Multi Family New Construction Pro Forma

[Emilio Ramirez]

I would really appreciate your opinion on these numbers. I'm banging my head against the wall. If anyone has done a project like this can you tell me where my assumptions are wrong. I'm looking at a brownfield lot in the city for a 100 unit multifamily development. Costs to remediate will be matched at 50% plus it is a foreclosure so they will match construction costs 50%. Even with these incentives, it does not seem like a great deal. What am I missing? I see these buildings going up all day in my town. Any ideas?

Best regards - Emilio

Land Purchase $100
Remediation and Demo $1,000,000 $500,000 50% match from gov

Total Acquisition costs $500,100

SF Per Unit 760
units 100

total SF 76,000

circulation 38% 28,880

Grand Total SF 104,880

Cost Per SF $95 $9,963,600

Fees/permits 10% $996,360

Total Costs $10,959,960

Contingency 5% $547,998

Total All Costs minus acquisition $11,507,958

Paid By City 50% $5,753,979

Costs by Developer $5,753,979
Amount Financed $4,000,000

Equity Required $1,753,979
(with acquisition costs)$2,254,079

Monthly Mortgage Payment $28,000
7.50% 30 years 10 year balloon renewable

units 100
Rents 750

Total Rents $75,000

Expenses 50% $37,500

NOI $37,500

Monthly Cash Flow $9,500

Cash on Cash Return 5%

After doing the calculations, I think it could work, but it seems unrealistic. Any thoughts? Even if my investor put down the required equity, the Cash on cash ROI would only be 5%. Plus there would be a balloon payment at 10 years. The $95/sf includes AE fees and GC fees. This doesn't seem like a deal to me. How are these guys doing it? Thanks for your thoughts.