Building A Small Multifamily Dwelling?
I own 2 properties (a 6 unit and a 2 unit)in a small city just outside of Detroit city limits, where I can get a ~60x100ft lot for less than $10,000. I’m considering purchasing a lot or possibly two next to each other and building a new multifamily property, between 4 and 8 units, 2-3 bedrooms each depending on the size of the lot.
I have no doubt that I would be able to find tenants to fill the building quickly, but I need to get the thing built first. Has anyone done this before? I’m looking for resources for contractors, builders, how to finance, and some pro’s and con’s of this method. Also, if you don’t mind me asking, what was the cost to build the units?
Any help is appreciated . . . I’ve been doing this for about a year, so I’m still a little green . . .
[ Edited by MDH on Date 11/22/2004 ]
GC'ing new construction is somewhat complex. If you don't have experience with project management, the construction industry, or subcontractor relationships, then you may want to employ a fulltime builder / GC to run the project for you.
Before you buy the land, you may want to make a trip to city hall and make sure they'll give you the approvals you'll need to get your building permits.
Good luck, Mark
pro's- you can save a "huge chunck o' change" cons-it's your first time its a nightmare. more people than not that have built for themselves share that they will never do it again. i am just finishing a 3000 sq.ft. home. it was a pain but fun at the same time. the "big thing" is your subs. get it in writing and some will fight this tooth and nail. make them explain and write in detail what they are doing and what it will cost. then when they go up on the price, and some will, you will know if it is a "legal cost plus" or just a "slick add on".........km
I guess I should clarify . . . I'm not looking to be my own GC. That takes more time that I have at this point. I want to find a builder and have them do the construction on my lot, similar to if you were to have a custom home built for your self.
I have had a condo built and a house built for my own personal home, so I am somewhat familiar with the building process from that standpoint.
Our current properties are converted single family homes that were built in the first half of the 20th century, and as such, there are issues with maintance and heat. The pro’s that I see are:
1. Greatly reduced maintenance
2. Attractive to prospective tenants (maybe translates to slightly higher rents)
3. I know what I’m getting into (NOT inheriting other people’s problems)
4. Improve the appearance of the neighborhood
5. Modern ( therefore efficient) floorplan, electrical, plumbing, and heat systems
Con’s are:
1. Money is tied up during the construction process (8-10 months)
We have more than enough cash flow from our other properties to keep us going (+$2000/month)
2. Finding builder/financer/getting permits
This is where I’m asking for advice
[addsig]
I looked into doing the same thing last year simply because I could not find any multi family dwellings. There here, but when they are up for sale they sell in like 10 minutes to cash buyers. I cant compete with that. Anyway, I was quoted 117,000 (best quote) on my own land (15000) per duplex, each unit 997 square feet. Rents would be about 595 a unit. Now, for the same 65000 a unit I can buy a 3/2 1300 sf sfh that would rent for 695-725. So it doenst make any sense in my area. Maybe yours is different.
I looked into doing the same thing last year simply because I could not find any multi family dwellings. There here, but when they are up for sale they sell in like 10 minutes to cash buyers. I cant compete with that. Anyway, I was quoted 117,000 (best quote) on my own land (15000) per duplex, each unit 997 square feet. Rents would be about 595 a unit. Now, for the same 65000 a unit I can buy a 3/2 1300 sf sfh that would rent for 695-725. So it doenst make any sense in my area. Maybe yours is different.
MDH,
I too am interested in what you want to do. I am just starting out and one of my single family houses that I am currently rehabbing has a lot next to it that I own. I am using a GC and he suggested building a modular house (side by side duplex). He said he could build it for $25-$30 per square foot complete (except for a driveway and landscaping). A 2000 square foot duplex ($45-$65K to build) or 1000 square foot per unit(about $30K) each with 2 BR/1 Bath would rent for $750 - $800/month each in this neighborhood. Of course I have to do due diligence in checking on the zoning, permits etc...
Jon
Feel out the local police department how they would treat this situation. Don't reveal the actual identity or location, as it could work against you. Get a copy of the prescription, and consult your attorney about states rights vs the feds.
Heck, I'm just a poor midwesterner and we don't know nothing about such things but I thought everybody in CA had a few pot plants growing in the back yard.
lol commercialking!!!
I think reporting to the narcotics unit advice is a bit overboard. It is just a few pot plants for gods sake, it is not like they are cooking up a meth lab, gotta put things in perspective. HOWEVER, it does make sense, from the standpoint of ensuring your property does not get seized (though they would have to have a SIZABLE OPERATION to warrant that kind of action) to follow the advice of the poster who said to feel things out a bit with your attorney first. Then if there is a larger issue, get a copy of the prescription, start talking in generalities with law enforcement.
For all you know, this person could have a legitimate medical problem that they need marijuana for.
The reality is, a cabinet full of liquor is ok, but a few plants aren't - in my opinion, alcohol is the REAL danger and should be outlawed, but that is for an entirely different discussion.
You do have to start taking the proper steps to protect your property and yourself due to pot's illegal status, but do not go overboard like some of these others are suggesting - do consult your attorney about local laws, and let them know what you know.
IF this is a stable tenant, better to make things work within the law, while keeping neighbors out of your business, and have a good renter, then freak out and act to hastily. My 4 cents, best, Dave
I would check with a local lawyer to see exactly how the local laws read on this issue. Then I would change my lease for the future to state tenants could no longer grow or possess any contolled substance for any reason- if that's legal. ( I still think the landlord has the right not to have thriving pot plants on his or her property).
Cordially,
Alice
CRIME FREE LEASE ADDENDUM
Next time have your tennants sign this with their lease. Having this form signed would automatically put her in breach of the lease agreement...If you want a copy of it just email me. Good luck !
kevinstuteville AT www.Verizon.net
Hey,
Put the clause out here and we can review it.
Kathy,
Does this tenant pay her rent ??? Does this tenant cause any problem otherwise ??? Those are your only concerns. Hell you said she has a prescription for the stuff. Do you really want to become an authority on the subject at your own expense (rehab costs, loss of rent) ??? Why ? Let it go and if she ever causes you any problems then handle it. In the meantime go do other deals.
I agree. Leave her alone. Feds don't bother with stuff like you described. If there is a real problem with activity at that property, then the local police would probably contact you about it (that's what they do in St. Petersburg, Florida- they have a nuisance abatement procedure where they involve the landlord to help resolve a problem with activity at a location). Unless the neighbors are calling you complaining about activity at your property, do something more productive with your time instead of worrying about your tenant's little plants.
My husband had a good suggestion. Just go over there when no one is home and pluck the plants out and take them back to your place. Ah.ha.ha.[ Edited by bellybean on Date 11/17/2004 ]
My humble opinion is to go slow and ask a lot of questions before any actions are taken. You don't want to ruin someones life for a "little pot". Above all things make certain of where you stand legally.
Do you have a non-smoking clause in your lease? If so, and you want to evict the tenant, this situation may give you grounds that avoids DEA involvement. I have non-smoking clauses in my lease and my advertising does specify no-smoking as a qualification.
Otherwise, I agree with the other posters who say if the tenant is legal, leave it alone if you allow smokers as tenants.
By the way, even though you saw a prescription that was just written, how do you know that it was not a renewal?
[ Edited by NewKidinTown2 on Date 11/18/2004 ]
You definitely need to seek legal advice. Im not sure how laxed CA is with forfiture laws etc.....but right now you have a moron for a renter that is creating great liability for you as well as legal issues........she needs to be out.
You wouldn't have a client bringing their drugs into your place of business........why would allow the same to bring it in your rental property.......it's a business too.
If she wants to smoke crack in her OWN home then so be it........but right now she conducting illegal activity on your property.
Dump her....
NC_Yank
PS. As a former officer, I have allot of law enforcement personnel that work for me part time. We had a lady that was growing in her backyard..........we installed some siding and a new deck........after we got paid, one of the officers had the narcotics unit bust her.
Due to the amount on the premises, she was looking at having her property confiscated. She was a moron too. (laugh)
NC Yank,
You read a lot more into the question than was there. No one said anything about smoking crack.
The question concerned pot, and the poster said that according to the CA law, the tenant is legal. Unless the lease specifically states that the unit is a non-smoking unit, I don't see any grounds to evict.
Hey,
If the pot is a prescription, I doubt your non-smoking clause is enforcable. You would be discriminating against a person with a disability.
And, how do you know she's smokin' it? I seem to remember something from my youth called "Magical Brownies"...
I think that you don't have much of a leg to stand on until her lease is up, at which time you can put a "Don't grow dope in my living room" clause in her lease, and the problem goes away. Unless you've got something like that in there now, then what're you gonna do? Nothing much you can do, as long as she minds her P's and Q's... Oh, and that's the other thing, if you watch her close enough, I'm SURE she'll mess up somewhere, and you'd be able to get her outta there.
As far as confiscating your property? Look if she were growing POUNDS and POUNDS of pot, and selling it, then it may be different. But, she's got like 5 plants, obviously for personal consumption, and not for selling. I don't think, in this day and age, they'd confiscate your house for a TENANT growing 5 plants...
Of course, this IS just my opinion, and should be taken with a grain o'salt.
Follow this case for the state vs fed issue on medical pot:
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/10/14/MNGBU99A3L1.DTL