Real estate

Ultimate Guide: The Cost To Build An Apartment Building 2023

Written By Urban Real Estate Center
Last Updated: Dec 20, 2022 •

Various building costs throughout the country are reported as $398 per square foot. Therefore, constructing a residential property with 100 normal-sized units could cost approximately $37 million. With apartment construction on the rise, it's no wonder there is a need for an ultimate guide about the cost of building an apartment in 2023.

Many aspiring property developers and other stakeholders in the apartment industry are looking for this information to make sure they plan appropriately and avoid costly mistakes when constructing their apartment complexes.

This guide will discuss everything from construction materials, labor costs, project overhead costs, and more to estimating the total cost of constructing an apartment building or apartment complex in 2023. From start to finish, we'll give you all the information you need to get your apartment building constructed without unanticipated additional expenses along the way.


Is Buying An Apartment Building A Good Investment?

Buying an apartment building is a great way to become a real estate investor, and it can be financially rewarding if done correctly and provide you with additional income sources. The cost of buying an apartment building depends on the size of the multifamily property or single-family home you are purchasing.

However, larger apartment buildings typically require much more capital upfront because they have higher per-unit prices and expenses. 

When considering whether to purchase an apartment building as an investment, several factors should be taken into account, such as location, property condition, how long it will take for your investment to pay off, and what types of tenants are renting in your area.

Additionally, understanding how much it costs to properly maintain and manage a multifamily property is essential when determining if this real estate venture is right for you.


How much is the Cost of Buying an Apartment Building?

Buying an apartment building can range in cost depending on many factors, including the property's size, location, and condition. Generally speaking, the purchase price will depend on how much rent can be generated from each unit.

The cost per unit starts at around $50,000 for run-down buildings needing serious repairs. However, if you're looking to purchase something more modern and luxurious, prices can range from $200-$500K per unit. Additionally, there are other costs to consider when buying an apartment building, such as using a general contractor for renovations or improvements to the property.

A larger building with multiple stories will also include additional structural and safety requirements, potential elevators, and other cost improvements. Labor costs should also be factored in when considering a purchase. These include hiring a general contractor for any renovations, plus anytime professional services are needed.

With all these possible expenses, it can take time to anticipate the exact cost. Buyers should always ensure they have enough capital to invest, plus an extra buffer for unexpected costs during construction or repairs. However, if managed properly, most buyers expect to find worthwhile returns on their investment in an apartment building.


What are the Factors to Consider When Building an Apartment Complex?

Building an apartment complex is a big decision, and it's important to do your research before you start. Here are some factors to consider: Location, Land Costs, and Permits.

1. Location and Land Costs 

Location and land costs are important factors to consider when building an apartment complex, and they can be a sizeable part of the overall cost. It is important to correctly estimate the potential costs associated with land purchase and any repairs or modifications necessary before construction begins.

The location also needs to be taken into account, as prime real estate carries a heavier price tag than those areas located further away from bustling city centers. Location choices could impact the prospective tenant base, so careful consideration must be given before signing on the dotted line for land acquisition.

Investing in research for market studies regarding demographics and trends can pay off dividends when choosing a location for an apartment complex, as effective location selection can reduce overall costs down the line.

2. Building Apartments Permits

The process of constructing apartment complexes is no small feat, and many factors must be considered during the development and design phases. Among these steps is procuring permits in order to begin the building processes officially and Legally.

Depending on the size of the apartment complex, necessary permits may include zoning and building permits that give the owner permission to erect a new apartment. That same level of complexity could arise when constructing a luxury apartment complex due to concerns such as grandiosity, grounds-keeping protocols, waste disposal, and much more.

All these facets require controlled decisions to ensure comprehensive apartment development regulations are followed. While all this sounds intimidating, such permits are available for those looking to build their first apartment building providing law-abiding steps for you to take in order to construct a successful apartment structure project.


What is The Cost of Materials and Labor at The Time of Build Apartments?

Building apartments can be daunting but also bring many rewards and financial security. Calculating the cost of construction materials and labor is the first step to ensuring success. Labor costs usually account for 20-40% of the project's budget, including payroll taxes and paid time off for workers.

Construction material costs vary according to the square footage of land plus the cost of components like cement, steel, sand & gravel, tile, bricks, plumbing & electrical fixtures, windows & doors.

Additionally, there are factors such as subcontractors who build floors or roofs; all these aspects must be carefully considered when estimating a construction budget. Although much goes into constructing an apartment building, an excellent return on investment is achievable with proper planning.


Who Is Involved in Building Apartments?

Finding the right people to make your dream apartment a reality can be daunting. From architects to contractors, plumbers to electricians, and even investors, who are all involved in building apartments? When dealing with such an important project – who you hire is of the utmost importance.

Attorneys, architects, and contractors typically play the largest role in constructing an apartment complex. An architect would create plans for the project, manage hiring processes and finalize drawings and material selections. Lastly, they often oversee filings for the paperwork necessary for construction efforts.

The contractor is likely responsible for supplying materials, contracting work, and protecting necessary permits. On a national level, it's estimated that about 15 percent of the total cost goes toward labor costs coming from architects or general contractors.

Letting the professionals handle your next building project will give you peace of mind knowing that experts handle your vision with experience and education on the subject matter.



Building an apartment building is a huge investment- one that comes with a lot of risks. However, if done correctly, it can be highly profitable. This guide provides you with all the information you need about the cost of building an apartment building in 2023 so that you can make an informed decision about whether or not this is the right investment for you. Thanks for reading.

Urban Real Estate Center

Discover the ultimate guide on the cost of building an apartment building in 2023. Learn essential information about apartment complexes and construction costs, from financing and permits to design and materials.