Please help with analysis...

[Lucas]

Hello all,

I have an opportunity to possibly put together a deal about 1 hour west of Edmonton.

The land is vacant and I would build a Multi-family rental.

Here is one idea I have:

Build a 10 suite walk-up multi-family comprised of all 1 bedroom/1 bath apartments. My budget, including land, would be 360k. I have projected the total revenue to be between $600 and $800/suite (depending on floor) with an average income of $700/month. I would provide laundry facilities in each unit. The heating would be Geo-thermal...I have an "in" and I like the idea of tightening up the monthly heat costs. I would pitch the roof, so to avoid the cost and maintenance of a flat roof. I live in the area and will be managing the building myself.

Money talk:

Initial costs (this is where I am not so sure...) =

Appraisal = $1500
Legal costs = $3000?? =
CMHC = 3% of gross mortgage?? = $8100

Anything else with commercial construction??

Gross rent = $84,000/yr
Variable expenses = $42,000/yr (assuming a "rough" expense ratio of 50%...this includes maintenance, insurance, management)

PIT (assuming 20% down, 5% interest, 25 year Amortization, $3000/year yaxes) = $1,925.02/month = $23,100.27/year

Cashflow = 84,000 - 65,100 = 18,900/year or $1575/month

These are very rough numbers and wanted to get some opinions and input.

Thanks for your time...

Lucas

 

[housingrental]

You can build a self contained 1 bedroom apartment for $36 000 / each in Edmonton and including cost of land ?? Really?
Also - why not 2 bedroom ?

 

[Lucas]

I`m not sure yet if it can be built for that and it isn`t in Edmonton...its in a small town about 1 hour west...Land is 60k. With a budget so small, I am trying to keep costs down...Extra bedrooms = more materials/labour (ie. 10 extra windows, int. doors) and bigger footprint (ie. concrete). I am going to GC so I am really, really trying to fit this into a tight budget...It may well be unrealistic...Essentially, I would like to complete for 30k/door. Each unit would be approx 650 sq. ft.

Lucas

QUOTE (housingrental @ Mar 17 2009, 10:23 PM) You can build a self contained 1 bedroom apartment for $36 000 / each in Edmonton and including cost of land ?? Really?
Also - why not 2 bedroom ?

 

[Nir]

Good analysis Lucas. Adam summarized it well, I believe the main risk is if it ends up costing you double the amount to build it you will have negative cash flow. so just do your due diligence on this part and good luck. Neil

 

[Ken15]

In my "neck of the woods" you are looking at cost of ~$100/sq.ft for residential construction. That is if you are the General Contractor.

If you hire a GC to do the work you are looking at ~$120/sq.ft..

Not including land. Building only!

 

[housingrental]

I like the last two posts (investsmart, Ken15)- after reading your new post Lucas I thought I should add: if you have a tight budget are you sure new construction is the best idea even if you can get something off the ground close to your planning ? Things can go wrong.. very wrong occasionally... you need to have the pockets to absorb the risk

 

[Lucas]

Thanks guys...appreciate your tips.

Adam: This is true...I have included a 10% contingency fund and I expect that it will be spent. Around Edmonton though, 70k to 100k/door is the going price. If I can build for 30 to 40k per door I could save alot of money and have a new building. In the town I am building, a multi- just sold for 50k per door and its an old building in need of a little TLC (although far from distressed).

I still have to have plans drawn up...Here are some thoughts to keep costs down:

• conrete slab foundation
• 4/12 pitched roof w/out dormers and ashphalt shingles
• stock windowsvinyl sidingenergized stall parking

I would love for this list to be added to. A list of the most economical building procedures (including materials) would be a great resource on this site.

Lucas


QUOTE (housingrental @ Mar 18 2009, 10:13 PM) I like the last two posts (investsmart, Ken15)- after reading your new post Lucas I thought I should add: if you have a tight budget are you sure new construction is the best idea even if you can get something off the ground close to your planning ? Things can go wrong.. very wrong occasionally... you need to have the pockets to absorb the risk

 

[Thomas Beyer]

$100 to $150/sq ft + LAND is a good rule of thumb .. maybe less if you do a lot of work yourself

how is it financed ? all cash ? 50% mortgage ?

costs upfront: drawings: $20-25K
engineering assessment: $5-8K
approvals: 3-8K
+ land .. so 100K .. and nothing exists yet except the right to build !

so a 650 sq ft 1BR would be 60-90K PER to build .. plus parking + common areas .. so $1M maybe for a 10 plex if you are good !

get it speced out by an EXPERT .. YOUR COSTS ARE WAY WAY WAY TOO LOW !!

 

[Lucas]

QUOTE (thomasbeyer2000 @ Mar 19 2009, 10:54 AM) $100 to $150/sq ft + LAND is a good rule of thumb .. maybe less if you do a lot of work yourself

how is it financed ? all cash ? 50% mortgage ?

costs upfront: drawings: $20-25K
engineering assessment: $5-8K
approvals: 3-8K
+ land .. so 100K .. and nothing exists yet except the right to build !

so a 650 sq ft 1BR would be 60-90K PER to build .. plus parking + common areas .. so $1M maybe for a 10 plex if you are good !

get it speced out by an EXPERT .. YOUR COSTS ARE WAY WAY WAY TOO LOW !!


At that price, it just does NOT make sense in that location...at all...I will have to pull together some quotes to see what I can bring it in at. I guess if I have drawings made that can be put anywhere (as the lot I was looking at is flat) I can keep the drawings and use at another location.

I think I can bring it in cheaper (I have men employed, access to material acct`s with distributors, some other contacts that I have already brought in on other projects for below market labor costs...etc...) and I`ll let the forum know what my final numbers work out to.

Thomas or someone who knows: Are labor prices coming down with the market?

Lucas

 

[Thomas Beyer]

QUOTE (Lucas @ Mar 19 2009, 04:04 PM) ...
Thomas or someone who knows: Are labor prices coming down with the market?
of course .. QUITE A BIT !!!