I have just purchased a triplex (two 1b/1b and one 2b/1b, 1700 sq ft in total) on a 7000sq ft land in San Diego (City Height). The zoning allow me build up to 5 units (1500sq ft max) on this land. I don't think demolish everything and rebuild 5 units is cost effective now so I plan to build two studios or 1b/1b on the empty land and redevelop other building in the future. I anticipate the rent is ~US1000 for 1b/1b. I have no idea how much would it cost to build a studio or 1b/1b. Any idea? What else can I do to increase cash flow as I don't want to waste the empty land. Thanks!
@Wai Wah Chan
I would double check the rent comps on that property as my sister lives in University Heights, which is a much superior neighborhood close to Adams, and pays $995 for a 2 bedroom. You definitely want to nail down your rent comps and then figure out what it is going to cost to build. If you are only getting $700-800 per unit rent/month it doesn't make a whole lot of sense to spend $100k+/unit to build. Just my thoughts.
Thanks for the response. Your sister gets a very good deal! Rent is booming in San Diego so US1000/month for a new 1b/1b in City Height is very reasonable.
@Wai Wah Chan
Another tool for you to check out is Rentometer and Craigslist for rent comps. Of course, like any part of town, you will want to pull comps from your immediate area. I guess $1000 for a new 1bd/ba is reasonable, but certainly not for a typical dated unit built in the 50's/60's/70's.
Wai Wah (cool name, btw),
I can get some figures for you, but estimate at least $150/sq.ft. for new construction. Maybe you can divide the lot and build a smaller duplex on the new lot?
The reason I say this is you have to look at it from an end-user perspective. It's easier to get conventional financing on 4-plexes or less. Conventional lending is available for 1-4 unit properties. 5+ units requires commercial lending.
Probably somewhere around 190-200/sf, given that it is San Diego. Not a whole lot of builders there, law of supply and demand. SD is among the slowest I have dealt with when it came to permits. Build time is at least a year.
Wai Wah Chan What you're describing is what I've been doing for the past couple years. I've got a project going through the same thing now.
Happy to share with you real costs and the gotchas I've experienced if you're interested. PM me so we can chat if you'd like.
Spoiler alert: it's very expensive when you consider all things, but can work out.
@Wai Wah Chan Sounds like a great project please keep us informed. what you decide to do, and why.
Thanks for sharing!
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