Build to Rent Mixed-Use Case Study: Breaking Down a 16-Unit Ground Up Development!
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- เผยแพร่เมื่อ 2 ธ.ค. 2024
- Want to see EXACTLY how real estate development deals get structured? I show you every number on this ground up 16-unit mixed up development project here.
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If you're currently developing or want to develop ground up real estate whether multi-fam or mixed use like in this case study, watch this video as we lay out the entire deal structure here: land purchase, short-term financing, then permanent funding once the building is built and stabilized.
We put these videos out for 2 reasons: 1) Nobody else really teaches real estate development, especially for free. When I started out I had to figure all this out on my own. No help. I'd like to make it easier for the next generation of developers. Our country needs more housing and more people thinking creatively about land use and building. 2) Our software company (Rehab Valuator) is built to serve investors and developers. The software makes deal analysis, raising $ and project management a breeze. Another way we're helping the development community and those coming up behind us!
So grateful for someone like Daniil to show us how to execute deals so efficiently. Wow !!!
You're very welcome!
You are a beast!! Thank you for the details others leave out or gloss over
You're welcome!
Thank you for sharing!! Please continue.
Can you do a video on finding a architect or draftsperson and the cost?
Good idea!
I’m in need now trying to find the right architect
New to development just started working with 1 this is great info look forward to using your software
Awesome content
So excited that I found your channel
Thank you
Glad you found us too! How did you find us btw? Always interesting to know
Trying out the app. I’m so new to this but inherited land in Miami. I have to start somewhere right? I appreciate you
Awesome! Yes, baby steps and you'll get there :)
In your “cost” what about soft cost such as: architecture, engineering/permitting, interest reserves, dev fee (if any), RE Taxes during holding period, insurance during construction, environmental reports, engineering reports?
We typically include these in the soft costs section of the budget. If you have a more specific question, happy to answer!
@@RehabValuator oh I didn’t see that cost in this video. Maybe it was just skipped out?
Yep probably didn't go into detail on that in this video. But we typically build a detailed budget inside Rehab Valuator Premium and itemize those items in the Soft Costs section. We have a pre-built budget template for that as well in the software.
@@RehabValuatorbut including those costs will definitely effect your CoC return, right?
@@thomasdeen8629 to clarify the budget figure I used in this case study included all my soft costs. I just lumpted everything together for simplicity rather than itemizing it all. But yes all those costs affect your CoC unless they get financed
I know of an old Kmart that can be razed and replaced with affordable apartments. Huge project if I can get seed money
Sounds like a lot of land! Nice!
@@RehabValuator How do I raise seed money to do preliminary work? I have access to couple of fund sources without have to raise money myself for the major work.
Awesome project, Daniil!
Thank you!
Thanks for all this power content. Please Could you make a video about how new real estate investors can survive this extremely challenging market especially with inflation?
I’m looking at feasibility for a small mixed use development. It’s a rehab and add on. 1875 building in an art district. It’s a full gut. It’s currently 2 story I want to convert to 3 story, about 1900 sqft per floor. Potentially 3-6 residential apartments 600-900 sq for each and 1-2 first floor retail. How can I configure in software?
Let me know if this video is helpful: rehabvaluator.com/commercial-rehab-purchase-financing
Excellent video!! Thanks very much. Mark Rickert
You're very welcome, Mark!
Great video! How big is the lot?
About 15k sq ft
How do you figure out the dollar per sq foot to build , do you get comps of current rents of similar buildings or nearby by current ongoing rents of similar new constructed Apts ?
I cover how to ballpark construction costs here: th-cam.com/video/Mxvyo_bjZ4M/w-d-xo.html
@@RehabValuator gonna watch it do you do any videos on Low income housing or a video explaining Tax credits and how they work low income housing tax credit LIHTC?
@@ziggyc4474 haven't ever done LIHTC so no. I
I’m so happy to find you in recent days! You are really knowlegeable in your chosen area of expertise! TY for your great material! We have no experience in RE, but bought our first (it's a mixed used) property ever this year which has a fixer upper in the back and a large empty space facing Main Street with commercial value (1.54 acres total). We have been overseas with a missions organization for 2+ decade but cash is limited after paying for said property... From listening to you via a couple of videos, we can feel that you really are experienced and can offer the advice that we seek. We are wondering if we could pay to have a consultation with you?
Sorry - missed this comment a while ago! Do you still need help?
Hey, how re you? I am interested in building a double dexplus from ground up. how much does it charge?
Great explanation! When do you break ground?
This week actually! Permitting took forevaaaaaa
Daniel,
Great content, as always. What percentage do you pay yourself for the developer's fee?
@anthony - thanks. I typically don't have equity partners (or LPs) so I don't pay myself a developer fee since all the equity goes to me anyway. If I was bringing in limited partners, then I'd pay myself 3-4% of the project cost as a dev fee
What do you do in common walls for sound insulation?
Double stud walls, rockwool insulation in each cavity (or sometimes just batts) and RC channel on at least 1 side. Works well.
Am I understanding this after all the bills are paid on this 16 unit there’s only 3500 net profit , why would you do this deal other than if you sell it make 800k pay 30%capital gains , walk with 500k and also that leaves you with nothing cause you put down close to 500k in cash in project . I don’t mean to sound negative I’m just trying to understand because I want to start building multi units and am starting to look at all my numbers , I like your vid’s ty
Hi Mark. 9% 1st year cash on cash return. It's not amazing but it's also pretty good given construction costs these days. That's just cash on cash. On top of that I get depreciation, appreciation and amortization. So in reality I am making above 12% a year to start with. That's how real long term wealth is built. It's not quick but it's a pretty sure fire way. Secondly if I sell I make $800k AFTER getting my cash investment out. So I'll net $700k+ if I sell though I won't. I'll just hold it for decades.
Gotta upgrade my subscription
You can do that here: www.RehabValuator.com/upgrade
My wholesale connections should help with getting land below market value but now I need to pick a market and finish the initial concept development. Have you looked at pre-fan manufacturing for these smaller sized units?
Pre-fab? I looked at it but haven't done it yet. Stick building is much more common in my market.
What about funding for land and building?
th-cam.com/video/EFOJ18FluYU/w-d-xo.html :)
are these types of developments very management intensive? im looking to do these out of state but am not sure if i have to travel back and forth 45x a year
These smaller projects under 70-80 units don't require onsite management. We design them with very few common areas so overall these are not management intensive. But you'll still need to have a local management company handle the day to day, including leasing and management. So find someone really good!
@@RehabValuator no i more specifically mean the construction of the building.
Im a premium user, is there a ‘financing’ section for the property purchase? it doesnt make sense that theres only financing for construction. Maybe im missing something, thanks
Also, it would be great if there was more options like interest-only loan calculators etc.
@@kwmuntisbuilds1766 short term financing is interest only. And the software definitely allows you to enter inputs for both: land purchase and construction. Here's a good tutorial to watch: rehabvaluator.com/tutorials-web/knowledgebase/real-estate-financing-scenario-inputs/
@@RehabValuator thank you! Ill check it out
@@RehabValuator im talking about rolling the deals into long term interest only financing for say 10 years interest only etc. like on a large new construction apartment building. And im talking about being able to say carry the building for X number of months and then kickstart building months later from closing. Youd have to break the deal down separately because theres only a time period for the construction
@@kwmuntisbuilds1766 who's giving you 10 years interest only financing? On multi-fam?
Great videos my man, but PLEASE stop slamming the mouse 😭😭😭
Great video as always Daniil. Great stuff. I'm curious how you managed to snatch up that land before RM.
I'll tell you what, that street has come a loooong way since I first stepped foot in 1301 Bainbridge back in 2006. Great to see projects like these moving forward.
This was an off-market deal. That area has definitely come a long way! Looking at more opportunities there as we speak.
Overly complicated “program”. Save your money use an excel spreadsheet
Actually the feedback we get from most of our clients (thousands of them) is that this is much much more user friendly than any spreadsheet. Of course there are always a few who either don't take the time to watch a few tutorials or are just not teachable.