Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes
I've been finding several RM1, CMX1, and CMX2 lots in the city of Philadelphia at low prices. I'm very familiar with turnkey multis, so there's half the battle. But I need to sharpen up on the intricacies of estimating new build costs.
The cost of lumber has thrown off new construction costs recently, but I'm not sure by how much. Can anyone provide insight into this?
Also, how should you accurately estimate the construction costs? I know the basics... like multiplying the lot dimensions by 0.75 to calculate buildable square footage. But where do you get your numbers for price per square foot?
Has anyone attempted a new build around Philly? How did it turn out for you?
I don’t see how you’re finding these properties at low prices unless they’re in total spec areas. Inventory for multi family development sites are at an all time low and prices are at an all time high
Sure can you buy an RM1 triplex lot for $50k yes, but only In areas that are completely undeveloped and perhaps make a good land bank play
Even some spec areas are trading at $30k a unit for the land. Already developed and high demand b/c neighborhoods like sharswood/Brewerytown are trading for $60k a unit
Lumber has gone 100%, doubling in price. In this time of extremely low inventory and housing shortages a lot of new home builders are not doing any starts because of the price of lumber. The lumber package (rough, finish, doors, etc) is the biggest number by far in a new build.
I was working on a transaction earlier last month in Brewertyown and was amazed that what used to cost $375K to build had gone up to $400K because of lumber. It seems like lots have gone down in value for that reason.
@David Haynes that's probably a fair guess. It could also be related to some of the regulations the city has been putting on development in some areas, Strawberry Mansion in particular. Investors may see the restrictions on building height and others becoming more common across the city and they don't want to be stuck "holding the bag" when the development music stops.
I don’t see how you’re finding these properties at low prices unless they’re in total spec areas. Inventory for multi family development sites are at an all time low and prices are at an all time high
Sure can you buy an RM1 triplex lot for $50k yes, but only In areas that are completely undeveloped and perhaps make a good land bank play
Even some spec areas are trading at $30k a unit for the land. Already developed and high demand b/c neighborhoods like sharswood/Brewerytown are trading for $60k a unit
@David Haynes I’m currently building a quadplex with my partner in olde Kensington and we are looking for another lot. Land prices have gotten pretty ridiculous. I’m not sure where you are finding these cheap lots. And yes, the price for our lumber cost us almost double what it did 6 months ago.
I'm seeing the same rates on the MLS. I and my partners snagged a shovel-ready RM1 triplex lot in the heart of Brewerytown for $50K a unit. However, we have a pretty good system of finding off-market inventory, so I guess I shouldn't define the market by what I'm able to find though my systems. My biggest need for strength though is calculating the build cost. I'm not a pro when it comes to estimating new construction costs.
I don’t see how you’re finding these properties at low prices unless they’re in total spec areas. Inventory for multi family development sites are at an all time low and prices are at an all time high
Sure can you buy an RM1 triplex lot for $50k yes, but only In areas that are completely undeveloped and perhaps make a good land bank play
Even some spec areas are trading at $30k a unit for the land. Already developed and high demand b/c neighborhoods like sharswood/Brewerytown are trading for $60k a unit
@David Haynes I’m currently building a quadplex with my partner in olde Kensington and we are looking for another lot. Land prices have gotten pretty ridiculous. I’m not sure where you are finding these cheap lots. And yes, the price for our lumber cost us almost double what it did 6 months ago.
That quad in Olde Kensington sounds very interesting. In my opinion, multi families are the only good rental plays in that area. I'm working on a duplex lot in West Kensington right now for $80K. I'd be curious to know what number you got that quad at.
Where in west Kensington? At $40k a unit that’s far from cheap but still sounds like it would work. I am actually closing on a 9 unit lot for $270k / $30k per unit