All Forum Posts by: Shane H.

@Mike Wood

My thoughts were involving the partnership is to have a 50/50 split of the equity.

I'd fund it (down payment, dealing with lending etc) be involved in some of the sourcing of materials, paying bills, some of the grunt work (yard, painting possibly, handling setting the plumbing fixtures or hiring out some of it...then lease up, paperwork and management.  I thought that was fair - he is also going to look into getting a line of credit to throw a little cash into the deal or keep it as a reserve so he has some skin in the game.  However his work and employees work on certain items would be a major contribution.

My partner would have the GC license, be able to run things day to day give direction where necessary, pull permits etc.  I've dealt with the inspector once before when he filled in for the neighboring cities inspector on my rehab project - he was easy to deal with.

I'd need to talk about taking a management fee when the property is rented out to make up for my time/systems and dealing with the taxes.

I only live about 10 mins if that from the development so it wouldnt be a big deal to check in or hop over and work when I could.

@Mike Wood

I should have clarified - the $66/ft cost is the builders cost - he only builds for himself/partners as far as I know.

I'd agree after analyzing more that it would be extremely difficult to get to the $50/sq ft # - however I'd think it wouldnt be impossible.

My thoughts were if I could get it in the high $50s to below $65/ft or so you are in the project less than it will appraise for, can lease out, keep the property for 5 years for example, sell each side of the twin home as a possible exit, or sell the investments to others at near retail pricing thus recapturing the equity you created.  I'm sold on the future of the area - the growth will be there soon as long as we do not have another serious downturn.  Good schools, shopping etc are all close by.

Ideally I'd like to use hard wood base trim at $1-2' cost from a supplier out of the area, the casing of course would be more, Masonite doors $70-80 ea, Schlage Door knobs, LP Smart Siding, basic roofing materials unless I could snag a good deal on class IV shingles - 5" concrete for the slab, Basic Vinyl windows.   

I have a good grasp on what I can get siding, windows, trim, interior/exterior doors, decks, guttering roofing, flooring, landscaping and concrete done for and who to use/where to source materials, along with electrician/plumbing -- lacking site prep, foundation/framing/roof trusses cost -- I could get the cost of the rough in from a buddy who runs a plumbing co.

My challenges are A - not being able to be there all day to run things, and B - still missing some of the key contractor connections.  Need this second person to step in and be a part...if he isnt interested I will find someone else if I move forward. 

Hello,

I have found an opportunity that I do not believe will last very long.  A development near me has been re-zoned for duplex construction and many of the lots are available.  This development was started a year or so after the downturn (wheels were set in motion before then) and it has for the most part sat idle for a # of years.  

The developer as I alluded to earlier had most of the development re-zoned for duplex construction to spur things along as he is wanting to get rid of the lots and the "specials" taxes he is liable for.  (In our locale, the developer does not pay to put the sewer/water/roads in...the city does and then levies a "specials" tax payable for 15-20yrs by the lot owner)

I think I have found a partner though I'm not sure - he doesnt seem as excited about the opportunity as I do.  He is a contractor who does sub work for high end custom homes here (his primary trade is finish carpentry) though he can do the gamut of tile, drywall, siding etc)  I'm also capable of a lot of this work though I work better assisting someone else, some I can take the lead.  So together I think we'd be a good fit - he knows/sees who the good subs are for the various areas of work that would need to be hired out, has been in the industry for a good # of years and does work for quite a few well known/respected builders.  Back to that in possibly another post.

So given the scenario above, where my partner would have his GC license and can pull the permits, between the two of us have a good handle on high quality materials and where to source them, the general knowledge of the order to get things done, dealing with inspection etc...Is there a good way to gauge how much we could collectively build the duplex for?

Keep in mind some parts of the job (such as finish work - hanging cabinets, trim, doors, decks etc) putting up fences etc would be done by us/his crew, other parts would be hired out and we'd be paying full retail for nothing.

8 bdrms, 6 baths two 2 car garages (so 4 bd 3 ba ea unit) would be the ideal layout with a basement.  There'd be appx 3500-3900 finished sq ft per duplex so about 1750-1950 sq ft per unit finished - each would be a ranch with ideally a view out basement.

Another builder in the area is offering to build similar units with the same grade of materials we'd use/craftsmanship for $300k all in with the lot/turn key - you buy appliances. 

I've been told figure $75-100 a sq foot but that seems so general.  @ $75/sq foot I do not think pursuing this makes much sense unless I have loads of cash burning a hole in my pocket.  If we could get the cost down to $50/sq foot I want to build as many of these as I can as when completed they should appraise $275-300 and some change.  

(My idea for the partnership would depend on two scenarios - we have not sat down yet and came to a solid conclusion at this juncture, however option one would be he stays in the long haul - I help finance the deal, take care of that side, put in my sweat equity/management where I can, then take care of lease out, property mgmt - we'd split equity 50/50 - second option would be for his exit at a pre-determined point in time.... cash out refi - and he gets 50% of the equity - walks away or keeps a percentage of equity leave some cash in the deal etc)

Am I out on cloud 9 as far as getting build cost down to $50/sq ft or so?  He was thinking it was possible with a simple well thought out floor plan and our combined connections and based on his experience.  However he is supposed to run it by a couple builders he works for to double check - I have not heard back yet and they may not want to give up any proprietary info.

A similar high end builder in town builds Grade A+ duplexes which rent for $1700-1800 per unit and his all in cost is around $280 or so with him GCng the deal.   (I had insider info for this figure and it is accurate) Ours would be a tad smaller and may not have all the high end touches - he's also hiring everything out and no hands on.  Building his own duplexes/multi-family has been his business model for years and years and he's done quite well.  

@Erick Tran

Welcome Erick - quite a few Wichita folks active here.

 I use it for my accounting.  Have not used Quickbooks so cant compare the two.  Have used Buildium since 2010, for me it only made sense to use their built in system.  Only thing it's not the best at or I need to play around with some more is automatically linking to your bank account and pulling down your transactions.  I just have not been able to get it to work quite right.  

Preparing my financial statement for tax season is a breeze.  

@Abhijit Dey @Martin Rogers

You have to sign up with an account first before you can get a referral credit.  I could run you through that and would be glad to send the emails once you have your accounts set up.

Here's a link on the Buildium page that explains the referral process.  Once you set up the accounts, please @ me and I'd be glad to send the emails.  http://www.buildium.com/buildium-referral-2/

@James Eng @Account Closed @Brent Shryock

Found this thread by performing a search...I found a development that has some duplex zoned lots for sale...I was surprised as all get out that the developer was willing to sell to outsiders -- here ALMOST ALWAYS you have to be in the "good ole boy" club - ie part of the construction industry, money man, builder, major plumbing contractor etc to get any multi-family zoned lots in a new development.

I guess the kicker  with this place is the development was started at the start of the bust (end of 2007 beginning of 2008) and the development just stopped for a # of years.  Lots of the cities development is heading this direction - it is literally off of a major highway and a couple big shopping centers are planned at a future point a mile away...they were talking putting a large open air shopping center which I think something similar will get built eventually.  Anyways, it's in a good location.  Just doesnt have much in the way of retail/restaurants around it now, but should in 5 or so years...however it would only take residents about 5-10 mins to get to major restaurant/retail areas.

I just drove over there this evening since it's not far from my house, every finished duplex had tenants in them and the construction company/contractor that put them all in has been in business for a # of years.  The city told me there is high demand for rental housing there and they are looking for more developers.  Right now there are 2 lots avail which I have the funds to purchase and more could be made avail from the developer to an outsider such as me.  My partner would be a contractor who I've vetted and trust.  Basically I want to copy what all the other big guys do around here is partner with someone and get the property built at cost.  Those details can be covered later.

However my question is how tough is it to get a Fannie Small Market Loan for multi family (duplex) new construction?  I'll be making some phone calls to one of the small market lenders but last I checked into I do remember one of their caveats was that for multiple properties all lots must be contiguous.   If I could roll the money over from equity created by cutting overhead/doing some of the work into the next property I'd love to put 5-10+ of these properties in.

Presently I have 10 years experience managing a duplex, and 2 single family units - so 4 units in total - strong financials as well.  Based on what you guys put above would I qualify for a Fannie Multi Family loan or am I lacking a couple qualifications they'd be looking for -- (management of 5+ units, etc)

Hope my questions make sense and would appreciate any feedback.  I think this coming week I'm going to pick up at least one of the lots -- what I'm having a hard time with figuring now is how much cost I can cut off the build if my partner acts as the GC (he works as a contractor and 99% of his work for the past few years has been in new construction so he's familiar with who does good work, dependable etc)  and we do some of the work and cut quite a bit of overhead.  Others can build a quality 4000-5000 sq ft (inc finished area in the basements) 8 bdrm, 6 bath 4 car garage duplex w Smart lap 50 yr siding, vinyl windows and high quality finishes/fence/and lot for $300k all in minus the appliances - So I'm thinking I should maybe be able to get this done for $200k or so?  My partner was thinking this was possible, however was going to run it by a couple other builders tomorrow he'll be working with who have experience building similar properties.  Am I crazy?  The breakdown of construction cost is probably best suited for another topic.    I've crunched the #'s and if the duplexes finished/rented out appraise for $300-320 each duplex, and you have a loan for $240k, (could take your mortgage up to 300k if you could) you will still cash flow when getting market rents of $1300-1500 per unit.

However if you guys think I'd be chasing my tail seeking Fannie financing to put in a few of these duplexes I wont waste my time and will work with my local bank...however I feel I might get a better deal with the Fanny multi family small market loan/dus lender.

I worked with the neighboring city on a rehab a year ago and dealt with this cities inspector as well during the process when he filled in for someone on vacation -- he's pretty laid back so as long as I'm organized getting all the permits/inspections wont be difficult.

Welcome @Andrew Moore

As @Carl Willis stated - good # of folks active in Wichita.

@Robert Muzyka

I've had one in Wichita since 2006 - first investment purchase - Wish I had 30 more of them.  I've always looked locally - in the class/rents/areas I'd like to have them in they just very rarely come for sale and if they do typically the ask is too high.  I've done more homework and I think most are sold in larger packages off market.  Next goal is to get in the network to have a shot at the large off market packages.  Lots of older/aging folks who "control" a lot of assets should be getting closer to retirement so should present some opportunities I hope.

The other option which I've been investigating more recently is building my own.  

Is the house in CO or KS?