Built a 56 Unit Passive House Apartment Complex in Georgia. AMA!

Built a 56 Unit Passive House Apartment Complex in Georgia. AMA!

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

Hey guys my name is George and about a year ago I posted on BP in regards to a 36 unit development that we finished in Moultrie GA. We built it for around 1.5 million, post construction Refi appraisal came out to 2 million(~500k net) and today it has sold for 2.7 million(another ~700k net). Since the post over a year ago there's lots that I have learned. In the last couple years we've only done one complex per year. Typically around the 36 to 48 unit size. But this year we are 90% completed on a largest to date: 56 unit development in Bainbridge Georgia. It's been a really busy year and I haven't really had time to post any thing else on BP because as soon as we finished site work on our 56 units.. we purchased 4 other lots to build on in Dublin(80 units), Americus(80units) and Cairo Georgia(48units). We spent the last year applying for rezoning, variances, city/community meetings, back and forth with engineering etc and finally today everything is ready to build. 

The 56 unit apartment complex that we built this year we used passive House design where we used to buy six on the exterior walls with 6 inches of open cell spray foam insulation. As well as 14 inches in the roof to create an airtight thermal envelope. This theoretically this will help us reduce our HVAC needs by up to 70%. This is important because we include all utilities in our base rents. All electricity, water, gas, trash/sewer and high speed internet is included. The more we save the more we earn. We want to take the responsibility out of the residents hands to get all of this done since we think economies of scale wise it should be a top down effort. At the end of the day hopefully to put some more time and $$ back into the hands of our residents so they can spend it on their families, careers and giving back to the communities around them. 

There is so much I learned about developing. I mean the actual building part is what most think about but thats just one task in a sea of tasks and probably the most straight forward.. Other things from how to have banking relationships, what they ask and look for, what kind of draw headache do they have. How to properly present to a city/community meeting. What areas to purchase in and others to avoid. How much can we afford to pay for the land? Wow all four lots we bought are in federal opportunity zones.. What are those and how to take max advantage of that? 18 or 24 months construction loan? As projects get larger we need more cash. Mezzanine debt model or equity model? What rates to borrow the money at? We want to keep these for cashflow but damn we can sell at such a profit! What do we do now? We want 10,000 units but how can we get there if we have to keep selling existing to build more? Its just a hamster wheel... Prices of lumber are skyrocketing should be buy now and tie up cash for our upcoming devs, ocean freight pricing tripled should we continue ordering from overseas vendors? Our GC is stretched too thin and cant do all of our projects we have to find another shop but everyones so busy! List goes on....

For myself I am nostalgic sometimes and like to look back at photos and videos of my own journey. Sometimes I forget what things that have been done because i'm constantly looking at the future so this way I can look back and see the ideas that i had during that period of my life(right or wrong) and see how far I have come. I also have had lot of interest in the process for developments from my own circle of friends as well as people that have found us online. When I was getting started, there wasn't anyone that I could find online that could really answer my questions or had some videos about it. So i'll be documenting our journey here for anyone that comes after us there will be some bread crumbs. My first mentor said that success leaves clues if you look closely enough. Hopefully a good google or youtube search is all thats needed. Affordability is going to be a huge topic soon so the world needs a much help as it can get since Elon Musk isn't solving that one for us we have to do it ourselves... dang it!

I'll try and update more on BP blog style on the progress and answer any questions that can help anyone who's curious!

ok its 12:33am now and so time to wrap this up...

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Paul HanPro Member
Member since 2021 · 14 posts · 19 votes
5y

Crazy, I was looking for multifamily's and I saw your post for the sale of the cairo units.  I'm thinking, who the heck is this guy, so I clicked on your profile and I see that you posted this post literally 10 minutes ago LOL.  

-Considering you look pretty young, can I ask how you got started in the development game?

-how did you get the funds to begin such a large project? 

-In your opinion is it worth your time to do these developments? any regrets?

-why not keep them for cash flow?

See this reply in the discussion

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  • Rental Property Investor · Columbia, SC · Member since 2020 · 245 posts · 275 votes
    5y

    @George Yu great post 👏🏾. Thank you for sharing.

  • Flipper/Rehabber · Trenton, NJ · Member since 2021 · 6 posts · 1 vote
    5y

    @George Yu

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Ryan Copeland Thanks guys glad you’re getting some value

  • Rental Property Investor · San Francisco, CA · Member since 2017 · 207 posts · 138 votes
    5y

    @gerogeyu what a journey this has been and thank you so much for sharing the heart to heart of how difficult development and construction can be.  There are so many moving pieces and every project so unique that one will never know what goes into the rainbows and uicorns in the Proforma story.  I love Georgia, i own there.  I am about to sale my small apartments and probably 1031 exchange.

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Angela Yan Nice meeting you and thanks for your kind words. Congratulations on the sale and if you have any capital gains look into 1031 as well as qualified opportunity zone funds. Both have pros and cons depending on your situation. Yes coming from California it's hard to imagine how expensive things can get when you come to the south lol but there's plenty of opportunities all over just not usually in our backyards so as long as we venture out a little bit we may stumble across one. If you're ever in South Georgia come by and check it out!

  • Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
    5y

    @Michael Plante

    I was reading about opportunity zones the other day and it says that the government will sell you land at special price and give tax advantages to those investors who are willing to move capital and build properties such as commercial and residential to get these areas so that local economy gets stronger, job creation and all that. In other words the government will incentivize you to prop that local economy as long as it's an opportunity zone!  

  • Investor · NorCal · Member since 2015 · 282 posts · 240 votes
    5y

    Wow 36 units for 1.6 million! I am building a large 1 unit single family home in California and paying around 1.5 million but my profit still might be the same as it should be worth at least 2.2 million when finished. So no need for me to leave the state… lol 

    California is surely not the place to buy cheap, but definitely the place to sell expensive.

  • Chicago, IL · Member since 2019 · 19 posts · 10 votes
    5y

    @George Yu

    Hi George,

    I read your post on the 53 unit complex and am very impressed. That’s quite a feet you’ve accomplished. I am looking for some advice/input and was hoping I could borrow your expertise/lessons learned and experience.

    My situation;

    Presently, I have 3 buildings, totaling 14 apartments. All 1, 2 and 3 bedrooms.,2 are in Chicago, and 1 in Michigan. I rehabbed most of them myself, and also work a full-time job. So over the last 20 plus years, my wife and I are proud to have very modern and healthy units. They are sustainable and profitable.

    What’s next?

    As of last month we just finished our last two apartments, and I have recently begun thinking about our next steps for strategy.

    Contact?

    If it’s easier, and you could spare some time, I would greatly appreciate connecting via voice. I have several ideas, but most are based around backyard real estate. I would like to open myself up to other markets and opportunities.

    Thank you for the consideration,

    Kind regards,

    Ben Thompson

    

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Jim Spatzenfeld great point and congrats! How scalable is it in Cali? Is there a pipeline where you Can do 5-10 a year? Just curious long term play dill for that.

  • Investor · NorCal · Member since 2015 · 282 posts · 240 votes
    5y
    Originally posted by @George Y.:

    @Jim Spatzenfeld great point and congrats! How scalable is it in Cali? Is there a pipeline where you Can do 5-10 a year? Just curious long term play dill for that.

    No idea, I’m building this house for my personal use but I see some spec home builders building and selling one after the other, but smaller in size and price  

  • Flipper/Rehabber · Atlanta, GA · Member since 2019 · 8 posts · 3 votes
    5y

    @George Yu I am so impressed at your success. I started selling houses and now have 10 sfr under my belt and an undergoing flip. I am planning on learning about MF investment and my curiosity is piqued by your success story. Since I am in Georgia I would love to meet. Can we connect?

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Jim Spatzenfeld well thats great! Go down the rabbit hole and see where it leads. For me I try to pick things that have minimum 10 year lifespans. Spec houses are a need but there are a lot of people out there meeting that demand generally speaking. Certainly build yours first and if you can sell it for 2.2 and find another lot to build another do it!!! keep me loop on your journey!

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Benjamin J Thompson congratulations sir! Thank you. Sure send me a direct message and I'll shoot you my details.

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Bikash ChhetriYeah man sounds good send me a direct message and we will meet up in Atlanta

  • Jonathan PavkovBusiness Member
    Columbus, OH · Member since 2021 · 201 posts · 166 votes
    5y
    Originally posted by @George Y.:

    Hey guys my name is George and about a year ago I posted on BP in regards to a 36 unit development that we finished in Moultrie GA. We built it for around 1.5 million, post construction Refi appraisal came out to 2 million(~500k net) and today it has sold for 2.7 million(another ~700k net). Since the post over a year ago there's lots that I have learned. In the last couple years we've only done one complex per year. Typically around the 36 to 48 unit size. But this year we are 90% completed on a largest to date: 56 unit development in Bainbridge Georgia. It's been a really busy year and I haven't really had time to post any thing else on BP because as soon as we finished site work on our 56 units.. we purchased 4 other lots to build on in Dublin(80 units), Americus(80units) and Cairo Georgia(48units). We spent the last year applying for rezoning, variances, city/community meetings, back and forth with engineering etc and finally today everything is ready to build. 

    The 56 unit apartment complex that we built this year we used passive House design where we used to buy six on the exterior walls with 6 inches of open cell spray foam insulation. As well as 14 inches in the roof to create an airtight thermal envelope. This theoretically this will help us reduce our HVAC needs by up to 70%. This is important because we include all utilities in our base rents. All electricity, water, gas, trash/sewer and high speed internet is included. The more we save the more we earn. We want to take the responsibility out of the residents hands to get all of this done since we think economies of scale wise it should be a top down effort. At the end of the day hopefully to put some more time and $$ back into the hands of our residents so they can spend it on their families, careers and giving back to the communities around them. 

    There is so much I learned about developing. I mean the actual building part is what most think about but thats just one task in a sea of tasks and probably the most straight forward.. Other things from how to have banking relationships, what they ask and look for, what kind of draw headache do they have. How to properly present to a city/community meeting. What areas to purchase in and others to avoid. How much can we afford to pay for the land? Wow all four lots we bought are in federal opportunity zones.. What are those and how to take max advantage of that? 18 or 24 months construction loan? As projects get larger we need more cash. Mezzanine debt model or equity model? What rates to borrow the money at? We want to keep these for cashflow but damn we can sell at such a profit! What do we do now? We want 10,000 units but how can we get there if we have to keep selling existing to build more? Its just a hamster wheel... Prices of lumber are skyrocketing should be buy now and tie up cash for our upcoming devs, ocean freight pricing tripled should we continue ordering from overseas vendors? Our GC is stretched too thin and cant do all of our projects we have to find another shop but everyones so busy! List goes on....

    For myself I am nostalgic sometimes and like to look back at photos and videos of my own journey. Sometimes I forget what things that have been done because i'm constantly looking at the future so this way I can look back and see the ideas that i had during that period of my life(right or wrong) and see how far I have come. I also have had lot of interest in the process for developments from my own circle of friends as well as people that have found us online. When I was getting started, there wasn't anyone that I could find online that could really answer my questions or had some videos about it. So i'll be documenting our journey here for anyone that comes after us there will be some bread crumbs. My first mentor said that success leaves clues if you look closely enough. Hopefully a good google or youtube search is all thats needed. Affordability is going to be a huge topic soon so the world needs a much help as it can get since Elon Musk isn't solving that one for us we have to do it ourselves... dang it!

    I'll try and update more on BP blog style on the progress and answer any questions that can help anyone who's curious!

    ok its 12:33am now and so time to wrap this up...

    Wow! That's super cool. What was your background in construction to make this happen?

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Jonathan Pavkov no background in construction but I partnered with the guys who had the construction background. I brought the net work of investors and I set up the system that brought us as much multifamily land as we needed. It was a great partnership that we had and it all worked out well. I learned as I went. I’m a kind of guy that just commits first and then learns on the fly.  I lived on our first construction project for the last year I was there when we took the first tree down. It’s invaluable what you learn on site but currently my value is putting the deals together. As well as finding new ways to make our lives easier and bring the cost of construction down.

  • Member since 2021 · 4 posts · 2 votes
    5y

    @George Yu thank you!

  • Jonathan PavkovBusiness Member
    Columbus, OH · Member since 2021 · 201 posts · 166 votes
    5y
    Originally posted by @George Y.:

    @Jonathan Pavkov no background in construction but I partnered with the guys who had the construction background. I brought the net work of investors and I set up the system that brought us as much multifamily land as we needed. It was a great partnership that we had and it all worked out well. I learned as I went. I’m a kind of guy that just commits first and then learns on the fly.  I lived on our first construction project for the last year I was there when we took the first tree down. It’s invaluable what you learn on site but currently my value is putting the deals together. As well as finding new ways to make our lives easier and bring the cost of construction down.

    Very awesome man, inspiring!

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Jonathan Pavkov Thanks good Luck!

  • Investor · Member since 2019 · 15 posts · 10 votes
    5y

    Hi George,I am really impressed with your work. I am also building a 30 door . 10 studios and 20 1B/1bath units in Tucson, Arizona. I am also thinking like you to include utilities in the rents . I am planning to install solar panels to cut down the utilities cost. I would like to know how  you guys are determining the utilities costs/ door and keeping it fair for the tennants and also the operators( owners) .

    Thank you 

    Harish.

  • Rental Property Investor · Madison, WI · Member since 2013 · 629 posts · 339 votes
    5y

    The best part about this to me is that Passive House standards are a part of your plan. Kudos to you!! Insulation is critical and should be the top priority. Then add solar and smart HVAC and you've got some really nice buildings.

  • Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
    5y

    Congrats George!!! 

  • Investor · Frostburg, MD · Member since 2015 · 46 posts · 26 votes
    5y

    Congrats George.  We've been doing this for a long time, so it's nice to see other people being successful at it also.  Just curious, for your property management, are you paying 6% for everything (I think I saw that somewhere) and are they dedicated to just your properties and in house and how many people are there.. I'm asking because you're in that number of units range where it sometime does or does not make sense to have in house property management based on the finances. Thanks

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Harish Nandipati The first couple we did were an experiment and we took the data from the first once we built five years ago and built up on that. But energy efficiency starts with the design phase so try working with an architect or a energy model or to make sure that you guys are thinking the entire thing through. We decided to try to implement some of the passive house methods to help us. Basically just double what your code locally requires. We cover all the utilities currently we haven’t had a situation where we have thought we need to put a cap on electricity usage. Everything we have and there’s energy-efficient and we don’t really make it the tenants responsibility to be more efficient. At least not yet

  • Financial Advisor · USA · Member since 2017 · 151 posts · 379 votes
    5y

    @Tanya F. Yes we use Ductless minisplits with multiple zones. We wanted to use solar panel’s over the parking to bring our project as close to net zero as possible. However because of Covid and the rising material prices is eating up a lot of the budget that was supposed to go to our solar panels so for now we will not be using those but I think we will still be satisfied with our energy consumption

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