Potential development opportunity?

Question

Hello everyone! Been reading these forums for a while, first time posting.

So let's get right to the point: I have a half acre lot Chicago (Rogers Park). Building was crumbling, so had it demo'd and fenced in.

I purchased this property a few years back attempting to rezone for commercial use, but to no avail. It's currently zoned at RT-4 so I'm thinking it may be best to use for construction of a midrise apartment complex. I have pretty much all liquid tied up in here, so would be looking for institutional/private funding.

I've never done a project of this size. Would it be wise for me to pursue this? I'm looking to get a feasibility study done. I've contacted 2 national firms, and their quotes came back in the 20-30k range, which I honestly feel is way too much. Any guidance on this topic would be appreciated.

Thanks!

Pavan Sandhu · Answer

just sell it to a developer whos doing similar projects around the area. tag along, keep a small interest or something to keep you involved in you'd like to learn but sounds like no easy project for a new to development person.

Imran Sabir · Answer

Hi Seth - appreciate your response.

Yes, that's part of it. What I'm also interested in is depth of the market for new construction rental apartment development, overall marketability for 21-28 rental apartments, determining geographic boundaries, permitting/potential rezoning, neighborhood demographics, demand forecasting, market-rate rental analysis, and current/future project under construction that may pose competitive influence upon future residential development. With a clearer picture of the above, I would feel much more comfortable making a go/no-go decision.

Nick Marrs · Answer

For perspective, I've seen Architects in San Diego and Los Angeles charge minimum $15,000 for feasibility studies for similar mid-rise apartment buildings (I'm a structural engineer). You could also ask for their hourly rate (might be around $150/hr) with a Not-To-Exceed limit, and bail if it looks like the feasibility study won't work out before the hours start exceeding your preliminary budget. Tip: Overall, don't go cheap on your architect / design team or you will spend even more money fixing problems occuring during construction due to inexperienced designers.

Kyle O'Connor · Answer

Have you contacting the Alderman they can single handedly help or hurt your project. They also "know what the neighborhood wants". Like anyone they're more willing to work with and help people that contact them early instead of after the fact.

Justin F. · Answer

I second this. Assuming it's more than the standard city lot, it sounds like more risk than reward unless you partner with someone more experienced. If you don't know exactly what should be built there and who it should be built for, I would find one of the developers in the area and talk to them. A smaller percentage of their pie will be a lot more than 100% of a smaller or non existent pie.

What's the address? Maybe we can help

Seth Holmen · Answer

Maybe start with a "lite" version of that analysis before you drop the big $$. Get some help and do some zoning / feasibility study with a brokers opinion and market analysis. This could be done for a fraction of that cost. What you are describing sounds like an entire underwriting document with building cost estimate. We've done that on a few larger multi-family projects around Chicago last year. We get a pretty fat book with all of the research and projected financials for the first 5 years.

Jay Hinrichs · Answer

see what your lender is going to require..

Ibn Abney · Answer

@Imran Sabir I live close by and have a rental in West ridge. Hot area!!! Hot like a summer afternoon :-)

I would do the study and /or continue to explore options. The land alone you can probably flip at a good profit if you bought right. $20-$30K sounds about right, if not alittle low

Good Luck!

Seth Holmen · Answer

Feasibility study on if it’s a good rental market? What sort of information are you looking for? Confirm zoning and allowable use and building cost?

Account Closed · Answer

@Imran Sabir awesome piece of property, I'm originally from Chicago and know a couple of developers that may be interested in jumping into this deal with you. They can bring in the equity and experience to reduce your risk and allow you to participate in the upside together. Shoot me a message if you'd like to chat!

Potential development opportunity?

Most Popular Reply