Building homes in the yard of an existing rental - questions!
Hey folks. I own a rental property in Seattle (unincorporated King County technically) and it has a 10,454 sqft lot, zoned R18 (18 units per acre). There is a home on there currently with a huge back yard surrounded by larger multifamily properties. The previous owner started the subdivision process but went under after the crash. With rental properties as scarce as they are in King County, I'd like to see if its feasible to build 3 townhome new rentals in the backyard. I'm a total noob at new construction, so I asked a friend that has done it and she pointed me to company called ASPI surveyors and land planners. I'll be consulting with them next week on overall feasibility of the project.
I'm gonna need a construction loan to get this off the ground. I'm hoping all construction cost for 3 units (townhomes, 2BR/2BA, hopefully 1200-1500 sqft and 1 car garage/carport) is <$400K since gross rents are in the $5000-$5500 range. I'm able to qualify for $400k-$500K for a residential loan so I'm assuming I can swing it for construction.
Few questions for the experts:
1) What are typical terms for construction loans? Is 20% down gonna cut it? I could do more if needed. Are they typically 1 year balloon payment? Once construction is done? Do most folks just do hard money?
2) Can I roll all construction costs into the loan? Stuff like drainage, soil stuff, etc?
3) What is a quick and dirty way to estimate new home construction costs to help make sure I'm doing alright in the cost department?
4) As I'm waiting to get my feasibility and land plan done, what else should I be doing?
5) What is the typical time frame to get this done? I was hoping to be done <1 year, am I crazy?