FULL Underwrite on a Multifamily Development | How to Develop 200 Units in 2 Years (PART 3)

I am reverse engineering all the numbers on one of my big apartment complex developments in Arizona. This is the nuts and bolts of how you can develop and a 200+ unit complex and how much profit you will make. Long term wealth is all about passive income from complexes like these, ladies and gentlemen. And it is MUCH easier than it seems, as long as you can break down the numbers like I'll show you in this video.

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Jerome Maldonado is a 25+ year veteran in the real estate investing industry. He specializes in real estate development, and teaches his students how to developing single family homes, multifamily complexes, and entitle land to sell to developers (or develop themselves!). Jerome also owns multiple 7-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.

[jeromemaldonado]

📣HELLO EVERYONE! Jerome Maldonado here, we just wanted to inform you that we are growing a new IG account. The other account (and the biggest channel we had) was hacked and deleted last December 31st. We want to build it from the ground in 90 days, so I'd love to see you and talk to all of you interested in getting started in Real Estate RIGHT THERE!🏘💯

[jeromeandjoyceminor]

Jerome this 3 part series is golden.

I'm in the beginning of analyzing 10 acres zoned for 82 unit new construction. I have talked to the bank for debt and capital equity fund underwriter.
Have the broker researching land development and met the architect who is also on the city zoning board.

I'm going to need more of your expertise and experience because this is beginning to roll.

[zerofactor]

Man. I'm gonna have to watch this video 100 times. The underwriting process for these big development deals is pretty heavy on the fine details, but at the same time I'm starting to understand how you can apply a "stock" formula to each deal that will make it simpler. Right now I just scout deals for established developers but this will help me learn how to do it myself.

[vbhomesoftexas]

Replay. This is Gold. Thanks Jerome. Victor Da Connector (Balderas)

[contenthouse]

Appreciate the vid, you should make a video like this underwriting a new construction home within the 500k-800k range

[andrewpugni]

So the only thing I don't get is how are you getting the 4m for the land ? are you giving the investors a debt or equity stake in the project?

[jnsargent]

Grest teaching! Jani'ce from Indianapolis

[careysamford]

1 problem I'm not understanding is that when you get stabilized and cash out refinance 45m worth of debt. Unless you can access money for under 5% (P&I) or get interest only debt, your debt service is more than your NOI. The banks will required you to have a minimum of 1.2 DSCR correct? I'm still just a poor boy who has to take bank debt at current rates and there is noway that deal cashflows for me.

[addisonwalker]

A bit confused in regards to construction loans. If you have build cost at $35MM, what makes the bank give 90% LTV at "retail" when they initially said 75%-80% LTC? 19:00-20:30 for reference

[sikandarbegg]

Mind blowing Jerome, can we replicate these kind of idea in Canada. I might be sounding dumb but your reply is highly appreciated.

[briansalerno]

Do you raise all the money to run the construction, if yes what percentage do you raise or how much do you allocate to run construction and holding cost?

[vbhomesoftexas]

I watched this one 4x in a row. Victor Da Connector (Balderas)

[AmandipSingh-nfpo]

Hey Jerome I love the knowledge you provide!!! I have two questions or at least one question and another clarification.

1. You said there is complex math or understanding behind calculating of the LTC retail the banks will generically loan up to and that amount is roughly around the 90% LTV. So for this project that's 54mm and the bank would loan between 70-80% of that being around 37mm to 43mm, which would should cover full LTC wholesale which it does in this case. Am I understanding that Correctly? Do you ask your contractors for a wholesale budget and retail budget?

2. Second question is the refi out portion to cash flow 750k per year. Your cap is 5% which is 3mm a year, but if your refi is 75% LTV which is roughly 45mm which would be 270, 000 a month with terms 30 year amortization at 6% which would be 3, 250, 000 how does that work? or do apartment loans differ?

Thanks again for the in-valuable knowledge,
Amandip (AJ) Singh

[bushman]

Hey there! How do you valuate a piece of raw land that has civil engineering approvals for a MF development ??? Thanks !

[keatonenglish]

where can we get the proforma template ?

[victora]

What about minimum DSCR requirement for loan and cash to close to needed for down payment?

[prestonlong]

Sick series. The return on capital invested is insane. Dad got to partner on something similar few years back. You almost mentioned it but i never hear about it on social media and that is the tax credit money if you can qualify for it. Is there anyway i can add value to you? Love to get more involved.

[Finderskeepers.]

If you get an investment loan of $40m (75% of LTV) interest will be $3.15 @7% quoted and on an GROSS income of $3m
Thats before capital reductions on the loan or the deduction of management costs, maintenance or voids from the income. LTV is not the only test banks do, repayment ability is another one which is also stress tested, a standard test being reducing the income by 20% and still be capable of covering interest.

If you get a development loan 80% LTC on a spend of $35m you have to show the bank your 20% in cash of $7m, often it has to go in 1st after which the bank will cover 100% of the spend.

[Flatpockets]

Since you had 19 million in equity does the bank not require you to have a down payment of 15-20% on the 40 million it costs to build? That’s the only part I’m confused about

[efsvpqe]

24:40 - Don't you have to pay extra interest also, if you estimate too much, for covering Yield Maintenance and PPP?