Have any of you ever had experiences building a duplex/triplex from the ground up on vacant land? I currently own a piece of land near downtown Chicago and am wondering if the best route to go would be to eventually build something on it. Just curious of what your experiences were? How'd you find your developer/builder? How much did it run you (just a ballpark, I know it varies by area)? Any other advice would be welcomed.
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Sorry -- just seeing this tag now. We have been in new construction for almost 20 years -- renovations are newer to us. We have done ground up construction all over Chicago (Lincoln Park, Lincoln Square, Andersonville, Roscoe Village, etc.) and the NW suburbs. My best advice would be to not view new construction through the same lens as renovations. It is a completely different project. Your time lines are longer and your expenses are higher. But, there tend to be fewer surprises in new construction (making accurate budgeting easier) and the potential payoff is usually much higher.
Your first order of business is to find out your zoning for your lot -- that zoning will determine what you can build. Second order of business is know your alderman. If you want to change that zoning, some alderman are open to it, some will absolutely not consider it. Ever. So don't waste your time. Once you know what you can build, find an architect with experience getting permits in the City of Chicago (a process unto itself). Those are the basic steps before you even consider breaking ground.
Once you know what you can build and have plans, you can start interviewing GC's. A good GC is the biggest part of a successful project, maybe even more so in new construction that in renovations. There tend to be more subcontractors to manage, bigger payouts to administer and a lot more decisions to be made, so a good GC is key. Find someone with good communication, a good track record and good references. We are out there!
Hope that helps!
Hey there! We still have not broke ground just yet, but yes as @Ann Folan has mentioned you want to start with zoning and your alderman. I am currently in the process of working with the alderman and the community on some final details. Hoping we can break ground soon!!
I might just add for further thinking, that once you get through site ident/acquisition, zoning, politics, initial design, then you'll want to run a proforma to make sure your deal pencils. This is the natural break point in the process to gut check youself, do my rents work, are my operating expenses sufficient, is my land and build cost conducive to profits. Simplistically, the model is develop, build, rent, sell - with the formula being:
Sale value - costs = profits (if you are long term hold then: cash flow / equity = return on costs)
So often we see folks get in love with their projects, then start to lose site of the "gut check", keep gut checking at every level, every step if you can, keep your model/proforma open, and update each time you get a new data point on rent, costs, etc.
Ann and Weston have the advantage of having done it before, so they likely have some general sense of sale values when a small apartment project is complete, and Ann for sure has the costs dialed in. You don't (sounds like they'll help, which is another move of power, build and use your networks of help), but as some point it's your bet and not theirs.
After you run your proforma, and have gathered sufficient info in your proforma, and the number work, then you'll need to raise capital, debt and equity. Everyone of those folks will want to see your proforma, plus some schematic plans, and an investment deck. Invest the time to put your deck together now, leave it generic, then when your schematics and proforma are done, you can plug the info in and go.
A couple of helpful sources:
1. See my "Lifecycle of a MF deal" thread here: https://www.biggerpockets.com/forums/44/topics/427...
2. If you're interested, I do a video podcast (brand new), where we spend 30 minutes assessing your deal (after some basic information gathering and preliminary design layout). This could be a way to have your deal assessed for free, you would just need to be comfortable being on a podcast.
Hope that helps
I am right in the middle of doing this, as in RIGHT IN THE MIDDLE!
Each side is 1650sq/ft. I picked the land up several years ago from a business deal. Value of the land is in the $70K range.
I had to design and engineer the plans due to small lot size. Pay for engineering and permits. I have a builder who provides me with the invoices, and adds 9% fee.
I'm looking at about $95/foot for the build, not counting the land. Adding permits and design fees brings me close to $100/foot. Both sides will be rented.
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