Wife and I are interested in creating a multifamily property, either through creation of an in-law suite, or maybe just building a nicer MFR property from the ground up for a house hack opportunity.
Location agnostic at this point, just seeking info on people who have successfully did a new build of a small MFR property? Most existing MFR I've seen in the markets I'm looking in are in C+ to C- communities. We're looking to be in a B community at worst.
It's certainly do-able. I haven't done it, but a few have gone up in the neighborhood of some of my rentals. The owners have done pretty well. One individual I know has built three duplexes and a quad as infill construction. He rents them out to college kids.
I'm looking to do the same on some land I own. Two parcels I own are sized/zoned for single family and one I own is sized/zoned for multi. There's a moratorium on building multi family in my town that was instituted to stop an enormous multi family development. I'm looking to kick my project off when that expires (if the town stops renewing the moratorium period)..
Its an option for sure and can be done. Just know that financing a build is COMPLETELY different than just buying. There is more of a need for up front cash. You will need the cash for not only the "down payment" for the loan but also any builder/designer or architects that you hire. Its not really a "down payment" but its basically the same thing. Those bills are more than likely NOT covered by the loan. The loan will only cover construction costs. Now you probably could get another loan to cover those but thats 2 loans now and probably a higher interest rate. i.e. hard money load which I advise against in this circumstance. Now don't forget that you have to pay off those loans as soon as money is taken out which means you will be paying the entire construction period while you have ZERO income from that property. Hence the need for more cash.
Don't get discouraged from this. Developers do this ALL the time. So it works. Just you need to be aware of how different it is when it comes to financing.