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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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

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  • Atlanta GA · Member since 2019 · 101 posts · 59 votes
    6y

    This is exactly the sort of energy I need in my existence at the moment. 🔥🔥🔥

  • Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    6y
    Originally posted by @George Y.:

    @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. 

    Partnerships become ever so important as one moves from relatively simple REI strategies to most advanced ones...

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

    @Michael H. Thank you. Each of us three owners invested about 90,000 each so 270k total. That was it. We got that back when we refi

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

    @Steve Vaughan we have a 197 unit on 11 acre development that we spent 8 months working on that is now in hold because of similar government BS. Could turn our to be a complete waste of time and we might have to walk away after almost a year of work and $10,000 in drawings and travel. We actually never built two story but was forced to since the bak acre of this lot was in a flood plain so we had to build up in order to get our density. our normal floor plan is single story and we wont buy in a flood plain again haha. Glad to have a comrade in the working class sector! Sent you a connection!

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

    @Jay Hinrichs thank you for sharing. No I have never been in a cirrus. Out of the budget for me for now :) We did set a company goal for a Baron at 500 units. Its really great that all three of us partners are also pilots so we enjoy similar pastimes because I am 29 and they are 37 and 43. 

    Im curious on how you managed your tax liability when you were holding compared to now building and selling. In your experience which do you prefer when regards to tax avoidance? Or have you found some other strategies to make either relatively tax friendly? 

    We have installed 16 wireless security cameras on all of our properties. Every door es equipped with wireless locks with pin that we can remotely unlock/lock and change code anywhere in the world on our phones. We have one property manager and she manages a 75 unit mobile home park and 82 apartment units spread over 4 cities. We have local maintanence guys but for the most part we are trying to become the amazon of housing. Automated to the brim. Tenants apply for showing on buildium, once approved are sent a one time 15 minute code to see the demo unit. They also apply online with credit/background. They rarely speak with our PM until move in day. All payments are electronic and cash payments can be made at any 711 or family dollar with paynearme.com. Hoping to be able to manage up to 500 units with same PM relying on process. 

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

    @Anthony Rosa thank you i will be talking to the partners about this ASAP! We have been interested for a while and best time to inquire is now since we are in between developments!

  • Los Angeles, CA · Member since 2019 · 3 posts · 0 votes
    6y

    What an incredible story! I’m inspired by your success. New investor here trying to learn and take action like you did. Thanks for sharing!

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

    QUESTION in a DM: 

    George,

    Did you look into and consider any modular construction? Why or why not?

    Are you going to get money from accredited investors in the future to scale faster?

    How did you decide on your floor plan? How did you decide on the outside? Are you fully rented now? Do you think the outside looks kind of like a motel? Do you offer any Airbnb/STR / month to month if vacant? Is it all passively managed or has an on site maintenance and leasing?

    ANSWER: 

    We actually will be testing out using SIP panels on our next dev. We are very much interested in it for energy savings. Yes we may but our developments are under 70 units at a time so we have enough private capital to stay small thats why we like it. 

    Floor plan came from trial and error over the last 9 years. Jeremiah took the lead on that. Partner with someone who is open to experimenting. 

    LOL they made me choose the paint color and I butchered it because I was too cheap to pay an exterior designer $1500 bucks to do it. The blue wasn't supposed to be that light hahaha. Lesson learned. Dont look at paint card in the store. Go outside in the sunlight!!!!! Feel bad for the tenants......

    Yes we are full plus waiting list. Yes it does look like a motel hahah. we are changing that next time. Everything we do right now is more or less an experiment. Its really fun for us. 

    No airnbn. We have an in house management lady who works full time. She also manages my partners mobile home parks and their other apartments they built in the past. Shes been with us for about 5 years now

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

    Few people were asking best way to connect professionally. BP is good or Linkedin. 

    https://www.linkedin.com/in/george-yu-02364076/ 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @George Y.:

    @Jay Hinrichs thank you for sharing. No I have never been in a cirrus. Out of the budget for me for now :) We did set a company goal for a Baron at 500 units. Its really great that all three of us partners are also pilots so we enjoy similar pastimes because I am 29 and they are 37 and 43. 

    Im curious on how you managed your tax liability when you were holding compared to now building and selling. In your experience which do you prefer when regards to tax avoidance? Or have you found some other strategies to make either relatively tax friendly? 

    We have installed 16 wireless security cameras on all of our properties. Every door es equipped with wireless locks with pin that we can remotely unlock/lock and change code anywhere in the world on our phones. We have one property manager and she manages a 75 unit mobile home park and 82 apartment units spread over 4 cities. We have local maintanence guys but for the most part we are trying to become the amazon of housing. Automated to the brim. Tenants apply for showing on buildium, once approved are sent a one time 15 minute code to see the demo unit. They also apply online with credit/background. They rarely speak with our PM until move in day. All payments are electronic and cash payments can be made at any 711 or family dollar with paynearme.com. Hoping to be able to manage up to 500 units with same PM relying on process. 

    We are in Write on mode not write off.. so yes we pay tax.. but that's OK  at my age and where I am at I don't want to 1031.. and or in a position to do charitable remainder trusts etc.. so for me its stacking cash.. and deleveraging.. I am almost eligible for SSI  and medicare so different end of the business time line and spectrum your age I would do exactly what your doing.. If you dig being a property manager .. you sound like your managing those units like a storage facility.   you can do that with nicer units.. let us know how that all turns out.

    also on flying.. when I am setting up for a nasty cross wind landing and check out the wind sock last thing I would think about is how to monetize the windsock.. so conrats on that one. !!!  Me I am just trying to put it down in one piece trying to decide if I want a big crab or am I going to kick It out. 

  • Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    6y

    Most of us would love to buy existing stock at $42K per unit.  Having new construction at that cost is unimaginable.

    This is the best post I have read on BP in a long time.  Nice work and thanks for sharing.

  • Specialist · Omaha · Member since 2019 · 22 posts · 5 votes
    6y

    @George Yu

    Hey George,

    You’re freaking awesome! I looked at your pictures and I was getting butterflies in my stomach just looking at them. My wife and I are just starting our journey at 57 and 58, and I eventually want to get the multi family commercial real estate. Never thought of doing construction but man you must of been scared.

    Couple of questions, you may have said it but I didn’t see it and I didn’t see any questions in regards to this. If it’s too personal then out of respect for you by all means don’t answer.

    Being I’m new, I’m trying to wrap my head around the whole money in and money out situation on a deal like this.

    Q1) So you were in at 1.5 million. It appraised at 1.9 million. Did you take all of your money out of this project then? Or Did you have cash or was this all finance from the beginning ?

    Q2) what is your profit per door after everything’s been said and done?

    Q3) May I ask more questions later if they come up?.

  • Specialist · Omaha · Member since 2019 · 22 posts · 5 votes
    6y

    @Michael Ealy

    Yeah since I’m new, it’s like I don’t want to partner because it’s like a marriage. Probably worse than a marriage. But the more I network the more I see the benefit. You partner often? Is it always the same people? Thanks for your input if you decide to answer.

  • Specialist · Omaha · Member since 2019 · 22 posts · 5 votes
    6y

    @George Yu

    Ok I got that puzzle piece to fit in place. So, with taking all your initial investment out with refinancing, you could literally perpetuate this forever. And what are the economic risk for you? Other than bad credit if you default, I don’t see the downside yet....but then again I’m a babe in the woods.

  • Member since 2019 · 3 posts · 1 vote
    6y

    @George Yu

    Thank you for sharing ur inspirational journey. Simply awesome!

    1. How did you select the location?

    2. What process did you go through to ensure there was sufficient demand of renter's in the area ?

    3. Is ur strategy to hold the property or sell ?

  • Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    6y
    Originally posted by @George Y.:

    @Anthony Rosa thank you i will be talking to the partners about this ASAP! We have been interested for a while and best time to inquire is now since we are in between developments!

    Good luck my man!! 

  • Member since 2019 · 3 posts · 0 votes
    6y

    @George Yu

    Hey George,

    Your story is truly inspiring. It is amazing guess people with drive can move out so far in life.

    I have recently started to work a developer. Joining all the meeting s ect.

    We have started to look for an accounting program geared towards develpings.

    What did you guys use?

    Thanks

  • Rental Property Investor · Cumming, GA · Member since 2017 · 66 posts · 15 votes
    6y

    @George Yu Nice .. congratulations!!

    I started single family, same way like you..partnered with experience builder.

    Would be pleasure to connect with you!

    Which city did you build these?

  • Rental Property Investor · Cumming, GA · Member since 2017 · 66 posts · 15 votes
    6y

    @Tyrone Hood I did research in mobile home park, learn lot. Firstly cities are not permitting now. You can buy existing one (permitted)and build. After that research , started looking the mobile home parks to buy than building.

    PM me to discuss. Thanks Trin

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

    @Trin Nagireddy

    Hello Trin,

    Thanks for that info I will most definitely PM you to learn more.

    Thanks again!!

  • Investor · Bolton, MA · Member since 2012 · 133 posts · 72 votes
    6y

    @George Yu Wow what an awesome accomplishment!

  • Bronx, NY · Member since 2014 · 148 posts · 34 votes
    6y

    @George Yu Could you explain what you mean by NY is tenant favored?

  • Gabriel F.Pro Member
    Rental Property Investor · Fort Myers, FL · Member since 2014 · 22 posts · 7 votes
    6y

    @George Yu

    What system are you utilizing for your keyless entries on each unit where you can remotely change the pin codes? I have tried several different keyless systems over the years and from time to time we have a defective one but in person need to change, add, remove codes. I'm trying to find something that could maybe would stand more of a commercial use then having the current system will utilize where I could remotely change in attitudes and such from afar to automate processes better. We presently use Schlage keyless turn and auto locks.

  • Gabriel F.Pro Member
    Rental Property Investor · Fort Myers, FL · Member since 2014 · 22 posts · 7 votes
    6y

    @George Yu

    That is some great tips and I appreciate your response! I would enjoy connecting with you.. I've sent you a p.m. please look out for it :) btw, I checked on YouTube your windpouch invention very creative yet simple but not thought of from the norm.. Great little touches added that are thoughtful. Right on man!

  • Member since 2016 · 4 posts · 3 votes
    6y

    Congrats on a successful completion George!!! I was amazed how you pulled it off with $43k per unit including the land price. what is the typical size of the Units?

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