Help determining feasability of 5-plex on MS Gulf Coast
Hi all,

First time poster, total noob commercially.  I've got an opportunity to build a 5-plex townhouse multifamily structure for long-term rental on the Mississippi Gulf Coast.  Max depth is 32', max total width of structure is 270', so each unit could be up to 50'  or so.  It needs to go on a 12' pier foundation with a max height (from lowest horizontal support to top of gable) of 35'.  Preferably each unit will have 2-3 bedrooms &amp; 2+ bathrooms.  Area under unit will act as carport.  Lot is in a historic district, so façade will have to be approved by local historical society.

I'm trying to figure out ballpark cost to determine if project is financially viable.  I'm considering financing the purchase of the lot along with the build, or buying the lot outright &amp; financing only the build.

Any advice, recommendations for conventional or modular builders, recommended loans (preferably one-time close loans) &amp; lenders, and gotchas to watch out for would be greatly appreciated.  Also, if you think I'm absolute crazy for considering this, I'd like to hear why.

Thanks in advance,  
Matthew
[{"id": "hv8er05", "text": "Whats the current rental market like in the area for this type of housing?", "replies": [{"id": "hv8gfyr", "text": "Really strong.  Not a lot of rentals available in the area, and waterfront rentals, of which this would be one, are fetching a premium.  Property is in a *great* location.  There are not a lot of rentals available, but here are some comps:\n\n3/2/1500sf plus loft on one side of duplex, $2800/mo:  \n[https://www.trulia.com/p/ms/gulfport/153-markham-dr-b-gulfport-ms-39507--2563593920](https://www.trulia.com/p/ms/gulfport/153-markham-dr-b-gulfport-ms-39507--2563593920)\n\n2/2/1380sf condo, $2295/mo:  \n[https://www.trulia.com/p/ms/biloxi/2060-beach-blvd-601-biloxi-ms-39531--2042357933](https://www.trulia.com/p/ms/biloxi/2060-beach-blvd-601-biloxi-ms-39531--2042357933)\n\n2/1/1600sf, $2880/mo:  \n[https://www.trulia.com/p/ms/biloxi/133-hopkins-blvd-a-biloxi-ms-39530--2174368853](https://www.trulia.com/p/ms/biloxi/133-hopkins-blvd-a-biloxi-ms-39530--2174368853)  \n\n\n2/1.5/1100sf, $2500/mo:  \n[https://www.trulia.com/p/ms/biloxi/273-benachi-ave-a-biloxi-ms-39530--2561345585](https://www.trulia.com/p/ms/biloxi/273-benachi-ave-a-biloxi-ms-39530--2561345585)\n\n2/1.5/1000sf, $2520/mo:  \n[https://www.trulia.com/p/ms/biloxi/253-benachi-ave-b-biloxi-ms-39530--2184875169](https://www.trulia.com/p/ms/biloxi/253-benachi-ave-b-biloxi-ms-39530--2184875169)", "replies": [], "depth": 2}], "depth": 1}, {"id": "hv8gz7i", "text": "Prolly also worth noting that the area is not zoned for short term rentals, and while it's likely that it could be rezoned, it would be a lengthy process with no guarantees and would require the coordination of three other lot owners on that block, as the planning committee will not entertain single lot rezoning requests now, only entire blocks at a time.", "replies": [], "depth": 1}, {"id": "hv8jim8", "text": "I would talk to a broker in your area about the feasibility of the project you are talking about. I would see if they have sales and rental data of new builds like what you are talking about. \n\nI personally think this sounds too complicated and risky and probably not feasible for a person who is new to real estate investing. If you had a mentor or partner who has developed something like this before\u2026.maybe, but probably not. \n\nYou really didn\u2019t provide enough data for anyone to give you even a ball park figure which really isn\u2019t good for you to use anyway.", "replies": [{"id": "hv8kyxf", "text": "u/Ligdeesnutz Appreciate your caution.\n\nOur broker says the rental market is strong, but that's a good question that I'll ask him.\n\nWhat factors make it sound too complicated?  I expect to have a mentor if I pull the trigger.  Or just y'all here in this group!  \ud83d\ude0a\n\nFurther, I wouldn't say I'm a newbie real estate investor.  We have had long &amp; short term rentals since 2010, and we're adding more short term rentals soon.  We're just new to the commercial, multiplex arena.\n\nWhat data could I provide that would be helpful?  Note that I'm still fact finding.", "replies": [{"id": "hv8nvqz", "text": "Just construction costs and the time it would take to build are huge\u2026can\u2019t even trust the cost approach on a new build SFR costs risen so fast.   A lender is going to want to see a feasibility study among which in this market will probably take 2 months and then boom rates already changed.  You need to really interview a handful of market participants in you area and get data\u2026.cost sheets, BPO, etc\n\nI\u2019m a pessimist by trade and I think just the time value of money needs to be considered vs other investments including improvements that are already on market and can cash flow now. If there aren\u2019t any then maybe the market is telling us something. In my market now it\u2019s just making sense to build small multi-family higher end STR &amp; LTR but I still scratch my head at there numbers vs other investments.  Have you considered the present value of the money you are going to put into this project and the return on investment?", "replies": [{"id": "hv8r7dp", "text": "You know, we have considered just buying existing single family/multifamily homes that are or could cash flow right out of the gate.  Your questions about the time value of money are good ones, for which I don\u2019t have answers.  All good things to think about.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]