How to Build Apartments: Learn to Value Land and Analyze Deals! (Real Estate Development)
HTML-код
- Опубликовано: 11 сен 2024
- Full Process for New Multi-Family Development Analysis laid out:
- Density Study (I walk you through how you can do this yourself)
- Creating Pro-Forma Rent Roll and "Stabilized NOI Projections"
- Where to get rental comps
- Determining As-Built Value of Multi-Fam developments
- Determining Construction Costs
- Figuring out Land Values
- Evaluating Short and Perm Financing correctly
- Vital Metrics you must pay attention to
- How we get tens of millions in cheap bank funding easily
This training goes through a multifamily development example, step by step.
Helpful Links:
Create a Rehab Valuator Lite software account here for free: RehabValuator.com
Rehab Valuator Premium (with full Project Management Suite, Funding Presentations and more): RehabValuator....
New Construction Training that goes over re-zoning process and options: • House Flipping Trainin...
Build to Rent Financing Training: • Build to Rent Financin...
How we Find Land Deals and Build a Team: • How to Develop Ground ...
I dont think the internet is anywhere close to aware of how much gold you are sharing. I work at a commercial bank and have actually learned a lot from this.... incredible value. You are a gem. Thank you!
I will also add that the type of reports and analysis that you are providing via your software is the type of analysis that I see Ulra High Net Worth clients prepare for us to analyze. This is of the upmost top tier that can be provided.
Always nice for the effort to be recognized! Thank you.
Daniil and Rehab Valuator are second to none. Everything about this team screams EXELLENCE‼️
Thank you for all that you do. We need and appreciate EVERYTHING‼️
Appreciate the kind words! Thank you
Thank you so much for this knowledge. I am working on an analysis for a 81,000 sqft site in a prime area in my city. I brought it to a big time developer who is having me do the work to help me learn. I needed this.
That's awesome, Brian! Glad you found us.
This is a wonderful presentation. Our business not only builds new to rent but new to sell on mortgage. Not only that I'm seeing this will apply to building an industrial park and then using it for each anchor business in that park which we are financing. Thank you.
Glad to hear it's helpful and appreciate the feedback!
Kindly elaborate on the park concept, you lose me my friend
Real world investment calculator
Next year starting 16 unit apartment construction based on this software
Thank you
That's awesome! Congrats!
This is literally remarkable. You are single-handedly teaching me how to be a pro at this. I will be using your platform and following your principles! Thank you!
Appreciate that feedback, Dallas! Makes all the hard work worthwhile.
Your video randomly popped up
Im so happy RUclips did its thing
Great video
No BS just explaining thank you
Thanks. That's what we do! :)
Excellent video --- in a real estate development class and proformas and the whole process have not been broken down in this way.
Appreciate the compliments and glad you got value out of it!
Thank you. I’m a rehab valuator pro user and can say that this has been the most useful tool for me to run comps while not being an agent
Really glad to hear that!
Bro you're the goat. Thanks for sharing
You're welcome!
This is so much fun to learn! To be actually able to crunch out the numbers before you start. Counting up the cost is the most important thing before beginning anything, especially something that is costly as construction. Thank you for taking your time to teach us. God bless you.
You're welcome! And appreciate the awesome feedback!
Well said!!
Wtf, this is free info?????
oh crap! Forgot to charge $10k. Not good at business I guess 🙂
@@RehabValuator 😂😂
I want to get the software??
Love your work , I’m 22 and I’m trying to find a niche , for a good career and this Content you put out blows my mind , so I gotta learn everything and this seems like something right up my alley , feel like a kid and I just wanna absorb everything I see’ 😂 but I’d be curious on how to get started cause I am new to all of this
Glad you're liking the content! Make sure you grab the free version of Rehab Valuator software as that will massively help you with deal feasibility and analysis plus will also put you on our email list for additional training updates! www.RehabValuator.com
Thanks for this series I loved the duplex one as well
You're welcome! The duplex one is one of my favorite for sure!
WOW!!! THANK YOU SO MUCH! This was very successful for our company!
I have a few properties in the UK, and been doing it for years and getting lucky, this takes all the luck/risk out of it and make it to make it an eyes wide open sound investment.
Boom!
Great info. I m start of a residential R3 zoned project in Ontario, canada. Hope to learn more. 😊😊
You know that it's pure gold when Daniil drops a video. Let me get comfy and enjoy 👍
Don't know about "pure gold" but it's definitely pretty good :)
thank you so much, you will be rewarded for your generosity...god bless you.
You're welcome!
I love this case study. Thank you for this walkthrough and breakdown of deal!
You're welcome!
This is awesome. This came to me at the right time. Thank you Thank you Thank you.
You're welcome, John!
very informative video
Thank you!
This is good. Thank you. Just what I needed to get myself started.
You're very welcome!
I’ve been looking for a better explanation of creating a ProForma. Thank you! 🎉
You're welcome!
Keep them coming.. my wife and sons want to start and im glad I found your help.
Glad you found us as well!
Just wow. Getting the premium for sure
Awesome, John. Look forward to helping you and having you as a client!
Thanks for sharing bro
You're welcome!
Thank you for this very detailed explanation
You're welcome!
Thank you for posting this. I am really learning alot .
You're welcome!
Looks like pretty good value for money.
I'm not a developer but i want to work with some
this is pure gold! thank you for sharing
You're very welcome, Hugo!
Daniil extremely valuable as always!!!
Thanks, Joe!
This is an amazing program! I’m going to get this now. Thank you for the tutorial. I hope you are finding deals in this market.
Hi Michael. Look forward to having you aboard! And yes, still finding deals in this market. Takes a bit more creativity but they're out there.
Wow, this is great!:) Thank you!!!
Glad you like it!
Very informative video love it ❤
Naga Manu aseee taeeee🎉
Thank you!
Great video. Thank you so much
You're welcome!
Thank you for sharing this knowledge!
You're welcome!
Thank You for your content!!
You're welcome!
This is awesome! Thanks for sharing!
Glad you liked it!
Major Value💎💎💎
Amazing video as always Daniil!
Appreciate the compliments, Ayo!
Thanks! This is a great video.
Great video! Lots of great info and to the point!
Glad you like it! And thank you!
what if i don't have to buy the land? meaning the land is pre-owned and i want to start building an apartment building in it, what's the calculation will look like? Thanks before hand, your video teaches me a lot.
In that case we typically run 2 parallel models in the software: 1) Internal model: purchase price for land either $0 or my true cost basis and 2) Bank model: purchase price is today's market value of the land. You want to show your lenders how much the land is worth today because that is the equity you're bringing into the deal!
GOLD!👌🏽
Thank you !
You're welcome!
Sweat Equity = The lower you go, the less you pay
Thank youuuu!!! Wow! ✊🏾❤
You're welcome!
Hi Daniil, quick question. Can you dig a little deeper as to how you fine tuned your product mix to arrive at seven 1BR vs three 2BR? I understand one bedroom is more efficient and more popular in that market but wasn’t sure how you fine tuned it to that exact mix. Thank you for your great content!
Hi Larry. It's a balancing act. I want to have a good product mix in the building to appeal to multiple types of tenants. In our market there's a very strong demand for 2s, but I can't fit 10 2s here and I can't do more than 10 units. So what can I fit where i get 10 units and as many as possible are 2s? That's basically the logic in this example.
This is amazing content. Thank you. Do you have video that shows the analysis to find land cost for a large acreage where there could be commercial, single family and multi family development potential?
Don't have content on that. Process here would be more complex. Would advise to break into pieces and value each separately.
I have the land feee and clear , big enough for 16 units. I’m looking for guidance and help to develop. Can you point me to the start of it all?
I mean this video is kind of a good place to start :) Here's another training actually with a 16-unit deal structuring case study: ruclips.net/video/t-c6KArq_6A/видео.html
Wow It is just incredible information, I would only like to ask you, how do you raise that 600k that you showed, that the loan won't cover, do you need to invest that much of your own money, or you raise it some other way? Eather way this is supper informational and i hope of someday doing something like this.
2 options: earn the $ yourself in some operating business (like wholesaling, flipping houses, or something else entirely) or raise the equity. No right or wrong answer here. I prefer to make the $ myself and then deploy it as equity into projects
@@RehabValuator Thank you very much for explaining it to me. I do have another question, do I need to set up a company, or can I as an individual do real estate development?
@@timjuvancic178 I recommend LLCs and not putting anything in your personal name
Thank you so much !
You're welcome!
Great stuff guy!!!
Thank you!
good information
Thank you!
Awesome video
Thank you!
More interst to associate keen to be reseller the software
The software can be used also just for creating a proforma for a residential multi family development just for sale? To sale units? Not to rent. And do you have tutorials for using the soft for this development type? Thank you for answer 😊
Absolutely. Rehab Valuator is used by fix/flippers and ground up for sale projects all the time. We have plenty of tutorials on this!
@@RehabValuator Thank you, where I can found this tutorials?
@@adizyg1 email us (daniil at rehabvaluator.com) and I'll send you some links
Hi Daniil! Are you making any new videos? Really helpful and hoping to see some more soon!
Yes. But greatness takes time :)
Go to our channel and look under Playlists for 2 recent podcasts on development I recorded very recently.
@@RehabValuator oh great, will check it out today.
@@RehabValuator do you do any private coaching or consulting?
@@tcmintcollection2784 Not one on one. We do weekly group coaching calls with Rehab Valuator Inner Circle (www.RehabValuator.com/inner-circle) but these aren't solely focused on development but rather investing in general. I am also starting to host some very small 2-day development masterminds in my office & job sites. They're not cheap but if it's of interest email me at daniil@rehabvaluator.com and I'll add you to wait list
How much should you expect to pay your Architect for conceptual drawings? Do you cap that amount? Is there something typical for a building the size 10 units
Hi Julie. I usually budget about $3/ft for architectural all the way through permit ready drawings. Conceptual should be $1.5/ft or below, at least from my experience working with many architects here in Virginia
Loved the video! Im a General Contractor in California. Looking forward to develop but i would need to partner with someone that has experience in this field, in finding the right lands and knowing what to build.
My plan is to partner with a real estate agent and sell to investors the whole plan so to get the cash to do it. What do you think? Is a real estate agent the right person to partner with? Is selling to rich investors a doable concept?
Thank you!
What is a real estate agent going to bring to the table? In your 1st paragraph you stated you need a partner with experience in development, that can find land, and knows what to build. Very few agents would like fit that category.
Daniil, I am Premium user. Love the software. What is avg cost per sq for SFH or Duplex builds in your area ?
Hi Frank. I am seeing anything between $110 and $150/ft right now in my area for SFH and duplexes. My duplexes are somewhere in the $130 range currently. A lot higher than 2 years ago for sure.
Than you so much for the video they are all great ! Question: If during the construction phase lenders are doing draws then that means that we will only pay interest on the draw amount to date is that correct? So we should be able to save some money on interest is that how it works. Question: Is the contingency amount that most lenders require already build into your software? Thanks again great info
Correct on the interest! We typically build a contigency as a line item in our construction budgets.
Daniil your video was great. Question: In a ground up construction where your going to refinance into a conventional, it is that point where you court outside investors for returns on capital. Does the software automatically produce a ROI you can use in marketing?
Hi Darrius. I am not 100% sure I understand your question but let me try. In a scenario where you refi a ground up project into conventional financing, you would need investors for the initial part of the project where you're doing the land acquisition and construction. Then you take them out via refi. Rehab Valuator does create funding presentations that can show your investors their ROI for funding you through construction and until refi. Let me know if I am misunderstanding your question and we can try again :)
Brilliant video Daniil.
I love how the software does all the back end work for the finance for you for the lender. This will save a ton of time.
And ill be trying this out to see if help me.
One thing i need to ask though regrading initial land valuing.
I was shown a formula.
GDV (grand development value) (ARV)
Minus
Total build cost( including financing plus profit % margin)
Equals the value.
In this video i didnt see the short term construction finance being in the land appraisal unless i missed it?
Not sure if I fully understand but short term financing costs should be backed out as well to arrive at max land value
@@RehabValuator sorry I was on a rush texting the question.
That's ok. You answered it anyway thanks.
I downloaded the free software👍👌 to start with
I assume that dealing with the local government and getting permits would cost a lot of money...? also, would it be more profitable considering the risks if I didn't take out a construction or land purchase loan and paid for everything upfront? FYI not sure if this helps but I'm considering building some units of affordable housing in western suburbs of Portland, infill development.
Sure it saves money to pay for everything cash upfront but you need a lot of cash
Hey love your videos and the series. Been following all the videos and use the software. I know you mentioned you can reduce the footage but you reduced it from 18k to 8k for 10 units? This didn't affect the rents and NOI?
Hi Zohan. The marginal increase in rents if I took my 1 bedrooms to 800 sq ft, for example, would have been too small to justify the increased construction costs. I can get $1399 for these as is but if they were larger, I'd probably get $1450 maybe $1475. Not worth the costs to increase the footprint of the building: more foundation, siding, less parking, etc.
Great stuff and thank you for taking the time to create this series. Question - At 18:41 you say the cap rate is $1,125,540 @10%. If I apply that same equation @5% ($112,554 x 5) I get $562,770. Would the value of the cap rate need to be 20% to make the $2,251,080? Just want to make sure I understand the math correctly.
Value goes up as the cap rate goes down. They're inverse! You divide the NOI by the cap rate, not multiple by "5" :)
@@RehabValuator My formula was off - thank you for the clarification!
@@Maine_K1 all good! Glad I can help
I’m so confused by that cab rate math at 5%!!!
Makes no sense to me..why it would double at 5 %..
How do we get cities to allow us to build more than allowed? 15k lot and they said max is 4 units while older buildings have 12-15 units. Dedicate to section 8 or something?
I just did a detailed training on "up-zoning" for our Rehab Valuator Inner Circle members ;) www.RehabValuator.com/inner-circle
Copped the program and I am promoting your teachings. I did not find a template for a apartment building budget. Can you upload one to the program?
Awesome and welcome aboard! Working on a multi-family template as we speak actually! Waiting on a change in the software to be deployed before we released. I'll be emailing all of our clients when it's ready.
CoC returns not great now compared to some good dividend ETF and such now, yeah? I can qualify for VA 100% financing, thought about duplex or quadplex and owner occupy, 30 year locked rate. Worth trying?
CoC is not great right now but it's only a small part of the overall returns from owning good quality real estate long term! Don't forget depreciation, amortization and appreciation. That's where REAL wealth is built. So yes, definitely worth looking at what you mentioned!
Thank you for making this.
Do you have an opportunity where a subscriber can email questions about the new construction process. The numbers. Average timelines. How to structure effective partnerships. What % should each party be entitled to?
Hey Michael. I am going to launch a pretty in depth development training/mentorship at some point in the future. For now I suggest joining the Rehab Valuator Inner Circle (it's a great deal). I help our members there via email and FB Group: www.RehabValuator.com/inner-circle
I followed the video and did an analysis for a property. It came out be loss of a million dollar.
I do not understand one thing and need help. Are we estimating net income for one year and expect that total cost to build +land will be paid in one year?
No way! I wish that was possible :) Email me a screenshot of your analysis screen at daniil@rehabvaluator.com and I'll be happy to take a look
Hi, Can this software work in other countries?
Absolutely. We have users in many other countries currently. The software is currency-agnostic. The only thing that may differ depending on where you are is how compound mortgage interest is calculated in certain scenarios but it's typically a minor discrepancy
Hi Daniil, thank you for this information. What would be your advice to someone who has an outstanding deal, but has no experience. To get financing, will I have to have JV partnership? Or are there other ways to go around this.
To get financing especially for any deal of a decent size, banks typically want to see a track record, especially these days. Now, that can come from you or that can come from a JV partner. You can always make lenders feel more secure by showing them you have a great team on board: GC, architect, engineer, consultants. And liquidity right now is really important too. Lenders want to see that you have the cash needed not only to execute the deal but to ride out any cost over runs, lease up delays, etc. Ultimately for your first deal, I'd start small and learn and partner up with someone if you have to, and learn as much as you can from them.
This is insane I’m actually working on a 10,169 sqft buildable 5,508sqft we can build 5 story’s 1,000 or less by end of plan no variance needed 24 parking spaces subtracting elevators, stairs, common areas ect. I’m looking for equity partners btw I’m in north New Jersey market.
Looks like you found us just in time!
Do you offer full courses...?
Working on a development platform now. We do have courses on wholesaling and raising private money if you're interested in those topics
Property Value = NOI / cap rate
Hey, great video. We do Real Estate Development In Montreal Canada and use the same strategy. Although, at 24:41, you’re assuming 80LTV, what about if 1.3DCR is lower? Or is that not how the loan value is calculated in the states?
Hi Marco. At 24:41 I am assuming my cost will be 80% vs. value. So not an LTV but rather my equity position. 1.3 DCR is a good target to hit on your loan so yes what you can borrow will depend on debt coverage. I tackle that in a later part of the video
I am probably over complicating things, but I'm having difficulty understanding how you got your stabilized value numbers.... Would you mind breaking down how you came up with $2,251,080 with a 5% cap rate and $1,125,540 with a 10% cap rate when your annual NOI is $112,554?
Or perhaps you could help guide me through my scenario that I'm trying to work through as I follow along with your video? I've found 0.53 acres priced at $41,000 and currently zoned as R2. According to my density study, if I could get rezoning to R4 approved, I could fit 4 stacked duplexes on the property for 8 total units with an annual NOI of about $59,580. This is the part that I am hung up on. Do I divide the annual NOI of $59,580 by the potential purchase price of the land at $41,000 to come up with my cap rate of 1.45%? If so, what do I do from there with that number if it is accurate to determine my stabilized value? Any information would be greatly appreciated. Thank you for your time.
Value = NOI / Cap Rate
❤
If there is no maximum to the number of dwelling units per zoning, how do perform this analysis?
Every zoning code sets a maximum that you can build by right. You can try to upzone but there's a reasonable limit to what you will be granted there. Does that make sense?
Wait I think I misunderstood your question. Some zoning codes won't specify max dwelling units but rather will have other restrictions: height, lot coverage, setbacks. Those will naturally limit the size of the building and thus dwelling units you can put in there. That's where density studies come in.
My zone has setbacks but no density max or height limit
Is the concrete for parking and other dirt work/horizontal costs included in your $160/ft cost?
Yes
I want to get started, where do I go? I’m a newbie!
Hi Chester. We have an awesome Wholesaling 101 course that takes you step by step through finding deals, finding buyers, and wholesaling houses and it's just $18. That is where I would start as it will build a great foundation: www.RehabValuator.com/no-bs-18
How does one account for things like sewer connection or water meter upgrades? I’ve seen a $500k sewer line for 12 townhomes in socal and $40k for 1 water meter
That sounds very extreme. But you're right - it differs by county and jurisdiction. Do your own research locally to find out typical costs.
How much is it for an architect?
It really depends on project and the scope: just design? Design and permit drawings? Design, permit drawings and construction admin? For full scope on commercial projects we generally budget about $3/ft
@RehabValuator Oh my God, you responded. I commend you for figuring out the analytics out on your own, when you first started in the industry.
Hello from florida.im looking into building a plaza.with seller financing for the land.what advice can you give me for building etc
This entire video is free advice ;) Our entire channel is free advice. Good luck with your project!
What about the excavation cost?
What if you already own the land?
That's great. The rest of the video covers how to put together a pro-forma, determine how much you can borrow, and how to get funding. Watch the whole thing!
👍🏾👍🏾👍🏾
When rates pop rents drop and apartments go belly up
Yeah...except rates popped 9 months ago and rents have absolutely not dropped, and neither have apartments gone belly up. Basically none of what you just said is true in this market. Massive housing shortage and a lot of people being pushed from homeownership to renting.
Time will tell. Im not the expert just stating what i am seeing. Rates go up and values go down then LP must do cash-in refi because the banks appraisal is coming in lower or ltv refi is now lower.
where you go? Why stop posting?
Quality over quantity! :)
Why buy your program when anybody can just get the excel for free or at the most $20 from reputable CRE courses...
You can find excel models for deal analysis all over the internet. That's why the deal analysis portion of Rehab Valuator is actually free (and much easier to use than some clunky spreadsheet). What you pay for are professional lender presentations and the full construction management suite, which you won't find in some $20 spreadsheet. Plus great support and constant updates. But nobody is forcing you to buy anything Gino. This is a free country (for now at least ;)
Not interested the game rigged
The game is rigged against people with that mentality, that's for sure
Wow!🤌
If I get your email. I can share more info about .