Setting aside the right budget is wise if you want to construct an apartment complex. Unfortunately, that’s something most people ignore. They focus more on how real estate is a lucrative industry and the high housing demand.
In other words, they can only think about the high return on investment once they build. This prize comes at a huge price, and it is often overwhelming. One should be willing to spend substantial money on such a product.
So, how much do you need to build? Here’s a detailed discussion that answers this vital question. It also discusses more about such projects, making them worth your time. Check it out!
1. Average Cost
On average, one needs approximately $398 to build a square foot of an apartment complex. Consequently, the larger the building, the higher the chances of spending more.
It is worth noting that there are various costs of building an apartment building. These costs usually include the following;
1.1. Soft Costs:
Most investors overlook these costs since they aren’t directly related to constructing the apartment complex. However, they are crucial, and the construction can’t commence without them. They include the inspections, engineering, drawings, designs, permits, fees, and taxes. One will spend money on such, hence the need to consider these soft costs when budgeting for an apartment building.
1.2. Hard Costs:
These are the most obvious costs for such a project. After all, they are directly related to the construction of the apartment building. They include expenses such as utilities, site work, property, equipment labor, and materials.
1.3. Long-Term Costs:
After the construction of an apartment complex, you will incur other costs to maintain the various building systems. Most of them are monthly bills, including utilities. Others revolve around the amenities, including laundry equipment, pools, and elevators. So, remember to factor such costs in since they are inevitable.
1.4. Finance Costs:
It is no secret that building an apartment complex is quite expensive. Consequently, not many people can afford the money the project needs upfront. Therefore, they source the money from investors, banks, and other financial institutions or lenders. Under such circumstances, they will incur additional costs, including finance charges, origination fees, and interest.
Depending on the costs of that particular apartment complex, the cost per square foot can differ from one building to another. Besides, some of the costs are for the entire complex, especially the long-term ones. There are other costs emanating from disputes, delays, and lawsuits.
In most cases, the distribution of the various costs is as follows;
- Architects: 8-10% of the budget
- Builder or general contractor: 25%
- Electrical: 10%
- Floor structure: 12%
- Flooring: 5%
- Foundation: 9%
- Interior Features: 3-5%
- Interior finish: 10%
- Kitchen: 8%
- Masonry walls: 9-10%
- Plumbing: 12%
- Roof: 10%
- Structural engineer: 1.5%
- Windows and doors: 5%
- Wood walls: 6-10%
Some activities take up less money, whereas others are relatively expensive.
2. Factors That Will Determine How Much You Need
The cost of building an apartment complex depends on several factors, including the following;
2.1. Number of Stories
Did you know that the number of stories determines the amount of money you need? Tall buildings often cost more to construct than their shorter counterparts. After all, high and mid-rise apartment complexes usually need relatively expensive materials, including steel and concrete.
On the other hand, low-rise apartment buildings often use wood. This material is relatively low, thus making such construction projects relatively cheaper. The same applies to the labor costs since they usually increase with the number of stories.
2.2. Number of Units
On average, building a single apartment complex unit can cost between $70000 and $200,000. The margin is due to the various features people settle for, including the materials, size, and finishes.
The design and available amenities of these units can also make a huge difference. It is advisable to settle for the same floor plan for all units. After all, it reduces the cost you spend on the apartment units.
2.3. Location
Did you know that two individuals could build similar apartment buildings but spend different amounts of money because their locations are different? That’s true because a piece of land’s location determines an apartment complex’s price.
If you buy a piece of land in the city or areas where it is in high demand, it might cost you a fortune. That translates to a huge figure when calculating how much you spend building an apartment complex.
2.4. Type of the Apartment Complex
There are four major types of apartment buildings, and the price of constructing these complexes usually differs. Here’s a summary of the impact of the type on the cost of an apartment complex.
- High-Rise Apartment Complex: This building has at least 11 stories. It requires a unique permit and construction requirements. Besides a driven pile foundation, the constructor must use steel and concrete. Due to these demands, the cost per square foot is usually between $270 and $675.
- Mid-Rise Apartment Complex: These buildings have 5 to 10 stories and have relatively complex design elements. For instance, construction requires steel and concrete. The buildings also need double-sided corridors and elevators. Due to these requirements, the cost per square foot is usually between $210 and $310.
- Low-Rise Apartment Complex: The stories of these apartment buildings don’t exceed four. They are relatively inexpensive since you can construct them using wood. Under such circumstances, cost per square foot is usually between $180 and $275.
- Infill Apartment Complex: Due to its location, this building is usually a triplex or duplex complex. After all, the land is usually small, thus limiting the size of its structure. Consequently, cost per square foot is usually between $95 and $205.
Besides, an apartment complex with additional features, such as a basement parking garage or ground-floor storefronts, will cost more than regular ones.
Final Words
It is no secret that you need a lot of money to construct an apartment building. This figure also varies from one project to another due to various factors. The most common ones include the type of apartment, number of stories, building materials, number of units, and location, to mention a few.
Whereas the average cost for every square foot is $398, it can be higher or lower than that, depending on the different factors. So, research before buying a piece of land. Equally important, factor in all costs when preparing the budget.
Last Updated on by Ananya_Sreen
The article is well-organized, making it easy for readers to follow and grasp the key concepts. It serves as a helpful guide for individuals involved in real estate or those planning to venture into apartment complex construction.