Rental Property Investor · Mitchell, SD · Member since 2017 · 57 posts · 68 votes
8y
I happen to have a 8 plex in Mitchell SD. I think your price to build is a little low. The 2 bedroom for $1000 might be high. I charge $700 for a 2 bedroom including a garage. A new build could go for $950 possibly. I own and manage rentals for a full time job. I have tried to build several units and it has never penciled out. You must also take in account it will be empty day 1 up to 6 months. Message me anytime with any questions.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
@Kaleb Carsten I would consider doing only 2 bedroom units, so maybe a 6 plex instead. Bathrooms and kitchens are where more of your money goes, so basically you can ditch 2 baths and 2 kitchens from the plan, then move that square footage to the other units. This should reduce your overall construction costs and your rents change to $6000 per month instead of $6500. Not a huge change in rents, but you will end up with more desirable units and reduce your upfront costs.
New construction will never have the same return as existing, but you also don't have the CAPEX demands in the first 10-15 years that you would in other properties. New units come with higher rents and appeal to a higher class of tenant, so you may be trading some ROI for less tenant issues.