Building apartments.

[bmlyon]

I've been lurking on this forum for quite some time to the point where it has become a habit. I'm constantly reading others ideas and choices and what drives them and I'm glad I found this knowledge base. My ideas may not be revolutionary but they still can yield huge returns.

This is an idea that has always been in the back of my head because there will always be a need for it, the customer base is larger than housing simply because of the price point and average income in the us and I would be building equity at the same time to liquidate one day.

Coming from a traditional construction background, primarily residential homes, fathers company, I've always been surrounded by the constructionindustry. I have a goal in mind, to build apartments. There is quite a bit of money to be made by doing this. It may not be as fastlane as some other's ideas on this site but it will certainly build millions!!

My issue now is where to start? Is there anyone on this forum with the resources or direction to point me in to get obtain the knowledge to get this train moving. I know the general aspects of this but I NEED the knowledge to start taking action to achieve this. I understand it would take an large intial investment to get this started but with the right plan I could get funds from private investors.

I would build as the general contractor and owner of the complex with the intent to sell within a 10 year window.

I would like to hear from gentlemen with experience in this area. Any help or guidance would be much appreciated.

 

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[Silverhawk851]

Real Estate as road to wealth is still very much alive and well, as long as your that kind of person.

What kind of apartments do you mean? Multiplex? 0-30 units? 30-150 units? 250+ units?

There are a few heavy hitters from the Real Estate realm here...stay a while, search and read up there stuff.
Alot to be learned.

 

[bmlyon]

It takes all kinds of people to make the world go round' and people will always need housing.

I'm thinking 3 story 30-150 unit apartments.

Unfortunately after researching this forum I've found not too many people are on this road therefore I'm reaching out.

 

[Silverhawk851]

Actually there are plenty of them here...research harder.

Check out @Russ H @SteveO and @RealOG, just to begin with.

 

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[PSDSH]

Building apartments and housing is easy. All you need is money.

 

[SteveO]

There is money in apartment development. Like everything else, it is a tough road with lots of learning.

Finding investors without a track record will be a major challenge as well.

You will first need to secure the land. If you don't have the cash to purchase it outright, then you will need to tie it up under contract while you line up your plans. Land sellers usually want a premium from non-cash buyers. Be prepared to put some amount of money down that will not be refundable.

Next comes the planning and approval stage. This is where many of the complications arise. Most people don't want apartments built in their neighborhood. So expect a lot of resistance.

While you are working on that, you will need to work on the investors and obtaining loans. Lenders don't like to loan to people that don't have high net-worth for projects like this. If you don't have this, you might want to find a partner that does. They will want a large chunk for putting money at risk.

You will need to spend a lot of money on each site that you are looking at whether the deal goes through or not.

Good luck.

 

[Milkanic]

I'd start by finding some local real estate groups through http://www.meetup.com/ and network from there.

 

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[Lakeview]

I have a goal in mind, to build apartments. There is quite a bit of money to be made by doing this. It may not be as fastlane as some other's ideas on this site but it will certainly build millions!!

It certainly can be fastlane, if done right. There are ways to still build a fastlane business in real estate with less entry. Instead of a GOAL to build apartments, I have a goal to maximize my ROI through multifamily units. There are multiple ways to do this a fastlane way. Pick a way, learn to be really good at it and prosper. You are in the right section, keep reading.

 

[PSDSH]

If you really want to build apartments, start by hanging out at your local building department meetings. Learn about the process. There's a lot to learn before you're even remotely ready to risk millions of dollars. You need to know the laws, rules and regs inside and out before thinking about buying land.

 

[SteveO]

I know my post has a bit of a negative tone to it. I don't mean to come across that way.

I am a rehabber, not a developer. I have done some development though. I did a 10,000 sq ft medical building. It made money but was tough to get through all the red tape and other challenges. A group of us used our own money. There were no zoning challenges.

Most of the deals that I work on are older apartments in need of some fine tuning and updating. I find this to be a lot easier than development. But that is just my opinion.

I have personally witnessed people chip away at major challenges and be very successful. Keep us informed of your progress. We would love to hear about it.

 

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[Mattie]

Just make sure if you build it is in the right area. lol In my area, they built all these fancy condo's and apartments. They've been empty since they were built in 2008 etc. Beautiful places, but obviously they have taken awhile to get filled up.

 

[bmlyon]

I appreciate all the feedback. I have strongly considered the rehab side of apartments but I'm very uneducated in that area. I participated in some single family rehab and found that quite enjoyable, very satisfying work. This is something I would considered doing in order to scale myself into building apartments.

I'm aware of a strong barrier to entry in new construction given the amount of liquid cash or assets required to even get started. I was wondering of there any specific information out there or places where I could get this i.e. books, websites or whatever.

@SteveO Ive read a lot of your posts and threads over the past months and gained a wealth of knowledge. Any suggestions as to books or resources to get my foot in the door of apartment rehab? I would assume there would be almost the same amount of money to be earned this way?

Thanks!

 

[SteveO]

Any suggestions as to books or resources to get my foot in the door of apartment rehab? I would assume there would be almost the same amount of money to be earned this way?

Vollucci and Berges have books out. Any books that I have read are outdated now and probably don't apply very well to the current market. They will teach you how to evaluate a deal and estimate for repairs. Pick up any apartment book to learn that though.

I'm aware of a strong barrier to entry in new construction given the amount of liquid cash or assets required to even get started. I was wondering of there any specific information out there or places where I could get this i.e. books, websites or whatever.

There are usually groups that meet on a national level for everything. I'm sure that if you do some research, you will find publications and groups for this. It usually costs a bit of money to go to these meetings to network but it is a great way to hear about the issues in the field.

 

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[BlakeIC]

i vaguely remember @(zen*******) mentioning something before how he used to buy quite a few homes/apartments
Although these are somewhat different realms maybe you could ask him to shed some light on your questions

 

[PSDSH]

Just look for buildings with good bones. Everything else is easily repairable and/or replaceable. I bought a couple of fixer uppers on 2 and 5 years owner finance notes with minimal down...so it's possible. On the other hand I missed out on great properties because of a lack of funding...it gets pretty frustrating.
I've flipped houses and had 11 rental units at one time, all were fixer uppers.
Feel free to PM me and I'll give you my email so you can reach out anytime. I could write a couple of books on what I learned in the real estate game.

 

[Steve37]

Being around the construction industry for a long time isn't exactly a great reason to build apartments. I'd think that experience is much more useful rehabbing a poorly maintained property as a turnaround play. Is your goal to own the cash flow or are you looking for big construction management fees on the jobs and moving on, or both?

That being said the process of building apartments is really no different than developing a piece of dirt, it just requires significantly more money and some expertise on going from 100% vacancy to a fully leased up and functional property. There are some groups doing very well right now building high end student housing projects, maybe you can be one of them?

 

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[PSDSH]

We've been building spec houses for about two years now, and are currently evaluating a potential apartment build (about 50 units). From the actual construction standpoint, if you can build houses, you can build apartments. Entitlement of the land is more complicated and more expensive, but the place where things are much trickier is when dealing with your local jurisdiction. Most places will require zoning approvals for these types of development projects, and that means public hearings, impact studies, etc.

I like to document whenever we do new stuff like this, so if we decide to move forward on this project, I'm sure I'll be writing about it in much more detail...

Yep, and neighboring homeowners can throw a major wrench in the works if they don't want you to build an apartment in their neighborhood...you might have needed 50 units to be profitable on the land you bought and you could end up be forced down to a maximum of 36 units on that land after going through the public hearing meetings. And you may be required to build a park or improve roads and sidewalks in the area. It's not for the faint of heart or those with shallow pockets, that's for sure.

 

[458]

It takes all kinds of people to make the world go round' and people will always need housing.

I'm thinking 3 story 30-150 unit apartments.

Unfortunately after researching this forum I've found not too many people are on this road therefore I'm reaching out.

Lmao..

Why don't you start with 1 unit and see how that goes.

 

[bmlyon]

Lmao..

Why don't you start with 1 unit and see how that goes.

That would be the same thing as building a single family household. Been there done that, the market is over-saturated.

Just look for buildings with good bones. Everything else is easily repairable and/or replaceable. I bought a couple of fixer uppers on 2 and 5 years owner finance notes with minimal down...so it's possible. On the other hand I missed out on great properties because of a lack of funding...it gets pretty frustrating.
I've flipped houses and had 11 rental units at one time, all were fixer uppers.
Feel free to PM me and I'll give you my email so you can reach out anytime. I could write a couple of books on what I learned in the real estate game.

I appreciate your insight. A pm will be coming your way in the future.

 

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