How to Build an 8-Unit Complex ($1M+ Value): Step by Step Guide
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- Опубліковано 17 кві 2024
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Jerome Maldonado is a 25+ year real estate developer, investor, and author. With a staggering $600 million portfolio under his belt and on track to hit $1 billion by 2025, Maldonado is a titan shaping the contours of property investment. Over the last four years, he has molded $247 million in multifamily assets, solidifying more than 1,100 doors. He specializes in real estate development, and teaches his students how to develop single family homes, multifamily complexes, and entitle land to sell to developers (or develop themselves!). Jerome also owns multiple 7, 8, and 9-figure businesses including a construction company and a realty company, founded in 1998 and 2000.
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--DISCLAIMER-- The suggestions, advice, and/or opinions that are given by Jerome Maldonado are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Jerome Maldonado and Jerome Maldonado brands harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by Jerome Maldonado as a perspective based upon experience.
awesome value, thanks for sharing this great information! I think i mentioned it on another one of your videos, but I'm looking to get into real estate once I get my money right so I'm appreciative of the content you're sharing.
Insane Value! Thank you!
Best real estate videos on UA-cam. Thank you Jerome!
110%
This was gold!!! 🔥🔥🔥🔥
@@K1ngDutch 🤩💪🏽💪🏽
Awesome content.
Please go over the process of “tying up land” especially the Seller Financing part. Thank you.
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I love these videos. I use these videos as motivation
She pressing brother anything we can do to help
Great knowledge! New to your channel…do you offer a funding group or Joint Venture on your projects? I would love to talk!
@@NavigateYourVentures yes on selected projects
Info@jeromemaldonado.com. Hit me up
💪Jérôme Maldonado. Thank you
Congratulations. Personally I think modern homes multi micro homesteads make sense. We need multi generational housing so every family can have a man house and 3 smaller units
Agree. 😉
Thanks for sharing that info
What analysis do you do prior to putting offer on the land if you’re completing the Proforma itself after entitlements?
And nice thumbnail. Those look like the 87th terraces in st Pete!
We find an area that supports the business model. The analysis that we do as we look for the upper middle-class areas where homes are being sold between $600,000 and $1 million. Make sure the homes sit under 3000 ft.² and the lot price supports theresale value
Jermone I'm confused on the final step. Say you use 6 CAP based on the current markets but when you stabilize the bank offers you 8% 20 year loan. Then your actually negative 1000 a month right? 8 units roughly 1950 each 30% expense put you at 10.5K but the 8% 20 year loans puts you at 11.5K. Or am I not understanding CAP rates and HUD loans. This video was done 2 days ago and interest rates are 7.5% with perfect credit.
You can do a bunch of different scenarios and a lot of what if that’s going to keep you broke or you can focus on the solution and what is working. Don’t wait for the bank to offer you. You go out and get the lending that you are in need of or focusing on HUD with Build certifications and we are working at affordability components with tax abatements on almost all of our projects. That’s why you work with the pros my friend so that you don’t run all alone in the middle of the night. This is no playground for the inexperienced résumé up and Mentor up!
best of the best of the best
I love it thank you bro
Great content Jerome... Don't forget zoning!
Many additional steps
Awesome breakdown on this deal!! Thanks for the content! What about the debt service at 1.4 mill? How much is the monthly payment ? Does the NOI cover the Debt service? At 100k it seems like it won’t cover it.
Net operating income does not consider debt service. The debt service is always going to be different depending on the terms of the loan right now HUD loans are the best lowest interest rates and if you can add an energy and efficiency green build certification to the loan you will even save more.
I gave the same question.
Awesome content! Can you 1031 cash into buying the land?
You don’t need to it’s ordinary income, so you can deduct all expenses that are normal business expenses into growing and expanding your business. The cost of expenses are a write off. This is all ordinary income, not capital gains tax when you build houses when you get into apartments and those are long-turn holds then you can utilize at 10:31 exchange as a tool when you sell the asset if you ever do
jerome if you are borrowing money at 7% and when youre finished the rates are 9% how are you making money ?
You’re not that’s why we’re doing full-term loans on the vast majority of our bills. We have one local institution that we are doing construction money at 7.1% and we don’t even have to do a bridge to perm. We just get permanent financing at 7.1% with no payoff penalties if interest rates are lower or tapping, we can go and refinance it the lower rate, if rates are higher, we’re already locked
Freddie’s work the same way institutional loans with designated lenders work the same way you got a shop you gotta be smart. You gotta be strategic and you gotta put your product out to the market. The terms we shop terms leverage terms and leverage.
@@jeromemaldonado Thank you Jerome for the detailed response. We have entered a rising interest rate enviorment so when you go to sell your newly built apartment complex rates will be higher thus eliminating your equity forecasted when breaking ground.
Hud dscr at 7% rate?
HUD is between 6.1 to 7
You seriously just covered like a full month of the real estate developement intro course from when I was in MBA school. Tons if info in this video! Anyone trying to learn this stuff should watch this video over and over until you can repeat the whole process without missing a beat.
One thing I would mention.. At the end when you are determining cash flow, you multiplied the value by the cap rate. This gives you estimated cash flow with no debt. But in your process you were assuming financing at 75-80%. If we took the 75% (provides higher cash flow than 80% LTV) and subtracted that debt service from the NOI, you are left with a cash flow of just a little over 10k per year, assuming a 6% interest rate. That is still technically an infinite cash on cash return though since you are easily recuperating all of your investment amount on the financing. However there is one other issue with the financing. Currently, I believe HUD has a DSCR of 1.176, but your DSCR on 75% LTV is only 1.11. Most banks will require at least a 1.25 DSCR in my experience. So even getting a 75% LTV seems unlikely. I didnt bother to do the math but probably a 65-70% LTV at best, which could mean you dont actually get all of your invested capital back on financing, and creating a real cash on cash return, possibly lower than what is desired.
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As far as I understand, from NOI of 106,000 if you subtract EMI of bank finance of $ 1.33M it becomes cash flow negative.
Depends on your terms. He mentioned that in the beginning of the video. He also said 106,000 was at 40% while saying it should realistically will be at 25-30% he just did it at 40 for the video
Jerome, please take the time to show newbies how it really works. You are not even considering the move in move outs, damages, new paint, make readies, eviction court cost. So the good bad ugly.
and would love to see him do this in california
Agree with everything actually but confusing about rent on this unit. The price in $1700 and $2200 for Unit it’s may be only in California or Washington State, Hawaii and similar… But not in Texas, Arizona, Florida or something like that…
So the numbers in Texas will be much much lower than that, but the price for build that asset - around the same 🤔
how can I get in contact with you I have property I want to do 8 unit complex ???
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Jerome Maldonado
One of the Best of the Best 👍
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I have a 10,169 sqft lot buildable 6,800 I can build a 20 unit or subdivide and build 3 2familys
Great area near the city.
One thing that's not covered in this video is proper zoning for your lot. In my area, single family houses need a minimum of 6000 sq. ft. per lot, and you can't build multifamily and single family properties in the same type of lot (zone). You need to check with the city to see whether your lot is zoned for single family, residential multifamily (2-4 units), or commercial multifamily (5+ units) and go from there.
I loved that 💩😂・👏🏾👏🏾👏🏾
I don't agree with his number ither. If you have to take into consideration that he sells a course. If he shows how it usually works out, he can't sell you his course. You are not making anything when in fact you will be in the hole each month with monthly unexpected expenses over the entire complex. You will not have an approx $8000 per month net..noi
Where are you? $1 million for eight units. That’s insane. Here in the San Francisco suburbs it’s about for eight units it’s around 6 to 12,000,000 on the neighborhood
There is life and opportunity outside of San Francisco
Yes, Tiffany areas Bear different values. I underwrite these at a very conservative value. Imagine what you make with a larger evaluation. If I’m as conservative as I am underwriting, the upside potential is exponential.
@@ErickaWilliamsCC If you can call that living.
See you Soon 6/22 Victor Da Connector
It’s time bro
At 12:19 he claims capital expenses are operating expenses. This is 1,000% WRONG. What a disservice to investors starting out. He doesn't even know how to correctly calculate NOI.
We’re talking about expenses in general when underwriting do you want to take all expenses into account? you have to take into consideration, operation, expenses, and expenses. They’re all expenses. Net income is the gross operating income minus all expenses that includes both operating expenses as well as repairs and expenses parking lot roof Stucco broken toilets, all expenses minus debt service.
@@jeromemaldonado NOI stands for net operating income so ONLY operating expenses are subtracted. How can you not know this when you are posting on the internet?
He didn’t claim capital expenditures were the same, he said he factors them into his expenses for NOI which you should because it’s an expense. Just because nobody ever mentions it doesn’t mean it’s wrong too.
@@KevinMcClain13 CapEx are not OPERATING EXPENSES1111 NOI is income LESS operating expenses. His calculation is 1000% wrong.
@@KevinMcClain13 It is wrong to include capEx and mortgage expense into the NOI calculation. Nothing wrong will addressing them afterwards but they are not part of NOI.