New construction costs per sq. ft small multifamily
Investor · Denver, CO · Member since 2016 · 213 posts · 57 votes
Hi all BoggerPickets...
I am curious about new construction cost for small multifamily projects. This would be for everything except land. We probably should assume a smaller mostly level infill site with rentable finishes. Location will probably be important for this discussion so if you could post where you are talking about. Maybe we could have best cost advantaged building practices.... Modular.. precast... stick frame... sips (structural insulated panel system ??).. block etc. My hope is that this could become a resource for any investor with a small house on a duplex type zoned lot. Thus helping all of us come up with a better value for some of these infill sites. Thanks for all your time and input.. Smole In :)
Clearly a lot of variables, but I can share a few real life scenarios. All excluding land costs and in Denver.
I finished a 7 unit town home project in August 15, near Sloan's Lake - we finished at $165 per ft - this is demo to door bell with all costs included
I am breaking ground on an 8 unit south of Sloan's in about a month - I am estimating $185 per foot again demo to door bell. About $140 a ft in hard construction costs - the balance is everything else.
Both of these projects are 3 and 4 story, modern, nice finishes with sales prices in the high $400's.
I just funded a single family house for a client last week - SFR about 5,000 finished sq ft - $140 a ft - completed value over a million.
Square foot prices are dangerous.
Some quick examples of where this could go bad in a hurry:
Slab on grade or pier and beam?
Rocky soil or expansive clay?
Seismic zone or no seismic required?
So far I am still at the foundation but you can begin to see the hazards with square foot prices.
If you want VERY preliminary budgets, I am tracking Homewyse to see how it compares to reality. It seems a little cheap for our market, but if you add 5-10% contingency, you can at least get into the ballpark. I would not use it if I have money on the line though.
Interior finish out can make a big difference in cost. You need to specify what type of - flooring, countertops, appliances, light fixtures, plumbing fixtures, tile, hardware etc.
Your shell cost will vary depending on - brick vs. wood siding, type of windows, type of roof. Also, the amount of driveway and landscaping can vary from job to job. Hope this helps some!
all input is great thanks
will check out homewyse @Hugh Ayles
My hope is we will get a few of :
>>> we bought a scrape in Atlanta so we used existing water and sewer. built a 800/800 side by side 1bd/1ba each duplex on slab with basic finishes and with the scrape it cost $97per square foot excluding land and taps. >>>
For 25 years I made a living estimating. With my REI business I am still making a living with estimating.
When it comes to putting my wallet on the line, I am using either bids from contractors or my experience to determine pricing. There is no shortcut.
Another poster in this thread, @Cave Johnson indicates he is a contractor. He is not offering unit prices. It is not because we do not want to share costs, it is that we know a quick way to get into financial trouble is to use pricing guides.
In my market basic finishes may be laminate floors and stone countertops. In another market basic finishes may be carpet, vinyl flooring, and laminate countertops.
We might get away with siding and your area is all brick.
There are too many variables for a list of $97/sf in Atlanta, $110/sf in Austin etc. to generate meaningful data.
When I worked for a GC we were called often by estimating services. We were a big GC with a good reputation. Even those professional estimating services budgeted buildings by system (structure, roof, floor finish, etc.) rather than a square foot price for building type.
Like others have said.. It depends. I wouldn't be suprised to see $125 - $150 per sf. I hear denver market is getting expensive.
Clearly a lot of variables, but I can share a few real life scenarios. All excluding land costs and in Denver.
I finished a 7 unit town home project in August 15, near Sloan's Lake - we finished at $165 per ft - this is demo to door bell with all costs included
I am breaking ground on an 8 unit south of Sloan's in about a month - I am estimating $185 per foot again demo to door bell. About $140 a ft in hard construction costs - the balance is everything else.
Both of these projects are 3 and 4 story, modern, nice finishes with sales prices in the high $400's.
I just funded a single family house for a client last week - SFR about 5,000 finished sq ft - $140 a ft - completed value over a million.
Boy I would never walk down that path and I'm a dumb ole contractor. That is a very broad and open ended question. So much depends on the type of options you're talking about. You talken tile floors, wood laminates, vinyl sheet goods, carpet, etc?
What type of countertops, quality of cabinetry, window coverings, plumbing and lighting fixtures, appliance and the lit goes on. You need to supply a lot more info before you'd ever get someone to gestate that. Plus a lot depends on your particular geographic region and local building and material costs.
@Cave Johnson thankyou
@Hugh Ayles I see your point and am sure you are correct. I also looked at Homewyse and it does seem to be quite interesting. thanks for your tips.
As far as this post goes... It seems to me that an opportunity exists with investors on BP who own property with higher density zoning to better themselves with a project instead of a new property. With this in mind it seems that an investor could use some rough info to estimate if they would prefer to buy another property or entertain the risk to build on an existing lot they already own. Light rail is going all over Denver area and I am sure plenty of BP investors have properties where the zoning has increased in density. Lots near a main station have gone from R1 or one house on roughly a 50 x 150 lot up to unlimited density if you follow guidelines on setbacks, parking, landscaping and stay below 60 feet total heights. So, as an investor in real estate when does one decide to keep buying or stop and start developing for the best return.
Lastly...
@Jim Adrian Thanks and @Travis Sperr thanks for your insight and your time to post this.... and as you all have stated we have lots of variables..
for a little fun here I saw that habitat used precast for a duplex... http://www.pci.org/project_resources/project_profi...
@John Arendsen Yes, I have been getting straightened a bit.... :) what if you built a nice or fun precast building with just lower $ materials inside. Maybe nice cabinets but lino, carpet and laminate tops. Now you have the building that will last to 2150 and all it needs is periodically updated. look at that cool precast duplex and tell me you don't smile... thanks.
Lastly...
@Jim Adrian Thanks and @Travis Sperr thanks for your insight and your time to post this.... and as you all have stated we have lots of variables..
for a little fun here I saw that habitat used precast for a duplex... http://www.pci.org/project_resources/project_profi...
Fyi... Precast panels run about $35 per sf not installed for a design like that. Very economical when you get over 25ft tall.
I know Freddie Mac uses a unit price system on a national basis and while the system created for their approved GC's offers some specific guidelines in terms of finishes to be used, it isn't without flaws. I have yet to find a short cut that trumps experience.
I may be biased as a contractor when I say this but so far it's been the only sure fire way to get real numbers, call one of us and ask for a bid.
Without plans and product specifications a contractor is throwing out random numbers as well. Same as everyone here. But this is all speculation / generalization at this point.
Travis's numbers are pretty close to what I'm seeing right now. For a high level guesstimate, you would be ok using $140-150/sf to pencil out a proforma for hard costs (for a duplex rental...studs not precast :) . However, just like design, estimating and costs have different levels of detail. A high level estimate is schematic. You establish the number and see if it is in the ballpark and then you have decisions to make. You cannot take the cost exercise to the next level without starting to get more specific about what it is you're going to build. That means plans and that usually costs money. The more detailed the plans, the more money. Eventually you need structural engineering, a survey and a soils report.
Contractors can take plans and then give you a more specific cost estimate. But to be more precise you need specifications or at least a well defined scope of work. A project may pencil out, but you'll never know if it will work until you understand the details. If you don't want to commit to the full cost of plans, you can pay for them in incremental steps (Schematic, Developed, Construction Documents) and put them out to bid at each step. If the budget hits the mark, you can continue to develop the project.
Lastly, you should carry a contingency.
15-20% schematic
10% Developed
3-5% Detailed
@Nate Wightman so you are not the first to consider this. I know someone that looked into the option of building a small multi-unit project (10-30 units). He is a landlord through and through. He looked at it 15 different ways to Sunday. He couldn't make it work. The bottom line was, even as hot as the rental market is, he could not make the property cash flow as a rental. He has chosen to building new and selling. It's my opinion if this guy couldn't do it, then it's probably not doable. I'm not intimately familiar with his deal but he is a very thorough and detailed person. He has made a boat load of money in real estate in Denver.
@Nate Wightman Just to throw something else into the mix, have you looked at prefab? I know two developers who are working to bring two different prefab products to Denver. One is the iunit which is a smart lego-style unit which I believe you can use up to 4 stories with above ground parking underneath. The other is a flat-pack unit that works similarly but I'm not sure if they're stackable.
Just to keep things interesting, I know there are obviously lots of variables still, but do any of the contractors in this thread want to throw out a ballpark $/SF for these units? Luxury finishes, detached garages. Obviously land cost is a huge variable.
@Bill S. @Micki M. thanks and Bill, I understand your friends situation... :)
I looked at Modular and the quality was all over some not so good and some seemed great... prices were +- $120 ish/sq.ft built, transported, craned to position and fastened and siding and drywall finished (seams) on site mostly state inspectors viewing the construction so the cities don't seem to have big issues..... NO sitework, foundation, water sewer taps or installs, they don't hook building up to any of the utilities.... However they are cool because if you plan it you can start collecting rent months ahead of a built on site product. They were some questions about fire ratings on their system with units stacked over units.
I will look at the Iunit.. and I believe in my life you can have crap in one hand or compost in the other.... so, maybe the opportunity is to find this system to cut down on small apartment costs... @Ross G. we can hope :)
The way I see this issue... is the more people who can understand the cost associated with building new will create a demand for the construction types... this conversation is a win.. win... win situation I hope we can cut thru the absolutes and have a conversation about the possibilities. LOL... it is healthy
Just to keep things interesting, I know there are obviously lots of variables still, but do any of the contractors in this thread want to throw out a ballpark $/SF for these units? Luxury finishes, detached garages. Obviously land cost is a huge variable.
Oops, I meant to link to these townhomes so we have a specific property to discuss rather than just generalities.
https://www.redfin.com/CO/Golden/719-Arapahoe-St-8...
@Ross G. Hi Ross... not sure it makes sense for anyone to do a takeoff on a job they know very little about.... as Hugh and John A mentioned up above.. As @Bill S. mentioned about a builder who couldn't find a way to build apts. .... and if you poke around 8 plexes for $130k per door.... to build 1000 sq ft apts. at $140 to $200+..... 140k to 200k per door... and this sounds like you still need to pay for your land... then the 1% rule (1% of cost for rent) won't work. But what a challenge...
Interesting topic.
Along my quest for knowledge I was able to speak with a very successful developer in the Springs about my ambition to develop SFH . The one golden nugget I took away from him, was:
"Your Soft Costs should never exceed 15% of your Hard costs"
Soft costs include items like engineering, architectural and legal fees and other pre-construction costs.
Hard costs include physical construction. However, hard costs vary by market quite a bit.
The formula is something like this ( I hope someone will correct me if I am off the mark )
Soft cost + Hard Costs + Land = FMV
If what you come up with for FMV is not realistic you know where you can adjust - making sure your soft cost do not exceed 15% of your hard costs.
my 2 cents. good luck.
another angle on apartments...
http://www.usatoday.com/story/money/business/2015/02/26/shipping-container-apartments/24076583/
these containers are 40 long by 8 wide and 8 or 8-6 tall, can be shorter most commonly 20 foot long...
@Nate Wightman, @Travis Sperr is pretty accurate on hard costs at $140 p sf in the denver metro area for mid-higher end, modern multifamily new builds. I have a 6 unit townhome project in denver breaking ground and my construction hard cost estimate is coming in around $135-$140.
In terms of types of construction, in colorado stick frame seems to make the most sense still in terms of cost effectiveness for small residential projects. Modular is great in places where labor costs are high, and maybe if you're building to the dimension of shipping containers/trailers so that it can be easily transported and pieced together. Otherwise, the cost of transport and other factors with building modular doesn't justify much savings compared to stick frame in the Denver market.
I've designed a lot of charter schools using tilt up, and like mentioned earlier, it's great for taller, larger projects like gymnasiums, etc, but I just don't see it for residential, particularly with small two to three story multifamily. In commercial projects, tilt up is cheaper than steel framing since building type requirements per code and fire ratings rarely allow wood framing for commercial and institutional projects. However, in residential, which is mostly always wood framing, if you use concrete, you'll still need to fur out (frame out) the walls for electrical, insulation, etc. Therefore, totally redundant.
Same goes for SIP. I've looked into SIP panels for my previous projects but even for a 6 unit, 3 story town home, it doesn't make since cost wise and came in more expensive than stick frame. Also, consider SIP requires a large lot to be able to lay out all the pieces so they can put it together like a puzzle, and most residential lots just don't have the size to allow for this, which is the same issue with tilt up as well - both require space to layout the panels, and cranes to lift them into place.
There is RS means which is the industry standard for cost estimating. They have an online subscription you can use. You can put in your locations and it will base your estimates off up to date, regional prices, however, it's based on an average and is still in the end, an estimate. Until you get bids from your contractors and subs, all estimates have some percentage of contingency to cover for the changes I the market.
Switching gears with you...Shipping containers are best left to military style barracks and third world countries. Try living in one. Short term housing only.
However, a way to capitalize on shipping containers is to approach it from its surplus, 15 years of war, I would think has caused and over supply. Get them cheap slap some lipstick on them and call it 'war zone chic'. 30% premium per door easy!
Even though they are shipping containers getting them from one place to another maybe the largest cost in acquiring them.
The shipping container properties I have seen also required a lot of regular preventative maintenance.
Going back to your original thread, below are a couple of links with info that may be useful to you.
The first link is from Fundrise.com a realty investment group of some variety. The web page has a graph that seams to show Denver - hard costs - at $165. questionable source.
https://fundrise.com/education/blog-posts/real-est...
The second link is from the American institute of Architects on construction costs. I found it very insightful.