If you read the post above, I told Mike that I wanted to talk about my past, so here it is
I have always been smart and stupid. Book smart, and life stupid (choices) bad ones...I always got straight A's in high school but I was suspended at least once a month. In my senior year of HS I was kicked out. Went to another HS for the last 3 months but still walked graduation at my original HS.
I then got into Penn State and this is where life really went downhill. I stole an econ test, not for me, but for my dorm, I was seeking approval ...before I continue, most of my hardships were self-inflicted and I was 100% responsible for them happening...So I was kicked out for one semester and not allowed on campus...next semester I was given permission to get a ping pong table I bought out of my old dorm. Apparently, the person was not allowed to give me permission so I got arrested for trespassing and kicked out another semester. That same week I got my first DUI coming home from a frat party. Self-inflicted because I only had 2 beers, stupidly refused the breathalyzer not knowing if you do that, you automatically get the highest tier DUI. Kicked out for another semester...So I enrolled in another college nearby. this is 2006. I did ARD and did not have much trouble. In 2007 my roommate gave me an ounce of weed for free because he was going to another country for a little.
I have never sold drugs in my life nor did I want to. But I didnt smoke weed so I wanted to make a quick buck. I ended up selling it to and under cover...Court was set for sometime in 2008. I decided to move home and go to a community college. I did that, then I enrolled at Temple University . On my way to PSU 3 hours away I got another DUI, this time for adderal. I was not going to get a DUI because I was just pulled over for speeding, but the cop wanted to search the car, I should have let him, but It was such a mess I had no idea what he would find so I told him no. He said he would have to impound the car. I asked if I could call my lawyer to which he said yes, but my phone was in my car and he said I could not get it. I went for it anyway and he decided to blood test me at the hospital.
2nd highest bracket DUI. I had to do 3 months in jail, 3 months of house arrest, and 3 years of probation. In jail, I was introduced to opiates being fully ignorant of addiction. When I got out I had a nasty habit. Because of this I kept pissing dirty and going back to jail (Opiates are hell, anyone reading this, if you get surgery deal with the pain because if you ever get hooked, its the worst because the brain compels you to do it even when you know the consequence. it literally pulls you to the drug no matter how hard you try) so I went back to jail a lot of times, 3 months, 6 months, 9 months....
I got clean in jail but eventually relapsed and I knew what was coming, more jail....I could not handle it. At this point in time, it was 2013 and I was a Junior at Temple University....I became suicidal (but not really because I didn't do it) but my dad knew I had a gun because I told him what I was going to do. I eventually calmed down and went to sleep. But my dad wanted the cops to check on me so they broke down my door at Temple. I am not allowed to have a gun so I went running to hide it, the cops saw me with it so and the situation went from 0-100. I reacted, I pointed at myself and told them to leave. Long story short this ended up being a 17-hour standoff with swat, homeland security, and police. I demanded one thing, a phone charger. I wanted to call my probation officer and the news so that I could make sure it was on record that this we a mental issue (for future purposes in court) There's no service in the basement so it took 12 hours before I finally got a full call through. https://www.nbcphiladelphia.co...
BUT EVERYTHING HAPPENS FOR A REASON and let me tell you why and also tell you how messed up the justice system is....I am on probation in Montgomery County, and the incident was in Philly. Montgomery county picked me up from the hospital and put me in jail for 8 months. In jail, I read every book on real estate I could. My lawyer worked out a deal to hold off my court date and let me do a program. So I was enrolled in a very extensive 18 months halfway house program. At this point I am clean....I knew that if I did not do better than my best then I would go to jail for a very long time.
So I enrolled in La Salle University in 2015 and bought my first REI flip. By the time I finished the program I had completed 8 flips and owned 4 duplex's . Mind you when I kept going back to jail for dirty urines, every time I got out I enrolled in school, I don't give up what I start, so I wanted to graduate. In hindsight It is probably why I kept relapsing, I should have focused on my recovery. When I finally went to court in Philadelphia the judge gave me 5 years of parole, no jail time! WHAT, I did 3 months for Adderal DUI where I was introduced to opiates and hard drugs to help the time go by (yeah I made the choice to take them, but I was ignorant about addiction, I didn't know) so that's why I feel the justice system is messed up, if I never went to jail for a harmless DUI then I never would have become an addict which I have to live and deal with for my entire life.
BUT NO JAIL FOR SHOOTING A GUN WITH POLICE OUTSIDE (I FIRED OFF SHOTS IN THE BASEMENT)
Anyway from 2014 to the end of 2016, I stayed clean. Dec 2016 I was diagnosed with stage 3b melanoma (this is how bad addiction is when I got the call all I thought was YES! PAIN MEDS.) Had to get 3 surgeries one of which was full lymph node dissection. I don't have any family and no support system. I made a poor choice and did not tell them I was an addict.
So I relapsed because I made a bad choice AGAIN! While dealing with cancer I was still in school and running my business. I graduated in 2018 with a 4.0 GPA. I went to rehab and have been clean ever since. From 2014 to 2019 I had done 15 flips and owned 7 duplexes. I was lucky with having cancer because my Probation officer would not put me in jail for being on pain meds, but then again if I never got it, I would never have relapsed...So I guess i was not lucky.
From 2009 to 2017 I had been to jail for a total of over 2 years, rehab if you put it all together 2 years, and a halfway house for 18 months. Having spent approx 5 years out of 8 locked away in some form and being diagnosed with cancer I still managed to succeed because there were two options give up and die or keep on trucking and live. I chose the latter and it was beyond difficult. But if all of the above never happened I would not have a business, I would never have read those books in jail, and I would not have forced myself to buy my first flip (because I only did it when I was going to get sentenced) I could have done 20 years....
Now it's 2022 and I have been sober for 4 years now and in remission for 5 years and have my dream project! These plots of land I saw for the first time in 2014, my girlfriend at the time, it was her parent's backyard (you don't have yards in the city so they bought the lots to keep them as a yard, the first thing I said when I picked her up on our first date was when her parents want to sell them CALL ME! From 2014 until recently, I help my ex-girlfriend start her own business and stayed in touch helping in any way I can for the sole purpose that I will be the first person they call when they are ready to sell....I got the call and jumped on it. However, I did not have 720k to pay for the land. But I got the AOS and figured it out. I had just enough in my bank to put the down payment. I stalled closing as long as I can, refinance some homes, and found a hard money lender willing to loan $500,000, so all i needed to close was 148k...that's where the refinancing came in. Rates were so low it made sense either way. So I got the money (not knowing in the beginning if I would, but I refused to let it slip out of my hands) Mind you this is the first time I ever did anything in the sense of winging it. I always plan first, and make sure if I am going to buy a deal that I have everything needed, so this was WAY OUT of what I am used to, talk about stress. I didn't even know if I would be able to get a construction loan, but I did know so long as I owned the lots if I couldn't get the loan I could at least sell them for $1,000,000.
At first my plan was to build 4 SFH row homes 3500sqft each on 20x60 lots. Saw how much it would cost and decided to sell two and keep two. When zoning came back and told me the lots did not meet the sqft of 1440 per lot and that I would need a variance, I was like ****, I don't have time to wait for variance I am using hard money. I convinced the sellers to let me subdivide and give me 8 feet onto their property line through an easement. BUT they had side decks that would need to be removed or shortened, this direction was going to be too much. My architects told me I would have garages by right on these SFH, but that was not true either, I would need variance.
In the end, I found my loophole. First off I did not sell the two lots....the loophole to get garages by right solved my sqft problem too. Instead of building 4 homes, I would build 2 larger homes. The code says if you have 5 feet of open space on each side, you can have garages by the right. Before subdividing, I did research and saw homes in the area of the size I planned were selling for 1.7 to 2.1 million dollars and they were selling in a matter of days. (Those days are over, so I know it might take longer to sell now) but this area is in the top 3 best places to live in Philadelphia. 5 min a drive to the city with highway access really close.
So I subdivided them, got all the approvals, building plans approved, zoning, street etc etc you name it I got the permits for it. At this point , March 2022, I still did not have a construction loan yet. So that was the next piece of the puzzle. Solved that by getting partners, and will be breaking ground real soon.
I am scared and worried about our economy, but I do know that in the worst of the worst I could sell these homes for the money I have into them and not lose a dime (1.3-1.5 mil) if I listed them for that, there would be the biggest bidding war in history. 3000sqft homes are selling for $1 million... Now @Mike Smith is right in I am starting to big and that's unwise, however the way I see it, if I built a smaller home or a bigger home, I'm still building, i just have a different clientele profile and to be honest, homes for sale in the $500k range are getting hit the hardest. People want to move and upgrade because they have a larger family now, but do not want to go from 3% rate to 9%. People who can afford a 2 million dollar home, are affected by the recession, of course, but if you have that kind of money, you are either putting down a large payment or buying cash, and if not cash are thinking they can refinance down the road knowing that these houses make a good investment so would be willing to pay a higher rate. Appreciation in this neighborhood is about 5% a year and on a 2 million dollar house, in 10 years the house would be worth $3 million.
In conclusion, hell yeah this is a scary venture for so many reasons. Number 1 is that I am building when the prices of everything are extremely high. We are heading into a recession , Inflation, rising rates, you name it. If I had the capital I would buy out the mortgage and hold the land, but I only have two options, sell the lots for a litter over what I bought them for (because in this economic climate, $1,000,000 that I could have sold them for is not there now, I am closer to $875,000) or build them. I choose to build, but one at a time hoping by the time I start the second, things will have gotten a lot better. It was a scary venture when things looked good, I am entering a new game with no experience in it. Scary but exciting at the same time. But so long as in the worst case I can sell them for enough to get my money back, then I am happy because the connections of people I have met through the process are worth it. I now have a board member of a bank as a resource for future projects, I have a great builder for future projects, and when people see them being built I will make more connections to my network. The network of the people you know in this business is one of the most important parts. They help with the financing, they bring you deals, they partner with you, and they allow you to expand! AND THE KNOWLEDGE, even if I lost 100k on the project, would be worth it! And most important the experience. Banks want to see experience before they lend. If I succeed, I will be able to get loans to do much larger things because my ultimate goal is to build a large apartment complex with 50+ units or to buy a distressed complex and do some value-adding.
I worked very hard to get where I am today as you have read above, and going through what I have, gives me confidence! Everyone who has commented about this (the experienced people) they have been giving me tough love, telling me things I dont want to hear, advising me, etc etc and most of them are not wrong. BUT I BELIEVE IN MYSELF! and to be honest if there was no good exit plan, meaning that my price point is 2 mil+ to sell them, but if I was not sure I could sell them for a min of 1.4M then I would probably have sold the lots but to me with the ability to sell them at a min of 1.4M its all worth it ! Experience, networking, knowledge, pivoting, adapting, learning, gaining patience, and so much more!
I thank everyone for being a part of this journey and I will keep you updated as things move forward!