Building a Rental — What's the Perfect Floor Plan?Oct 01, 2021
Whether you're looking to build a one-off rental or you're planning a massive syndication with 100's of doors--the right diversity of floorplans is crucial! This is a clip from a recent episode of the Build-to-Rent Podcast where we discuss how to go about picking the perfect floorplan for your situation.
Watch the full episode, here: https://youtu.be/H0g2Lf81gG8
So you're thinking about building a property. You want to build a house, an apartment complex, a gigantic, institutional style, build-to-rent community. Whatever one of these that you're considering, the actual floor plan of your units is going to be really important.
And we know all about building too much or too little, or too efficient of a floor plan. There's a concept when you're designing when you're doing your architecture, called Value Engineering. We want to design this unit structurally so that it's as cheap as possible to build.
We want to make it a part of this show where we own our mistakes. I think we've got a couple of units that have been over-value-engineered. Probably a way for the layman to understand is that as it looks like a military barracks.
So what would make you go from a nice cozy place to live that's custom-designed to a military barracks. You've got to be somewhere in the middle. What do you think about that?
I want to back it up just a little bit. My first thought we're talking about, I guess, floor plans, upgrades we were talking about today is what will the city allow? Right? Isn't that maybe your starting point? Yeah, it has to be right. And so obviously, if you're trying to make as much money as you can, you're probably going to want to get the most density as possible, usually.
But you might be just beating your head against the wall if the city doesn't want that. Or if it doesn't make sense. So understanding the location of the piece of dirt that maybe you found that you're trying to develop or put a project together. And then talking with the city, seeing what their overall general or master plan is, and see if it makes sense. So you're not just wasting their time or your time.
And I think also be open to doing different kinds of product types within a specific location. Right. So maybe you say, Okay, I can do some townhomes, I can do some single-family, I need to do some stat flat type of product. So being open to that to get the density that you need, maybe that the city wants.
Just because the city wants it or allows it doesn't mean that it's profitable, or what the market needs.
We're giving the city far too much credit there. The more you farm a specific area, the more you're going to realize that there are some cities that are friendly to what you're trying to do and others that it's just a hard stop--you're not going to get anywhere.
We had to let a build-to-rent project go in Caldwell, Idaho, this last week, where they are just not going to give us the density that we need. We can only get quarter-acre lots out of that city and there's not a chance that that kind of density is ever going to come even close to working on a build-to-rent product.
So James, our lead developer on it, he's just going to spin it off to a home builder that deals far more appropriately for a home builder than it is for a build for rent project.
So to Chase's point are you going to be able to get the density that you need? I've got one that we're working on right now. Where to get the density, right. We had to sacrifice parking. What that means is a much higher HOA budget to enforce parking, because you can see that that will be a problem down the line.
I mean that kind of parlays into what we talked about on the last episode was development, layout, and amenities.
What will the city allow? So we know they're going to allow up to 120 units,
What's the most effective floor plan? Within that? What are some of the observations and lessons that you've learned as we've thought about floor plans and, and seeing them put into practice,
I think you need to diversify. I know some areas, we've done two-bedroom units, we've done one-bedroom units, we've done three bedrooms, we've done townhome, style stacked, but be diverse. If you want to stick with townhomes, then maybe see if there's a way you can do a three and a four-bedroom townhome, maybe there's a way you can do a two-bedroom townhome, but give people options.
If you have all of the same bedroom counts, you're kind of tying your hands a little bit unless that's needed in that specific area. But there are some people that say, I'd pay a little bit less to have two bedrooms, I don't necessarily need three, or, hey, I'm a single guy or gal and I just want one bedroom. To see how you can maximize that in your floorplan layout.
But I totally agree with you that have variety. And you could have a couple of different three-bedroom layouts if three-bedroom is the ticket, and it makes sense for that location. But I know we've done projects where we have three-story three bedrooms, and that's all we had, if we had had a two-story, three-bedroom, and three-story, three bedrooms, that would have made a huge difference. So have a little variety. And there's huge, I agree with you on that.
You're gonna feel that in your lease-up, I think let's say you do your analytics, right, we look at costar a lot. We've even gone into local apartment communities and talk to the leasing agent just to learn about what are they really seeing here? What one thing that you can tell is, oh, yeah, I have I'm sorry, I have no three bedrooms available until November. I have these four two bedrooms available and we're running a rent special.
What did the market just tell you there? Do they need three bedrooms? Yes, it's time for some three bedrooms. And we probably don't need as many two bedrooms. And that's the knowledge that you can look like on apartments, calm or local rental search engines, and you can see what people are charging the Wow, what a leasing agent tells you just off the cuff really, really does reveal a lot. Very valuable. It is very valuable.