Awesome video and breakdown Thach and Chris. Thanks for the details. New construction is a different game for sure in terms of up front capital. Of the $500K that you put up for soft costs, what amount do you typically to try recuperate through the construction loan?
So how much of a construction loan did you need to take out and how much have you spent on payments over the last few years? You never mention that in any of your videos. 🤔
Yeah. Everybody notices that. At least people who also do this for a living. He will be 750k-1M in the hole on mortgage payments alone before he sells or rents a single unit multiple years from now. Amd he can only hope that Seattle still isn't a declining market by then like it is now.
So these loans are typically interest only, short term, then paid off within a few months to about 2 years or 3 (from what I’ve seen). And you also only pay on what you’ve borrowed. For example 1M construction loan will take 6 months to build and get leased up. The first month let’s say you’ve drawn 150k, your payment would only be 1500. As the months get longer the payment gets higher, so that’s why you’d likely want to be in the latter parts of refinancing the property, or already have your perm financing in place. The payments do end up getting costly, but that’s the cost of doing business
@jonathanlarios5218 He says he has 10 year fixed rates, if that's true he is paying on the full amount from month one, and they are not interest only. If it's a "cost of doing business" he should include those costs in his break down, because it adds SIGNIFICANTY to his cost basis, and makes these deals not worth it.
Yeah I can’t attest to his actual numbers, but most multi family/ Commerical loans are around 10 year terms. For example, 1M loan with a conventional lender would be something like 6.5% or 7%, 25 year amortization, 10 year term.
I promise you, these loans are interest only for the life of the term, and you only pay interest on the amount drawn for the construction (unless he included the land in the sale and is paying interest on that portion as well)@@WelcomeIncorporated
At what point in the process do you determine you actually have a profitable project? For example, it sounds like you bought this land first. What happens if you engage an architect and all you can build is 2 units, or soil conditions/topography are so bad the project is not profitable? Is any of this factored in before land purchase during contingency periods such as consulting with an architect for preliminary plans?
during your due diligence period typically you try to get a few months to make sure and get preliminary plans done etc - you put up like 25k in soft cost before you close - but there is always some level risk
Due to the radical change in market conditions he is already well upside down. But he has to continue at this point because he is already neck deep in expenses and the construction loan he took out and has likely already been paying on for years.
if you have enough money, you can hold long enough for it to be valuable. So what he does is he is constantly building for the lowest reasonable cost, and will always keep making money off them eventually.
@@WelcomeIncorporated unlikely. He's big enough he can keep doing a refi if needed or HELOC or similar without having to lose properties through bankruptcy.
Thank you for the video, I don't know who needs to hear this, you've got to stop saving money. Invest some part of it, if you really want financial freedom.
Investing is not for everybody, you just need a strong stomach too see your portfolio go down. It might be wiser for a novice to start with copy trading investing, but it is not easy. To invest in growth stocks it is another level.
I've been solely investing in real estate. But with the recent hyper home pricing i've liquidated a few things and have $45k in cash laying around idle. Would love to get your recommendations, I'm in search of something lucrative in the current crazy markets, i will be glad.
@@waltercamelaWhat if you don't know how to trade any of these? I mean, I see your point. Some people have the money and are willing to invest. But the problem is where to.
Hi Thach! am glad to watch your video, i would like to ask, at the time period waiting for permit etc.. how do you pay mortgage in case of investing in Real estate with no money down concept (formular)?
You Forgot Civil Design consultant,Most of the Project Will definitely need grading and drainage plan, Stormwater management plan , utility sewer and water, Fire dept and Frontage improvement Streetscapes' (optional depends on jurisdiction).
*Finally a great video exposing some real hard and sorta bitter facts to save many from unpleasant surprises when they dream to make big money overnight and jump blindly like a small fish into this pond of hungry alligators. Thank you Thach!*
@@ThachNguyen Yep, and then they have a competition against alligators in the pond like YOU - who has A LOT of cash money, and A LOT of battle hardened experience, A great Team and lots of resources at hand. Small fish like me and many others, do not stand a chance here.
Why dont you have an inhouse team. Architect surveyor engineer. Get all that down with different subsidies. Wouldnt this be much much more cost effective paying employees salary rather than per project?
Designer here for MFH. To anyone interested in being a developer, never go cheap on your architect/designers/consultants. Having somebody on your team with a huge vision and creativity will increase your property value when appraisals come around, which ultimately increase your equity so you can take out and roll it over into the next property. 120k sounds about right for your average architect, really really experienced ones can easily charge 10-15% of a project cost
This is great When you buy the land, how much feasibility analysis do you do? How much time do you recommend to do so? And who do you engage with? From the video it seems as though feasibility is done AFTER purchasing the land but there has to be some consideration during land purchase, correct?
It can depend on the deal of course. Some have more time available and some don't. Ideally on a typical site we try to get 45 days for feasibility and we do most of it ourselves. There are consultants and designers that offer feasibility studies if you need assistance with that.
GOOD AFTERNOON EVERYONE I HAVE A QUESTION SHOUL I RENT MY 5 PROPERTIES ( MAKING ME $700 EACH EVERY MONTH ) OR SHOULD I SELL AND INVEST AND PAY CASH FOR THE PURCHASES ?? OR HAVE A PASSIVE INCOME OF $3500 EVERY MONTH , HAVING SAID THAT , KEEP IN MIND , I HAVE NO MORTGAGES ON THE 5 PROPERTIES
![กี่หมื่นฟ้า | Your Sky Series EP.1 [1/4]](http://i.ytimg.com/vi/vLGjxFL6U_I/mqdefault.jpg)
![PASULOL รามเกียรติ์ ตอนที่ 4 นนทกพบรัก [Ramakien Ep.4: Nonthok in love]](http://i.ytimg.com/vi/tMUQgmZzf_A/mqdefault.jpg)
This is major league real estate investing. Thach is the man!
200k before a truck shows up is insane !! These guys are doing things the right way. Much appreciated
Thach you’re the best real estate youtuber out there right now
This is amazing advice and overview of how anyone can just get it done if the finances are rite
Awesome to see the complete breakdown. Great video!
Glad you liked it!. What else you want Chris and I do make for you bro 😀
Great video!! Thanks for take the time to show us the process..
This is the best video out right now
Great video. Looking forward to the next one
I just got excited! Hertz slogan!
Great video
Awesome video and breakdown Thach and Chris. Thanks for the details. New construction is a different game for sure in terms of up front capital. Of the $500K that you put up for soft costs, what amount do you typically to try recuperate through the construction loan?
These numbers are spot on
Very Informative Guys. amazing how much is involved with new constuction
Mainly depending on the municipality. They make or break your project sometimes
Do you get the design and consultants involved “before” you make an offer or after you make an offer but before you sign a contract?
After
Awesome info. Thanks Thach and Chris
future goals
Gold. Thanks for sharing your knowledge.
My pleasure!
I appreciate you both giving me insight on a new construction projects. Thank You 🙏
So how much of a construction loan did you need to take out and how much have you spent on payments over the last few years?
You never mention that in any of your videos. 🤔
Yeah. Everybody notices that. At least people who also do this for a living.
He will be 750k-1M in the hole on mortgage payments alone before he sells or rents a single unit multiple years from now. Amd he can only hope that Seattle still isn't a declining market by then like it is now.
So these loans are typically interest only, short term, then paid off within a few months to about 2 years or 3 (from what I’ve seen). And you also only pay on what you’ve borrowed. For example 1M construction loan will take 6 months to build and get leased up. The first month let’s say you’ve drawn 150k, your payment would only be 1500. As the months get longer the payment gets higher, so that’s why you’d likely want to be in the latter parts of refinancing the property, or already have your perm financing in place. The payments do end up getting costly, but that’s the cost of doing business
@jonathanlarios5218 He says he has 10 year fixed rates, if that's true he is paying on the full amount from month one, and they are not interest only.
If it's a "cost of doing business" he should include those costs in his break down, because it adds SIGNIFICANTY to his cost basis, and makes these deals not worth it.
Yeah I can’t attest to his actual numbers, but most multi family/ Commerical loans are around 10 year terms. For example, 1M loan with a conventional lender would be something like 6.5% or 7%, 25 year amortization, 10 year term.
I promise you, these loans are interest only for the life of the term, and you only pay interest on the amount drawn for the construction (unless he included the land in the sale and is paying interest on that portion as well)@@WelcomeIncorporated
Waiting for the next episode 👌🏻
Great info. I would love to become a developer.👍🏽
Thank you so much for this video.
At what point in the process do you determine you actually have a profitable project? For example, it sounds like you bought this land first. What happens if you engage an architect and all you can build is 2 units, or soil conditions/topography are so bad the project is not profitable? Is any of this factored in before land purchase during contingency periods such as consulting with an architect for preliminary plans?
during your due diligence period typically you try to get a few months to make sure and get preliminary plans done etc - you put up like 25k in soft cost before you close - but there is always some level risk
Due to the radical change in market conditions he is already well upside down.
But he has to continue at this point because he is already neck deep in expenses and the construction loan he took out and has likely already been paying on for years.
if you have enough money, you can hold long enough for it to be valuable. So what he does is he is constantly building for the lowest reasonable cost, and will always keep making money off them eventually.
@yourfacelookslikebut ...unless he's over leveraged.
@@WelcomeIncorporated unlikely. He's big enough he can keep doing a refi if needed or HELOC or similar without having to lose properties through bankruptcy.
Thank you for the video, I don't know who needs to hear this, you've got to stop saving money. Invest some part of it, if you really want financial freedom.
Investing is not for everybody, you just need a strong stomach too see your portfolio go down. It might be wiser for a novice to start with copy trading investing, but it is not easy. To invest in growth stocks it is another level.
Facts 👏
I've been solely investing in real estate. But with the recent hyper home pricing i've liquidated a few things and have $45k in cash laying around idle. Would love to get your recommendations, I'm in search of something lucrative in the current crazy markets, i will be glad.
@@waltercamelaWhat if you don't know how to trade any of these?
I mean, I see your point. Some people have the money and are willing to invest. But the problem is where to.
Hey dude, this is 2023. People who aren't even traders make money from the crypto and forex markets.
Hi Thach! am glad to watch your video, i would like to ask, at the time period waiting for permit etc.. how do you pay mortgage in case of investing in Real estate with no money down concept (formular)?
Thank you
Thank you ✔
You Forgot Civil Design consultant,Most of the Project Will definitely need grading and drainage plan, Stormwater management plan , utility sewer and water, Fire dept and Frontage improvement Streetscapes' (optional depends on jurisdiction).
Amazing video I love those real deal videos
*Finally a great video exposing some real hard and sorta bitter facts to save many from unpleasant surprises when they dream to make big money overnight and jump blindly like a small fish into this pond of hungry alligators. Thank you Thach!*
Investor who want to go big don’t know what kind of cash you need to play and the risks behind all this
@@ThachNguyen
Yep, and then they have a competition against alligators in the pond like YOU - who has A LOT of cash money, and A LOT of battle hardened experience, A great Team and lots of resources at hand.
Small fish like me and many others, do not stand a chance here.
Why dont you have an inhouse team. Architect surveyor engineer. Get all that down with different subsidies. Wouldnt this be much much more cost effective paying employees salary rather than per project?
Designer here for MFH. To anyone interested in being a developer, never go cheap on your architect/designers/consultants. Having somebody on your team with a huge vision and creativity will increase your property value when appraisals come around, which ultimately increase your equity so you can take out and roll it over into the next property. 120k sounds about right for your average architect, really really experienced ones can easily charge 10-15% of a project cost
That’s right
Let me help you build your next MFH building, Thach!@@ThachNguyen
Nahh fuck that
Cooool videos
Thach is the GOAT
Thanks 👊🏼😊
This is great
When you buy the land, how much feasibility analysis do you do? How much time do you recommend to do so? And who do you engage with?
From the video it seems as though feasibility is done AFTER purchasing the land but there has to be some consideration during land purchase, correct?
It can depend on the deal of course. Some have more time available and some don't. Ideally on a typical site we try to get 45 days for feasibility and we do most of it ourselves. There are consultants and designers that offer feasibility studies if you need assistance with that.
What does cycles mean?
Nearly 20% as permits!!! Wow.
How do you find an architect / engineer / surveyor?
Google, a real estate agent may know surveyor surveyor may know an engineer, engineer may know an architect. A builder may know all three
Can you do a video of excepted returns and how to value this deal before buying the land/tear down house.
GOOD AFTERNOON EVERYONE
I HAVE A QUESTION
SHOUL I RENT MY 5 PROPERTIES ( MAKING ME $700 EACH EVERY MONTH ) OR SHOULD I SELL AND INVEST AND PAY CASH FOR THE PURCHASES ?? OR HAVE A PASSIVE INCOME OF $3500 EVERY MONTH , HAVING SAID THAT , KEEP IN MIND , I HAVE NO MORTGAGES ON THE 5 PROPERTIES
Do you ever build custom log cabins for people? What's a 2000ftsq cost?
Why everything is so overpriced
Soft cost
First
@Thach Nguyen how can I get some merch/apparel you know dream big t-shirts?
Great video. A video that talks exactly what needed to know
i am a civil engineer/building general contractor and could provide you with design/plans/permits for your projects, kindly contact me