All Forum Posts by: Scott Choppin

@Brian Lau

Doing a larger commercial project as your first deal out of the gate is ambitious. The advice that @Joel Owens is correct, partner up with a developer, and learn while watching them develop the project. 

Send me a DM and I would be happy to talk about it in detail. 

Thanks!!

First, I applaud your vision, this is the type of thinking that changes your community for the better.

Second, we have experience in adaptive reuse, turning non-residential structures into housing, as well as, experience underwriting and preparing RFP's. 

Would you be interested in talking about this? We may have some ideas that would be helpful.

Send me a DM and we can catch up.

Thank you.

Scott Choppin

@Kamyar Fg

Thanks for your question. In my first post on this thread, I outlined that some info would remain private to protect the interests of our partners and investors. Our build costs are one of those items that must remain private. 

@Vanessa B.

Hi there, my name is Scott Choppin, I run a RE development company in Long Beach, we might be able to help.

Do you have specific land parcels identified? Is there a specific areas you want to work in?

Have you run any proforma numbers? This will tell you how much the land is worth based on value of home sales after taking into account the build costs, soft costs, development impact fees, etc. 

Have you identified a general contractor to build the project for you?

Do you have equity and debt to build the project already in place?

There's way too much to try and guide you via this forum on BP. I would suggest you send a DM to me, and we can set up a call. Our offer is either as a consultant, or we can look at a joint venture. Bottom line: LOTS of complexity to work through, better to get good help if your serious about taking this process on yourself.

Thanks, Scott Choppin

@Mike Wood

Great questions. 

1. Apartments sales values are always a function of comps, at least related to appraisals that are used by buyers to finance their deals. On small projects I would agree that cap rates are less commonly used by buyer. We are working on larger projects - 15 to 30 as an example, where cap rates would be commonly used by buyers. On smaller projects, we often we see folks using a GRM. But comparable are used in all cases related to the appraisal process.

Now the tricky part for my entire career has been, when you are a developer offering a residential project that has not been done before, or you are offering new housing in a market that has not seen development for a long time. This has been typical for us over nearly 20 years of developing in the urban environment, where there is just not a lot of good comps. This is true now for our UTH offer where we are building in low and middle income urban neighborhoods. We do have our own sales comps (projects that we built and sold and know the exact value as a function of the rents and NOI).

2. Question for your: What are you seeing that you would say are "nicer details" that add costs? Just a small amount of detail about those things can help me answer your question more effectively. Our UTH model works by building a very simple Type V, slab on grade product, on an already zoned site, delivering a vanilla residential product. This is where the cost savings really are found. We are able to cost effectively deliver items such as granite countertops, but these are the market standard for all affordable housing in CA these days anyways. As well, any buyer of our projects would expect no less, and therefore helps in our projects sales conversation with the potential new owner. 

We are renting units at rents based on true moderate incomes. We ground this by referring to the CA State HCD website which says "moderate" is defined as 80-120% of area median income for the county in which the project is located. On rents we are comparing our rents to the CA TCAC tax credit project rents for 2017, where the LA County 100% area median income rents for 5 bedrooms is $2,884 per month. This puts us squarely in the moderate income category.

3. On bedroom sizes, we really try to stay at or above 10x10, sometimes one of the bedrooms does go below that, but usually one and not all. Recall that our goals is to deliver true affordable housing to larger, dual, and multi-generational urban families. We have to refine every cost component to make this both affordable at moderate income and viable for private equity returns. 

Let me know what other questions you might have. 

Thanks, Scott

@Nicholas F.

Good morning, some questions in order to be of help.

1. Have you run a proforma generally? I realize you are seeking build costs, but have you run any numbers so far?

2. I note you are in the COLA, is the site zoned correctly for your proposed use?

3. Have you discussed the design of the project with an architect? The design will influence the costs, so that question is critical. 

4. How did you arrive at the decision that subterranean is required? There are some critical reasons to make this decision with great care. 

Take a look at this thread, where we wrote about the lifecycle of a development deal, this may be valuable for you: https://www.biggerpockets.com/forums/44/topics/427144-lifecycle-of-a-ca-multi-family-development-deal

Finally, we are an offer of help, our company provides real estate development consulting, and we can absolutely help you with your process. Send me a direct message/colleague request and we can set up a call. 

Scott