at least 5 builds.

When you consider all things involved if the development process I believe that working with an experience builder and coming in at the end with long term financing is a much better and safer way.

I have been working with a number of contractors lately in a number of different markets.  I let the builder take care of all the work and construction financing and am happy to get a Build to Rent property after the investment has received the CO.  We then get the PM involved and many times have a tenant lined up with in 2 weeks of closing.  This allows the investor to get a return on the investment within the first month.

Please let me know if I can help more.

Best of luck.

Ezekiel Trevino · Answer

Make friends with contractors. Also make some friends with real estate agents and property managers. Real agents and property managers might have a of list of people including contractors. They can also can help you find land and the property managers can help you manage the property. Or you could just Googe sreach contractor/ builder near your area. Look at the reviews, if they have good reviews contact them and get an estimate.

How to get started with built to rent multi-family

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