Advice on analyzing infill apartment development/apartment investment

[Grant P.]

Hello all,

Seeking advice on how to analyze potential apartment development to hold and carry as an investment.

The building would be 8 units total project cost in the 1.2m range, and would be projected to gross $125,000 before expenses. The numbers look very good on the proforma's that I have built, but the real value could be in the concept.

I have run projections and financial proformas from an investment standpoint, but these do not take into account the added value from developing the project.

To anyone that has developed investment property and can provide any insight on how you would go about making projections please feel free to contribute. I think I have a good handle on the numbers, and they look EXTREMELY promising as is, but I'm missing a big piece, which is the increased value of the building.

Also when you develop projects, do you build a development fee into your projections if you own the project? How about design services? The architect is part of the team as well. The building will be financed, but no additional investors, just us.

Thanks in advance,

G

[Joel Owens]

All I will say is I have seen 8 deals go bad like this for the 2 where they break even at best or make some money.

How much land are we talking here??How many units allowed per acre??

You could increase the number of units to try and bring down cost to build and development numbers.

I just think you might be better going after repositioning deals for less than replacement cost.