Scraping SFH and building apartment complex

3 Replies

Hi BP!

I live in a house that is on a lot zoned for high density MFH.  I'm trying to educate myself on the process (if I decide that the economics make sense) of scraping my house and building a 12-unit apartment building.  The zoning is not an issue.  


Does anybody have experience with this?

Would I need to engage an architect? 

Are there pre-published cookie-cutter plans I could buy and then provide to a builder?

Are there any resources on how to evaluate the economics?

Will a bank finance this?  Assuming I have to pay off the existing mortgage before demolishing the existing house...

Any insights are greatly appreciated!  If i left out any information, let me know and i'll try to clarify.  Thanks! 

Hi Rob,

While I have only been part of developments in CA, the approach will be similar but there will be outliers in every development. The first thing you will need to do is a feasibility study on if this development opportunity would even pencil at the high level. You are starting off in a great position since you own the land already, thus that upfront cost will not be wrapped into your analysis. Below is a list of items that you should be able to populate to begin the feasibility study (The last few depend on your exit strategy, Rentals, For Sale, etc.). While you fill out the costs for all of these items, the questions you posed will be answered and I believe you will get clarity on this opportunity.

- Design Fees (Building and Site) - Reach out to local Architects that design these building types, make sure they include the cost for there consultants.

- Permits and Fees (Includes Entitlements, Utility, Plan Review, Inspections, Any required studies, Reports, Environmental) - Reach out to your local municipality or whoever will be providing your permit.

- Financing/Taxes and Holding costs - Talk with the bank that you have your home mortgage. Find out the banks that will be providing the construction loan for your project.

- Construction costs - Reach out to local GC's that have built these building types and size.  

- Leasing/Marketing Fees - Reach out to commercial real estate firms. 

- Development Fee - (this might be zero but something to think about)

- Operating and Maintenance costs - If rental units, will you be managing or using a management company. Maintenance should be minimal but still need to factor it in.

- Market Value (Rentals or For Sale) - Reach out to commercial real estate firms.  Do your own research.


I hope this helps.

Brian Giambastiani

@Rob Newsom

I am an investor and builder. You can look at predesigned plans but each lot is different so you will need a site plan that is specific for your lot. You will need an architect that has done apartment designs for the size you want. The architect will be able to help you walk the plans through the city's permitting process. However, you should look around and find stuff you like maybe using Pinterest so when you sit with an architect you can give him your ideas on what you want thus can give you pricing. 

Banks will give you a loan up to 80% of the appraised value after it is built. You will need to own the land which you do and will need to have approved plans for them to review. In addition a builders pricing. 

Best of luck

Awesome info, thank you both!  I'll start looking into these costs.  My gut tells me that replacing a single-door with 12 doors has to be a money maker, but I really need to start putting pencil to paper.  Have either of you (or anybody else for that matter) had any experience with seeking LIHTC, or other governmental assistance (i.e. grants) to help with building costs?

Thanks again!