Has anyone built their own Multifamily Investment for long term hold?

Question

Just been driving around places and have come across entire sub-divisions with Duplexes, Fourplexes and Apartments.

My question is:

1. Has anyone here built their own Duplex/Fourplex/Apartment to rent and hold? How did it work out and is that a good way to go?

I was thinking about hypothetical, where one would build Multifamily dwelling and rent it out on a long term hold. It should be cheaper to build than to buy as it is often the case with Single Family Houses.

Bob Hank · Answer

Glenn I tried to send you a PM. If you did not get it let me know.

Grant P. · Answer

We are currently in the process of a new build 8 unit development here in Denver. Getting the numbers to work is and has been a huge challenge for buy and hold. At the end of the day, our investment will cash flow about the same as a project that was turnkey and on the commercial market. Our cost basis would have been much higher as we did not account for our time, or an architecture fee.

Simply put if we didn't have free design and free PM this deal would have been garbage. We build and are happy with less cash flow because we know we have created the value when we go to sell as condos. But in our market it is hard for us to build for buy and hold. Building to sell is another story, as this can work quite well assuming the variables all line up in your favor.

Glenn Espinosa · Answer

Hey Bob,

What part of Virginia are you in? I'm currently looking at duplexes and if you have a line on any that you aren't interested in yourself, I'd more than appreciate the info.

Bob Hank · Answer

When the market dropped I owned both side of a street. We had 19 duplex shells built and we finished the inside our self. With the bad market and the amount of work we gave the contractor we got a good deal.

It would have been cheaper to buy duplexes, but at the same time I was not going to be able to sell the land to a developer so I was going to be stuck with it all for who knows how long.

I would never buy anything more than a duplex because of the codes and regulation changes I would have to deal with. Right now you can buy a used one cheaper than you could build where I’m at and know a few that might be for sale.

Brian Burke · Answer

I would agree with Joel. In most areas I've been buying in or researching, properties are selling below replacement cost. When that reverses, building starts to make sense.

Joel Owens · Answer

I guess it depends on your area. Here it is much cheaper currently to reposition value add apartments or buy fully performing than the cost of building new.

Has anyone built their own Multifamily Investment for long term hold?

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