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Apartment Construction | Create a Multi-Family Housing Complex

In today’s marketplace, most investors purchase apartments that are already active and earning revenue. It’s easier to get a loan, there is less risk involved, and there is a bit more certainty in ownership that helps you figure out whether or not you’re making a good investment.

But if you’ve gotten your hands on a great piece of land, you may find that your best investment is apartment construction – developing a brand new apartment complex (or drastically upgrading a past complex) and collecting its rent.

Why Apartment Construction is a Good Investment

The value in apartment construction is that the cost to build the apartment is often significantly less than the rent collections, especially when compared to the sale cost of an apartment that is already turning a profit. While you’ll need quality construction and a great location, a well-made apartment is going to have massive profit potential.

Obtaining Funding for an Apartment Construction Loan

The only thing standing in the way of apartment construction is financing, because often these are fairly significant investments that require a lot of funding up front. Unfortunately, apartment construction loans can be difficult to obtain, because it’s difficult to guarantee the investment in a way that will comfort lenders. Keep in mind that:

  • You Can’t Prove Rent Yet – It’s not possible to prove that your apartment is rentable for the price that you’ve considered until it happens. This makes lenders weary.
  • You Won’t Have Revenue – Not every home will be rented out right away, so revenue may be slow to come by and take a while before it’s earning enough.
  • It’s a Changing Market – By the time the apartment construction is completed there may be a chance in the renter’s market. While unlikely, lenders don’t always like to take that risk.

Yet do not let these roadblocks turn you off from the serious value of apartment construction financing. If you can get your hands on the financing and a good piece of land, you’ll find that the payoff can be substantial, especially once your apartment is off and running. Often the ROI of these types of loans is better than purchasing an already working complex, because construction is often cheaper than purchasing an existing apartment.

Still, because there are going to be a few issues standing in the way of receiving these types of loans, it’s important that you connect with CRE Lender today. We’ve helped numerous investors get their hands on apartment construction loans at the most competitive rates possible given their situation. Sign up today to find out more.

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