New build fourplex

4 Replies

Hi y'all,

I was presented with a fourplex new build deal. The realtor provided a conservative cash flow analysis, capturing all necessary expenses. The funds needed for the project are ready to be deployed, but I am somewhat skeptical based on my lack of experience with new builds. The fourplex will become part of my buy and hold portfolio. Currently, my portfolio consists of zero properties, classifying me as "green".

What questions should I ask the realtor? I have been studying and learning as much as possible about real estate investing. I appreciate any help and am excited to learn!

Thanks!

@Ryan Hutchins why is this new build up for sale? is it common in your area for multi family properties like this to be build and sold new?  Before you worry about asking the realtor any questions you need to crunch the number for yourself. What do the finishes look like, are you buying into high end units? middle of the road? low end?  what are the comps for rent for units like what you are buying in your area?  I would not let the realtor give you any cash flow numbers, that persons job is to sell the property I would bet money that what ever numbers they give you are on the high end of what you can expect.  Remember a realtor is working for the seller,  not you.  Also something else to look at or ask about is, are all utilities split so you do not have to include any utilities in the rent.

@Michael Karl appreciate your comment. In response to your questions, this particular development has been underway for about two years. This particular fourplex is a design and less than a quarter mile from the 25 fourplex properties already built. I would assume a new builder who had rights to develop the land noticed the success of the other. I am planning on driving by the location today to see if there is current construction occurring.

In this particular area, a majority of multi family properties are built and sold new. The current average days on the market for existing multi family properties about four days in the county that I reside in. Rents have steadily increased in the 8 years that I have lived here. This current project projects rent in line with the other 25 fourplex properties. The rent however is lower than most fourplex properties due to its location, but the commercial and shopping center developments will hopefully bring rents to market level.

The build itself middle of the road. I would not reside in most of the fourplexs in my area.