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

124Reply
1,021 views

Most Popular Reply

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.

See this reply in the discussion

278 Replies

Jump to latestLatest
  • Architect · Hudson Valley, NY · Member since 2015 · 133 posts · 35 votes
    6y

    @George Yu Congratulations on the ground up development. I really can’t wait to see my vision come to life. I look forward to seeing the numbers. I’m actually contemplating moving to the area with the hopes of eventually becoming an architect and developer myself. I actually just posted something about it here on BP last night. Check it out if you have a chance.

  • Member since 2019 · 8 posts · 7 votes
    6y

    @George Yu

    Congratulations! This is super exciting!

    1. How long start to finish

    2. What were some of the unforeseen city, etc expenses and why did they come up?

    4. What was the hardest step?

    5. Your long term financing - commercial? Regional or large bank?

    6. Same as 5, but for short term construction financing?

    7. Did you have to put up a bond or bring in any money of your own to get started?

    8. Anything you’d do differently?

    Thanks!

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

    @Noah Mccurley haha it sounds a little crazy when you put it like that but yeah it started as that simple thought! 

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

    @Sean H. around $75,000 which caught us off guard. we still came out fine but could have been 75k better! So when you build two stories this particular ULDC required that we install a sprinkler system and these below

    1) site engineering with EPA gets involved with projects over an acre -$13000

    2) soil and water engineering runoff drawings only cost- $15,000

    3) two story added bunch of sqft bc of walkway and rails added $100,000 that doesn't generate revenue. so about $3000/unit extra we had to to. not doing two stories again. 

    4) retention pond required $20,000

    5) needed a $10000 engineering stamp 

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

    @Edgar Martinez love to hear that and do it! thats a powerful combo. read your post and yes go where you are treated best. NY is tenant favored. Atlanta is saturated as well though. Live in atlanta but work anywhere and hour in any direction outside of ATL for better deals

  • Jack YenPro Member
    Rental Property Investor · Cary, NC · Member since 2018 · 106 posts · 34 votes
    6y

    @George Yu thanks for sharing your amazing journey! I am at a similar crossroad myself, I have a small residential portfolio and buy them here and there. Trying to find value added multi family but number just scares me away from doing it. I love the action you took and think outside of the box! Amazing and inspiring!

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

    @Julianna Sauber 

    1) 14 months 

    2) i answered that in another post

    4) hardest was talking to the land owners and getting the city officials on board with our ideas! Government is slow as a snail and they dont have big imaginations :) 

    5) started with construction loan and now refi into a 30 year with local bank

    6) short term was also local bank 

    7) Yes the three partners we each put in about $100k each

    8) Great question! Better timelapse video, Be more assertive with the city officials, documented it better with photo and video(i lived 5 hours away from development), built more since they are all filled up now! 

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

    @Jack Yen nice to meet you. I think thats where most people are at unfortunately. I see a corelation when theres tons of online courses gurus that pop up teaching get rich quick on Amazon or fix and flips and then over the next couple years it gets saturated and harder to find great deals for Amazon sellers or flippers. But thats the nature of capitalism. How do we push forward and do what others cant/wont do? 

  • Rental Property Investor · Orlando & Submarkets · Member since 2019 · 49 posts · 15 votes
    6y

    George, xie xie! (Don't know too much Mardarin beyond that in the 6 months I studied). Greatly appreciate the inspirational story you've lived! Looking forward to starting my own journey and you motivated me to look beyond single family.

    V/r,

    Bob

    Robert Carlson

  • Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    6y

    @George Y. This is classic pushing through and getting to the finish line. 

    Your entrepreneurial ventures definitely spill into REI and/or vice versa!

    Congratulations! Partnering with others isn't a go-to strategy for many for some odd reason! 

    You have figured that out and it has worked to your advantage. 

    Two heads are always better than ONE. Always!

  • Member since 2019 · 11 posts · 2 votes
    6y

    Did code require a "qualified" installer for the sprinkler system, or was your general plumber able to take care of it? 

  • Flipper/Rehabber · Jackson Heights, NY · Member since 2019 · 28 posts · 16 votes
    6y

    @George Yu

    Way to hit em Hard my man!

    Thats a great Story! and Totally inspiring. Im an Electrician in NYC and have started with our first 2 family house hack. I love the way you went for it! That makes it so fun. I suppose the moral of the story is to have the vision, line your ducks in a row and then Deligate everyones role untill the end of the project. That being said, Id love to know how did you guys figure out the design and were there standard designs to choose from? How were you able do determine exactly what the fit would be for the design? Was it based on Comps of similair multifamily units in the area?

    I know that you were targeting market rate, but not section 8.

    Anyway this is a really awsomw story and thank you for posting and sharing in such detail.

    Best,

    Lewis.

  • Member since 2019 · 66 posts · 15 votes
    6y

    @George Yu great job. I’m just starting out so it will be a while before I can do this but thanks for the inspiration. I’m going to do duplex multi family style properties

  • Investor · Coppell, TX · Member since 2016 · 1 post · 0 votes
    6y

    @George Yu Congratulations for the unthinkable endeavor and success for a Chinese guy like me. 好样的!

  • Investor · Philadelphia, PA · Member since 2015 · 172 posts · 58 votes
    6y

    @George Yu thank you for your story! Would you recommend starting off with multifamily to someone who hasn't invested yet or does doing a single family investment make sense/is safer for someone just starting off?

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

    @Robert Carlson thats great! thanks for sharing that with me. It motivates me to share more with people! Keep in touch

  • Rental Property Investor · Tampa, FL · Member since 2019 · 74 posts · 27 votes
    6y

    @George Yu

    Well done George! Many can see and recognize a need exists, however it takes a lot of courage and self confidence to take action and put up a lot of your own skin in the game and create an entrepreneurial solution for that need.

    Keep posting please and would like to connect,

    Ryan “Zach” Hall

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

    @Ola Dantis thanks for sharing! I wasnt always into partnering but now this really has changed my perspective. Opportunities are where most people arent looking! I just try to do the opposite of the crowd. Doesn't really matter what it is. 

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

    @Lewis Buckley the designs were drawn from previous projects. Jeremiah had been experimenting for the last 8 or so years. It was a bunch of trial and error that he did before we met so it was good to partner with someone who had done most of the leg work on the building side. We built as many as the city density for multi family would allow for. We also applied for a variance on the density and got 18/acre. There was a flood plain towards the back of the lot so thats why we went two story. Never again though. 

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

    @Alma Bagaoisan please do. You wont regret it! 

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

    @Zane Cheng thanks hope i can simplify it for more people to take the leap!

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

    @Ben Feder it depends on your situation. Of course both has their pros and cons. Depends on who you know or are yyou doing this yourself. I would do anything if it was learning from someone who had been doing it for 10+ years. That way you can learn faster. If you dont have someone like that locally find them or start small and make small mistakes while learning as much as you can. 

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

    @Ryan Hall thanks man! ive done it a few times. Its sort of like bungee jumping or roller coaster for the first time. The fear is there up until the point the deed is done. Then its more or less pure bliss. The only thing scary usually is the fear of the unknown. 

  • Investor · Philadelphia, PA · Member since 2015 · 172 posts · 58 votes
    6y

    @George Yu

    Thanks! I need to find someone to learn from. Otherwise I may have access to a deal that is 100% seller financing that could be a good learning experience for me.

  • Rental Property Investor · NY · Member since 2013 · 844 posts · 350 votes
    6y

    @George Y. So your all in cost is $41k per unit? WHat is the sq footage of each unit? Any Amenities?

Join the conversationCreate a free account to reply, vote on answers and follow this thread.