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I work with an Industrial developer in the NW Chicago suburbs, and we are looking into building affordable housing on a couple prime lots in our area.
We need a business plan that can allow us to build one 6 or 12 unit building at a time, therefore, we can allow it to fill up before we return to the bank for more money to build another, then another, etc. In the end, we want to have between 40 to 60 units, depending on what piece of land we use.
Also, we want these to be "affordable". Is there more money to be made in renting apartments with luxuries like a washer/dryer, central AC, etc. or is it better to have window A/C's and a central washing machine in the basement, etc...?
You need to look at the market where these lots are. What is being built? What rents for what?
What is the demand for affordable? Are there city/county incentives for deed restricted properties?
Yes, the lots would be close to the downtown of our city here. Within walking distance of everything. There is a large Hispanic population in our town that lives almost exclusively in rental apartments, and they look like they are overflowing out of the existing buildings.
No deed restrictions. We may have to change the zoning from R-2 to R-3, but that's about it. Most apartment complexes that exist now were former houses that were torn down to make space for the tenant buildings.
Firstly there is basically no such thing as a sane way to group "prime lots" and 'affordable housing'. If you already own these lots your lender is not going to be excited by any attempt to redevelop them into rentals that will not be rented at ABOVE current market rates. If you are going to acquire prime lots are develop them for residential literally no one will lend you money to develop multi-family at all, let alone "affordable housing". In decades past there were some HUD programs to do such a thing but most end up in with more corruption than housing...
Secondly if you think you are going to con some morons on the local zoning board of appeals / planning commission that you NEED a higher density zoning classification I hope you already have these guys on the "manila envelope payroll" because once any adjacent property owners get wind of this it will be a fecal storm of hurricane like proportions -- I don't care if you are working in Carpentersville or Elgin on some other Se Habala place there are going to be land owners (some even with Hispanic ethnic origins...) that know that higher density zoning and below market rate rentals are not good for anyone but slumlords.
If you already have a pipeline to joys of quasi-legal rentals in converted single family homes you probably know that some people in these circumstances consider in-unit bathrooms and kitchens "too luxurious". The reason that you can buy hot plates and dorm sized fridges at WalMart for less than $100 all year round is because to the "affordable housing" set this is easier than trying to get the landlord to supply that works...
If you want to eventually own 40 to 60 units you better be prepared to have some really deep pockets and some magic relationships with lender(s) because no normal sources are going to want that kind of exposure to rental properties especially with the current broad problems in multiple segments of the real estate...
Firstly there is basically no such thing as a sane way to group "prime lots" and 'affordable housing'.
A prime lot for 'affordable housing' is one that is already in the poor or high density part of town, close to commercial districts and schools. It is even more prime when the lot can be bought for cheap, or the shape of the lot suits itself well to a good site plan.
Quote:
Originally Posted by chet everett
Secondly if you think you are going to con some morons on the local zoning board of appeals / planning commission that you NEED a higher density zoning classification I hope you already have these guys on the "manila envelope payroll" because once any adjacent property owners get wind of this it will be a fecal storm of hurricane like proportions -- I don't care if you are working in Carpentersville or Elgin on some other Se Habala place there are going to be land owners (some even with Hispanic ethnic origins...) that know that higher density zoning and below market rate rentals are not good for anyone but slumlords.
In a part of town where most properties are zoned for high density in the first place, changing the zoning to R-3 or 'dense residential' is easier than you might think, if the property or house isn't already zoned that way in the first place. You obviously wouldn't waltz into an area of $500k homes and ask for a zoning hearing!
Quote:
Originally Posted by chet everett
If you want to eventually own 40 to 60 units you better be prepared to have some really deep pockets and some magic relationships with lender(s) because no normal sources are going to want that kind of exposure to rental properties especially with the current broad problems in multiple segments of the real estate...
People are getting thrown out of their houses and downsizing more than ever. Affordable housing is like McDonald's, there will always be demand, especially with the never ending reconquista.
Fastfood restaurants have to adjust their menu and their prices all the time.
The drawings you posted are of units built on slabs, with in unit furnaces / water heater and laundry equipment. The costs of plumbing and ductwork in such configurations can add substantially to the build-out costs/ construction timeframe, and may have some long term cost issues as well.
If you want to own a mess of multi-family units there are much more cost effective ways to do so than building from scratch.
Fastfood restaurants have to adjust their menu and their prices all the time.
The drawings you posted are of units built on slabs, with in unit furnaces / water heater and laundry equipment. The costs of plumbing and ductwork in such configurations can add substantially to the build-out costs/ construction timeframe, and may have some long term cost issues as well.
If code would allow multi unit construction without HVAC and in-unit washers/dryers, it would greatly reduce construction costs, and long run maintenance.
Quote:
Originally Posted by chet everett
If you want to own a mess of multi-family units there are much more cost effective ways to do so than building from scratch.
Let me know, I am a good listener.
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