How much can you make owning an apartment complex?
In very challenged areas, it could be up to 50%. If the investor can figure out how to run a stable, low-vacancy apartment community where others struggle to do so, with a 50% cash on cash return, you actually earn back your entire cash investment in as little as a two-year period.
How much does it cost to run an apartment complex?
While there are many factors that go into determining the cost of operating an apartment complex, the truth is that you should expect to pay around $500 to $1,000 a year per unit. While this is a general guideline, this is a normal range for maintenance, repairs, and other costs associated with real estate ownership.
What is the average lifespan of an apartment complex building?
The latest study by the Faculty of Science and Engineering at Waseda University estimated the average life of a wooden home to be 64 years. For concrete apartment buildings, figures vary. Some experts suggest 68 years, while others suggest 120 ~ 150 years.
How to finance a small apartment building?
- HUD loans are available for market-rate properties (not just affordable properties).
- Bank, hedge fund, life company, and other construction loans are available.
- HUD loans are non-recourse, including during the construction period.
- Fixed rates available for construction and permanent financing with HUD.
Cost to build an apartment complex per square foot
On average nationally, the cost to build an apartment complex is $398 per square foot. However, there are many factors that affect this price: the complexity of the design, level of finish size, and, possibly most importantly, the region in which the construction is taking place.
Apartment complex planning and construction
As with any building or development project, developers and project owners have a lot of factors to understand and consider. Between the costs and what impacts them, as well as choosing materials, there is a lot to know.
Who plays a role in the process of building an apartment complex
Any construction project will include a few moving parts, but projects at the scale of an apartment complex will involve many players. The project might start with a developer and some investors, but the actual process of planning and building the apartment complex takes many hands.
Stages of construction for an apartment building
There are several stages that any project needs to go through, and an apartment complex is no exception.
How long does it take to build an apartment complex?
According to a 2020 report performed by the Census Bureau, 75% of residential projects involving 20 or more units took over 13 months to complete.
Payment risks for contractors
Private construction is always risky business. Project owners can run out of money. Bankruptcy can shut a job down. Even payment disputes elsewhere on the apartment project can affect a sub or GC’s cash flow. For these reasons, contractors and subs need to manage risk as much as possible.
