Tips for building multi-family units
In Charleston SC we have a limited supply of multi-family units. Does anyone have recommendations on how best to find land, approve zoning and build multi family units? Particularly duplexes, triplexes and quadplexes.
Are there any books or other resources I can use to get smart?
Hi John!
I'm a long time BP user and multifamily investor. I'm currently building my first project in the Los Angeles area (37 units).
Personally, my experience with BP is that the forum is great for those looking to invest and flip single family homes or small to mid size apartment complex. It hasn't been as good of a resource for land developers.
I asked the same questions you are asking several years ago. You can get many tidbits of information from the web but land development is so vast and non-formulaic that everything on the web was either contradicting or "to general".
Cliche to say but the best way would really be to get to know some local developers and ask to buy them lunch or a coffee to pick their brain. Be up front with them and say that you want to learn from them and don't turn around and try to pitch them a deal or ask them to spend too much time looking at deals that you aren't too serious about.
@John Vietmeyer I'm no expert, but I do have some land in Summerville already zoned for multi-family. I'm wondering the same thing about finding developers/builders who who want to build on it. Let me know if you want to talk offline or grab a cup of coffee.
@Pearce G. Pearce... it depends on which spot in Summerville, but given the recent and planned growth, you could have a valuable tract if already zoned appropriately. The way it typically works is that you would get a Commercial Broker (Caldwell, CBRE, Colliers, JLL, etc.) who has extensive relationships with multifamily developers (Greystar is top 10 and HQ'd in Charleston). The Broker helps you to determine a value based on market comps and then shops it around for you. Depending on your expected terms, you would then enter into a contract with a Developer. Within this contract, the Developer will have a Feasibility Period (60 -120 days if it doesn't require a Rezoning) during which they will have access to your land to conduct any due diligence they deem necessary (wetlands, title, cultural, geotech, traffic, etc.) to help them understand if the project works for them and any associated risks. If the Developer finds something that will negatively impact their cost to build, then they will attempt to negotiate the price downward to compensate. If, at the end of the Feasibility Period, the Developer would like to move forward with the project, they will close on the property and that's that. Obviously, this is a very basic version of this process, but I hope it helps.
@John Vietmeyer John... the best comprehensive resource I've read is the "Professional Real Estate Development Guide" published by the Urban Land Institute (ULI). I have the 3rd edition (ISBN: 9780874201635). There could be a newer one out now. It covers all the major asset classes (multifamily, retail, etc.).
Taking a project from raw land to vertical structures usually requires a team of professionals, since not really anyone is a master of all the different skills needed. Most "Developers" have intimate knowledge of the whole process but hire Consultants (design, marketing, sales, etc.) as experts. I would suggest concentrating on one stage within the whole process and learning how to add value there. For example, a civil engineer with extensive experience in land development could add value by taking a raw tract thru the entire entitlement process, and then selling it to a Builder. Large builders like to move fast and will pay a premium for a project with a green light, even if it's still just raw land. Anything to shorten the cycle.
I hope that helps in some way.