I’m looking into building an appartment complex and am wondering what kind of percentage of profit is reasonable to expect. I’m also wondering what is the relationship between the total assessed value of a property compared to the asking price. Any advice would be appreciated. Thanks.
Hi,
Your percentage of profit is subject too a number of variables within the project.
If you build say 4 units everything cost’s more than say building 40 units, there are discounts when buying in volume, 40 toilets, 40 vanities, 40 kitchens, 40 sets of appliances, etc.
Your profit will be determined by a combination of land cost’s, on and off-site improvements, permit and assessment fee’s, and value engineering. The better your negotiation and planning skills, the better your returns.
Are you capable of acting as your own “general contractor” and either hiring a project manager and superintendant or undertaking these job’s yourself?
Can you write contract ammendments and scope’s of work? Do you know how to establish and create a critical path schedule?
Value for apartments is based on income minus expense and is primarily calculated by a gross rents multiplyer or cap rate!
The assessed value is the city, county or state making an estimate for tax value and asking price will be more accurate and based on value using total income minus expense with a multiplyer or cap rate!
You can make a potential profit between 0 and 30% depending on how you structure, build and carry cost’s!
GR
If you are newbie in the real estate or any other business then it is necessary to avoid too much investment initially as there are more risk for you in the business because you have less experience and knowledge about it.
The best you can do right now is to hire a realtor agent to asses the value of your property for you and how much should you price for the rental / purchase price of the property.
Making that first investment can be daunting. First-time investing covers the news information you need to know about as a first-time investor. This includes investing tips, analyst reports, and more to help business professionals make the most our of their investments. First-Time Investing is part of Business Exchange.
Hi! Have you had any experience in investing on a small scale property before or is this your first time? Oops, I’ve seen the thread title, sorry for being redundant! 
Anyway, I would suggest that you ask a professional on this matter in helping you out in understanding the specifics, technicalities and legalities of this matter. This is a good investment as getting one will spare you from any future headaches due to areas which are vague to you. From there, learn all you can, and you will succeed in starting your business/investment properly and not through “trial-and-error” basing your knowledge on your current ones alone. Good luck!
I feel like I’m the token pessimist on this board, but my advice is that if you have to ask what kind of return you can expect, you probably shouldn’t be building an apartment community. I’m not sure what scale you’re looking for (5 units, 50 units, 200 units, etc…) but I would start with buying an existing apartment before building one… That would give you some much needed experience and it is much less risky.