anyone have experience with doing a new build 4-plex?

Question

It seems like all the 4-plexes on the market were built >20 years ago.  Is there a good reason for that? Is it still possible to build one today?

Does anyone have any numbers that they can share on what a "typical" new build 4-plex would cost, and how long it would take? I know that there are major regional variations in costs (especially land), and building materials (and labor) are much more expensive than they've historically been, but I'm starting to think that a new build might come out more favorable than an existing structure even so, given that the prices on existing places is so high.

I'd like to build a standard class-B property with 4 large-ish units (1200sf) within commuting distance to downtown Phoenix.

If that's even possible to do :-/

Travis Heppe · Answer

@Ray Johnson thanks for the detailed response.  We'll be careful during the feasibility study.  You're right that there are a lot of hidden costs, and we'll need to keep adequate reserves.I'm still hoping I can get someone to post some actual numbers here on a completed project, though.  Do you know anyone who has done a small-scale new build multifamily?

Ray Johnson · Answer

Hello @Travis Heppe there are a lot more variables than those that you've listed that will have an impact on your overall project cost.

To determine if it's worth doing a 4-Plex in addition to the cost you listed, I would recommend looking at; is the lot already graded, and ready for construction, are sewer, water, and gas already at the lot for connection, what type of rents are on your proforma, the biggest one many people forget about are the developer fees charged by the municipality to allow you to build the project, etc.

There are a few soft cost items that will be a part of the project that do not get lower just because you're doing a smaller project. Some cost that may vary based on location will be your environmental impact study, your list of cost from the Architect may see a lower cost for the schematics on a smaller project, with similar footprints for all four units, versus varying unit size, and scope requirements (less work, lower cost for A&E), the feasibility study, proforma, 3-D renderings, and other associated cost are going to depend on where this project is going to be built.

In my experience since time is money, I always hire out this initial process and have professional who does this regularly conduct a thorough feasibility study to tell me what's the best route to get me the biggest bang on a particular lot, look at Density allowances, etc.

I will add that I've never looked at a small project like a 4-Plex to have built as new construction because in my targeted areas of investment which are Washington, DC, Orange County, and Los Angeles, California, it's always cheaper to buy smaller properties in these areas unless you're going to build larger apartment buildings, and get the government subsidy's to mitigate cost.

Good luck with your goals!

Stephen Brown · Answer

I'd like to see others responses to this. Many multifamilies here in our area are reaching 50, 75 and 100 years in age. I've never done the process of a new build for multifamilies and I'd love to hear someone's experience on this. There's got to be a step by step process starting with the city.