Hey there calling like minds for a little brainstorming. I'm an investor from Boston and I've been having trouble finding deals for fix and flips. I do notice I've been seeing alot of land for sale in Boston around Dorchester. The costs of multifamily homes in the area are quite high.
So! What I am trying to do is gather as much information as my brain can soak up on the process of Developing a house. I am I'm in network with quite a few architects and contractors. From my understanding I would need a blueprint. That blueprint would have to be approved by the city? Then digging the foundation and connecting pipes from the sewer? Then finally developing the frame and doing interior and exterior work? What is the process? Calling all developers and likeminded individuals in iMassachusetts to give me wisdom and to brainstorm. I know this is a very big procedure but I'm sure with proper planning and networking it can be worthwhile. I did just download the new construction diary here on biggerpockets so I'll be starting there.
Hi @Jabari P. - to develop a parcel of land, you will want to give yourself a solid 24 months. I know someone who just took down a property and it took him 30+ months to fully complete from acquisition to resale.
You need a lot of things and we are doing our first tear down/new construction project. You are more than welcome to follow along by following us on facebook. We are also part of a group called Boston Wealth Builders, found on meetup, where we give property tours and insight/presentations.
For Dorchester, you should not consider any land that would be suitable for 3 units for more than 100k with approved plans (this is just an example). Some land is sold with approved plans, some is not. When we acquire raw land that needs ZBA approval, we cannot pay more than 50k based on our numbers. But Dorchester is huge, so the specific area will better define what is the right price.
Feel free to connect with me - I'm by no means an expert, but am going through all this right now in Southie, so I do have the relevant info.
Maybe consider partnering or a rehab project first?
How are you looking to find your deals? If it's just MLS, you are not going to find much there. Let's talk about your marketing plan/budget for direct mail and/or online.
I'm actually a part of that group on meetup.com I think. I found my current fix and flip by driving by it was an abandoned house i contacted the owner he agreed to sell it. Would have started construction in May but there is a title issue that is still being worked out. (It'd be too easy if things went smoothly) everything is all lined up for that deal its just the waiting game until the title issue is resolved. I've just began sending letters to absentee owners in Dorchester and Mattapan waiting to see results from that. I go to meetup events to network with others I've met a couple wholesalers so far.
So for the land with plans i should be looking for less than 100k? The cheapest lot i found was 139k that was on a zillow search i dont think comes with plans. Multifamilies in Dorchester avg sale price is about 550k in the last 6 months. How can I find a rough estimate of how much a 3 family would cost to develop?
@Jabari P. - Oh, great! Have you been to any of our projects? Hope to see you around soon! Between the site work (water, sewer, electric, gas, foundation, surveys, curb cut, temp fencing, police detail, water line for sprinkler - if required vs pump and tank system, etc), you're probably looking at 100-135k. it might be more if the soil is no good, you will want to get a core soil sample before you get to a firm contract price, since that can be another 30k to truck out bad soil and bring in good soil.
Then to build it will be anywhere between $125-150 a sq foot, maybe more maybe less - all depends on contractor relationships you have and the finishes.
With everything being very busy in Boston, affordable skilled labor is hard to come by. I think every project is different, so it really depends on the complexity of the building proposed.
If you're doing a 3 family in a good part of Dot, you will get more than 550k, especially if you get tenants in there and sell it as turnkey. Could be 750k+ in some parts. I think the worse areas you will probably see 500-550k in the current market.
So rough numbers:
100k - Purchase with plans
135k - site work
437k - frame and finish (assumed at $125/sq ft)
672k - all in cost of land and construction
??k - legal, taxes, ins, broker fee, utilities, misc
I would look for condo potentials instead. Some areas in Dorchester you can sell for 350k+, so your ARV would be more like 1.05M and then it would be worth it.
I can help you a little bit too: here are a couple of "three letter-four letter words" you need to know: BRA & ISD. :-) @Ray H. nailed the numbers. But let me see if I can give you another different piece of advice when it comes to these guys:
On the one hand, Boston EXPECTS Zoning issues (setbacks, non-conforming uses, height variances, etc.) because the land is so dense and land use is so tough. On the other hand, the best advice I can give you is to TRY your ABSOLUTE BEST to stay within the Code. You'll burn time money, and hair going through the BRA for Zoning approval even in the best scenario; don't make it worse by trying to eke another three feet of linear floor space on the boundary. Trust me, it's just not worth it.
Here's a particular situation where it was too close: we had an appx. 16 total sq. Ft encroachment into the setback in the shape of a very thin triangle: a Point in the front, all the way up the building width, back something like 35 feet to about a 1 foot width and back again... For a NON PROFIT in Roxbury... and we had to purchase land from the neighbor and get it redelineated with the Land Court's engineering department because it was Registered Land. Yes... Something that small, that 'honest' of a mistake, for a well-known & respected non-profit, only into the setback... and it went back through the BRA, ISD and the Land Court. Make sure your engineers, surveyors, and GC are on their toes if you're building right up to the setback. Hold them accountable.
I'm interested in your numbers, too... I'd love to connect with both of you, if that's possible.
@Jabari P. Welcome.
Lot of "mouths at the trough" when you start with land which is why it takes so long.
@Jabari Piper Congrats for venturing into this exciting industry/market with limited experience, you gotta start somewhere! I'm sure you'll do well because you're doing the right thing...asking questions. Many of the answers to the questions you initially asked about process are outlined on the BRA's website: bostonredevelopmentauthority.org.
After getting the general idea of what to expect, you might want to start interviewing general contractors. I work with guys in the Southie market who know the folks downtown, which is a huge help. Especially when you want to squeeze another unit into a project or can't get enough parking spots. Another key player is your architect. This person MUST have experience and relationships with the BRA & ISD. If not, it could cost you time and money.
Ultimately, there is going to be a learning curve so don't get frustrated. Best of luck and feel free to shoot me an email if you need some referrals.
@Ray H. I'd like to connect with you also. I am moving to the Boston area soon and would like some insight on land and potential rehab projects. Thanks Ray.