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Become a Developer in 2026: The Complete 7-Step Roadmap — Transcript

by Arthur Ryapolov · 12,425 words · 1,751 segments · language en · Watch on YouTube

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0:00Welcome to the buildup development
0:01master class. If you're an entrepreneur,
0:03an investor, or somebody that wants to
0:06create financial freedom through this
0:08real estate development game. In this
0:10master class, we're going to cover the
0:11entire framework of how to do this start
0:13to finish. We'll cover how to transition
0:16from that full-time job or business and
0:18get into this game while only spending
0:21about three to four hours a week
0:23underwriting, making shirt pencils,
0:24putting the team together, and walking
0:26away with six to seven figures depending
0:29on the level or the stage in development
0:31that you're at. We're going to be
0:32covering the three levels of the real
0:34estate game. We'll also be covering how
0:36much capital you actually need to get
0:37into this game, the complete seven-step
0:39process start to finish, and how real
0:42people are doing this exact game across
0:44the entire nation and executing on
0:46single family homes, duplexes,
0:48forplexes, and infill development as
0:51well. Let's dive in. If you can, if
0:52you're excited, you're ready to learn,
0:54put a seven in the chat. I want to see
0:55lots of seven. I want to see you guys
0:56active. I'm going to always ask you guys
0:58if you learn something, put maybe a
1:00three or whatever it looks like. So,
1:01throw a seven. I'm seeing some sevens.
1:03Really excited. Before we get into it,
1:04maybe this is the first time you've seen
1:06us or you don't know us. We'll give you
1:07a little background on who we are, our
1:09family, and what we've done.
1:10>> Cool. My name is Ruben. Um, I started
1:13out in the real estate game with
1:15$250,000 in debt for my previous
1:17business. I started as an assistant
1:19project manager for a national builder.
1:22And I built my very first home while
1:24working that 9-to-five job. To date,
1:27we've built, I think, over 300 doors.
1:29Um, we just like to be a little bit
1:31conservative. 240 plus doors
1:33>> at least 240 for sure. And my name is
1:35Arthur. I go by Arthur the developer on
1:37Instagram, YouTube, Tik Tok. So if you
1:39want to look us up, look our content up,
1:40just type that in. And I had no
1:42construction background. I actually came
1:44from the auto industry. I would fix and
1:46flip cars and I did car and auto sales
1:48or worked for a dealership. And uh I
1:50built six homes on the side leveraging a
1:53team. So I'm not a contractor. I'm not a
1:55licensed agent. I just leveraged the
1:57right team. Worked a full-time job. Got
1:59six homes built. realized I can make
2:01more money on these homes than I can a
2:02full-time job or doing auto sales. And
2:04then I quit. And now today, I've managed
2:06over a,000 lots to date. The biggest
2:08project alone was 514 doors or units.
2:12And uh I've built over a 100 doors under
2:14my name under my own loans without that
2:17GC license.
2:19Let's see here. And a little bit on our
2:21portfolio. We've done about $84 million
2:23in real estate. And uh I'm going to dump
2:25it down to these seven steps so you guys
2:27can fully understand it. It's going to
2:28be the foundational piece of how you
2:30operate in this real estate game. And uh
2:32this is just over the last six years. Uh
2:34250 doors, 17 different states, thousand
2:36lots developed to date. So, a little bit
2:38on my story. I started in the auto
2:40industry. Again, had no background.
2:42Built that first home without being that
2:44agent, without being a general
2:46contractor. And that first deal, I sold
2:48all of my cars that I had and I I went
2:50and transitioned to a different job. And
2:51I made a profit of $47,000.
2:54This was putting around 50k down. So
2:56imagine I put 50,000 down and doubled my
2:59profit. Well, in the car game, usually
3:01I'm buying a car for from anywhere from
3:03like 7 to 12 grand and I make about 1 to
3:063k of profit. So I never leverage loans.
3:08I didn't understand what that meant. I
3:10always thought loans were risky. And so
3:11I would put 10 grand in, make 2 grand. I
3:13made 20% of my money. Awesome. And then
3:16I realized there's this leveraging where
3:18you can put a down payment. You could
3:20put 10% down and then you can double
3:22your money in this game. And I'm
3:23actually going to show you the personal
3:24house game where it's not just double or
3:26triple, you can actually do four or five
3:28times your money on it. So that's a
3:30little bit of my story. And uh now we're
3:32building over $340 with our buildup
3:34community. So first home 47,000. Second
3:37home was that personal house game and I
3:39put 56K down and made $335,000 of
3:42tax-free profit. I'll get into it a
3:44little bit later. And then my current
3:46home, I put 62K down and I'm at roughly
3:49$280,000 of equity. That's based on the
3:51actual appraised value. If you talk to
3:53Reuben, he's going to say, "My house is
3:55worth way more than what the bank says,
3:57which they said 900,000. He thinks it's
3:59worth 1.2."
4:00>> Sometimes the appraisers that the bank
4:02hires are a little bit more
4:03conservative.
4:04>> Yeah. And so, I'm not going to uh I'm
4:06not going to say that. We'll we'll just
4:07keep it simple.
4:08>> A little bit about my story. So, I told
4:10you guys I started in $250,000 in debt.
4:13Guys, my story is not that glorious. Um
4:16just started a business. I I failed it
4:19completely. I started in the
4:21construction industry by picking up
4:22trash, uh, punch lists and doing all of
4:25that like hard work. Um, as I was
4:28watching people, as I was watching the
4:31developer, uh, that I was working for
4:33build out 18 houses, I got to experience
4:37I got to experience uh, one house in
4:40foundation and the other house in final
4:42punch lists. And so I learned was I
4:45learned really really quickly on how to
4:47get into the construction game uh fast.
4:50And that's when I decided to become a GC
4:53or a real estate developer. And that's
4:56kind of where my aha moment was. And I
4:59realized I was like, "Wow, I could do
5:01this." And it was because I had the
5:03opportunity to see everything in front
5:04of me from the very beginning to the
5:06very end.
5:08Awesome. A little bit more. Let's see.
5:10Oh, frozen. There you go. Great. Keep
5:12going. So, here's my journey. Uh, I uh I
5:16built my very first house. I had none of
5:17my own capital. I had absolutely trash
5:20of a credit score and I made $53,000 in
5:23profit on that very, very first home
5:25using other people's money and using a
5:28hard money assetbased loan. The second
5:31home, it was my personal home. I sold it
5:33for a tax-free profit of $248,000 of
5:37profit. And then the third home, I
5:39wanted to stay in it. So instead of
5:41selling it, I pulled a heliloc, which is
5:43a home equity line of credit. It's
5:46essentially a big credit card against
5:48your home. And I use that even to this
5:50day for projects and to flip them
5:53continually uh and and I'm actually
5:56building my uh next home right now. Uh
5:58maybe we'll share about it a little bit
5:59later. Cool. So the leverage ecosystem.
6:02So what I did not understand when I was
6:04in the car space in the auto industry, I
6:07now understand through this real estate
6:08game. You are that center, that
6:10developer, the deal finder, the
6:12underwriter. Your main focus is
6:14understanding deals, understanding how
6:16to make sure they pencil. And that is
6:18the key factor. Then you have these
6:20other branches. You have the lender.
6:21They're going to give you 80 to 90% of
6:23that total project cost. And this is not
6:25even including the personal house game
6:27where it's 95. Then you have the
6:29drafter. In other words, architect. Why
6:31do we say drafter, not architect?
6:32Because an architect usually charges
6:34double what a drafter charges. If you
6:37don't know, a drafter is allowed to do
6:39up to a 4-unit project because you don't
6:41actually have to be a licensed
6:42architect. Most of the people I work
6:44with are drafters. They understand this
6:46game. They understand how homes work and
6:48they design it per the building code.
6:50So, they actually can do this for about
6:52half the cost. I'm paying about a dollar
6:54per square foot for my plans. And that's
6:56the layout, the city and the city
6:57permitting process, all that. Then you
6:59have the builder. You don't actually
7:00have to be a builder. I've never built
7:02my own home. I always hire a builder and
7:04I pay them a cost plus contract. We'll
7:06get into that in the seven steps. Then
7:08you have that agent. It could be agent
7:10or deal finder or or I'm sorry,
7:11wholesaler. Agent, wholesaler. One, the
7:13agent can bring you deals off market and
7:16then you can offer a list back, which
7:17means you're offering to have them list
7:19it for you in exchange for bringing you
7:21the deals before they go on the market.
7:22That's one of my favorite strategies.
7:24And a wholesaler can bring offmarket
7:26deals as well. So really, every team
7:28member is paid by the deal. You're not
7:30dishing out 10, 20, 30,000. Everybody
7:33only gets paid as the project becomes
7:36successful. So today we want to cover
7:39these four different stages. If you're
7:42brand new to the game, you're an agent,
7:44you're a wholesaler, uh maybe you have a
7:47W2, you're a nineto-ive employee, or
7:49maybe a just a single owner uh for a for
7:52a business, maybe a subcontracting
7:54company. Um uh go ahead and put put zero
7:58in the chat. We just want to see who's
7:59here today. Um go ahead, Dealfinder. So,
8:02uh, number one, dealfinder. Dealfinder
8:04is somebody that they're going to be
8:06investing anywhere from 0 to $5,000. A
8:09dealfinder is like a wholesaler. It
8:11could be a wholesaler or you could
8:12specialize in in finding offmarket deals
8:14for builders and developers like
8:16ourselves. And what you're looking at is
8:18typically you're at $5,000 to $30,000 of
8:21profit. And that takes anywhere from 2
8:23weeks to 60 days. Why is it 60 days?
8:26Because sometimes you have a retail
8:27buyer, they have to go through the loan
8:28process, get it approved, and then they
8:30finally close. This person here is the
8:32middleman. So in these three stages of
8:34success, what I'm explaining to is if I
8:36was to restart, how would I go through
8:38these stages? One, I'd master the deal
8:40finding. Then two, I'd master how to
8:42hire a builder and build out the team.
8:44Then three, I'd become that developer,
8:46which is kind of that main place where
8:48you want to be where you're leveraging
8:50the entire team. You're scaling and
8:51you're doing larger projects. So that's
8:53dealinder. The first one, I call it the
8:55middleman. You can stack some cash
8:57really quickly without having to have
8:58too much capital. Then two, it's the
9:00builder stage. This person has anywhere
9:02from 50 to $250,000 of profit. And the
9:05timeline is 6 to 12 months. You think,
9:07well, why why such a big gap? The actual
9:09build process for a house. We did our
9:11furrest project. It took 120 days to
9:13build a duplex start to finish. It's
9:15actually the permitting timeline. So,
9:17you can build a home in 4 to 6 months,
9:19but the permitting could be in St. John,
9:21Indiana, 1 day, or in Portland, Oregon,
9:246 months. So, I keep it at 6 to 12
9:26months. And typically, you're putting
9:2730,000 to 90,000 down for one project.
9:3030,000 looks like it's a small number.
9:32That's the personal house game, 5% down.
9:34And then 90,000 is actually a duplex
9:36that I built and sold. So, the duplex
9:3890K, I made about 238,000 on that one.
9:41So, as you can see those numbers, and
9:43this one is truly the adult babysitter.
9:45Reuben, if you want to chime in on what
9:47that means, Reuben's a general
9:48contractor. He knows the game of adult
9:50babysitting.
9:51>> Yeah. So, me as a GC, uh I am a licensed
9:56builder uh in the state of Washington.
9:58Um if you wanted to do stage two
10:00yourself, you could hire a builder and
10:02simply pay a 10% cost plus fee or you
10:06could become an actual builder general
10:07contractor yourself like I do. And this
10:09is my income. This is my dayto-day. This
10:12is what I do. I build homes either for
10:14investors or I build homes for myself
10:17and post them up for sale. Uh the stage
10:20two out of this entire uh process is is
10:23very profitable. It's a really great way
10:25to make income as well as investing in
10:27real estate and becoming a developer
10:29eventually. Awesome. And then stage
10:31number three is going to be the
10:33development stage. This typically takes
10:36uh this typically is about a million
10:38dollars plus of profit. It's because
10:40you're baking in stage 1, two, and
10:42three. So you're getting the advantage
10:43of all three. And usually this takes
10:45anywhere from 18 to 36 months. Why?
10:48because it's a lot of paperwork, it's a
10:49lot of entitlements. What you're
10:51actually doing is you're you're taking
10:52this 5 acre 10 acre 30 acre parcel and
10:55you're creating an entire new
10:57subdivision. So, if you're ever driving
10:58down somewhere and you see this huge
11:00subdivision of 1 2 300 homes putting uh
11:03getting built out, track homes, usually
11:05there was a developer who developed it
11:07and then they sold it to a national
11:08builder. If you can play the game of
11:10developing your own property and
11:12building it out yourself, you're
11:13capturing a lot more profit. The cash
11:15you need is 250 at least or more. Why?
11:18Because you're spending the money on the
11:19entitlements. And then you have multiple
11:21exit strategies. One, you can sell it
11:23permit ready and then somebody else will
11:25come in and actually develop the
11:26infrastructure, the roads, and
11:28everything else. Two, you could build
11:30out the actual subdivision yourself and
11:32sell the lots to another builder. Or
11:34three, you can develop get the lots
11:36ready and vertically build out the
11:38actual construction piece of it and sell
11:40them, rent them, whatever strategy you
11:42want to do. But this here, I call it the
11:44land artist because you have so much
11:46advantage. There are so many different
11:47things you can do in this stage three
11:49development and it's the most lucrative
11:51and most profitable.
11:53If you are a two deal finder, I'd love
11:56for you to post in the chat if you are a
11:58two. I'd like to see all the different
12:00>> deal. Let's do all of them. So, if
12:02you're a zero, you're not in this game.
12:03Maybe you're agent wholesaler, but you
12:04haven't closed a deal. Put a zero. If
12:06you're a one, you find deals. You You
12:08get them done. whether you're an agent
12:10or a wholesaler, you know how to find
12:12these deals yourself, put a one. Put a
12:13two if you're a general contractor, a
12:15fix and flipper, or you hire a builder
12:17and build out specs. And then throw a
12:18three in the chat if you're somebody
12:20that knows the real estate development
12:21game. You develop your own land and you
12:23go through the entire process. Cool,
12:25guys. I see a lot of zeros, a lot of
12:27ones. Uh the twos and threes are way
12:28more rare. That's perfectly normal.
12:30That's that's part of this process. I
12:32love that you guys can see a ton of it
12:33in the chat. Wonderful. So, a lot of
12:37times the question I get probably second
12:40to how much money do I need to get in
12:42this game is how do I transition into
12:44development? Well, number one, don't
12:47quit your job cold turkey. Don't quit
12:49your business cold turkey. You want to
12:51build the team first. You want to put
12:53together a lender that can fund your
12:55deals, a builder that can build out your
12:57projects if you if you want to choose
12:59that model. And then usually you want a
13:01good real estate agent that is that is
13:04specific to the new construction space
13:06and is experienced. A lot of times this
13:08looks like coffee meetings, uh, real
13:10estate networking events. You can spend
13:13as little as 1 hour a week. Uh, we we
13:16recommend 5 to 10 hours a week. And
13:18really, this is just building your own
13:20business. This is the core concept.
13:23building your teammates, getting
13:24referrals, and oftentimes, this is
13:26what's going to be set you up to be the
13:29most successful in the game. Phase two
13:31is going to be Arthur. That's market
13:33research. He is an absolute wizard at
13:35it, but it's fairly simple. Yeah. So,
13:38with phase two, you want to start
13:39understanding the market. You want to
13:41start underwriting deals, even if you're
13:42not buying them, so that when that right
13:44deal comes around, the way I love to say
13:46is like if you're somebody and you're in
13:48the market for whatever you're looking
13:49for, whether it's a car, a truck, or
13:51buying a piece of property, if you look
13:53at enough deals, when the right one
13:55comes, you're like, "Boom, I know that's
13:56the one." You check off all the
13:57different boxes. You make sure it has
13:59the right return on investment. We'll
14:00cover all that later on in the slides.
14:02But you understand what's the right
14:04deal? How do I make those offers? And
14:06then when the right opportunity comes,
14:07you jump to phase three, which is which
14:09is execution. And that's month roughly 3
14:11to 3 3 through 12. And now you do your
14:14actual first deal. You're submitting
14:15those offers. Your team actually does
14:17the heavy lifting. That leverage system
14:19that I talked about. You got the agent,
14:21you got the builder, you have the
14:22lender, and then you as the developer
14:24underwriter. You're executing on that
14:25project. Then you jump to stage number
14:27four or phase number four. This is where
14:30I always push our students and buildup
14:32community to be. This is where you start
14:34to scale. You've tried it. You've tasted
14:36it. you had that aha moment and you're
14:38like, "Okay, I like this type of project
14:40more or I like this type of project
14:41more." And you start to do three, four,
14:43five, I did six builds on the side and
14:45then I was like, "Hey, you know what?" I
14:46told the the company I was working for,
14:48I said, "Look guys, this is not a good
14:49fit for me. I'm going to have to
14:50transition out." And so I transition out
14:52because I realized this game now that I
14:54finally scaled to that phase 4, I quit
14:57my job. So anyone quitting their job at
14:58phase one or two, that's too premature.
15:00You want to get to that right one, do at
15:02least one or two deals and then boom,
15:04from there you're pushing and you're
15:05scaling. Real quick, if this is
15:07resonating and you're ready to join and
15:09work alongside with me with my personal
15:11number and weekly Zoom calls, click that
15:13link below, fill out the application,
15:15you'll be part of that buildup
15:16challenge. A little bit about Buildup
15:19Community. So, we've had Buildup
15:21Community for almost almost two years
15:23now. And uh these are some of the
15:26different events that we've been at that
15:27we've spoke at. We do uh live buildup
15:30meetups. So we'll go to student sites. A
15:32few of those photos on there, one was in
15:34Asheville. We did one in Orlando. Um
15:37we're planning to go to Texas here
15:39shortly. Idaho. Um, so these are the
15:41meetups that we do with our students
15:43where we teach, we show the project, we
15:45go over numbers, we break down deals,
15:48and what buildup really is is a
15:51collective place for agents, developers,
15:54wholesalers, loan officers, basically
15:57your team that you need to be able to
15:59come together and build out your uh,
16:01real estate development business. We've
16:03had multiple students partner with each
16:05other. Some bring the capital, others
16:07bring the deals, and we put things
16:09together, which has been really, really
16:11great. And you'll see these people
16:12talking inside of the buildup community,
16:14which is really cool. Awesome. Before we
16:16jump into the sevenstep process, one
16:18guys, remember the people executing on
16:21these projects really took the seven
16:23steps and made it their foundation
16:25piece. Like, this is critical to this
16:27game. I follow the sevenstep process for
16:29every single deal I do. Even today, any
16:32deal I pick up, I go through the entire
16:33process, make sure I check everything
16:35off, and then boom, if it all does, I
16:37pull the trigger. So, before we get into
16:38the seven steps, I want to share a
16:39couple of these people here. I've got
16:41Avery here. He's doing a duplex, and
16:43he's going to have over $250,000 of
16:46profit in uh where is it? Uh Fort
16:49Lauderdale, Florida. Yeah, Fort
16:50Lauderdale. So, Fort Lauderdale,
16:51Florida. I've got Kado. She's in
16:54Portland, Oregon. She's a real estate
16:55agent. She reached out, said, "I want to
16:57get in this game. I don't want to just
16:58be an agent." Long story short, she
17:00picked up her first forplex using other
17:02people's money, not her own capital. And
17:05now she has three projects, a total of
17:0711 doors. And she actually was featured
17:09in the business journal of Portland.
17:10That was really cool. And then I've got
17:11Luke. He's a young hustler. I'm going to
17:13share a little bit more about him. He
17:15found this Buildup community, became
17:17part of it, and brought other people
17:18from Buildup together, and now he's
17:20doing six doors for over $400,000 of
17:23profit because he realized the value in
17:25this. So Avery here, month in, $250,000
17:28of profit on his first uh duplex. Then
17:30you've got Kado, as I mentioned, and a
17:32Miko partner.
17:33>> Something quick to mention about Avery,
17:35guys, the
17:36>> Reuben really likes Avery.
17:37>> I love Avery because uh he really dives
17:40into the details and we helped him push
17:42up his profit on his single deal because
17:45we found one simple thing that
17:48absolutely set apart the comps and there
17:50was a big difference. Believe it or not,
17:52it was a pool. if he didn't add a pool,
17:54he probably cut his profit in half. But
17:56for some reason,
17:57>> 100 to 120.
17:58>> For some reason, when you add a pool in
18:00that neighborhood, the profit doubles.
18:02And so, it really matters when you look
18:04at the details and when you're
18:06underwriting. And I just want to say
18:08like congrats to Avery for making those
18:10kind of detailed uh decisions during the
18:14planning process. It matters a lot.
18:16>> Yeah. And then Kado Mika again from from
18:18Portland, Oregon. Zero experience. They
18:19raise capital for their first deal.
18:21They're hiring a GC at 10% and their
18:23first forplex is around $380,000 of
18:26profit and on their 11 doors they're
18:28going to collect an extra $45,000 in
18:30commission because their active income
18:32is being a real estate agent or a
18:34broker. Uh that's one of the the coolest
18:35things there. And this group chat that
18:37you see with Ko Mika, we have these
18:40group chats with our uh uh buildup
18:42students that are are building houses
18:44and we'll share about that a little bit
18:46at the end. And then we've got Luke, as
18:48I mentioned, uh he's again project
18:50manager background. He's doing six
18:52projects with the Buildup community,
18:53none of his own money. He's splitting
18:55all the profits, and he's been in this
18:57game for less than 12 months, and he's
18:5923 years old. So, been really cool just
19:01to see what he's doing and how he's
19:02doing it. 19 doors just from those three
19:04students. And then another 252 doors
19:07from our buildup community, a total of
19:10271 doors, not including our 113 that we
19:14have in the pipeline. Cool. Let's get
19:15into the meat and the bones. Ruben, if
19:17you want to jump on this, we're going to
19:18share some rules. Before we jump into
19:20the seven steps of this game,
19:22understanding it, and then breaking down
19:24those seven steps. So, before you ever
19:27ever get into a deal, you have to think
19:30about your profit first. So, your
19:33ultimate goal with underwriting any
19:35single deal, you have to get a minimum
19:3925% ROI. This is return on investment.
19:44And this formula is very very simple.
19:47Your total cost divided by your total
19:50sale. If you can get to a minimum 25%
19:53return, then you can continue to
19:55actually dig into the details of the
19:57deal. This is really important. This is
19:59an an incredibly important precedent to
20:02set because I don't want you spending
20:04time underwriting tons of deals if
20:06they're 10% ROI. Market shifts just a
20:09little bit, this deal is useless and now
20:11you worked for free. And so this is
20:13really important to set before we go
20:15into anything else. Also guys, if you
20:17guys can't see the screen, maybe it's
20:18too small, you can click click the three
20:20dots above Ruben and I and click pin the
20:23screen. It's going to make it full
20:24screen. I know some of these numbers are
20:26small. You can go ahead pin it, full
20:27screen it, and then you can see us
20:29breaking these down. So this project
20:30right here, what are we looking at? It's
20:32a 2200 ft home. 4 bed, 2 and a half
20:35bath, two-car garage roughly. The build
20:38cost on this is about 378,000. I get
20:41this argument all the time. There's no
20:43way you're building for that. There's no
20:44way you're building for that. All of our
20:45students across the nation are from $100
20:48to $170 per square foot. Hard and soft
20:52cost. Soft costs are permits, plans,
20:55architecture, fees. And then hard costs
20:57are the actual build costs. So,
20:59excavation, foundation, lumber, all of
21:01those things. 100 to $175 per square
21:05foot roughly. To give you some quick
21:07ones, in Washington we're 140 a square
21:09foot. In Oregon, we're 160 a square
21:11foot. In California, we're 170 175 a
21:14square foot. If homes are million-doll
21:16homes, they're no longer builder spec
21:18grade. They're higherend homes. So, what
21:20happens? Price goes up. Construction
21:22goes up with it. I'm talking builder
21:25grade spec homes. In Texas, my student
21:27Luke is building for a 100 bucks a
21:29square foot. In Houston, we're building
21:30120 a square foot. In Florida, 1201 130
21:33a square foot. Georgia, 135 a square
21:35foot. Chicago, 160 a square foot. again
21:38across the entire nation. It's around
21:41that price point. I've seen it. Our
21:43students have seen it. We've been doing
21:44this game long enough to know that the
21:46target sale price for this one
21:47specifically is 750,000.
21:50Land price, the rule is maximum 20 to
21:5325% is what you should roughly pay for
21:55the land based on the value. So take
21:57750, multiply it by 25%, you'll get that
22:00number. Then you have the construction
22:02plus the builder fee, 10 to 12% of the
22:05cost. So if the builder fee if the build
22:07cost is 350 you add another 25ish,000
22:10maybe 30,000.
22:11>> So so put in the comments ROI must be
22:1425%. Okay correct
22:16>> the next rule is going to be what can I
22:19pay for land? I just want to
22:20re-emphasize this.
22:21>> So I just said the land I'm jumping to
22:22ROI. So land 25% or less construction
22:26cost your profit after paying the agent
22:28and title fees will be roughly 147 for a
22:32deal like this. The number that
22:34absolutely matters the most that you
22:36should never take lower is that big
22:39yellow circle ROI return on investment.
22:43My rule is minimum 20 to 25%. 25% for
22:48investments, 20% for the personal house
22:50game because you're going to live in it.
22:52You get tax benefits. There's much
22:53there's so many other benefits and the
22:55financing is cheaper. So 20%'s okay. But
22:58if you stick to the rule 25% ROI on my
23:01project and you always move forward with
23:03that, you will always have a profitable
23:06deal. If market's correct, if maybe it
23:08doesn't go as planned, you have cushion.
23:10Those people that say, "Oh, I'm going to
23:12put 10%. I mean, I'm going to do 10% ROI
23:14because the down payment's so small.
23:16This is actually a good deal." Well, if
23:17the market corrects 15% and you have a
23:1910% margin, you're negative. And so,
23:21I've learned that rule over the last
23:23$250. You have to be strict when it
23:26comes to ROI. The land price is not as
23:29strict. In Missouri, you're paying 10%
23:31of the value because land is so cheap.
23:33Prices are lower, but the margin never
23:36changes. You always have the same
23:38margin. I don't care if it's a custom
23:39house or a nicer higherend $ 1.5 million
23:42spec or if it's a duplex or a single
23:44family home. You've got to stick to the
23:46ROI. The So, I just want to
23:49differentiate Arthur because you are
23:50blending them together. So ROI versus
23:53max land land cost formula, those are
23:55both roughly 25%. In some cheaper areas
23:58of the United States of America, we
24:00sometimes pay 15% of the of the final
24:03resale value for land, but at the end of
24:05the day, the ROI should still stay the
24:07same.
24:08>> ROI has to be 25%. That's the main rule.
24:10So just
24:11>> the max land cost like to give you a
24:13simple formula if you know houses you're
24:15selling for a million dollar that means
24:17you know land shouldn't be more than
24:19250k roughly. If you have a Redf fin or
24:22Zillow search for land and it goes into
24:24your email that's what I like to do and
24:26you get a land a property for sale that
24:28says single family home asking price
24:30500,000. Off the bat I already know it's
24:33too high. I don't even have to spend my
24:34time on it because it's 500,000 for a
24:37single family home lot when it should be
24:39250. That's what I mean by indication.
24:41But when I'm actually underwriting the
24:42deal and the number, the ROI is the
24:44number that I say yes or no to the deal.
24:46It's not the max land cost. Um, all
24:49right. So, down payment on this one
24:50would be 76,000.
24:52You would turn it into 150, almost
24:54doubling your money. If you were to
24:56build a personal house or primary down,
24:58yeah, if you were to build a personal
25:00house, you'd put roughly 40K down. And
25:02we'll break that down in a little bit.
25:03All right. Cash on cash. Uh, if you guys
25:05can put in the chat, put yes in the chat
25:07if you know what cash on cash is. put no
25:09in the chat if you don't know what cash
25:10on cash is. And Ruben, if you want to
25:12start breaking that down, I I see a
25:14little bit of both answers, so we'll
25:15break this down for you.
25:16>> Yeah. So, cash on cash is very similar
25:19to ROI, but it's a little bit different.
25:23ROI is total cost divided by total sale.
25:28Cash on cash is very is is just slightly
25:30different than that. So, if you have
25:33$750,000
25:34cash and you can put that out and build
25:37a house, then you can make a 25% return
25:39on your money. But who has $750,000 cash
25:43to put out? Very few people. So, we have
25:46a spin on ROI, which is cash on cash.
25:50And that means you're getting a loan,
25:52you're getting a leverage for this for
25:54whatever's uh of this uh
25:57>> 90%
25:57>> 90% 95%. So, in this case, it's
26:00$565,000.
26:02And the only money that is actually
26:05leaving your bank account is the down
26:08payment of $76,350.
26:12So, our true ROI
26:15is this number 76 leaving our bank
26:18account. And then what comes back when
26:21we finish and sell the project for a
26:22profit? 147. So, what is our true return
26:26on our money? our money grows at a rate
26:29of 193%.
26:32Now, please don't be fooled.
26:35Never focus on cash on cash before
26:38focusing on on ROI because your ROI can
26:41be 5%. But your cash on cash can still
26:44be 50. Who wants to grow their money at
26:4750% rate? I do at a risk of 5% ROI. I
26:51don't. You see the difference? You want
26:53to make sure that the project itself is
26:55healthy first. Then secondary, you
26:58leverage and you get a loan and then
27:00your cash on cash can be these uh really
27:03good numbers. Great. So the money coming
27:05out of the bank account and then the
27:07money coming back into the bank account
27:09is roughly growing at a 200% return. Our
27:12average project is about 150 to 250% on
27:15the down payment. Our average ROI is
27:17around 23 to 26%. So you guys can see
27:20those. Uh, and then as a comparison, the
27:22S&P 500, let's say 10% a year, average.
27:25The rental, if you're holding rental
27:26properties, 8 to 15% a year. And then
27:29development, just looking at ROI, is
27:31about 20 to 25%. That's why we love this
27:34real estate development game because it
27:36has a better return on investment
27:39generally. But then when you start
27:41adding in that leverage of cash on cash,
27:44it becomes extremely attractive as long
27:46as you keep that 20 to 25% rule. All
27:49right, the personal house game. Why we
27:51like this so much? If there's a first
27:53deal I would recommend to anybody, it's
27:55build a personal house. 5% down plus the
27:58closing cost. So you're talking 5% down
28:00or maybe 2 to 3% 8% of a total project.
28:03So if we're taking that same deal, we'll
28:05break it down. You're going to see the
28:06down payment almost gets cut in half.
28:08You can have up to 500,000 of tax-free
28:11profit as long as you live in the home
28:14for 2 years and you file jointly with
28:16your spouse. If you don't, if you're not
28:18married, you can still make 250,000 as a
28:21single person. So, imagine you build
28:22this house, you put half the down
28:24payment, you live in it for two years,
28:25you make 250,000, no taxes. You don't
28:28have to roll it over into the next deal.
28:30You literally get that money in your
28:31bank account and it's exempt from taxes.
28:34Go ahead, research topic 701 of the IRS
28:36code. You'll see it there. And I think
28:38section 121 is another one that talks
28:40about it. It's a beautiful advantage and
28:42I hope this this tax code lasts for a
28:44long time, but it's one of the best ways
28:47to grow wealth and to not have to do a
28:491031 and keeps, you know, exchanging
28:51your property for another for another.
28:53That game works well, too. But the
28:54personal house game is literally
28:56tax-free. And then cash on cash, just as
28:59we talked about, two to three times the
29:00return. It's still the same profit. It's
29:03just half the down payment. So, the cash
29:04on cash is growing even faster.
29:06>> Are you guys getting value here? Is this
29:08valuable to you? Drop in the chat.
29:09>> Yes. Throw a seven in the chat if you're
29:11loving it so far, if you've learned
29:12something new and uh you're enjoying it.
29:14So, why does cash on cash increase with
29:17the personal home strategy? It's very
29:19simple because you're getting higher
29:20leverage. So, the higher the leverage,
29:23which means the smaller the down
29:24payment, which means the return gets
29:28much higher. If the down payment is
29:29smaller, but the profit is the same, the
29:31the the calculation increases
29:34substantially. We don't recommend going
29:37out and getting a ton of leverage, but
29:39if the deal is solid, it's your personal
29:41house, you're going to be paying to live
29:43somewhere anyway, then the risk is
29:45minimal. You can have one personal house
29:48every 2 years. You can switch it. If you
29:50>> talk about our student that built
29:52personal houses and now he's he's on the
29:54last one and paying down has zero debt.
29:56>> Yeah. So, uh one of one of uh the guys I
29:58jumped on a Zoom call with, I think his
30:00name was Stan. Yeah. He started at a
30:02young age. He literally just bought a
30:04home on the market, remodeled it, uh
30:06added value to to the home, sold it for
30:09a taxfree profit, moved into his next
30:11one, and then his next one. And and he's
30:13uh just
30:13>> he's been around like 2 to300k a house.
30:15>> Yeah. And now he's building Oh, no. He
30:17built his house. He moved into it. It
30:18has a ADU at the house and he has a $1.2
30:23million house and his mortgage balance
30:25is 200,000 because all he was doing was
30:28moving over the tax-free profit on the
30:30home. And within a decade, he has over a
30:34million dollars of equity at age 30.
30:36That's
30:36>> did not pay a single dollar in tax.
30:38>> Single dollar in tax. Didn't have to pay
30:40it.
30:40>> And started with 50K and that's all he
30:42needed.
30:42>> Yep. No less. He started with He started
30:44with a small small house. Started with
30:46like something like $30,000. Turned it
30:48into a million dollars over a decade
30:51completely taxfree and absolutely
30:54incredible. And you're allowed to do a
30:56do a 5% down loan, I believe, every
30:59year. But, uh, he was doing it every 2
31:02years. Um, right now I'm living in my
31:04current house. I'm on my third year. I'm
31:06going to be moving into my next one here
31:07shortly.
31:08>> Uh, lost sound.
31:09>> Okay.
31:09>> I think it's maybe just All right. So,
31:11cash on cash personal house game.
31:13$565,000
31:16is the total cost of land plus build
31:18just like the same deal before. And then
31:20you're putting $39,000 down instead of
31:2276. So, 5% down plus 2 and a half%
31:25closing. A lot of you might ask, where
31:27do you get this loan? How does it What
31:28is it? It's called a primary residence
31:31construction to perm loan. Primary
31:34residence construction to perm loan.
31:35That's the product. It's a nationwide
31:37product. So, it's not one specific
31:38state. It's not one specific city. Cool.
31:41The net profit is still the 147, the
31:43same as before. The difference now is
31:46368%
31:48return tax-free. So, your 40,000 is now
31:52turning 368,000 because you're putting
31:55way less down. Again, you got to live
31:56for 2 years. 500,000 together and
31:59250,000 if you're a single person. This
32:03right here is the leverage of the game.
32:05It's absolutely phenomenal. Cool. Next
32:07slide. Go ahead, Ruben. So, for the
32:10sevenstep developer road map, this is
32:11what we're going to cover right now in
32:13detail. Number one is going to be
32:15finding the land. Number two is going to
32:17be the numbers and making sure the deal
32:19pencils. Number three is the building
32:21plans that you choose. Number four is
32:24getting those building plans permitted
32:26in your local jurisdiction. Number five
32:28is financing. Making sure that you can
32:31get the loan in place to build it.
32:33Number six is the construction process.
32:35So many people get overwhelmed. They're
32:37like, "I don't know how to build a
32:37house. I don't know how to do framing. I
32:39don't know how to do all this stuff."
32:40But guys, there's five other steps
32:42before construction. Construction is
32:44actually the easy part, especially if
32:46you have no experience and you hire a
32:47builder. And then number seven is the
32:50sale or moving into the home. the final
32:52punch list and things like that.
32:54>> And guys, real quick, so again, primary
32:56residence loan, we're going to cover it
32:58in step number five. Remember, it's a
33:00primary residence construction to perm
33:01loan. And please, as I said, please be
33:06focused. These seven steps is what we
33:08use. It's what our students have used to
33:10do the 271 doors. It's a key factor.
33:14We're going to run through all these
33:15seven steps. We're going to make sure
33:16that you guys have everything that you
33:18need to be successful. Let's jump into
33:19it. So, step number one. Step number
33:21one, obviously you got to identify the
33:23lot. You got to know what you're looking
33:24at. So the first step, the first step is
33:27step number one, and it's going to be on
33:28market. There's on market and there's
33:30offmarket. 70 to 80% of what we do is
33:34offmarket. There's only 20% that's on
33:36the MLS. So when somebody says, "Man,
33:38there's not enough land. I I don't find
33:40any deals. I nothing on the MLS. Is
33:42there anything that's a good deal?" It
33:44flies off the shelf. Keep in mind, less
33:46than 2% of America has been developed.
33:49Meaning there's 98% of land. The problem
33:52isn't the land. There's a surplus of
33:54land. The problem is understanding how
33:56to find it offmarket. So on market, to
33:59give you an example, what does that feel
34:00like? I'm in the I was in the auto
34:02industry. I can relate to it. So if I
34:04want to buy a truck, let's say a Ford
34:05F-150, and I go to Facebook marketplace,
34:07and they're all selling for $30,000. I'm
34:09looking and looking looking and 30,000
34:11is what they're worth. And then one pops
34:13up for 25,000.
34:15I message them, hey, can I come look at
34:17it? Can I I want to come buy it? and I
34:19finally get his number. I call him,
34:20"Hey, I'd love to come take a look at
34:21this F150. It looks like a pretty decent
34:24price." And he goes, "Haha, nice try.
34:26You're the eighth person in line."
34:27That's how the MLS is. When it's a good
34:30deal, it's like a bunch of sharks
34:32jumping on it. The offmarket side of
34:34things, I love this game. It's just me
34:36and a seller. We're negotiating. I don't
34:38have to close in two weeks all cash.
34:40I've done one-year contracts. I've done
34:42six-month contracts. This offmarket game
34:45is so powerful. It's the one big reason
34:50why we scale to $250 doors. I have a
34:52development deal under contract on a
34:54three-year contract. You might say,
34:55"Well, what if they go and sell it to
34:57someone else?" They can't. I recorded a
34:59memorandum of contract on the title.
35:01They cannot sell it without me being
35:03notified and me signing off on it. So,
35:05this offmarket game is absolutely
35:07powerful, understanding it. And I would
35:10say the next key is underwriting it and
35:12just going through like 20 to 50
35:14offmarket uh analysis like underwrite
35:16the deal, make sure it makes sense, make
35:17sure it it pencils so that you
35:19understand and you're familiar with it
35:20and then you can understand, oh that's a
35:22good deal and that's not a good deal. So
35:23the money is in the buy. You make profit
35:26on the land. Some two builders next
35:28door, one paid 200, one paid 400 for the
35:30land, but they built for the same price.
35:32So the land is where the profit is made.
35:34Any thoughts on this before we jump to
35:36step two?
35:36>> No, this is good. All right, we're hit
35:38it. So for step number two, running the
35:41numbers, uh more so many people make it
35:43more complicated than it needs to be.
35:45Very very simple. The formula is final
35:48sales price minus your total cost, which
35:52is the construction plus the land equals
35:55your gross profit. If you memorize that
35:58formula, underwriting gets very, very
36:00easy. What I want you to do when
36:03underwriting any deal on on that you're
36:06looking at is I want you to reverse
36:08engineer. What does that look like?
36:10Well, I'm going to look up comparables.
36:12I'm going to see what's selling. I'm
36:14going to see how many bedrooms it has.
36:15I'm going to see how many bathrooms, the
36:17square footage, the lot size, and I look
36:20at what I want to build. Put that final
36:22sales price in there, and then calculate
36:24the cost based on that. Arthur mentioned
36:27to you that
36:30roughly we're an average of 100 100 up
36:33to 175 per square foot. You can multiply
36:36that by your square footage in your
36:38local area. Depends on which area you're
36:40in. And you can calculate the cost of
36:41construction. So we know the final sales
36:45price. We know the construction cost. We
36:48know what land should cost based on the
36:50formula we told you guys earlier. Does
36:53the ROI meet the minimum 20% better 25%
36:58target for safety and can we move
37:00forward on this deal? And then typically
37:02for leverage, we're looking at a minimum
37:05100% cash on cash return specifically on
37:08our loan and our down payment to see if
37:10we can grow our money at a good enough
37:13pace to justify the time that we're in
37:16the deal. Does that make sense
37:17everybody? So, real quick, do you think
37:20you can get a 50% discount on the build
37:22cost? No. Do you think you can increase
37:25the price from a million to 1.5 million
37:28on the sale price if everything's
37:29selling for a million? No. But can you
37:31get a lot that's worth 250,000 for
37:34150,000? Yes. Your money is made in
37:37underwriting the deal, making sure it
37:39pencils, and knowing that your money
37:41isn't actually the buy before you ever
37:43even break ground. You know you're in a
37:45profitable state. So number three is
37:48going to be plans and design. Don't
37:50reinvent the wheel. Just do what's
37:53already working. That's the biggest key
37:56factor. Understanding, okay, if
37:58everybody's been building a single
37:59family home here, I could see what
38:00they're paying for the land. This is
38:03what I should be doing. I don't need to
38:04go build a three and a half story or a
38:06four story or five story with the
38:07rooftop if everyone's already building
38:09the single family. The way that I build
38:11my projects is I look at the data. What
38:13already happened? That's what I'm going
38:15to do. That's how I choose my product.
38:17Then I go, okay, what can I do
38:19differently? What's that unique factor
38:20that I'll sell faster than everybody
38:22else? And that's the way that you can
38:25move in markets and be the first to
38:27sell, be the best price, and I I always
38:29underwrite. Make sure I'm not the I'm
38:30not the highest price. My performer
38:32still pencils. Great. I list higher.
38:33Sometimes I sell higher and I end up
38:35making a bigger profit. And then I'm
38:37unique when it comes to design. So, when
38:39it comes to this game, I mentioned
38:40earlier drafter versus architect. You
38:42want to work with a drafter. They'll
38:44charge you a dollar a square foot. An
38:45architect charges you $2 to $3 a square
38:47foot. When do you actually need an
38:49architect? When you're doing five or
38:51more units or you're doing commercial,
38:53that's where their specialty is. But to
38:55build a single family home or to build a
38:57duplex, a triplex or a forplex, any
38:59drafter that has experience, that has
39:01done drafting and has submitted building
39:03permits for approval and works with
39:05different spec builders, they're usually
39:07your guy and they're going to save you a
39:09lot of money. I'm telling you, we have
39:10dozens and dozens of drafters that are
39:12at about a dollar square foot. All
39:14right. So, you're the coordinator.
39:15You're not the designer. You have the
39:17specialty in the team and the experience
39:19that's doing this work. I don't know how
39:21to draft up plans myself. I just know
39:23how to choose the right product,
39:24underwrite it, make sure it pencils, and
39:26then bring the team in, and they start
39:28moving the project forward. Any thoughts
39:30here?
39:31>> Great.
39:31>> This is pretty simple stuff,
39:33>> guys. Permits are very, very simple. You
39:37need to look at it as a to-do or a
39:40checklist. Usually, there's a permit
39:42submittal checklist that you can
39:43download for free from your local city,
39:45your local county. And then once you
39:48have all of the required documents like
39:50the site plan and the floor plans and
39:52the cross sections, the engineering
39:55pages, the energy worksheets if you have
39:58some. You submit all of that to the
40:00county or the city. They're going to
40:02review it usually, usually typically one
40:05week or two weeks and then you get those
40:08corrections back and you fix them and
40:11you resubmit. If you treat this kind of
40:14as as a checklist or checkpoint, pass
40:17the baton back and forth and you make
40:19sure that you hit the deadlines as fast
40:21as possible, you will get your permits
40:24approved. It's just a matter of time of
40:26how long and how fast you can get them
40:28approved, how quickly you can fix off,
40:30fix the corrections. So, in this game,
40:33what this looks like is literally adult
40:35babysitting. This is where the
40:37construction process starts. So, what
40:40you're doing is you're just making sure
40:41everybody's hitting their dates. The way
40:42that I do it, I've got my plans right
40:44now. I'm doing a $1.2 million spec. I
40:46got my plans designed. I went back and
40:47forth. They've done it. Now, the
40:49engineer is doing it. I'm getting a date
40:50from the engineer. Hey, can you get it
40:52done? Yes, by this date. Boom. I'm
40:53checking in on that date. Then where
40:55they're going to submit for permits. I
40:57even ask the city to make sure they're
40:59doing their job or county depending on
41:00your uh or county depending on your
41:02jurisdiction. They submit. The architect
41:04says, "Yeah, I put the plans in." I
41:06email the county. Hey, address 123 Main
41:08Street. Can you verify you got the plans
41:10for my architect? They'll respond two
41:12things. Never seen an email. Never seen
41:14your plans. Or, hey, it was never
41:15uploaded to the portal. They like
41:17portals nowadays. So, I'll go back to my
41:18architect. Hey, it was never uploaded.
41:20What happened? You're just playing that
41:22coordination game and that's how you can
41:24have speed. And so our permits in our
41:26town, sometimes we'll get them in 45
41:28days to 60 days. Most of our builders,
41:30it's taking them 3 to 5 months to get
41:34this done. So that's how quick we are
41:35and that's the advantage that we have.
41:37All right, go ahead, Ruben. So for
41:39financing, guys, the lender is your
41:43silent partner. Uh because at the end of
41:46the day when you look at how much
41:47interest you pay, how much closing
41:49points you have, and what the actual
41:52loan costs you, it is a significant
41:55amount. So it's important to pick the
41:57right per se, silent partner. You want
42:00to make sure to get a loan that is on
42:03draw. The technical term for this is
42:06full Dutch or nondutch or maybe partial.
42:10And so you want to really make sure that
42:12you're getting a ondraw. So, non-Dutch
42:15interest. So, as you take a $100,000
42:17from your $600,000 construction loan,
42:20you only get charged interest on the
42:22100,000. This lowers your average
42:25effective interest rate by the end of
42:27the course of construction to 5 to 7%
42:30and the holding cost or the interest
42:32cost are very minimal compared to
42:34somebody who charges you 12% interest
42:37day one on the full $600,000. And it
42:40makes a really big difference in the
42:42end. The down payment for a personal
42:45house is anywhere from 5 to 10%. One
42:49common
42:49>> I hope by now they know that we're just
42:51n. So I hope you guys are getting this
42:53and you're remembering this. But the
42:55thing is the more that you repeat it,
42:56the more that I think it'll stick. So go
42:58ahead, keep going, Ruben.
42:59>> And then the uh the 5% down for the
43:02personal side, the common push back that
43:04I get is, well, I don't have the GC
43:06experience. I haven't built 10 houses. I
43:07haven't built five houses. It's simple.
43:09You hire a GC for a 5 to 10% fee.
43:13Sometimes some GCs will put their
43:14license on the line, a nonreourse loan.
43:17They'll sign a completion guarantee.
43:18You'll they'll let you build it yourself
43:20or you can hire a builder and you can
43:22get exposed to all their systems,
43:24markets, schedules, everything. Pay the
43:2710 to 15% builder fee. Absolutely worth
43:29it to do it at least one time and you
43:31can get that loan not a problem. We've
43:34been able to do it multiple times over
43:36with zero hiccups. Investment loan. So
43:39typically what we recommend is building
43:41one personal house 5% down and then if
43:44you have the capital and if you have the
43:46drive you can get an investment loan
43:48which is not based on your income. It's
43:50based on the deal. It's based on the
43:52asset. You could put 10 to 15% down and
43:55you could be building multiple houses in
43:57the first year if you wanted to. You
43:59could also uh bring on investors. They
44:01bring the down payment. You bring the
44:03deal and you run the entire process.
44:05That's essentially what Arthur does.
44:06He's a real estate developer. And so
44:09that's the entire process specifically
44:12for the financing side. Either the
44:13personal house loan or the investment.
44:16What you're going to need to bring to
44:17these lenders is the full deal package.
44:20It's going to be your comparables, what
44:22you think the home will sell for. This
44:24determines their risk tolerance. Your
44:26budget. So this is your, let's just say
44:28$150 per square foot times 2,000 square
44:31ft budget divided by an itemized. What
44:34will foundation cost? What will
44:36excavation cost? What will framing cost?
44:37What will plumbing cost? What will HRA
44:39cost? So on and so forth. And then your
44:42proforma, which is your numbers that you
44:44did in number two. What's the land
44:47price? What's the build price? What's
44:49the actual sale price? What's the ROI?
44:51They want to see that to to know that
44:53you're competent enough to do this deal.
44:56All right, guys. To summarize all this,
44:58just so you guys understand, how is the
45:00personal house game 5%. Very simple.
45:03Your credit and your income. The reason
45:06it's 5% down is it's not how good is the
45:09deal, it's how qualified are you as the
45:12person borrowing. So, just for you guys
45:14to understand, if you're pre-approved to
45:16buy a house, build one. So, if you've
45:18got a pre-approval for 500 grand, you
45:20can go build a house for 500 grand
45:22that's going to be worth 25% more. 100%
45:25go that route. If you're someone that's
45:27like, "Well, I don't want a personal
45:28house. I don't need it." Or you're just
45:29not qualified income and all that, no
45:31problem. Jump to the investment side. I
45:33do all my projects with hard money loans
45:35if it's not my personal house and if
45:37it's not a rental property. So all my
45:39all my projects that are active, I go
45:40hard money, not traditional financing.
45:42There's just way too many hoops to jump
45:44through and it's only going to save you
45:45a few thousand bucks. Hard money is
45:47amazing. There are really good lenders
45:48that give you really good rates. This
45:50one is 100% all about the deal. It's not
45:54about how much do you make. They don't
45:55ask for your taxes. They don't ask for
45:57anything from the hard money lending
45:58side. All they ask for is it a good
46:00deal. Does it have at least the margin
46:02that we want it to have? And who's the
46:04person borrowing? And what's great is we
46:06have a team as buildup. We're the team
46:08together. That's why our students are
46:10doing the 271 doors together alongside
46:13with us. Step number six is the
46:15construction side of things. As a
46:18developer, I spend I don't have to be at
46:20the site at all, but I do. I stop by the
46:23site once a week. I go take a look at
46:24it. I see what's happening cuz I'm going
46:26from the perspective of the buyer. If
46:28I'm if I'm a buyer and I walk this
46:30property and I'm like, "Man, I really
46:31don't like this or I don't like that
46:32this neighbor's house is there, so I'm
46:34going to put some arbivider or some
46:35trees." As a developer, I have the
46:37perspective of the end buyer. So, I stop
46:39by once a week as it's being built out.
46:41I might catch a few small things like,
46:43"Hey, this doesn't look really right."
46:45Like, from a perspective of a retail
46:46buyer, I'm not a builder. I don't know
46:48the details. I don't even know if they
46:50put the beams and all that correctly. I
46:52have no clue. I have a builder in place
46:54to do that. And I have the inspector to
46:55verify the builder did it right. And
46:57then I have my bank inspector who's
46:59going to verify that everything was done
47:00properly and correctly. So I've got
47:02three different forms of verification so
47:04I'm comfortable that the house is being
47:05built. And then the GC provides a
47:07warranty. As a builder, you want to just
47:09jump into builder side?
47:10>> Yeah, sure. Go for it.
47:11>> As a builder guys, this the process is
47:14very laid out. So what I usually provide
47:17my students inside of buildup community
47:19and all my mentorship clients is give
47:21them a full visual gant schedule. What
47:25that literally shows them is, hey, you
47:27need to start planning out the survey.
47:29Here's how I find the surveyor. Here's
47:32uh when you need to start foundation.
47:33Here's when you stake it out. Here's how
47:35many days you should spend on
47:37foundation. Here's the scope of work
47:39that the subcontractor should include.
47:41Here's framing. What do you need to look
47:43out for in framing? What what holdowns
47:46do you need to look out for? What is
47:48important to note on the plan? How long
47:50should framing take? when to pay a
47:52deposit, when to not pay a deposit, when
47:54to avoid paying a subcontractor. Did
47:56they do this checklist? I have a
47:58detailed Gant schedule that lays it all
48:01out for
48:02>> not a builder.
48:03>> So, that's what I would provide to my
48:05students that want to build their own
48:06home. However, like Arthur is saying,
48:08you can hire a builder like me. We have
48:11plenty of builders inside a buildup
48:13community across the entire nation that
48:15do all of this process for you. And and
48:17real quick, guys, if there's new
48:18construction activity happening in your
48:20town, any, there are spec builders that
48:22are building to make a profit. If you're
48:24in the middle of nowhere and there is no
48:26new construction and houses are 5 10,000
48:29a piece, sure, there is no builders
48:30there. But if you go to Redfin or
48:32Zillow, you put 2024 or newer and
48:35there's new construction activity,
48:36guaranteed there are builders out there
48:38building to make a profit. Builder fee
48:41side, I love locking in that builder
48:43fee. First, we build out the budget. We
48:45agree. Let's just say the budget's
48:46400,000. Me and the builder agree to a
48:4910% fee. That's 40,000. I don't keep it
48:51a percentage. That's how we set the fee.
48:53Then we go, okay, the flat fee is going
48:55to be a 40k builder fee. And you can set
48:57up incentives. If you finish it for some
48:59reason, they go slightly over budget.
49:00You have a contingency. It might be a
49:02$30,000 fee. If they go under budget, it
49:04might be a $50,000 fee. There's ways to
49:06make sure and incentivize the builder so
49:07that they do a great job. And both of
49:09you are winning. The builder does great
49:11by being active, having the active
49:12income, and the developer is doing great
49:14because they don't need to know
49:15everything about building. So, the last
49:17thing I will say about building, and a
49:19lot of people would disagree with this
49:21or say like, "Oh, that's not possible."
49:22They may be a fix and flipper or they
49:24might be in a different game. You never
49:27ever give a deposit and you never pay
49:31ahead when it's new construction. Why?
49:33It's a predictable game. It's quick.
49:36It's easy. And the subs that do new
49:38construction understand that. The ones
49:40that are bad subs or the ones that
49:42always use that for cash flow because
49:44they're not doing too well, we'll ask
49:46for a deposit. You don't pay a deposit.
49:48If you need to pay for something ahead,
49:50the only things I pay ahead are
49:52jurisdictions, permit fees, uh, anything
49:55like that, I will pay ahead. If it's
49:57anyone that's a supplier or
49:59non-government, I will pay with a credit
50:01card because I have the protection from
50:03the credit card. But if you pay a
50:05deposit for somebody that's going to do
50:06the flat work and they run away or
50:08disappear, you have zero leverage. You
50:10just lost your money. So, we simply
50:12don't. We've paid over $250. And we
50:15don't pay deposits. If we do pay
50:18something, it's via credit card. If it's
50:20for tile or something, you can go to a
50:21store, pay for it, and then get
50:22reimbursed through the loan. And after
50:2430 days, you pay off your credit card,
50:26you're not actually putting money out of
50:27your pocket, and you're protecting
50:29yourself with all of the credit card uh
50:31what do you call it? Fraud prevention or
50:33whatever it's called. Yeah. Yep.
50:34Exactly.
50:35>> That's why I love credit cards is
50:36because if it's an issue, you can always
50:38submit a claim.
50:39>> Y and so in the construction phase as a
50:40developer, I spend about three hours a
50:42week, but that's because I like to go
50:44visit the sites. Otherwise, you don't
50:45actually have to do that. If you're
50:47like, well, I don't know how to design.
50:48I don't know finishes. Oh, really easy.
50:50Hey, builder, can you send me five
50:51projects you did? Oh, here's five links.
50:53I like this one. Just copy everything on
50:54that one. All the paint colors,
50:56everything. Great. Now you're a
50:57designer. Uh, anything else on
50:59construction? Adult babysitter. I think
51:01you already you knocked that one out.
51:02you're an adult babysitter. Uh, and step
51:05number seven, go for it, Ruben.
51:06>> The biggest thing that I can tell you
51:08for selling your home is unfortunately,
51:11please don't use your mother, brother,
51:13sister, cousin, brother-in-law,
51:15father-in-law, just to help them out on
51:17the real estate commission. Because,
51:19guys, the statistics are pretty sad for
51:21real estate agents. Um, actually, you
51:24know them off the top of your head. I'm
51:25not going to make
51:26>> 90% of agents 90% of agents that have a
51:29license don't do a single deal in a
51:31year. If you take the fiveyear span, 90%
51:35don't do a deal every single year. Out
51:37of the 90% that don't, there's only 10%
51:40left. Of the 10%, let's say 100 people,
51:43out of 100 people, 10 of them do a deal
51:45per year at least. Out of those 10
51:47people, about two of them do almost all
51:50of the volume. So if a thousand homes
51:52sold, 800 of them was by two people. The
51:55rest of them do one to two deals. What
51:57does that mean? A real estate agent is
51:59not an expert. Just because you passed
52:01your test does not mean you're good. The
52:04experience speaks for itself. Usually,
52:07I'm telling the agent what to do. Sadly,
52:09I only like to work with the agents that
52:12know what they're doing, and you will
52:13know right away, and that's where it
52:15starts to work. So, what I will say, as
52:16Ruben's been saying, hire someone that
52:18has experience, that has closed deals,
52:20and preferably someone that specializes
52:22in new construction because they have a
52:24really big network of buyers that want
52:26new construction. Go ahead. You want to
52:28break down the three strategies or the
52:30hybrid? I love these games.
52:31>> Yeah. So, path number A, once you have
52:33that real estate agent, you can sell for
52:35a profit immediately, post it for sale.
52:37Hopefully, like Arthur said, a
52:39specialized agent in new construction.
52:40It helps you a lot with repair
52:42addendums, going through the special
52:43disclosures that you need and all those
52:45different things. Number two, you have
52:47create force created your equity because
52:49you built it for less than what it's
52:51worth. You can hold it, refinance it,
52:53keep it for long-term cash flow if you
52:55wanted to. You could also eventually
52:57cost segregate, so accelerate the
53:00depreciation, have more to ride off and
53:03keep more houses, roll them over into
53:04the next homes. you. Number three, you
53:07could move into it, live in there and
53:09live there for two years. If you're
53:11single, 250k of taxfree profit after two
53:14years. If you're married, 500 grand of
53:16taxfree profit. I don't know a single
53:19person that bought a home on the market
53:21and it grew in two years, $500,000 of
53:25profit. Impossible. The only way you can
53:27do that is probably through either a
53:30massive addition that adds value to the
53:32home or a new construction or some
53:34insane remodel where you're doing an
53:36addition anyway and the the numbers on
53:39the square footage or the bedroom
53:40bathroom count or the lot size change so
53:43much that the value goes up enough for
53:45you to get that 500k of taxfree profit.
53:47>> So what what I would say with that is
53:49you natural appreciation in two years
53:51will never be the 500,000. I I just
53:54can't see it happening. But forced
53:56appreciation, you can get to that
53:58$500,000 mark. I would say average 1 to
54:01300K, right? Yeah. My my house 300,
54:03yours was 250. 1 to 300K, but you can
54:06get there because you're forcing the
54:08value. You're creating the value. You're
54:10essentially making that happen. So these
54:12three options, option A, B, or C. And
54:14then there's a hybrid where like build
54:16yourself a personal house, have some
54:17investment homes. Let's say you do an
54:19eightunit project where it's eight
54:21single family homes. You keep two for
54:22yourself as rentals. you sell off the
54:24other six. If you're a real estate
54:26professional, you can reduce your taxes
54:28significantly. But this is why I love
54:29this game. Like, there is so much you
54:31can do. There is so much out there. So,
54:33the complete sevenstep process, this is
54:35it right here. If you need to take a
54:37quick screenshot, you find your lot. Uh
54:39then you underwrite plans and design,
54:41permitting, financing, construction, and
54:44sale. You don't have to be an expert in
54:46all seven. All you actually have to
54:49focus on is understanding how to find
54:50deals, understanding how to underwrite
54:52them and build the team, and the rest is
54:54history. Guys, really quick, we want to
54:56share on the buildup challenge. The
54:57buildup challenge has been one of the
54:59most fun and fulfilling things that
55:01we've done. Build-up challenge is
55:03helping our community build homes. I
55:05believe that we can take over the
55:07national builders. We can compete with
55:09the national builders by teaching small
55:11business owners or just people that want
55:13to get in this game how to build their
55:14own house. So, the buildup challenge,
55:16the goal is to build 511 homes together
55:18with our community. We are at 271 doors
55:22today. You might ask why 5'11? It
55:24actually comes from the verse verse 1
55:26Thessalonians 5:11, which is to build
55:28one another up. We believe in building
55:30each other up through real estate,
55:32through creating generational wealth,
55:34and through our families. We, this life
55:36is relationship. The better and more
55:38healthy relationships you have, the more
55:40you can build each other up. It's not
55:42about just get a deal done. It's not
55:43transactional, but truly living life out
55:46with purpose. So, that's where the
55:47buildup challenge is. Ruben, you want to
55:49share a couple of our uh people that are
55:50in the buildup challenge?
55:51>> Yeah, these are a few people with non
55:53construction backgrounds. We wanted to
55:55share these specifically. We have a few
55:57students that have construction
55:58background. They struggled with finding
56:00deals, putting together the actual
56:02numbers. And so, we obviously helped him
56:04with that. But these are a little bit
56:06more substantial. Nick Truck brokerage
56:09built his own home $41,000 down 160K of
56:13profit $390%
56:15cash on cash return absolutely
56:18incredible
56:19complete he was he was in solar sales he
56:22managed salespeople he sold solar he's
56:25now building three luxury homes in a hot
56:27area in Texas and he's projected to make
56:31over a million dollars total on the
56:32three houses Armando he's he's in
56:35logistics a brokerage So, he gets on
56:38clients, moves all of their freight
56:40across the United States, and he's doing
56:42a uh speck home, two speck homes. Uh
56:45Ashley Ashley Houses, if you've seen him
56:47on Instagram, recently posted an update
56:49about that. But he's projected to make
56:51270K and he wants to become a full-time
56:54GC. So, absolutely incredible. This
56:58could be you following this entire
57:00sevenstep process. Guys, the the reason
57:02we're showing these, you guys might say,
57:04"Well, why are you showing these
57:05people?" I want to give you guys hope. I
57:07want you guys to understand this game is
57:10possible. It took me four years to pull
57:12the trigger. I told myself I'm going to
57:14do a real estate deal. And four years I
57:17finally did my first deal and I realized
57:20I'm like, man, why is there no one out
57:21there that at least just shows me the
57:23general idea and where I'm like, "Oh, I
57:25you just lit a fire under me. I'm ready
57:27to start doing deals." So, I'm showing
57:29you guys a few of our students and then
57:30we're going to jump into the Q&A. We'll
57:31answer some questions for you guys. So,
57:33Raina, she's in Seattle, Washington. She
57:35reached out to us. She said, "Man, I
57:37bought this property. I'm talking to
57:38builders. They're quoting me 300 bucks a
57:40square foot. I don't know what to do."
57:41We we showed her the entire sevenstep
57:43process. And then she decided, she said,
57:45"Look, I just want to build it myself. I
57:47want to go through this process. I I'm
57:48really excited." So, no construction
57:50background. She's just seeing it
57:51herself. There is no GC license in
57:53Washington. A lot of states don't have
57:55it. Oregon does. She went there, got her
57:57license, got bonded, got her general
57:59contractor uh licensing, and now she's
58:01building out her own house.
58:02>> There is no test in Washington. No test.
58:05Sorry. Sorry. There is no test in
58:06Washington, but you just pull a GC
58:08license. You get insurance. You're
58:09bonded. Boom. You're licensed. That's
58:11why you got to vet your builders. Not
58:13all of them have to pass a test. You
58:14want to look at the experience.
58:15>> Same as realtors.
58:16>> Exactly. So, anyways, she's building her
58:18house. She's 60% done. 2 and 1/2 months
58:20in. She's on track to build her house in
58:224 and 1/2 months. She's going to have
58:24over $400,000 of equity. If you want to
58:27watch her story, go to her YouTube
58:28channel. It's Raina Westber. Raina
58:31Westber. You can watch her story. She's
58:33posting all about her building her own
58:34home. Really cool story. Um, and then we
58:37have uh Jake. Jake is our social media
58:39manager. He's absolutely crushing it on
58:41our social media. He uh just about a
58:44year and a half ago, we hired him at 24
58:46years old. He saw everything we were
58:48doing. He's at our projects live. He's
58:49like, "Dude, I want to do this." So, we
58:51sent him to get a pre-approval. The
58:53pre-approval wasn't where we wanted to
58:54be to build that first home. So, he
58:56said, "What do I do next?" You got to,
58:57if you want to build the personal house
58:58rather the investment, you got to
59:00increase your income. you got to save up
59:01a down payment of 50,000 and go get that
59:04new pre-approval. We'll get you a lot.
59:06We'll get you set up. We'll you'll get
59:07this house built. So, 43K, a yearish
59:10later, 43K down, he's building a
59:12million-doll house. He learned the
59:13personal house game and he's going to
59:15have over $100,000 of profit. It's a
59:18two-story house, the first floor and a
59:20basement. So, a daylight basement. He's
59:22going to rent out the first floor for
59:24$3500 bucks. He's going to live in the
59:26bottom floor with his wife at $1,000 a
59:29month roughly out of pocket and he's
59:31going to take advantage of appreciating
59:33a million-doll house rather than
59:34building maybe a smaller 2,000t home.
59:37He's got this beautiful house with a
59:39beautiful view. If you want to follow
59:40his story, go to imrince on Instagram.
59:44You can see his entire journey. You can
59:45see what he's doing and you can watch
59:47him finish out the project start to
59:48finish. And then we have uh let's see
59:51here. It's not loading.
59:52>> It's playing.
59:53>> Oh, there you go. Got it. We have a ton
59:55of other students. We have Octavius
59:56who's in Atlanta, Georgia. We have Andy.
59:58He We sent him a few comps in our group
1:00:00chat. We have a personalized group chat
1:00:01with our students. And then we have
1:00:03Brandon who's building a house in
1:00:04Washington and in Mexico. Phenomenal.
1:00:07Ricky's building. Yeah, let's go.
1:00:08Brandon, he's Ricky's building in
1:00:10Indiana. He built his first house,
1:00:12captured his first profit. He's got five
1:00:14more projects going. David's building a
1:00:15personal house as well. That's really
1:00:18it, guys. Thank you so much for sharing
1:00:20with us. And as always, let's build up.
1:00:22And if you're watching this and you want
1:00:24to get into the game in 2026 and become
1:00:26a real estate developer just like our
1:00:28students, click that link below to join
1:00:30the buildup challenge. Fill out the
1:00:31application and my team will be
1:00:33connecting with you. And as always,
1:00:34let's build up.

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