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.

See this reply in the discussion

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  • Member since 2017 · 13 posts · 28 votes
    6y

    @George Yu congratulations on your success. You mentioned that you were inspired by Grant Cardone to go into multi family 30 or above units apartment complexes. May I ask why you didn’t invest in Cardone Capital? Are you making more returns going out on your own? If so, what type of investor should invest with someone like Grant Cardone?

  • Rental Property Investor · Stockton, CA · Member since 2017 · 22 posts · 7 votes
    6y

    @George Yu

    What are the net monthly profits on a project like this?

  • Developer · Detroit, MI · Member since 2013 · 86 posts · 23 votes
    6y

    @George Yu contests on everything! We've done SFR development, and it's been a goal to get into multi-family as well. Keep it up!

  • Rental Property Investor · Los Angeles, CA · Member since 2016 · 4 posts · 4 votes
    6y

    Thanks for your article, George. I read it at just the right time.  I'm trying to figure out where to focus my energy and I've always been drawn to wanting to make affordable housing a reality.  I would love to do this in So. California where it's desperately needed.  I've only done a couple of real estate transactions in SFRs and condos, so it just seems so daunting.  I'd love to learn a little more about where to start.  Would you suggest building from the ground up or focusing on existing apartment complexes, improving them, and still catering to the forgotten tenants? Either way, I would love to pick your brain or see what you're doing!

  • Member since 2019 · 2 posts · 0 votes
    6y

    id like to ask a question ? I have some land that joins a major resort in our area and iam getting low bald by them what can i do to get the price i want or is there other people i could contact like a developer or someone that could get me what i want for the property ill tell you this they have tried to buy a right away i know there interested its 18 acers road front and i feel its worth what iam asking but i dont want to wait ten years to get it .

  • Member since 2019 · 2 posts · 0 votes
    6y

    i just seen rules i hope i did right by them

  • Rental Property Investor · East Longmeadow, MA · Member since 2019 · 154 posts · 64 votes
    6y

    @George Yu

    Great work man. I’m curious to hear about your shark tank experiences as well! Big fan of the show and Robert. I’d definitely check out the Aged receivables report especially when dealing with low income tenants. To hedge against it section 8 isn’t a bad option (I know In original post you didn’t need it). Good luck in your future endeavors, stay humble stay hungry!

  • Specialist · Minneapolis, MN · Member since 2019 · 18 posts · 3 votes
    6y

    @George Yu What is the square footage of the units? One bedrooms?

  • Rental Property Investor · Long Beach, CA · Member since 2018 · 26 posts · 3 votes
    6y

    @George Yu can we use deepblocks.com for your next project?

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

    @Adam Mazhar Well to elaborate I was inspired by Grant Cardone to go into multifamily apartments no necessarily 30 units. I was actually looking to quads and shipping container homes before i met my partners. Honestly I like grant a lot but CC wasnt for me. I wanted something hands on that I could learn from. Im not a passive investor in that regards. I do it for the experience, thrill, rush in face of failure. I want to do what grant is doing and better one day! 

    I dont know if 'm making more than what CC can return me but I do know that I am fired up to build more. I love watching things grow. Seeing something that was dirt and then become a cash flowing asset is surreal. 

    Type of investor that should invest into CC is probably like any other REIT or stock investor. Sit back and let someone experienced handle their money. Thats not me at all. Not at this point in my life. They cant have all the fun!!!

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

    @Edmondo Morgan Jr we have about $7700 in net a month on 36 units after everything including debt service

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

    @Jeff Marzo that is great. Lets connect!

  • Rental Property Investor · Stockton, CA · Member since 2017 · 22 posts · 7 votes
    6y

    @George Yu Great job!!! Thanks for all the information.

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

    @Susan Armenta depends on if you have someone experienced to partner with. Doing either is risky if you are on your own unless you have done significant research and are comfrotable taking that risk. I think whatever better opportunity presents itself first. I always love a chance to learn from someone who has done it before me

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

    @Stefanie L Powers depends on how much money you want to spend to prove your point to them and how badly they want it. you could always get something nice drawn up and get a permit pulled that is public record and maybe let them catch wind that  they could be missing out on it if they dont offer something more reasonable. that will set you back a few thousand if not 10k depending on if they need full site plans to file. 

    Cheapest way is probably tell them upfront that they need the right away and this is your price to sell it. 

    If developers want your land they usually will be the first to find you. They are proactive. Land is the beginning of everything. 

    Get creative. Theres literally hundreds of options you can do. Dont let them push you over and dont appear too needy to sell. They can sense it

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

    @Luke Saglimbeni thank you for the words of wisdom. I definelty will. Keep in touch!

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

    @George Yu great story thanks for sharing

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

    @Adrienne Harrison 400sqft 1 bedroom

  • Investor · Boise, ID · Member since 2016 · 42 posts · 19 votes
    6y

    @George Yu

    Congratulations! You're an inspiration to many of us. I've also been an Amazon seller and have been struggling the last couple years. My wife and I are on our way back into real estate investing and believe multifamily is the way to go. We have over 16 years of property management and owned the rental property for several years in San Diego. Currently we don't have any real estate portfolio other than our home which were selling. As soon as we sell will be debt-free, woohoo!

    Do you suggest starting out with single families first just to get back into the market?

    Thanks again and keep venturing upwards 🙂

  • Rockford, MI · Member since 2018 · 97 posts · 26 votes
    6y

    Love this story! I have a passion for building for low income working class as well. We need more of it. Everyone has to start somewhere. Modular Homes, Mobile Home communities are great assets as well but they are either dated, not being built fast enough and/or some people want another option outside of that asset class.

  • Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 360 posts · 213 votes
    6y

     WOW @George Y. this is pretty amazing !!! 

    Extremely inspiring!!!

  • WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    I'm with Mike Dymski on this being one of the best threads I've come across in a while. Congratulations!

    One question regarding the occupancy and turnover. Have you ran into any issues with evictions, property damage, and any other nuisances yet? 

  • Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    6y

    @George Y.

    Congrats on your new build. Looks like you made this work out real nice. Just proves that even in a high cost build market you can still make new build profitable. I want to add a couple things to several of your replies to other peoples comments to help with some clarity and hopefully future developments. Your comments are in bold.

    1) Having to add sprinkler system because it was two stories - You having to add sprinklers was not just because it was two stories. It was because it was two stories AND the total number of units. Don't be afraid of sprinkler system when doing MF. They only seem scary and expensive when you don't plan on them. They are required in almost every MF situation. If you want to do higher density in the future and up your game in MF this will just be another part of the design. A 3 story 12 plex is going to be about the same as a 12-plex spread out on 1 story, if not probably cheaper. Now I know you probably have the land to sprawl out, unlike me here in the PNW, but building density up instead of out, especially if you are doing a long term hold, is only going to increase your value even more of the long term. Not only will you have the ability to build more in the future if/when density code change but you also get to market that when selling if you don't build more. Some jurisdictions let increase density over base zoning in exchange for more amenities and meeting other requirements. Parking and landscape areas/play areas can be in flood zones. Just because part of a lot is in a flood zone doesnt mean its useless.

    2) 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. -  I would not rule out never doing two stories again. In fact I would tell you to do just the opposite. I would push you to consider doing 3 stories. Also the design of you apts is why you have some much circulation space and wasted sf. If you had turned the units and done breezeways instead of motel style entries you would've cut your wasted sf in half. Now it requires more design intent than literally just turning your units but if you have done that from the start you'd be fine. 

    3) We actually will be testing out using SIP panels on our next dev. We are very much interested in it for energy savings. - I would be very careful when considering SIPs. Not that they are bad, I've used them and installed them myself and like them a lot, they just are not for every application. They go up VERY fast but they also cost more. They one thing I don't like about them for rentals is that they are not very landlord friendly for repairs and remodels. All the plumbing and electrical has to be pre-planned and are installed in very specific locations because they core out holes in the insulation so you can pull wires. The are usually only cored at specific heights. That usually not the end of the world since most that stuff is at set heights and doesnt move. But if you ever need to install something new it is very difficult to connect everything. Also if you have someone damage a wall its not just drywall you could be replacing. Again, they have their pros and cons. I just dont like how you dont have as much room to customize and change in the future....but that could just be the architect in me lol.


  • Rental Property Investor · Saint Charles, IL · Member since 2014 · 304 posts · 222 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. 

    @George Yu, do you mind sharing the brand or make and model of wireless locks with pins.

    I am missing out on potential tenants because I self manage and apartment building is 2 hours away so I do showing on weekends instead. Thanks in advance.

    Ashley

  • Member since 2018 · 13 posts · 7 votes
    6y

    George,

    Wow! What an amazing success story.

    This is the path that I want to take on. 

    Thanks so much for sharing your incredible achievement. 

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