It seems that new apartment buildings are popping up all the time. And rightfully so! With growing populations and a hard-to-navigate housing market, there’s a large need for apartments.
If you’re interested in real estate development, you’re probably tired of watching other people profit off of building strategic apartment complexes, and you’re ready to do it yourself. Learning how to build an apartment complex from the ground up is no small task, but with the right preparation, you can make your dream a reality.
1) Find a General Contractor 👷
The first step is perhaps the most important step. You need to find a reliable, experienced commercial construction company that specializes in building apartment complexes. This will ensure that your project is completed efficiently and to your specifications. Your general contractor can make or break the end result depending on their:
- Communication tactics
- Years of experience
- Ability to stay on budget
The last thing you want is to be over budget and delayed by months. Do your due diligence in reading reviews and consulting with multiple commercial contracting firms before deciding who to go with.
Additionally, you may consider working with a contracting company that offers design-build and construction management services. This will help consolidate everything under one roof instead of needing to find an architect and construction manager separately.
2) Determine the Size and Scope of Your Project
Will you be building a small complex with just a few units or a large high-rise apartment building with hundreds of units? Knowing this will help you choose the right commercial construction company for the job. Your budget will also be affected by the scope of your project.
You’ll need to have a clear understanding of how many units you want to build, what type of amenities will be included, and what the timeline for completion looks like. Once you have this information, you can start gathering quotes and proposals from commercial construction companies.
3) Narrow Down the Location 📍
This is an important step, as the location will determine many things, such as the type of tenants you attract, the amenities nearby, and more. You’ll need to consider details like:
- The demographics of the area
- The proximity to public transportation
- Any zoning restrictions that may be in place
- The school district and proximity to schools
The location of your new apartment building is key to its success. Of course, the perfect location comes at a price. You’ll need to balance the cost of the land with the expected rental income from your units. If you’re looking to maximize profits, you may need to sacrifice the ideal location in favor of a more affordable one.
4) Obtain the Necessary Permits and Zoning Approvals 📋
Before you can start construction, you’ll need to obtain the necessary permits from your local government. The approval process can be lengthy, so it’s important to factor this into your timeline. You should also expect to pay fees for the permits.
The type of permits you’ll need will depend on the scope of your project. For example, if you’re planning on making any changes to the exterior of the building, such as adding a new entrance or exit, you’ll need to apply for a building permit from the city’s planning department.
5) Secure Funding
You’ll need to have a solid plan in place for financing your apartment complex. This will likely involve taking out loans from commercial banks or private lenders. You may also need to invest your own money or raise capital from investors. Depending on your project, you may find success with FHA loans from the Department of Housing and Urban Development (HUD).
The amount of money you’ll need will depend on the size and scope of your project. A larger, more complex project will obviously have more construction costs than a smaller one. It’s important to have a clear understanding of your financial situation before moving forward with construction.
Be sure to over budget just in case you want to make changes to your initial budget. It’s better to have a safety net in place rather than scrambling to find funds.
6) Create a Blueprint
A blueprint will include all of the specific details about the units, the common areas, and any other features of the complex. The blueprint will be created by your architect or the contracting firm if you opt for design-build services.
You’ll need to make sure that the blueprint meets all local building codes and regulations. The commercial construction company you hire will be able to help with this. Once the blueprint is approved, you can move on to the next step.
7) Begin Construction 🏗️
This is the exciting part! After all of your planning and preparation, the apartment building construction will finally begin. This will be a major undertaking, so make sure you are prepared for it. The commercial construction company you hire will be responsible for completing the project on time and on budget.
There will be a lot of moving parts during construction, so it’s important to stay organized and communicate frequently with your contractor. This will help ensure that everything goes smoothly and according to plan (and budget).
8) Market Your New Complex to Possible Tenants
This is an important step in ensuring that your complex is successful. You’ll need to market the complex to potential tenants, highlighting the features and amenities that make it unique. You can use online listings, word-of-mouth, and print advertisements to reach your target market.
You should also consider offering incentives to potential tenants, such as discounted rates for the first month of rent. This will help you fill up your units quickly and start generating income from your investment.
9) Manage the Complex Once It’s Open
The only way to keep making money off of the apartment complex is to make sure the building is managed well and that tenants want to keep renting. You’ll need to hire a skilled team to complete tasks such as:
- Collecting rent
- Maintaining the property (the interior and exterior)
- Dealing with issues that arise
- Scheduling tours
- Managing applications
You can either hire an experienced property management company to handle these tasks or do it yourself. If you opt to manage the complex yourself, make sure you are prepared for the extra work and responsibility.
10) Enjoy Your Profits! 💸
Congratulations! You’ve successfully built an apartment complex from the ground up. This is a major accomplishment and should be celebrated. Now it’s time to sit back and enjoy the fruits of your labor (aka the profits).
Of course, this doesn’t mean you can just kick back and relax. You’ll still need to keep an eye on the complex and make sure it’s being managed properly. But with a little bit of effort, you can ensure that your investment continues to pay off for decades.
Start Your Construction Project on the Right Foot
As we mentioned earlier, choosing a reputable commercial construction company will make or break your project. Not only will your decision impact how smoothly the construction process goes, but the quality of materials and installation will directly affect how much (or little) maintenance issues arise in the future.
Maximize your investment by working with the friendly, 5-star rated team at APX Construction Group. We specialize in commercial construction, so we know exactly what your apartment complex needs to be successful.Schedule a free consultation to get started today!