Posted by DJ-nyc on November 25, 2008 at 13:29:38:
Join your local Real Estate Investment group for networking;information. Read and network FIRST.
Keep us posted; good luck!
DJ-nyc
Building a Multifamily Unit - Posted by Ms. Tutt
Posted by Ms. Tutt on October 23, 2008 at 18:41:06:
I am planning to build a multifamily unit (possibly more than one). And I am in need of tips and advice as to how I should begin.
Re: Building a Multifamily Unit - Posted by oneal hodges
Posted by oneal hodges on November 03, 2008 at 10:06:47:
hello MS. TUTT it depends on the no how and what are you trying to do. question have you ever built any or purchased any. its a matter of having the resources and team in place. also if you have done any its going to star wars unless you get advised on it . it can be done but its going to drama. how much cash you have to put down. what are your experience here. is the deal been underwritten i can do it but not for free.
Hold On Queen Tutt (long) - Posted by Jimmy
Posted by Jimmy on November 02, 2008 at 05:55:57:
a few nuggets o’ gold from my vast collection of scars and miscues.
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on my turf, building new MF is economically inferior to buying existing MF in need of major work, doing the work, upgrading the tenants and the rents, and operating indefinitely. otherwise put, you will invest 40-50% more capital to get a given amount of rent with your model v. rehabbing. and the “shiny and new” thng will fade in about 2 years. TRUST me on this.
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I don’t know Augusta. my understanding from some buddies who have been there for the Masters is that A-town has lots of lower-income areas, slums, run-down properties… if true, this sounds very much like the East TX towns where I do my biz. which implies that there should be tons of rehab opportunities.
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you mention government assisted tenants so you can rely on the rent… NO NO NO NO NO!!! (a) NEVER rely on Section 8 for your tenants or your desired rents. you can’t depend on them. in my 8 years in the biz, I have had as much as half of my rent coming in from S8, and as little as 11%. and all of my units are available to S8. so why the wide variation? funding! there was a period in 2005-6 where the local housing agencies had ZERO new vouchers to issue, because they had no funds. they depend on their money from HUD. and HUD depends on their money from COngress. if you put yourself in a position of dependence on S8–you just became a welfare care yourself. (b) Your units need to be situated so as to be attractive to wider variety of tenants. elderly. lower-income folks not on S8. students if there is a college nearby. working stiffs. and S8.
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two huge mistakes by newbies---->…at some point you will do an income and expence projection. your banker will certainly want to see it before committing loan money. MISTAKE #1: assuming that the S8 max rent is the same as market rent. wrong! its often higher than marker rent. and if you assume you can get, say, $775 for a 3 bedroom because S8 will pay that, and then you can only get 30% of your units rented to S8—you will find out–in a hurry—what real FRV is. I made this mistake in Tyler, TX a long time ago. HUD rents were 15-20% higher than FRV. ouch. MISTAKE #2. underestimating vacancy expense. in the 'hood, you need to expect 15% vacancy/collection expense. in other words, if your max possible rent is $100,000 for a year…you should do your budgeting with the assumption that your annual collections will actually be 85,000. many newbies ignore vacancy altogether. smarter ones underestimate it. very few get it right.
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there’s SO much more. you are lucky to have found this board. we have some very experienced, battle-tested landlords here. Had I been plugged in here back in 2000, I would have avoided some rookie mistakes. good news is this: none of my mistakes were fatal. and I made my early mistakes in a raging bull market. make them now, and you lose your shirt.
good luck
Re: Building a Multifamily Unit - Posted by sharon
Posted by sharon on October 28, 2008 at 06:47:56:
There are a number of issues to consider.Multifamily for high income families or will these units be for the moderate families? Of course, Multifamily units if operated correctly can briing you good return on your investment.
Re: Building a Multifamily Unit - Posted by Warren
Posted by Warren on October 27, 2008 at 09:16:19:
first how many units are we talking about – What part of the country will this be in – have you build anything like this before – do you have a Banker or broker lined up already – are you keeping or selling once they are built and do you have a realtor in place – I will be able to direct you send me a email about this so I have a better understanding how to give you the right advice
Re: Building a Multifamily Unit - Posted by Ms. Tutt
Posted by Ms. Tutt on November 03, 2008 at 21:31:48:
I have never built or purchased anything, I’m new to this. I inherited some land in an area of which I would not live. So my idea was to build a multifamily unit/ units on that lot. I have no resources or team so I’m still at the drawing boards. I’m not in a hurry to get it up, it’s just a project that I would like to have complete by the end of next year/beginning of 2010. And hopefully, I can gain knowledge from whosoever decides to share. I’m planning to get into real estate investing, so this could be my starting point.
Re: Hold On Queen Tutt (long) - Posted by Ms. Tutt
Posted by Ms. Tutt on November 03, 2008 at 21:37:05:
Thanks so much, that information will be very helpful.
Re: Building a Multifamily Unit - Posted by Crystal Tutt
Posted by Crystal Tutt on October 31, 2008 at 13:25:30:
I was thinking about renting to gov’t assisted families. That way, there would not be any problems collecting monthly payments.
Re: Building a Multifamily Unit - Posted by Ms. Tutt
Posted by Ms. Tutt on October 31, 2008 at 13:23:54:
Not many units, maybe 2 in Augusta, GA. As of right noe, I have not line up m the banker. The plan is to keep the units.