How Much Does It Cost To Build an Apartment & Factors Affecting Those Costs

By: ROS Team

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Apartments can be a good investment for many, but have you ever wondered what costs go into constructing an apartment? Multiple factors go into the costs, such as the construction material, type of building, size, location, and amenities. It also depends on whether you are building it from scratch or converting an existing structure.

There are a few different ways to calculate how much it will cost to build an apartment. The first is by figuring out the average price per square foot for construction in that area. For example, if you plan on building in New York City, you would use $150 per square foot as your average price per square foot.

You should also consider all other factors like financing costs, insurance, and additional costs. This can be more difficult to calculate because so many different variables are involved.

Let’s find out how much it costs to build an apartment and the factors affecting these costs.

The Cost of Building an Apartment

The cost of apartment buildings is a significant investment for any developer and it’s good to determine the costs in advance. However, the construction industry is one of the most competitive and volatile industries in the world, with prices fluctuating wildly.

The costs can vary depending on the location, size, and amenities you want. They can be divided into two categories: Development costs and Construction costs.

Construction Costs:

Construction costs are the costs associated with building the physical structure of a building, including labor, materials, and equipment.

The average cost to construct an apartment building is $350 per square foot of living space, which includes hard-to-reach areas like ceilings and closets and visible spaces such as bathrooms and kitchens.

Construction costs do not entail license fees, insurance, and other overheads. This means a 1,000 sq ft apartment will cost about $350 x 1,000 sq ft = $350000 to construct.

Development Costs:

Development costs start to incur before construction begins. These include architectural fees, engineering fees, and land acquisition.

Land prices in a city like New York City are much higher than in rural areas. Generally, land prices are higher in more desirable locations with more amenities nearby.

The size of the development site also affects the development costs of an apartment building.

Generally, larger sites have lower per-unit prices because they require less infrastructure and space for parking lots or other structures.

The amenities offered by development also affect the cost. For example, luxury apartments typically have higher rents than affordable apartments and will therefore require more expensive construction materials and finishes.

Cost of Building an Apartment
Photo Credit: Elements Envato

The Different Stages of Building an Apartment Complex

The process of building an apartment complex is complicated and time-consuming. It requires the coordination of many different parties and a lot of planning. The first stage is finding a site for the apartment complex to be built on.

Multiple factors must be considered when choosing a site for an apartment complex, such as zoning laws, proximity to public transportation, and environmental concerns. Once a site has been selected, it needs to be cleared before construction can begin. This will require the removal of any trees or vegetation on the property and any standing buildings that previous occupants or owners may have left behind.

After clearing the site, it has to be leveled out so that there are no hills or valleys on which there could be flooding during heavy rainfall events. Next comes installing utilities like water pipes, sewer lines, gas lines, electric cables, and telephone lines to provide residents with necessary services like heating, water, and cooking.

Let us discuss the Different Stages of Building an Apartment Complex.

1) Pre Construction

The first stage of building an apartment complex is the pre-construction stage. Some of the things done during this stage are determining the apartment complex’s location, finding a builder to construct the complex, and estimating the cost of building it.

This stage of the Pre-construction process includes acquiring land and preparing it for development. This includes surveying the land and ensuring it meets all zoning requirements, getting necessary permits from local authorities, obtaining other necessary approvals from third parties like utility companies, etc.

The pre-construction stage can be the most exciting part of the process because it’s during this stage that the designer has free reign to create their vision for a new community, and the contractor has an opportunity to bid on the project.

2) Construction

The actual construction of the complex takes place during this stage. It begins with demolishing existing buildings on site and ends with finishing touches such as landscaping and installing utilities like water pipes or gas lines. This stage typically takes six months to one year.

The different stages of construction include:

Site Preparation: This involves grading and clearing the site and some demolition work.

Foundation: This involves digging footings and installing pilings to support the foundation walls or slab.

Framing Includes:

  • Erecting walls.
  • Installing roof trusses and joists.
  • Installing other structural components such as beams or girders.

 

Cladding/Finish Work: This stage includes applying finishing materials such as brick veneer or drywall to the exterior surfaces of framing members.

3) Occupancy

After construction has been completed, there comes the final stage, which entails furnishing the apartment unit with furniture to make it livable for its future residents and installing appliances such as air conditioners or ovens that come with the unit for people to use in their new home.

The occupancy stage is also crucial as it determines how much profit the developer will make on their investment.

What Factors Affect The Cost of Building an Apartment Building?

The cost to build an apartment depends on many factors. These include the size, amenities, and location.

1. Size

The cost of building an apartment building depends on several factors. These include the property’s size and whether there are any special requirements for the build.

This is especially true if they plan to build something that is not standard or requires special considerations, such as underground parking spaces or car parking spaces.

2. Location

The location of the building is one of the essential factors in determining how much it costs to build an apartment complex. For example, a building is located in a remote area or rural community. In that case, it will be more expensive to build as construction materials will have to be shipped in, and there may not be any local labor available.

Furthermore, some cities have stricter regulations that can also affect the cost of building while some other cities require developers to provide affordable housing units with each new development they build, while others do not have such requirements. This means that developers in those cities may incur higher costs with each new project, while those who don’t have such requirements may incur lower costs for development.

3. Amenities

Apartments with amenities such as a pool, gym, or parking garage are more expensive than those without these features.

Apartment Building Cost Calculation

We have found that many factors affect the cost of an apartment building; these include land price, construction cost, property tax, and financing. Property taxes also vary by location. Financing options play a significant role in determining how much money you will need to start your business venture in this industry.

The cost calculation for an apartment building helps you estimate the cost of an apartment building in a given location. The factors included in this calculation are land price, construction cost, property tax, and financing.

It can be calculated by adding – (Licensing costs) + (Land Price) + (Cost of Construction) + ( Cost of Financing)

Apartment Building Cost Calculation
Photo Credit: Elements Envato

Types of Apartment buildings and the Costs Associated with their Construction?

There are many types of apartment buildings. They all have different layouts, amenities, and costs associated with their construction. There are also different ways to classify them. Some people classify apartments by the number of units they have, while others classify them by the number of stories.

Types of Apartment Buildings:

1) Low Rise Apartments

Building a low-rise apartment building costs anywhere from $156 to $240 per sq. ft. It can have 5 – 50 units with elevators, two stairwells, and a double-sided corridor. The cost of materials and labor are the two main factors contributing to the overall cost.

Low-rise apartment buildings are the most affordable and are usually built in the suburbs. They are also known as garden apartments or suburban apartments.

The cost will also vary depending on the location and size of the property. For example, a 3-bedroom apartment in Los Angeles will cost more than one in New York City. You can also find the approximate cost by looking up the construction cost index in your city or state.

2) Mid Rise Apartments

The cost of a mid-rise apartment building is typically between $185 to $270 per sq. ft. The cost for this kind of building is usually determined by size and location. Building a mid-rise apartment building in New York City would be more expensive than building one in Kansas. They have 50 to 200 units, double-sided corridors, elevators, and multiple egresses.

3) High Rise Apartments

High-rise apartments are the most common residential living in urban areas. These apartments have typically been built from the 1950s to the present day. They are an affordable housing solution for people who cannot afford a house.

The cost of building a high-rise apartment is typically determined by its location, size, and materials used in construction. Finally, different types of materials can affect the cost; steel and concrete buildings will be less expensive than those made with brick or stone.

The cost to build a high-rise apartment building can range from $235 to $450+ per sq. ft.

High Rise Apartments are being built in many cities around the world. These apartments have much more space than traditional ones, providing their residents with a better quality of life.

Maintenance and Enhancement Costs Associated with an Apartment Building

Maintenance and enhancements are essential factors for an apartment building and this is an expense incurred annually.

Maintenance is a broad term that covers everything from repairing the plumbing to replacing windows. It also includes regular inspections and cleaning. The amount spent on maintenance depends on the building’s age, condition, size, location, and use.

There are many different costs that need to be considered when looking at the cost of maintaining and enhancing an apartment building.

These costs typically include the following:

– Maintenance and repair
– Upgrades and improvements
– Replacement of materials, parts, or systems

The cost of maintenance can range from $2,500 to $5,000 per resident annually. This cost also depends on the size of the building. For example, if a building is smaller than 1,000 square feet, then the costs will be lower than a larger building.

This cost is usually split between the tenants and the landlord. The landlord pays for significant repairs while the tenant pays for minor ones. If a tenant has a major repair, they will typically pay for it themselves and then ask their landlord to cover it in their monthly rent increase, or they could ask the landlord to cover it in full without any increase.

Maintenance and Enhancement Costs Associated with an Apartment Building
Photo Credit: Elements Envato

Determining the Final Costs

Building an apartment complex is a very expensive endeavor. The land cost and materials used to build the apartment complex play a major role in the total cost.

Although building an apartment complex is long and tedious, the rewards are worth it.

As we have discussed, the first step in the process is finding suitable land. This can be done by looking for sites close to public transportation, schools, and shopping centers.

The next step is getting the city council’s approval for the project. Once the approvals are granted, construction can start on the site. It will take about 18 months before residents can occupy any apartments. The cost of an apartment complex also varies depending on the type of building materials that are used. For example, in most cases, concrete and steel are cheaper than natural stone or marble.

The cost also varies depending on the number of floors, amenities, and location. It is a general rule that the more floors there are in a building, the more it will cost to build.

It’s not easy to say how much it will cost to build an apartment; it depends on the location, size, and units.

A project manager can estimate the cost of the project by looking at the following factors:

– The type and size of the building that needs to be constructed.
– The type of materials that need to be used.
– The location of the construction site.
– Construction company rates and related costs such as insurance, permits, etc.

FAQs: Cost To Build an Apartment

How much does it Cost to Construct a 10 Unit Apartment Complex?

Construction costs are always changing, but the average cost to construct a 10-unit apartment complex is about $3- $15 million. However, the cost of such projects may vary depending on the complex’s location, size, and design.

Is Buying an Apartment Building a Good Investment?

Buying an apartment building as an investment can be profitable and rewarding for buyers and sellers as long as they know what they are doing. You must have the capital and knowledge of property management.

Many other factors include the potential to rent, providing a steady income, along with the property market tends to be stable in the long term.

How much does it Cost to Build 8 Unit Apartment Complex?

The cost of an 8-unit apartment complex will depend on the size of the lot, the type of building materials, and the level of finishes.

However, typically the cost of building a new apartment complex can vary between $3.2 and $16.6 million. This is an extensive range with many factors contributing to it.

We can calculate the cost by breaking down all costs into two parts: land, construction, and financing.

Is there an Apartment Building Cost Calculator?

Many websites have calculators for the average apartment size and the cost per square foot. They provide you with the estimated cost of building an apartment building by considering the number of units, size of units, land value, and other relevant factors.

How much does it Cost to Build a Studio Apartment?

The total price can range from $40,000 to $80,000 according to the construction cost, depending on various factors such as site selection, layout, plumbing, and electrical system. The size of a typical studio apartment ranges from 400-500 square feet in size. It is half the size of an average one-bedroom apartment.

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How Much Does It Cost To Build A House