Building multi family on land I already own

8 Replies

Hi Everyone,

Would love to hear feedback on a project I am considering. A little bit of a unique situation my parents bought a track of land in a suburb of Dallas in the 90s. It is roughly 3 acres with around 588' of road frontage running north and south so a long rectangular property. My mother still lives on the property and has a house on the south acre. She is gifting me the north acre which would be around 255' of road frontage. I am checking now with the city to see if they will allow me to build multifamily on this acre. I would love to build a couple 4-plex town home style properties on this. My main question is the pitfalls of building new. Land is free besides taxes so it would just be the construction cost. I'm also wondering if this is a good route or if it would be better to do a few duplex instead. I'm under the impression more doors under one roof is better but that may be wrong as I am new to multi family. I'm sure a lot of this is market specific but would love to hear from others that have built new multi family. 

Hey Matt,

What a great deal to already have the land in the rapidly growing Dallas area. I work for a home builder doing new residential construction and my current neighborhood is in Forney so not too far from you.

Let’s see if I can answer a few of your questions. I don’t have personal experience with zoning, but I’ve heard it can be a bit of a hassle/process trying to rezone land. There are several other threads about rezoning on BiggerPockets though that I’m sure would be helpful.

As far as building new, it requires a lot more work than you anticipate and usually ends up costing more than you budget for when individuals try to do one off projects like this. Now on the other hand, Dallas does have a shortage of new housing so it’s a good time to strike while the supply and demand is in your favor. If you do get the land rezoned, I would recommend going with more units under one roof (fourplexes as opposed to duplexes). The reason for that is economies of scale.

Is this land in Wylie or a different suburb? What are your end goals for the project? Build then hold, build then sell, etc?

-Steven

@Steven Byrnes thanks for the response! Geez I wish it was in Wylie! This is actually in Balch Springs pretty close to 635 and I20 split. The street it kind of odd but is turning for the better in the last couple of years. Relatively new apartment building was built just up the road and a few new builds are being done right now. I'm waiting on the city to get back to me but I am curious if it is actually re-zoning since it should be residential already. Honestly I know very little about zoning this is for sure a learning experience. I think the big deal will be if the city will allow me to build multi family and if that is considered re-zoning. I intend to build and hold. 

Go to a few of the P&Z meetings, listen to the issues and talk to some of the members. Every municipality does it differently but the staff members are usually the ones you want to make friends with if you can figure out who they are. There are also consultants who will walk you though the zoning and permitting process. Since Balch Springs is more remote and less developed you may have a harder time finding these types of consultants but I'm sure Frisco, McKinney, Allen would be places to look. 

I don't have direct experience with this but my dad was on a P&Z board a few years ago so I learned a few things listening to him. 

Sounds like a cool project. Good luck

I've never done this type of project, but as with all RE investments, let the math be your guide. Building new is expensive, yes, but you can get top dollar rents and will have little maintenance or CAPEX costs for the first 5-10 years. Add up how much you can get in rents, and if it more than covers the loan, then you have a potential winning situation. Let the math tell you if its a good investment or not. Dont fudge the numbers, be realistic, and see what gets revealed to you. Get the right spreadsheets to start with. And study the crap out of multi-unit investing! I'm sure you'll do well!

Well the city shot be down on building multi-family and say that re-zoning will not be approved because of city plans to keep the area low density. I'm not giving up immediately but also looking at numbers on building SF as well.  

Hi @Matt C., who or which department of the city do you contact and speak with to find out if they will allow this type of project? My uncle is in a similar situation, where he owns two SFHs right next to each other and owns the land. He's interested in demolishing the two SFHs and building 3 duplexes instead. Just gathering information at this time.

@Allen Tong I’ve been speaking to city planning and zoning. I’ve gone up the food chain a bit and still receiving the same answer. It’s a two part problem for me first part is the land is zoned SF 6 and the second part is the area is designated for low density in the cities master plan. They won’t even let me request re-zoning. I’m trying to convey the point the tax value on each lot will be more than double if they allow me to build multi family instead of SF but falling on deaf ears so far. I can still get 5 SF houses on the land but would rather have 4 four-plex. 

Originally posted by @Matt C. :

@Allen Tong I’ve been speaking to city planning and zoning. I’ve gone up the food chain a bit and still receiving the same answer. It’s a two part problem for me first part is the land is zoned SF 6 and the second part is the area is designated for low density in the cities master plan. They won’t even let me request re-zoning. I’m trying to convey the point the tax value on each lot will be more than double if they allow me to build multi family instead of SF but falling on deaf ears so far. I can still get 5 SF houses on the land but would rather have 4 four-plex. 

Thanks for the information Matt.