Commercial Real Estate Investing Re-envisioned
Traditional real estate investing in multi-family commercial buildings would consist of acquiring an architect or designer and engineer to have your building designed with a certain amount of units/suites and the proverbial pent house on the top. That building would be designed in such a way it would be different in the slightest ways from others in the same area, yet only able to offer a set amount of each type of unit/suite. Those types being studio, one bedroom and one bathroom, two bedroom and one bathroom, and three bedroom and one bathroom. If you have if a prospective buyer or tenant looking for a three bedroom unit and all you have two bedroom units - they will go elsewhere. This is just how it has been done and no one seems to want to innovate it? Well, Terra Floor Plans has the solution as we want to innovate the industry.
Now consider this, you have four buildings on a one acre urban lot and each one is similar to each other but there is a variance in the layouts of each floor of how many of each type of unit they have. There is a better chance you would have a unit available that the prospect is seeking. Sure it could be done with an architect but if you had to pay for the design and engineering for each building at $5 a square foot which would run a hefty bill close to 2 million (if each building has a footprint of 100,000 square feet). This is all before construction has even begun.
Our solution is simple yet very effective, as it solves both needs and reduces the cost to your company. Now you are asking... What could it be?
The Honeycomb design Terra Floor Plans has created has six units for each floor with centralized elevators and large stairwell starting from the 2nd floor going to the 10th. These six units are the following: 1 Bedroom 1 Bathroom Studio (500 square feet), 1 Bedroom and 1 Bathroom, 2 Bedroom 1 Bathroom, 2 Bedroom and 2 Bathroom, and 3 Bedroom 1 Bathroom. Each of our units has a kitchen in their design. On the ground floor it has a shared kitchen so residents of each floor can get to know each other. Three community rooms on the ground floor that any resident could use to host a larger event or to having meetings. In the entry way there is bike storage on both sides of the main entry foyer, which would be under lock and key to prevent theft or vandalism. Now you ask - why is the exterior of this picture white? Why not a rendered as a finished building? We have kept it this way so each builder who works with us would be able to add their own touch to the building by customizing the exterior facade and making it their own.
From the 2nd up it could be built to suite anyone's need or the prospective buyer could choose their layout from the six options. Taking note that all layouts are able to be placed on all floors from 2nd to 10th. How much does that cost? Terra Floor Plans is pricing is a mere 30 cents Canadian a square foot. This building design would cost $29,625 to buy the plans and build one of these towers - compared to $500,000 going thru an architect. We leave it up to have your foundation engineered either for underground parking or as a utility space. The roof would be the same as the foundation - as it could be engineered flat to become a roof top garden or sloped ever so slightly to accommodate solar panels. The cost of such updates and engineering would run approximately around 15 cents a square foot or around $14,812.50 for this building.
Lets break down the numbers so anyone can understand where we are coming from. First off this would be flushed out entirely for businesses building the Unlimited Use from Terra Floor Plans and plan on building 20 or more of these buildings in succession.
The November average rental rate in Canada for a 3 Bedroom apartment is $1838.18 - we are just going to use $1800/month.
Buying an apartment average falls in the range from $3090 to $4293. We are going to use $3700 below. $3700 multiplied by 91 square meters (which is equivalent to 1000 square feet) will give us an average sale price of $336,700 per 3 Bedroom unit.
Cost of building an apartment building works out to be in the range of $64,575 to $86,100 for 861 square feet. It is also stated the price per square foot would range from 85 to 200 dollars per square foot https://www.fixr.com/costs/build-apartment
With our units being 1,000 square feet, it will be budgeted on the high end of $150 dollar per square foot. So the total cost to build our Honeycomb would be $12,176,700.
Land prices vary drastically from market to market and city to city, so we are going to use 1 million as the figure for an inner city lot - it may be high for some locations and low for others.
Operating income will be 52% - https://www.naahq.org/news-publications/units/august-2016/article/2016-naa-survey-operating-income-expenses-rental
Build and Hold
The Assessed Property value would be around $13,500,000.
The Gross Scheduled income would be 1800 multiplied by 54 units for a total of $97,200 monthly.
The Vacancy Allowance (10%) would be $9,720
The Gross Operating Income would be $87,480 monthly
The Gross Operating Expense (52%) would be $45,489.60 monthly
Net Operating income would be $41,990.40 monthly or $503,884.80 annually.
Your monthly debt payments less the net operating income will give the cash flow of our Honeycomb.
Build and Sold
The Assess Property value would be around $13,500,000.
Each unit would be valued at $336,700 as an average
The total building sold would equal around $18,180,000
Which would put $4,681,800 profit into your business.
To recap our plan price for each building is $29,625 if rented it would make $41,990.40 each month - so within the first month the cost of the design would be paid off. Now to have 20 of these buildings or more in your inventory you would be making $839,808 a month or $10,077,696 annually for a low cost of $592,500 to buy the rights to build. But it gets better, your company can be built more than 20 since it is Unlimited Use. Taking into account that your company would only build our Honeycomb when 80% of its units have been sold or allocated to tenants prior to construction.
Now if you are looking for one of these multi-story designs - they are not listed on our website currently. Please contact Terra Floor Plans directly via firstname.lastname@example.org .
We are limiting our Unlimited Use for our Honeycomb design to 40 businesses for 2017, as to not over saturate the market with one design.
- Christopher Bauer
- Tags: appartment architecture cash flow co-housing condo development fully integrated real estate investing multi-family multi-family building multi-family design multi-family housing net operating income operating income real estate real estate investing realtor rental income rental management rental rate renting
What Green Should Be
To define what Green should be, we shall first define what Green should not be.
Green should not be using high VOC products.
Green should not be creating a larger carbon footprint than the building.
Green should not be wasteful of materials used in the construction process.
Green should not be using products that are known to cause health issues.
Green should not be banned in any manner or form by legislation or regulation.
Green building standards have been getting better, but not as quick as they are needed. The Green standard that will be used as the benchmark in this will be Leadership in Energy and Environmental Design or LEEDs for short. They have a scale rating system from certified to platinum, which I have seen and have also been in Buildings that were on the low and high end.
On the low end there is Built Green and R-2000 as they do not address key issues directly and only skim on Green standards by focusing on reduced power consumption, minimal air leakage, reduced water consumption and more insulation.
Leadership in Energy and Environmental Design on its higher certification can incentive builders to design homes or commercial buildings that almost rival some of the better standards available. These buildings are usually more efficient and create a healthy environment for who live or work in them.
Passive House & Net Zero take it one step further by reducing the entire building footprint to zero and making the building system being able to sustain itself. However these standards are not used as widely as they are more involved to meet.
The top tier in our books is The Living Building Challenge, as it brings together the best of LEEDs, Net Zero and elements of Passive House in one. Their challenge is broken down into 5 parts, including net zero energy and net zero water to create a building that has minimal environmental on its location.
Solution to the Housing Crisis
There is a huge issue that many people are facing today and that is the lack of affordable housing. Governments are not doing enough to address the issue head on and that only leaves private business to find such a solution.
We have ourselves looked at housing affordability, if anything it was the inspiration for our multi-story multi-unit designs. How so? Well, we wanted something that could be easily built and renovated, something that was able to address the issue head on instead of being a unique architectural building only to drive up the cost of the units. How did we do this? Through standardization and the ability to super impose each floor plan into the same area.
Now here is the thing - With a solution in hand there is one problem, one major problem. It is not a solution if no one is building it from us. So as we are seeking out builders, developers, rental management companies to be able to use our design and start address this issue as soon as they are able to break ground.
Our design which has the greatest impact for the affordable housing issue is our 54 unit tower. It has shared laundry on the ground floor and three community rooms the tenants can use along with a share kitchen - bringing elements of Co-housing into this design. On each floor from the 2nd upwards there are six livable units and five different layouts totaling to 30 different layouts per floor. With 9 floors like this there are a total of 270 different ways this building can be built. It is also designed with a flat roof which could either accommodate solar photo voltaic or a roof top garden for the building.
We want the world to move forward, but it cannot be done by building multi-family buildings using methodology that put us in this crisis. In order for us to change and address this issue, we must change our thinking and our designs to accommodate.
Finally - You may ask what do you have to gain from this plan? Being standardized if a developer would buy the unlimited use from us they would be able to build 20 (no limits of how many for one price) of these buildings. Now if you consider the cost of the units which would range from $800 to $1800 3 bedroom units if rented or $150,000 studio's to $325,000 3 bed room apartments if sold. Granted those numbers would change depending on the current market conditions and location. As of a builder or developer this would be a worthwhile addition to your portfolio showing that you want to also address the housing crisis along with us.
- Christopher Bauer
- Tags: affordable housing air-bnb Andrew Weaver Canadian Mortgage and Housing Corporation CMHA co-housing Commercial Real Estate Development Association development community energy efficent floor plan home ownership housing housing affordability housing affordability crisis housing crisis John Horgan Justin Trudeau multi-family multi-unit multi-story NAIOP off grid renting residential units solar panels solar pv tenant The Canadian Real Estate Assoication Toronto Housing Vancouver Housing Victoria Residential Builders Association
What Makes Terra Floor Plans Different
Starting from any search looking for online floor plans, there are plenty of similar businesses to us out there presently. Most of them have several hundred plans or several thousand to our small quantity and ranging in size from 1000 sq ft to massive 5 to 6,000 sq ft mansions. Not only that they all range in styles from Modern to Contemporary and almost everything in between. But that is them, the only thing we have in common with them is that we offer plans.
The first difference is the fact we do not offer plans in print or as mailed plans. Why? Terra Floor Plans want to reduce paper waste as much as possible and by doing so - if any alterations would have to be made to our plans they could be digitally off our PDF working drawings. Secondly, it removing the shipping and handling expense for our clients, which could save a several dollars to several hundred dollars depending on the size of the order.
The second difference is our design method. Sure our houses look different from the norm or conventional homes but there is a reason behind that and that is functionality. There is no sense in designing a home that is all form to be ascetically different, if all those changes make it more costly to build and take longer to build. This has more to do with the exterior of our designs to take advantage of sun exposure and ambient light in our homes.
The third difference is our goals with our plans. We want them to be different, to be efficient for the home-owner, so that at the end of the day it reducing living expenses for them with he addition of solar. Not only that, we want to address major issues head-on instead of using the same methodology for everything.
Finally, our pricing is in line with our industry for what we are offering. By being at the lower end of the spectrum it makes it possible to take our plans and get alterations done feasible in comparison of buying a custom plan at $1 square foot or more.