I just built a 36 unit apartment complex.

I just built a 36 unit apartment complex.

Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes

Hey guys my name is George Yu and I love passive real estate. The idea of investing into something and then collecting mailbox money whether you feel like working or not is like having your own golden chicken as long as you take care of it. I bought my first single family home in 2011 while I was a freshman in college for $32,000 move in ready from my uncle and it has been consistently rented out since for about $650/month. Fast forward till now, I have a total of 6 single family rental properties....and now a 36 unit apartment complex. Maybe your asking how did he go from single to constructing 36 units. Honestly it wasn't that easy or quick lol.

My last single family purchase was in 2017 so I had been roughly buying one property a year. While the income was great and I was making passively per year what an average American makes actively. I was searching for more. Enter: Grant Cardone. I love Grant and his high energy. He really had me sold on the "single door is death" mindset since late 2017 so around that time I made up my mind that no longer was I going to buy these "measly" single family home that afforded me my relaxed living up until that point. I was going to be a Multi Family Syndicator!! Well that would have been the case but none of the deals I could find excited me. I couldn't find anything over a true 6 cap (once I dug behind the brokers inflated numbers). I get the concept of more doors under one roof and management but I was collecting around 15-18% cash on cash from my single family. I didn’t expect 15% returns but I just thought that 6% was too low.

Now I am a salesman and I like to sell people what they want. My day to day work since 2012 was in product manufacturing and importing. I can speak fluent mandarin and everyone knows China is where everything is made. I started importing and selling anything that made a profit while in school. I didn't do too bad. I guess well enough to quit pharmacy school in mid application my senior year of undergraduate at University of Georgia. I was projected to make about 80k a year when finished with school and I was making over that working on my own. Didn't make sense to go into debt and another 3-4 years of school. Around 2015 I had began experimenting in developing my own product because everyone was selling on amazon by this time and margins were slim as a private label guy. I had to invent my own product to stay ahead. Well what to invent?? No idea. Not until I found myself in a cockpit of a 1969 Piper Cherokee 140 with my flight instructor coming down from a cross wind landing when I saw a windsock and had a bright idea. What if I could create a product that that inflated with just the wind and created a lounging device or even an air mattress? WindPouch was born. We a had a couple viral youtube videos one by Casey Neistat that really opened up a world of craziness for the next 16 months. We went from 0 in sales to a little over 4 million in revenue before being acquired in 2018 but not before getting a call to pitch on ABC's Shark Tank and landing a deal with Mark Cuban himself (the episode never aired unfortunately). That’s a crazy story for another time.

Back to being a salesman. I took a step back during that 2017-2018 time and figured if everyone is fighting over these 6 cap deals and buying them up before I could even get my hands on one then if I could build something better than a 6 cap with these low interest rates then i'm pretty sure I could just sell them back to the investors and do it again. Or rent it out for cashflow...or both. I didn't have a clue about new construction until I met my now partner Jeremiah. By random chance I was talking to a friend about my ambitions to build new product specifically for workforce/affordable tenants. I like staying in the NEED category rather than the WANT when it comes to living arrangements. There’s plenty of money building for WANT these days anyways. You see them coming up in every big city and Atlanta is no different. Literally we have 10+ high rises coming up at the same time while there is vacancy in the completed ones right next door! Bubble? I have no idea and wont to pretend I have an idea about how to time market cycles. What I do have an idea of is that there is a great NEED in affordable housing everywhere we look. My friend met a guy in his hometown that was an entrepreneur like us but decade older and had been building for about 15 years...and he was also building affordable housing. One phone call later I was in my car driving 4 hours away to meet him and see his products. I was hooked. Simple and yet much needed. He was focusing on the forgotten tenants. The ones that no one is building for. Most make minimum wage and are either divorced, widowed, elderly or post graduates just not wanting to move back in with mom and dad while looking for a job. Most product if you could find any in that price range were dilapidated. Often the poor insulation could cause the electricity to cost almost as much as the rent itself. We are building for them. I know what you are thinking. Section 8? Are they good tenants? Do they tear up your place? Here to report that so far so good. We build market rate so no government subsidies and we don't take section 8 vouchers. We just don't think the government's help is needed here at this time. Pure capitalism should drive this.

Jeremiah was just finishing up another one of his developments and he had located a piece of land where another potential development could go and he wanted help taking it on and then taking this long term and eventually nationwide. It was in that moment we agreed to partner up. From the beginning I was there on every phone call, email, variance/zoning/permitting meeting, numerous investor/bank meeting, contractor/subcontractor meeting, code enforcement and closely watching money from our million plus dollar loan account slowly being drawn out every week from contractors and subs. It wasn't a walk in the park by any means and we had our share of surprises. We got hit with substantial impact fees from the city, local cable/internet company screwed us over, few raining weeks slowed us down a little and of course a fair share of contractor issues. But overall it was a surreal experience to see the land transform from trees to completely built out with our first tenants moved in. We have set a goal for 2020 to build another 200 units spread over 4 cities in our home state of Georgia. We have empty lots selected in 3/4 of those cities. We have already had meetings with city officials, investors and land owners.

The point of this long post was to give people an idea of my journey as someone with little to no experience being able to take part in a multifamily development by believing you can, teaming up with right people, having a willingness to learn, and a healthy bit of luck. If I did this on my own it probably wouldn't have happened this quickly for sure. It's also a great feeling help create homes for people in need while making great passive income. We are so excited to be breaking ground on our next development in December. I would like to answer any questions about anything to help people who are interested in learning. There’s a lot that I didn't cover such as financials. I can say that we are above a 10% Cap Rate after refinancing our construction loan into a longer term loan and the demand is good enough that we have a waiting list.

Finally i’m taking all questions so please........ Ask away!

Here are some dropbox photos of our journey from Parcel to Passive income:

https://www.dropbox.com/sh/tyk44xnpc0mev8z/AACQSjHK1IskpaDnt4VHLxpMa?dl=0

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Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6y

@George Y. Congratualtions on your first Ground Up! It would be very helpful if you also share the financials with everyone. Land and development costs as well as rents.

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  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    Sorry if the pictures are out of order. Dropbox is being weird. 

  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    6y

    @George Y. Congratulations George! Very nice looking property. Is it stabilized? What is the rent? Are you satisfied you will turn your projected profit? Did you raise money? If so, how?

  • Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    6y

    @George Y. Congratualtions on your first Ground Up! It would be very helpful if you also share the financials with everyone. Land and development costs as well as rents.

  • Property Manager · seattle · Member since 2018 · 27 posts · 42 votes
    6y

    I'm actually moving back to Atlanta so i can invest in multifamily RE myself, though I'm going to start with a quadplex. Once i have some experience under my belt id love to link up. Seeing success stories in my home state does wonders for my own motivation. If i did have a question, it would be about what areas do you think you will look at in the future? I plan to start in the Stone Mountain area because i spotted some great deals on duplexes - quadplexes but i can't stop looking at the south Atlanta area even though its C - D at best. West Atlanta around Bankhead is out of the question though!

  • Investor · Columbus, OH · Member since 2015 · 625 posts · 601 votes
    6y

    @George Yu What a story, way to get after it man. What size piece of land do you look for to build a 36 unit apartment complex on?

  • Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    6y

    Congrats @George Y.

    What an awesome story!

    This has all the ingredients of success:

    1. Having the burning desire

    2. Being willing to work with the right people

    3. Taking massive action

    4. Solving the problems and challenges along the way

    Some people ask me "how do I go from single family to apartment buildings?" - and I told them to partner up. But they'd rather do things on their own. Wtf - Why Try to Fail? Why not try to succeed?

    Leverage on other people's expertise, experience and effort. Stop doing things on your own. This is not school. In school, working with someone on a test is called cheating. In real estate, working with someone is called leverage and it's just smart.

    You've mastered the art of leverage. You're on your way young man!

    Leverage is how I went from $0 to 1,000 apartment units and now hotels...

    You can do the same!

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Bjorn Ahlblad yes they were 90% rented out before they were finished building and the remaining tenants moved in a few weeks after. We were right on target when our appraisal came back at 1,900,000 so we will be able to refinance out at 80% LTV and take out all of our owner equity that we initially put in. We were all in at 1.55 million and our appraisal came back at 1.9 million so we have about 350k in equity.

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Bjorn Ahlblad Sorry the rents were on average $675 a month one bedroom one bathroom units

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Greg Dickerson Makes sense. I put some numbers together and present them later tonight when I get back to my laptop thank you

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Sherif Lyons well I’m assuming you’re talking about acquiring and not building from the ground up which is a part of my reason that I started trying to build from the ground up. I wasn’t able to find great deals on the market only good deals for fixing flips or buying holds. Dance your question I probably would just go at least an hour and a half outside of Atlanta into one of the suburbs and I would base my decision on the available inventory on the market and I would speak to local property managers to see what part of town to stay away from Ann which part of town can command the highest rents and best tenants

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Matt P. That will depend on your local ordinance and ULDC. Check with whatever city that you want to go to in google unified land development code or call the local planning and zoning commission and ask what their multifamily density is. Most places in Georgia or around 10 to 12 units per acre but we typically ask for minimum 18 per acre so in order to build 36 units of this piece of land was about 2 1/2

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Michael Ealy thank you for your kind words and really good to connect with you. Yeah in the past I always try to do things myself but this is my first real shot at partnering with someone who had the experience and bringing my time and money to the table. It turned out great and a really good friendship and partnership came out of it. Learning a lot about leverage right now and talking to local bankers. We haven’t had much luck with Big banks so most of who we deal with our local community banks but they love us. We also don’t see ourselves building larger than 70 units so we don’t need a loan larger than what a small community bank can keep on their balance sheet. If we keep with that strategy we should be able to do this for a while before hitting a problem with debt coverage

  • Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    6y

    @George Yu

    Persistence always pays off congrats !!

  • Phoenix, AZ · Member since 2018 · 40 posts · 12 votes
    6y

    @George Yu

    Hello George,

    I am a native of Atlanta Ga, but currently live in Phoenix Arizona. I am new to Real Estate have been asking questions and reading on BP and watching their Podcast on here also. Being new and having little capital to get started is kind of frustrating when you don’t know where to start or who to talk to in the business. I currently have a close friend in the North Carolina area looking to buy land and build a Mobil home park for low income to maybe mid class people. So I’m in talk with him on that, he is willing to share the little knowledge he has with the business. If any, could you give someone in my position some advice on what I could do to change my position, and what I maybe should be looking out for? It is awesome to hear the success of people on here that lets me know I can do it also! Your success in the business is truly wonderful George, just reading people post on here gives me the motivation I need. I know it is possible to be successful in the business, to many people are living the life that is meant for them, and it glads to see you are do doing the same George. I wish you many more great success!! And if you don’t mind me asking where are you investing at in Ga?

    Thanks George!!

  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    6y

    @George Y. those are really great numbers! It is hard to find an existing asset for sale that would perform that well. Love your story!

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Dennis M. It is but am I experience I found it a lot easier if you have people ahead of you and pulling you along!

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Tyrone Hood nice to meet you. One thing to keep in mind is that there are a lot of real estate investors/developers that don’t live on BiggerPockets. In fact my partner Jeremiah has never even heard of BiggerPockets and he’s been doing real estate for the last 20 or so years. He’s also from a small town in south Georgia and from his humble beginnings had no plans to develop outside of his small town until we partnered together. Does your friend have a lot of experience with mobile parks? I would find someone that’s doing exactly what you want to be doing and offer relation money on their next deal. Be willing to put in sweat and money. If you don’t have the money that’s everyone’s problem so I would recommend getting friends or family but don’t lose it!

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Tyrone Hood We don’t go to any of the major cities like Atlanta. It just doesn’t fit our model we can’t buy into the land at a low enough price. We stay in the small towns that big developers won’t go. Developers often build for millennials, students, healthcare, elderly and disabled but rarely do they build for low income working class.

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Bjorn Ahlblad yes we are pretty happy with the numbers. In the future I would hope to be able to help others develop their own small apartment units if they are interested

  • Phoenix, AZ · Member since 2018 · 40 posts · 12 votes
    6y

    @George Yu

    He has a little experience in the mobile home park industry. He also has all the equipment and people to clear the land of with it will just be investing in buying the land and so forth. The land is in a small part of North Carolina as well. Okay George I will keep that in mind with looking for potential investors.

    Thank you!

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    @Tyrone Hood find your niche and in the process life will put the right people in front of you to help you get to where you want to go. Believe that.

  • Phoenix, AZ · Member since 2018 · 40 posts · 12 votes
    6y

    @George Yu

    Will do George!!

  • Belfast, Northern Ireland · Member since 2018 · 128 posts · 56 votes
    6y

    @George Yu

    Love this theory. If it’s not there to buy, make it yourself. Entrepreneurship at its finest.

  • Developer · NC · Member since 2019 · 211 posts · 112 votes
    6y

    How much in impact fees did you have to pay? What codes made the construction cost a lot more than a typical sfh?

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    6y

    https://drive.google.com/file/d/1hWD4GdIshRkpniOzyOb6HqboRUe11hgw/view?usp=sharing 


    here is a time lapse that we took if anyone wants to see. 

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