Complete Cost Breakdown of Building A New Construction Apartment

[@Hannahbenowitz]

I built a house during the recession, it turned out to be the best time to build a house as I built a house for $75k that appraised for $130k when it was finished. I then paid the house off in full 4 years later. I didn't have the cash to build a house when I did, now my house appraises for $230k. I am anti-debt too, but sometimes biting the bullet and getting a mortgage is the right thing to do.

[@PennyBergeron-os4ch]

Most people are unable to handle a fall since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.

[@JosephineKenney]

The fact that the US stock market had been on its longest bull run ever makes the widespread worry and enthusiasm understandable given that we are not used to such unstable markets. As you pointed out, it wasn't tough for me to earn over $780k in the last 10 months, so there are chances if you know where to go. I hired a portfolio advisor since I was aware that I needed a solid and trusted plan to survive these trying times.

[@FinnBraylon]

Mind if I ask you to recommend this particular manager?

[@JosephineKenney]

Don't be hesitant to contact Sonya Lee Mitchell and follow her directions.

[@FinnBraylon]

I'm pleased with the advisor's prompt and knowledgeable assistance. Her professionalism instills confidence. Looking forward to further discussions.

[@GeorgeGetsItDone]

Total invested 3.7million borrowed & 500K his cash so 4.2Million over 3 years to build. He said the gross is 40K for 31 units so that's roughly $1300 a month rent. He said his monthly expenses $24,500 or $15,500 a month positive cash flow. Few things i noticed he didn't point out. (Maintence Monthly Expense (Materials and Labor) and also Property Management. That 15K a month can easily dwindle with those costs plus take into consideration vacancies, and move outs and any rehab work needed when a tenant moves out. I doubt highly that he is making that money cash flow on this property. Also saying his property will double in value every 10 years again that's a big IF. I believe this guy is successful but i rather have him paint a more realistic picture of the investment and expenses.

[@jaydeeare285]

He also left out utilities and sewer/trash service. Factoring in ALL the expenses I don't see him netting very much at all - especially considering the debt he is carrying on it. As for "doubling" every ten years, yeah that's just nonsense. He's actually upside down on it now based on his real cap rate.

[@PB111627]

Everything is new! He does the property mgt! Tennants pay for garbage!

[@GeorgeGetsItDone]

@@PB111627 people break things, common areas need cleaning

[@jaydeeare285]

@PB111627 He does NOT do the property management. You can see who the property manager is on a streamer in front of the building advertising vacancies. And it doesn't matter if a property is new, it still has to be MAINTAINED and is no longer "new" the moment a tenant moves in and starts wearing things out and breaking things. And WRONG AGAIN about tenants paying for their own garbage lol. In Seattle only landlords can open water, sewer and garbage accounts for their buildings. Anything else you want to be wrong about? Lol.

[@PB111627]

@@jaydeeare285 So what about if you own your own property whose do you get to open the water, sewer and garbage seeing that in Seattle only landlords can open these accounts? The appliances can be written off over their use period? Just because their is a sign you assume they are doing the maintenance? Maybe he is being paid for that advertising?

[@edwinhunnet2666]

It’s nice to have parents who are entrepreneurs. Shout out to all the kids who came from nothing with no guidance and made it out the rat race like thach himself. You guys are the true mvps.

[@Motionpicturelife2]

Hate won’t get you further along in life.

[@ThachNguyen]

I am thankful that my mom and dad got us out of vietnam and give us the opportunity to be here in the US. I took the opportunity to learn about RealEstate and be successful and today I want to teach my kid how to successfully also. I teach them how to fish vs giving him the fish.

[@edwinhunnet2666]

@@ThachNguyen please be my mentor!

[@passportmanzano]

@@ThachNguyen teaching all of us !

[@ToletRealtor]

@@ThachNguyen Thank you. I am learning a lot from you.

[@EatonZ26]

Strange you don’t count leasing cost, make ready cost, maintenance and recurring capex in your numbers

[@WilliamsSkilliams]

Damn, this video was stacked! Thank you for not dragging it out to a 30-40 minute video. I’m a carpenter/ architecture student hoping to do something like this after I get my license. This was really inspiring! Again the way you broke it down was awesome. Great video

[@ThachNguyen]

I try to get to the point as fast as possible and still give people alot of information so they can do it himself one day. If not, they always can be mentor by me in the future.

[@wuziye7832]

Exactly my thought, initially I thought it’s a click bait😂

[@joeyork9891]

​@ThachNguyen Hell. I wish community would invest together and forget crypto and wall scams

[@coreyfranco7060]

Hopefully he remembers plumbing and hvac on the next building

[@joeyork9891]

@coreyfranco7060 Over rated.

[@DRESIERRA]

The transparency is crazy. Thank you!

[@slshusker]

He may be overstating his net. Nice video.

[@WelcomeInc]

He is.

[@jessinuraina1046]

How many rooms u have in the building? And how much cost for rents? U should tell it...and who wants rent with no parking space,,,,???

[@alicebenard5713]

Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Instead of trying to predict and prognosticate the stability of the market and precisely when the change is going to happen, a better strategy is simply having a portfolio that’s well prepared for any eventually, that’s how some folks' been averaging 150K every 7week these past 4months according to Bloomberg.

[@Jessicatorres_768]

That’s crazy, I’m just doing everything wrong with my portfolio

[@KatherineAnderson-lm8bw]

The US-Stock Mrkt had been on it’s longest bull-run in history, so the mass hysteria and panic is relatable considering we’re not accustomed to such troubled mrkts, but there are avenues lurking around if you know where to look. My wife and I are retiring this year with over $7,000,000 in tax deferred investments. up until 3 years ago we were 100% in the S&P. During bear markets we had a perfect plan. We got an investment manager in our corner and didn’t look at our portfolio for nearly a year.

[@PhilSommer2]

Same here, 75% of my portfolio is in the red and I really don’t know how long I can stomach the losses. I’m beginning to reach a breaking point.

[@philipcollen482]

Patience patience patience. It's a cycle.... a sucky point in the cycle, but a cycle nonetheless.

[@brittanynicolette9473]

Hello, I am new when it comes to investing and i would really appreciate if I could get some tips about where it is worth to invest in (ETFs, Stocks, Growth stocks, Dividend stock etc.)

[@wilfredmotosue2615]

Thach can give us all this information but only about 1 % of us might venture out to do this because it takes GUTS to dive into a development like this. Not easy. But I subscribed to his channel to learn more . Seems like a straight shooter to me. Thanks Thach. His kids are the luckiest. I want to teach my kid how to do this in the future.

[@JaydogRules-q6w]

Here are the "other" expenses associated with this building that arent PITI: 1) Average monthly management fee in Seattle is 10-15% no matter the age of the building. Lets go low and say that's 4k deducted from the "cash flow" on top of the mortgage 2) $2k off for water bill 3) Much like average property management fees in Seattle the vacancy rate in Seattle is readily found with a simple Google search and it is 10%. So that's another 4k off the cash flow a month (banks qualify with a 25% vacancy factor, FYI not even 10%) 4) sewer service at 900/mo plus about another 900/mo for trash pull out is about another 1800/mo 5) maintenance for a building of that size , regardless of age , if you're not earmarking 10% of gross rent for repairs a month you risk taking money out of your pocket. So that's another 4k off from the cash flow for monthly maintenance and repairs Add all that up- 6k management 2k water bill 4k vacancy rate 1.8k trash and sewer . 4k maintenance That's about 18k in additional monthly expenses on this property, on top of the mortgage and taxes payments. Which means the buildinf is about a break even + or - a couple thousand dollars. That is not an ideal result after so much time, expense, and debt thats been involved i agree that a 5% treasury or CD would be a much preferable investment, and better playing, without all the hassles, headaches, ans uncertainties that come with dealing with this many tenants.

[@TInyK12]

no risk no reward

[@billiechung]

Work smart bump hard

[@danielmankinde1706]

how many times do you wanna calculate management fee? also new buildings have as little as 5% management fee, theyre built to be efficient and digitized with minimal daily management input. btw just based off inflation, his rent will increase by 1.5x in 10 years . which means the property value will nealry double , since the NOI will improve at a faster rate than the rent. if you dont understand it, you shouldnt be underwriting and analyzing real estate. 10 years from now too, his loan will be paid down to 2.5 million, building will be worth atleast 10 million, his all in was 500k, he sells and walks away with 6 million +, lets even assume he makes 0 cashflow, and all the cashflow was used as reserve for maintainance. explain to me how CD will turn from 500k to 6 million in 10 years

[@JaydogRules-q6w]

@@danielmankinde1706 You're literally just pulling numbers out of thin air, dude. Unlike you , my numbers are based on what the going rates actually are for these things now, and not pie in the sky nonsense that you're posting on everybody's comments. And for the record I literally laughed out loud when you said this building is going to be worth 10m in ten years. 🤣🤣 He'll be lucky if it's worth what he has into it now by then, as it is it is probably worth only about 3M now with his current REAL cap rate and interest rates and not the imaginary ones you keep trying to tpost all over the place. He's in a pretty big hole right now and commercial property is doing horribly right now wirb very little demand, doesn't matter where it is. Should have just bought a 5% treasury with that 500k.

[@danielmankinde1706]

if you read what i wrote and you have the brains to understand , you will see the rationale in my numbers. YOU claimed he will have 10% in management, i literally showed you similar property in SAME MArket going for 5-6% management fee, then why would a brand new MICRO units even cost more, no parking, no lawn. little to no common areas to maintain. NO one underwrites at 10% vacancy too, the price listed is what is readily affordable, if these units were 3k per studio, id say maybe, buy at 1200.!!!! people literally rent master beds and pay 1500 in that area, so it makes NO sense why youd anticipate that level of Vacancy for a BRAND New structure! Commercial real estate is valued by the rent ( free cashflow ) it generates and the ability to secure funding below the selling cap rate. Unless there's an underlying value add play His loan is 3.8 Percent, most commercial Loans are NON recourse and ASSUMABLE !!! which means a new owner can take over his loan, The loans are not due on sale like most residential loans, the borrower of the loan simply changes , the rates and terms don't change. hence the building can sell are a much lower cap rate or a higher value than what the "market rate" is , Infact that even makes the property more desirable, should he be interested in selling. almost NO one has a 3.8% interest rate in this present market. the least new loan you can get is 5.5% for the best properties and lowest Loan to Value , if he ever listed the building for sale today, he would EASILY find a buyer who will be willing to come take over his loan and put 2 million + as down payment, but if he did so, what else is there to buy outside at a higher interest rate, especially when he has only 500k in the deal?, so it makes sense for him not to sell. it also seems he has some form of tax abatement for the taxes to be less than 6k for that type of building, so why sell when you can cashflow and do a REVERSE 1031 exchange later. You're clearly someone who wishes to make such return, but cant wrap your head at the possibility of someone else doing such. so to make yourself feel better you want convince yourself that its a bad deal. 3.6 million loan at 3.8 percent is 16.7k a mo, at todays rate of 6.298% (200 Basis point above 10 year yield of 4.298), that same 3.6 million loan will be 22k a mo, see the difference? @@JaydogRules-q6w

[@straightup7up]

This man embodies the American dream - smart risk taker, not afraid of uncertainty or getting his hands dirty. Nice job, sir.

[@cvcexcomm]

2.95% cap rate based on your NOI and what the bank appraised. Good for you that you got your sweat equity in there but that's a tough asset to sell at a 2.95% cap rate.

[@jaydeeare285]

It gets even less favorable when you account for ALL of the expenses, like management fees, a 25% vacancy factor, etc.

[@ntdfmaverick]

It's great to see this laid out in a high cost area. Thank you.

[@ColdSweetTea]

What about running & maintenance costs? No staff payroll?

[@aleemkhalid6353]

Yea he forgot that

[@danhassler6585]

He gives a $700 common area cost. I don't envision any running costs for the landlord other than a nominal amount for electricity for lights and a couple cameras/security systems. Should'nt be any staff on the site regularly. Maybe cleaning a couple times a month. That expense is so little at this point in the building.

[@gamingloop6222]

@@danhassler6585 wait does the landlord pay for the electricity of the person living there in america? in belgium this doesnt happen

[@mkelly1118]

@ThachNguyen what kind of washer / dryers please? Having trouble finding digital payment system for mine. Thank you!

[@WelcomeInc]

Hi thach . What about the other monthly expenses associated with that many units ? - management fees and commissions- deduct another 10% or about 4k from gross, right ? Then all of the utilities, what is that, another $6k give or take ? And then maintenance expenses will eat about another 2k minimum. And what about a 10% vacancy factor ? Thats another 4k deducted from the gross. Even a 5% vacancy factor is still a 2k deduction. Theres much more than just PITI involved. Do you mind discussing all the true and additional costs that I mentioned above ? Thanks in advance.

[@ByllinhDagout]

I'm international student don't understand English at all but love what you teach love from Viet Nam god bless u

[@alexxiong8337]

This guy be dropping gems! One of the the realist successful guy that’s not scared to share the real info, he’s not giving bs answers and always is real! 💯💯💯

[@jacinedelarosa6302]

You forgot to factor in the 500k+ mortgage carrying cost you had over the past two and a half years.

[@bigboat8329]

Correct me if I'm wrong, but you're only getting a 3% cap rate on this property?

[@Polo22546]

As an auditor, I truly appreciate the breakdown of all of the costs of construction, including the monthly expenses. Congratulations on your success.

[@salvadorpuente8716]

Ohhhh,,, what about the plans? HOw much did you pay the architect to draft the plans? What category is that in your expenses??

[@kayadrakeford8380]

You forgot about the cost of paying your staff for the up keep of the building

[@danhassler6585]

What upkeep? It's a small 31-unit building. You don't have a full-time staff member cleaning and doing maintenance like in a 300+ unit building. You maybe spend an hour each week cleaning and the occasional maintenance, but in a brand new 31-micro-unit building I doubt there is much maintenance right now.

[@StephanieToddThornbury]

Wow!!! Well done. I thank you for sharing this information with us. Guessing you have decades of experience doing this and to share this valuable information is very kind. My wife and I are retired so we have the time and resources to build something down here in AZ for more income. You have inspired us Thach!! Thank you again.

[@FranciscoLopez-tp2vi]

I am trying understand how on the 10 year fix loan of $3,686,770 only has a mortgage expense of $17,813. According to that information should the mortgage payment alone be around $37,000? If im not mistaken I believe he accidentally said 10 year loan instead of 30 year loan which would make a lot more sense. Could someone verify this.

[@JuanLopez-uf8kb]

Seems like the math is wrong but I don't really know much about this

[@MrRhinosilver]

It’s a 3.8 rate that’s fixed for 10 years but it’s amortized for 30 years. It’s a 10/20 loan very common in the commercial loan market.

[@tonyyao2498]

monthly payment number is correct, just checked. it's a 10 yr loan, with Amortization Period of 30 yr.

[@FranciscoLopez-tp2vi]

@@tonyyao2498 Ok awesome, I did not know that. What would the payment look like then after the 10 years?

[@tonyyao2498]

@@FranciscoLopez-tp2vi close to the end of the term , borrower can renew with the bank , but it will be a new term and new rates

[@365sales]

I am looking for this type project and I am glad I watched this video. Thank you for sharing it!

[@noobyxviii]

Thank you for having the kids interview!

[@ThachNguyen]

My pleasure and I’m glad you liked it

[@_don206]

@@ThachNguyendo you pay the morgue once it’s completed? Or do you have to pay durring the building process

[@tonycerviver2123]

Here in the North East, the prime multi family unit for maximum profit is called the "Duplex". Two living units attached to each other either as ranch, townhouses, or condo's. Typically, a fire wall separates the two units for safety and security reasons. Ideally, the landlord can live in one unit and rent the other unit out.

[@sklai1907]

Now in Vancouver BC we are allow to build a 3-level duplex (left and right and basement unit by each side) on a single residential lot 33 ft frontage by 120 ft deep, which can accommodate up to 4 families.

[@danhassler6585]

I'm not familiar with having a firewall in a single duplex. At that point, it's just two separate single-family homes?

[@cwill5447]

Wowwww Absolutely Amazing Lots of lessons in this video. Thank you

[@j.t.5826]

Why so nice. I had a friend whose dad was just like this guy in San Francisco. He made alot of money developing houses. His last project bankrupted him. he was building over 35 homes in this complex. The city held up his permits and for some reason took their time ( I think some inspectors wanted money under the table). Eventually he was behind time and his construction loan was due. Long story short, he lost everything...All his hard work gone on one project. There is always risk in everything you do. just be careful. Thanks for sharing. Glad you are successful as people work hard and take risk especially in a market like this.

[@benb5742]

Thumbs up for teaching your kids the game.

[@Mencius101]

Thanks for sharing this! Great video. Need to also factor in reserves for repairs and vacancy as part of your operating costs since you’re bound to incur these costs down the road. You don’t want to have to pay for these personally.

[@harryherman608]

What about the plumbing, Hvac, windows etc...?

[@Seanmirrer]

I just sold a property in Portland and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains with months, I'm really just confused at this point.

[@GaryWinstonBrown]

Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge

[@Ashleycorrie8494]

Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.

[@Seanmirrer]

How can I participate in this? I sincerely aspire to establish a secure financlal future and am eager to participate. Who is the driving force behind your success?

[@Ashleycorrie8494]

There are a lot of independent advisors you might look into. But i work with Gregory Thomas Patchak and I have been working together for nearly four years, and he is excellent. You could proceed with him if he satisfies your discretion. I endorse him.

[@Seanmirrer]

I just googled him and I'm really impressed with his credentials; I reached out to him since I need all the assistance I can get. I just scheduled a call.

[@mershomspencer830]

Do you pay the monthly construction loan payment out of pocket?

[@WelcomeIncorporated]

Yes.

[@Mrdubomb]

Seeing these kids doing this gives me hope for the next generation...

[@jgg204]

Didn't account for repairs, routine maintenance, vacancy costs, turn costs.......

[@jaydeeare285]

...and $500k in mortgage payment carrying costs for 2.5 years.

[@ctowngambler]

You did a great job, breaking down the cost and, not dragging out the video. Here’s to continue success on your KZbin channel too

[@totalchaos444]

3.6 millions cost and 3.8 percentages interest are amazing numbers!

[@realdeal139]

How much was it to plumb the building

[@ethio-tech7028]

This is by far the most open and clear explanation I've seen about real estate investment. Thank you bro.

[@DJTrinivibes4U]

Legendary investor, businessman and father

[@frozentwintime9453]

Are u carrying the $24,500/month for the first three years? Since there is no rent coming in for the first three years? Or is the mortgage deferred until the building is completed? Thanks

[@jaydeeare285]

You have to ar least make interest payments during constriction on whatever amount you draw , so yes that was an additional expense for him as a carrying cost. He probably spent an additional 350-450k on interest payments alone over the course of those 3 years of construction.

[@ThachNguyen]

It was roll in the cost of Construction

[@ThachNguyen]

Remember I bought the land for $350k cash and I spend $150k for plan and permit. No interest there. Then I had a construction that was long enough for building it and until it’s least up and then it go right into permanent loan vs Refi it when it’s all lease up

[@danielmankinde1706]

so only 1 year of construction interest, which isnt too bad , great project. im working on something similar and less fancy , but same concept @@ThachNguyen

[@yudaw8494]

Interest rate is much higher now.

[@amlak.azarme4126]

You are an excellent consultant, you are experienced. I am a female consultant from Iran. I watch your videos. You explain very well 

[@WelcomeIncorporated]

Not loving that whole "no parking" for the building thing, what with that steep incline the building is on. I can't imagine very many tenants are going to want to deal with that for very long.

[@Basta11]

Most of the tenants will be people who would rather save money than have a car. A car will generally costs $300-$600 on the monthly payment, $150 insurance, $50-$100 on gas, $100-$200 in maintenance, $200-$1000 in parking (as a unit with parking will cost more all else being equal). If you are single, no kids, young, going to college, don't make much money, work remote, retired, transient (just trying out the city), can't drive, or you just don't like driving. etc. Then this is an option.

[@WelcomeIncorporated]

@@Basta11 Lol No car in Seattle? Sure. Okay. 🙄 Stop making excuses for this poorly conceived money losing development.

[@Basta11]

@@WelcomeIncorporated How do you know that it loses money?

[@WelcomeIncorporated]

@@Basta11 Math.

[@Basta11]

​@@WelcomeIncorporated Why isn't he broke then? How does he keep doing this if there is no profit?

[@greenmoxy]

CAP rate is a crap rate. 20yr ROI? Office commercial is 10yr easy. My last commercial building took about 2 months to buy all cash $2M and nets $24K monthly after property managed and taxes misc.

[@conservativeyogi]

3.6 million loan for 10 years at 3.8 percent - Mortgage is 36,000 per month. Was that included in your monthly expense? Cash flow is low and building will likely not be 100% occupied always. Repair and maintenance not factored in or staff salary, marketing. Taxes, utilities. 24k cash flow is high estimate. High investment and poor return.

[@jongkyleo8560]

Indeed

[@jacinedelarosa6302]

Well the mortgage is fixed for 10 years but amortized for 30 so the payment he said is about right, but the cash flow is not. For him, with all of his expenses, not just the PITI, he's probably putting 1-3k in his pocket a month net. Is that a worthwhile return for what was put into it ? No. And I can't think of any scenario where it would make sense for another investor to come in and buy it. I imagine if he really thought he could get 6.3M for that building (he couldn't) he would unload it in a heartbeat. The project certainly looked a lot better when it was started 3 years ago, but now 4.1M in that building doesn't pencil out in the current interest rate environment. The 31 units with only street parking is also going to hurt your rents and drastically shrink your tenant pool. Just because the city lets you build something like that with absolutely no parking doesn't mean you should. No parking is an automatic functional obsolescence, as is a building with nothing but small studio apartments. Tenant turnover will be very high.

[@danielmankinde1706]

you clearly dont know math, 3.6 million AMMORTIZED FOR 30 YEARS, which means your payment schedule is as if you have a 30 year loan, however the loan is due on year 10!!!. thats 17k a mo in mortgage, 6-7k a mo goes to tax, insurance and others and he collects 40k in rent, while cashflowing 16-17k a month for 10 years !! 10 years time , he will have paid down the principal of the loan down from 3.6 to about 2.5 million, disregarding his future view of how much it will be worth in 10 years, if rent increases by 50 dollar per year per unit, and average rent of 1700 at year 10, property at that stage will be easily worth 9-10 million based on the NEW rental income, he can chose to pay off the 2.5 million loan by selling or simply refinancing any bank will be dying to have such refinance, its extremely low risk, 10 year old property , 28% loan to value? not to even mention cashflow of 180k a year for 10 years. 1.8 million mhmn now think again, thats a poor return?

[@danielmankinde1706]

lol i dont think you know the area, just like newyork, people pay 1600 for 1 room in a shared apartment , no parking no nothing. its commute hub!! its not meant for people with cars, its for student, younger people, work from home kinda stuff. if you think he did such a poor job, why dont you build yours make the parking and lets see if its financially feasible @@jacinedelarosa6302

[@danielmankinde1706]

why will he sell off the property when he has a 3.8 % interest rate? and it cashflows 17k a mo, make it make sense.. in 3 years he will get all his money back, anything left in there icing on the cake for him, also with real estate investors do you think they want to be liquid? if they all liquidated their assets, they'd have a huge tax bill , so at every time, they always want to own something, his breakdown for 33 units 40k a mo. , checks out which is 1200/1300 per unit and thats very fair , people in shared apartment pay more for a master bed intact area , so which would you rather have . a master bed for $1500, or your own mini suite for $1300 mortgage- 3.6 million at 3.8% 17k a mo. +6-7k a mo. in tax , insurance he probaly self manages the property. so explain how his cashflow isnt 17k a mo as he said and is now 1-3k a mo? explain how 14k a mo, 144k a year is going to. i think you dont want to come to terms with the fact that someone has done such fantastic project and is making such returns @@jacinedelarosa6302

[@magiala5577]

This is an important video in regards of construction cost. I say he did a good job breaking down each part of the construction phase from start to finish. Understand there are more details, but he definitely covered the gist.

[@JaydogRules-q6w]

I dont like these numbers. First, you need to deduct another AT LEAST 4k off that 15.5k "cash flow" for management fees, vacancy rate, maintenance, etc. That brings you down to about 11k. That's already not great on its own but once you factor in the over $1M out of pocket spent for the land, early site prep, and two and a half years of mortgage carrying cost with no rent collection, it only looks worse. The clock has already been ticking for 2.5 years on that ultra low, never going to haopen again interest rate, and then it's over, the mortgage will shoot up to 26k a month just for principal and interest and the property will be a black hole. That means there is only 7.5 years to "cash flow" about 11k a month which is 132k a year which is just umder 1M in the 7.5 years there is left on this mortgage. Based on just the out of pocket expenses that's not even a break even before the property resets to the historical average interest rate. This place is an immediate SELL , if you can, while it is nice and shiny and new.

[@DarshanPatel-dc4sv]

When does the mortage start? After the construction is finished or does it start as soon as you borrowed the money?

[@whitenite007]

Usually it starts as soon as you get the loan, but some loans have the option to finance the payments for a while.

[@jacinedelarosa6302]

He has been paying on it the past 2.5 years but he didn't and he didn't mention it as one of his costs , even though it was his largest one at another 500k+ expense.

[@WelcomeIncorporated]

You would have made more money overall had you just kept and rehabbed the house that was originally there.

[@aleemkhalid6353]

Lol you smart huh???😂😂😂

[@jaydeeare285]

Youre upside down. Hope your fixed rate term outlasts the downturn in the commercial sector and the high interest rate environment. Youve got about 7 years left on it. Good luck man.

[@jacinedelarosa6302]

He's so upside down. Too bad. I know he's proud of it. Who knew the commercial and intetwst eate market would flip so drastically and suddenly when he started the project 3 ago though?

[@TheGreatMarcus]

Is great! But where all money come from? If Calculate all buildings in a town for example?

[@InvestorCenter]

Crazy how much building costs have increased the pst couple years! Making it hard for development projects to pencil out

[@ThachNguyen]

I agree 100%. That’s why building micro apartments with no parking make more sense these day for me than building luxury apartments.

[@freedomlandz]

​@@ThachNguyen I don't know if you did a video on this because this is the first video of yours that I viewed. I want to know about your team to get a project like this done. Also what is the best way to contact you?

[@jamesbroomfield7799]

You were able to fit that building on 5500 sq ft lot? What about parking? Are you responsible for parking? And how was the zoning? Did you have to go plead your case to turn the land from single family to multi family?

[@WhatDidIJustWatch78701]

My parents were teaching me how to color and read books, and throw a baseball, basketball, etc. Not teaching me about money like their dad😅

[@andrewlinlu]

What’s the reason behind exporting the dirt and then spending money on importing dirt again? Can’t you use the existing dirt to balance the grading?

[@htinvestment]

Love how you got your kids involved and teach them the value of investing.

[@ThachNguyen]

Teach them and they will have food for life vs give them they will have food only that day

[@mjcma1977]

Great video thanks for sharing your expertise, experience and most of all your MINDSET! Nice shirt 💡

[@subwaypapii6811]

Best thing I've seen in KZbin this year

[@EvoMitsubishiLancer]

Chart based on this video: Category Cost Land and Entitlement $500,000 Site Work $100,000 Concrete Work $190,000 Wood Framing $700,000 Electrical $400,000 Finishing $500,000 Total Cost to Build $3.6 million Export to Sheets Mortgage Payment: $17,813/month Expenses: $24,506/month Rent: $40,000/month Positive Cash Flow: $15,494/month Equity: $2.6-2.7 million Appraised Value: $6.3 million Sweat Equity: $2.7 million Potential Value in 10 years: $12.6 million Potential Value in 20 years: $24 million This is just a rough estimate, and the actual costs may vary depending on the specific location, materials used, and labor costs

[@darlantro]

He said site work was $800k

[@G.M.Esquivel]

Sir, you are an inspiration!

[@MattEatsMochi]

average rent of $1300 per unit? that sounds great, but you lost me at street parking only. I'll never go back to that unless I don't need a car.

[@Yuvraj.]

It would take the bill to 5M to make the parking garage

[@MattEatsMochi]

@@Yuvraj. that'd be worth the $200 a month for me.

[@Yuvraj.]

@@MattEatsMochi but it may not pencil out on the investment side of things.

[@MattEatsMochi]

@@Yuvraj. oh it absolutely didn't, which is why he didn't go with an on-site garage.

[@humberto2905]

2 questions what factors you see to select contruction company?? And what kind of loan is the $3.5M ???

[@albertedwards3803]

Dude I love the fact that you are teaching your kids from young how to invest and make their own 💰 🤑 ,I want to also thank you for always teaching us how it's done and keeping us motivated. 🤔👍😁🤝

[@americansailor7967]

Well Done. Welcome to America. One of the secrets of success is not being woke. You took a chance and made it happen. Good luck to you and yours!

[@ssj4deva]

Thank you sooo much for posting this!! I am building a 42 unit apartment in san antonio tx. Great to see someone who shares info so freely. BTW he says in a different instagram video the square foot per unit average is 275 Square Feet per unit and it rents out for $1250 to $1350 per month That is an INSANE amount per square foot but I can EASILY see why people pay that much since the Layout is soooo BEAUTIFUL!! GREAT WORK!!!! Your Rent Per Square foot is almost 3x mine Great JOB!!!

[@danielmankinde1706]

I am currently working on something similar too, 280-380 sqft studios , and my projected rents are 1100 a unit, to maximize value ,it just makes perfect sense to have micro units , a 2 bed with 1k sqft, wont rent for more than 1600 in my market , that same space takes 3 microstudios that will fetch 1100 each

[@BANGA2TIMEZ]

@@danielmankinde1706can I just ask. How did you obtain funding? Unless this all from the pocket.

[@danielmankinde1706]

NO one develops with cash from pocket, even if you have the cash, its not wise to do so, theyre a lot of equity capital, and senior lenders will offer financing based on the value of the project and the experience of the team. so if you can find the right deal, find the right team. the money will find you. Pref equity, mezzanine debt, JV equity capital@@BANGA2TIMEZ

[@uberdash007]

@@BANGA2TIMEZ it's called a construction loan, some banks/lenders ask for 10% down, some 20%, some 30%. There's 10+ ways to get qualified

[@4ex711]

When do you start paying back the loan from the bank? Immediately?

[@meetethan1857]

Jesus is King 👑

[@chinyereapakama298]

Thoroughly enjoyed this video. Loads of love to you and your wonderful family. 🎉🎉🎉🎉🎉🎉🎉

[@jaydeeare285]

Love your enthusiasm and knowledge but commercial real estate appreciates at a slug's pace, it does not "double every 7 years" regardless of where it is. And with current interest rates (as you mentioned) you would more than likely get around what you have into it (4.2M) if you were to try to sell it, despite the appraisal you got. But if you are getting those rents you should definitely hang onto it for the cash flow. Great job! Looks nice!

[@ThachNguyen]

I don’t know where you live and I can’t speak about where you live but I know Seattle market very well I’ve been building residential and apartment building for a long time 30 years. Of course the higher interest rate for buyer does affect the price of a building. However there is a massive shortage of a apartment building in the Seattle market so it’s a sellers market than a buyer market now especially in a good area

[@GAGANGROVER-z7b]

I have a question about the 3.5 million construction loan. During the construction phase, do we need to pay EMIs from our own pocket for the first three years, or do we start paying monthly EMIs only after the construction is complete and the loan is converted to a mortgage?

[@johnnyb33good21]

Very cool video and I appreciate you sharing! When it comes to the monthly cash-flow... Property Management fees, vacancy, maintenance & repairs, Capital expenditures etc were forgotten to be subtracted from the monthly cash flow number. Still a great project and a cool long-term hold I wish you could do another longer video with a full and total breakdown of every cost for the construction

[@uberdash007]

You can do the breakdown your self. A little research go a long way. Before construction move forward a estimator calculate the building materials & labor cost. Imagine a apart is 20×40 ft

[@johnnyb33good21]

@uberdash007 I have a 1 acre piece of land right next to my 6-unit apartment building that is zoned for multi-family in Apache Junction Arizona. I have never done ground-up construction. I've only purchased existing multi-family that had a value-add play where I remodeled the interior and exterior of the property. Where would you go about doing research and estimating to find out the total construction cost from ground up? Called the local city zoning office. they said for one acre that is zoned rm2 you can build up to 20 units then there are setbacks and parking

[@tritonh5683]

What a man your sons are! Wow what a fking a great parents. My boy is still an infant.Hopefully I have the skill as dad to teach my son.

[@kyles2232]

Um your expenses are gonna be WAY more than mortgage ins and tax!!!!!

[@kyles2232]

Just as ridiculous as assuming your property is going to quadruple every twenty years lol.

[@kyles2232]

Oh, and that thing's not worth six million if it only nets a hundred and eighty thousand a year. Better find a new market at those cap rates lol

[@jaydeeare285]

Somebody did a more complete breakdown of the total actial costs in the comments and it looks like he might be about breaking even on it. Unfortunately I don't think the place is worth what he has into it. But that's my opinion.

[@Jackroguettv]

So what about a building just like that similar to it that maybe we can get that is bank own door for closed or short sale so that way it doesn’t take three years and it just needs to be with a little bit of tender, loving care TLC and have everything up to code? What are the best states to Try to get it done for the best price And to probably get it up and running and under six months? Is that doable?

[@chino1127]

Hi Thach, I've been renewing my interest in RE and catching up on your videos. Based on your costs, under $135k per door seems like a deal. Can I ask how big the units are and the approximate cost per square foot? In this market of high interest rates, are you basically just waiting it out, or is it still possible to build and rent? I've done a dozen proformas for properties here in L.A. and it seems nearly impossible to cash flow, even with 50% equity. Construction costs are high, construction financing is through the roof, and yet properties have not quite come down in price to make construction feasible. I was lucky to have completed by home build a couple of years back - I could not afford to do it with today's interest rates and construction costs. What can we do?

[@danielmankinde1706]

make units smaller, Rent per sqft goes up when units are smaller, thats why he build micro studios all less than 300 sqft, renting for 1200 each, if it were a 2 bed 2 bath 1,000 sqft . he probably cant get more than 2500 rent with NO parking

[@bboylorettoEight08]

Great video !!! Happy holidays

[@luongo7886]

Nền kinh tế của Seattle có tốt như ở San Jose không anh? Bạn vui lòng cho biết tên công ty bạn mua những chiếc máy giặt và sấy đẹp đó? Cảm ơn.

[@jjlouis7762]

Getting his kids in on the hustle this early was so awesome ❤️❤️. They don’t make a whole lot but at their age it teaches them if they duplicate their grind the money will simply just duplicate itself

[@geneanseals9501]

GENERATIONAL WEALTH!!! "A good man will leave an inheritance for his children's children,"

[@Solisium-Channel]

here in Mexico, there's a new building for 2 years that they were selling overpriced apartments for. Thing was just a plot of land for 2 years, but little did any of us knew that all those projects had made deals with the municipal president. There was a rebuilt roads with even bike lanes, better than in the U.S. construction of that small Stretch of road took a year and half to build and they still aren't finished. Municipal president is also getting a kick back from the contractors. My front door neighbor with the biggest house in the neighborhood got his truck set on fire, He is a retired politician, and he was one of the good ones against corruption. Did it come out on the news? Nope. You'd had to see it to know it happened.

[@user-te9lc3cq3h]

🎉Great Family b2b Atlanta is no joke… You are a pioneer!

[@DanKohan]

I loved how they shared their secret about those laundry machines - they saved up and bought them to make extra money. It's awesome how they're teaching their kids about making smart choices too. Great video!!

[@jonathanlarios5218]

Hello, could you reference where he mentions this? Thanks 🙏🏽

[@nickiazzetta7814]

@@jonathanlarios5218last 3 minutes of the video

[@brianmchugh3724]

This is extremely high quality content.

[@builditfrom0]

Thank for the breakdown. I'm really interested in real estate.❤

[@ThachNguyen]

I’m glad you enjoyed it. Thanks for following.

[@riverlife2379]

go study real estate finance or accounting for real estate investment Jb.ok

[@jamaico96]

Appreciate the information. Wish you all the success. God bless.

[@jimmese252]

SELL & RUN

[@jaydeeare285]

Agreed. I'm sure he would if he could, but he would lose a bundle. He has no choice but to hold and hope the market improves, a lot.

[@jacinedelarosa6302]

He can't. He's upside down on it.

[@equityrepublic7414]

Good stuff.. thank you. How many total square feet for all 31 unit

[@showspotter]

came in to this thinking he was some greedy landlord but dam after watching it, my hats off to him.

[@nutter4butter]

i wonder how much the plumbing costs. and the boilers and mech room

[@danhassler6585]

Modern construction is probably not that much for mechanical. Modern VTACs aren't that much and a basic water heater is all you need. There's not a lot of mechanicals in a modern building.

[@mdmflash]

Did you hire one construction company to do all the work or did you outsource each specific job to specific companies? (Ex. concrete work to concrete company, electrical to electrical company, etc. or one company did all work?)

[@andrehubbard9294]

Just thinking should you put those type of washer and dryers in your rental properties???

[@theonlyalexoliveira]

Guys, this is very normal and attainable for the average person, just have half $1 million cash, just get 3 1/2 million dollar construction loan and then you’re off and running! Like and follow for more relatable, financial advice

[@tyr404]

its an advanced project (31 units) for the beginner real estate investor. Average man needs to start with single family homes until he's good financially first, and secondly to get to know the contractors and the tricks of the job. If you know shit about construction, permitting etc, all contractors and advisors will take advantage of you on every step with additional costs

[@GideonHawk-j8i]

He started off as a valet parker. There are endless other videos by him and other investors on how to do wholesales and flips with little to no money and build up your capital. Where do you think he got the money to put into this, the money fairy? So yes it’s very attainable for the average person who’s willing to take above average action to make it happen. Or look for excuses as to why you can’t and enjoy living paycheck to paycheck for the rest of your miserable life telling yourself that everyone who has it better than you just got lucky.

[@Confidence8595]

You are one person I take serious.. I am really interested in real estate development.

[@jacinedelarosa6302]

You seem like a nice and knowledgeable guy but not seeing anywhere close to a $6M value at that cap rate. And thats without even knowing what the full monthly expenses are (utilities, management, etc) Not even 4M. That same 4M could go into a 5% bank or treasury note right now and yield 17k a month without the headache and expense of tenants.

[@danielmankinde1706]

true , but will the base value increase?

[@jacinedelarosa6302]

​@danielmankinde1706 I know he said it appraised at 6.3M, maybe that was the projected value 3 years ago but it isn't worth that now, not with those rents, no parking, and not with where rates are now. I'm not trying to make him feel bad, but I would put the current value of that commercial property at 3.5M tops. He evidently holds long term so the paper value shouldn't matter to him anyway.

[@danielmankinde1706]

When you're a real estate investor, you don't care about what its "worth" today , so far its been stabilized your payments dont increase, the only thing that increases potentially is the rent and thus cashflow, he has 3.6 million loan probably amortized for 30 years with a 10 year term, do the math, after 10 years he would have paid off at least 30 percent off his loan principal and his loan pay off will be close to 2.5 million, even if the property doesn't even increase 1 dollar in value and doesnt double as he claims , if he sells at 6.3 million as he projects from he will walk away with close to 4 million dollars , that's lets not forget the 14k monthly cashflow or 1.68 million over 10 years. btw how much of his own money is in the deal? 500k !!! so tell me how you will turn 500k into 5.68 million with treasury in 10 years?, not to even mention depreciation, cost segregation study and all that @@jacinedelarosa6302

[@jaydeeare285]

​@danielmankinde1706 Except his real net cash flow is more like 2k a month once you factor in ALL the expenses and not just the PITI. And even if you want to do a strictly "cash on cash" return that 500k in a simple CD would yield the same profit a month with NO WORK. I still don't know where you and he are getting these crazy values from commercial property just does not appreciate like that no matter where it is. And yes you can depreciate the building but so what when you're millions of dollars on debt on a hassle property with little to no positive cash flow relative to what you spent on it ?

[@danielmankinde1706]

i dont think you listen carefully, his cost of holding the building is 24k in PITI, 40k in rent, how come you automatically downgraded the magrins from 17k a mo down to 2k a mo,. newer buildings have little to no maintainance, theyre built to have mostly individual heating and cooling, digitized access, and a door man isnt even needed for mailing and packages . you seem to want to take the easy way out and invest in CDs , if you think that is what works for you, please do so, however real estate to many people is beyond just short term cashflow, he has all in 500k into the deal, so far it pays for itself and hes able to make returns , thats all he cares about, if he holds that building for 30years , pays off the mortgage and the building value adjusted for inflation at 2-3% from 6 million today, will be worth 11-12 million then , he thinks its going to be much more, lets be super conservative and stick to 2-3% 30 years from now hes passing down a 11 million dollar building down to his kids , all paid , no mortgage no nothing, tell me where 500k in CDs will do that. btw rents will also increase, but lets even assume the increase in rent is wiped out by the increase in future expenses due the building aging and maintenance. - hes providing housing units that never existed - according to you hes cashflowing 2k a mo, i think 10k a mo min -conservatively the building will be worth 11 million with no loans in 30 years its a win, win , win at all ends , if his heirs decides not to even sell and they just hold and collect rent , that will have them set up for life. @@jaydeeare285

[@kompshi]

i like how he is teaching the kids financial plannig for future

[@vern0312]

Wondering if ICF would of been a better choice instead of wood. Of course you’ll pay more in concrete but the labor savings would be significant

[@christo2333]

Thach, thank you!! What a great video! Incredible to see what happens behind scenes for a deal like this.