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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  • 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. 

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

    @George Yu

    What is your passive income (profit) per door after everything finished. ( pulling out your intial initial investment after the refi, etc)

  • Rental Property Investor · Los Angeles, CA · Member since 2017 · 30 posts · 12 votes
    6y

    @George Y. congratulations on your success! For a newbie this is very inspirational and I thank you for sharing! 

  • Rental Property Investor · Warminster, PA · Member since 2016 · 59 posts · 22 votes
    6y

    @George

    Thank you for sharing you amazing story. I am looking into doing a similar venture with my partners. We are looking at turning some small motels into affordable rentals instead of building from scratch. Our numbers seem to be very similar to yours after we do the rehab to each unit.

    Your story inspired me and can’t wait for more of your posts. Keep up the good work.

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

    @John Culotta Really appreciate you for saying that. Amazon is slipping as a way to make consistent money for the smaller guys. Theres a way to make money but not just finding random products. You have to work in a niche for 3-5 years. Congrats on paying the home off! Really big deal there...

    John I wanna be careful recommending anything specific. In my opinion i really thing its up to the individual and access to opportunity. You can limit your risk by going single family and probably best place to start(prob not in cali). Go somewhere that there is population over 10k and stabilized population growth. Doesn't matter if it increases or decreases for me. See if there is little to no inventory on the market. Best thing to do is set the parameters on Zillow like rental: under $700/month and move the map all the way around the USA! Find a underserved market then call the local property management/ agents there to see if there is a real demand for the type of rental units you want to invest.  

    Other hand you could find someone that is building new product and partner with them on their next build like i did and skip 10 years. 

    Really up to you and how you choose to think about it! Either way its moving forward so JUST DO IT!

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

    @Victor S. really glad I'm able to provide some value and bringing others closer to taking the plunge. We were fully occupied and no turnover just yet but we are one 3 weeks since completion. no property damage. Also i should mention that this isn't the first apartment we have built. My partner have built another 48 units spread over 2 cities in the last 5 years and vacancy is less than 1% literally. I think in 5 years there has been a total of 6 evictions. They pay a $400 move in fee that is not escrowed. we do give it back if nothing is wrong but if need of eviction that goes towards the 2-3 weeks to get them out so no vacancy. And no significant damages to mention from any of our other properties. We screen them pretty good and our maintanence guy does "maintanence" walk throughs at least once a quarter. 

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

    @Nik Moushon I love it man and thanks for taking the time out to give me a different point of view! One thing that we did realize was that the sprinkler reduced our insurance premium significantly compared to our last developments! I would love to connect and get some layouts of a three story that you are talking about! Also correct about flood. We put the bulk parking lot there :) Maybe adding some enclosed storage units in the flood plain for additional income? 

    I'm constantly changing my mind on things with new info and I'm ok to be wrong on the two story piece. Your right about the breezeway.. Ill ask jeremiah and see why we didn't actually do that. Makes complete sense. 

    If not SIPS how can we get closest to full thermal insulation and prevent bridging as well as provide airtightness? We are interested in passive house standards. We pay all utilities for the tenants included in the rent. water, electricity, internet, trash sewer. 

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

    @Sut Sinpraw Welcome and thanks for reading!

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

    @Steven Hellinger thanks for taking the time to read! I was thinking about that as well! How is it going? Share some info on it when you do it? We can compare numbers and.... Stress haha

  • Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 votes
    6y

    Hi George! Congrats!!!   You have certainly define the entrepreneurial spirit at its finest.  I love your story and I can identify with you as a kindred spirit.  Not only are we both Asians... but even our last names are very similar! LOL!!!    In fact, I too, was on Shark Tank for a product I invented except I walked away from 3 offers including a $1M buyout offer from the Sharks ( I have a link of my episode in my profile).       

    Strangely on the same path...   I am finding myself back in Real Estate where my true passion is.  Im new to BP... and doing my first ground up multi-unit project as well in Los Angeles.  Reading your post made me realize I was spending about the same amount $$ to build only 2 houses in L.A.    Damn... Im in the wrong state!!  LOL!!   That said, If you need investors... please let me know.  ;)

  • Rental Property Investor · Jamison, PA · Member since 2017 · 11 posts · 9 votes
    6y

    Fantastic write up and you started a really great conversation.

    Did you explore modular built options? We've found that the savings are worthwhile on SFR builds.

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

    @Alvin Uy great to meet another Shark Tank Alum! LOL the last name thing really got me. I am going to watch the episode now. 

    Yea let someone else handle California haha. Come out here where the soil is fertile...and cheap!!! Will rent just as well if not better. 

    Sure I added you on linkedin! Would love to connect. 

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

    @Chris Leahy thank you kind sir! We didnt explore the modular options besides SIPs if they can be considered modular but didnt end up using them. Might not after reading @Nik Moushon post. 

    main thing we are concerned with is efficiency. as we include all utilties for the tenants. 

  • Rental Property Investor · Westminster, MD · Member since 2014 · 165 posts · 221 votes
    6y

    @George Yu

    What a inspiring story, thank you for sharing.

    This is my plan as I live 1 hour from from Baltimore and a little more than that from Washington DC. We love the NEED vs WANT mentality of you plan and truly believe this in the path to helping others.

  • Member since 2019 · 3 posts · 2 votes
    6y

    Awesome article George and I love how you included the
    pictures and time-lapse!

  • Rental Property Investor · Jamison, PA · Member since 2017 · 11 posts · 9 votes
    6y

    I wouldn't consider SIP's modular, but they do have their own advantages. Modular builds aren't constructed that much different from stick builds. The benefits in the build quality coupled with the time and cost savings are quite attractive. I'd encourage you to explore them for your future deals. 

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

    @Patrick McGrath thank you for reading! Its always been need>want. Stripped down of all of the noise we need food/water, housing, transport, healthcare and happiness. Please send me any info when you start! Would love to help and encourage 

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

    @Chris Leahy I will have to look more into that. Any companies or suggestions where to start?

  • Realtor · Chicago, IL · Member since 2019 · 274 posts · 191 votes
    6y

    @George Yu that is amazing! Very inspirational, stories like yours are exactly what propel me to continue moving forward with my real estate dream. Even if it is not always the most popular or supported idea.

  • Rental Property Investor · Jamison, PA · Member since 2017 · 11 posts · 9 votes
    6y
    Originally posted by @George Y.:

    @Chris Leahy I will have to look more into that. Any companies or suggestions where to start?

    Unfortunately I don't know anyone in GA. I'd ask around in your local REIA and in local FB groups for recommendations. If that doesn't yield results there's always Google.

  • Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    6y
    Originally posted by @George Y.:

    @Nik Moushon I love it man and thanks for taking the time out to give me a different point of view! One thing that we did realize was that the sprinkler reduced our insurance premium significantly compared to our last developments! I would love to connect and get some layouts of a three story that you are talking about! Also correct about flood. We put the bulk parking lot there :) Maybe adding some enclosed storage units in the flood plain for additional income? 

    I'm constantly changing my mind on things with new info and I'm ok to be wrong on the two story piece. Your right about the breezeway.. Ill ask jeremiah and see why we didn't actually do that. Makes complete sense. 

    If not SIPS how can we get closest to full thermal insulation and prevent bridging as well as provide airtightness? We are interested in passive house standards. We pay all utilities for the tenants included in the rent. water, electricity, internet, trash sewer. 

    The plans I'm working on are a lot bigger than what you are building. 2B/2B & 3B/2B apartments. So its basically 4 units per floor on 3 floors. All under one roof. With you only doing 1B/1B you could probably fit 6 on a floor in the same amount of space as my 4. Breezeways are great IMO. Ony the give great covered entry for all the units and they dont give that motel feel. They immediately will have a higher quality look to them. Better rent prices, better tenants and better sales price. Just be careful with your design if you decide to enclose it or not. Both are fine and can be done but, obviously, enclosing them will cost more and trigger different codes. Just an FYI. Oh and construction is easy. 2x with gypcrete. That simple. Nothing special. 

    I like SIPs, dont get me wrong, I just think they are better suited for SFR than MF when you start thinking of maintenance and future repairs or adding things. Since theres no studs in the walls (well there are they are just at the joints in the panels so very few) you are relying on the 3/4" plywood to support. Patching can be difficult. If you are wanting a tight thermal building there are lots of different ways to increase performance. Thats a bit of a detailed and long discussion for here though....and i dont want to take your thread off course more than i already have. If ya want to talk details shoot me a PM.

    Again, congrats on the success and good luck.

  • Rental Property Investor · MD · Member since 2018 · 287 posts · 205 votes
    6y

    @George Y. such and incredible journey.  Thank you for sharing and further lighting my intrinsic fire to pursue RE further. There's definitely nothing wrong with duplexes I'm buying.. I just know I'm capable of more! I will get there.

    Wishing you more success

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

    @Solomon Morris get a few of those duplexes under your belt and once you have found a team to go to the next step do it! And hit me up i would love to help any way i can

  • Rental Property Investor · Warminster, PA · Member since 2016 · 59 posts · 22 votes
    6y

    @George

    It is a tough road and lots of stress. I have not found the correct property yet. I will keep you posted on our progress. I kept looking at small apartment building with a 6 caps and that just doesn’t fit into our plan. It was great to see that you thought out of the box to make this work. I wish you much success in your ventures.

  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    6y

    Building a project that large and staying on budget is impressive.

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