Transcription of the Process:

So let's dig into the specifics as to how this would really unfold.

And you're really already kind of taking the first step, which is to visit with FIG. Number two is you've got to decide on a 4plex. In any given time, we've got a couple of projects rolling, that we're taking reservations and then and some of those might be starting right away. Some of them might be a year out, based on when you're going to have funds, which markets you'd like your timing, your preference, we're going to talk to you about what some of the best options might be that fit closest to what it is that you're after.

That's how we're going to help you decide on a four Plex and just put those in front of you so that you can decide. Then you're also going to decide on upgrades. Right. So whenever we quote a price for a four Plex, it's a base price with appliances, you can totally rent it out. Now, we give this option of upgrades because investors have different opinions here and different things that they want to do.

We, of course, do get tons and tons of feedback from our property management team on which upgrades really work, meaning when they're showing these units to prospective tenants, they hear what they're saying, right? They hear a tenant say, Oh, I hate that floor. Oh, I hate that fridge, or, hey, I really like these blinds. Right? They get that feedback. And they also are the ones that take these maintenance calls and complaints. Right, they know what's working best, and they know which unit to turn over faster.

For example, I have a project in spring, Texas where an investor didn't put any upgrades into his four Plex. And you can bet he's always the very last one to rent effort, but he picks the other units ahead of his because he skimped on the upgrades. So based on the project that you're in, we'll make some recommendations on Hey, and this one, you probably ought to go with a stainless appliance, you probably ought to go with a better counter, right? Or you could get away with just going kind of a mid-level appliance. It all really depends on the submarket and what the competition is doing, and what the tenant demographic looks like.

So once you do that, and kind of simultaneously, we'll get you pre-qualified for financing. So we have a preferred lender. His name is Lane Aldrich with First Colony Mortgage. He's done hundreds of these big construction loans and long term takeouts for us. Nobody's better than him at it. And you're absolutely Welcome to shop around, right. If you've got a really good lender, you want to make sure Hey, I don't want to get taken by this guy, please go, go check it out. Make sure that you're comfortable with it. I think you'll find that it's extremely competitive.

But most importantly, he's actually going to get it done. And the way that he does this is he gets a long term 30 year fixed rate approval for you. And he's going to put that right in a little file. We're going to come back to it in just a minute. Okay, but this was about the time that you decided on a four Plex you're doing your upgrades, you're doing your loan pre-qualification. This is all within a couple of days of each other you're going to do your purchase agreement and you're going to do a deposit. And I say 10 or 10. You see the little piggy bank icon over there.

The reason I say 10, or 10 is if we have not yet recorded the plat, that's the next step here. Then you're going to have a $10,000 refundable deposit. That's all that it takes to hold the four Plex. And if you wake up the next day saying, Oh, no, I've made a terrible mistake. You get your money back, no questions asked, right?

We can't hold a non-refundable deposit on a property where the plant has not yet recorded. Now when we get to the next step, the plat recordation. That's when we take that 15-acre parcel and we chop it up into 50 different tax ID numbers for these for plexus. That's when we go to 10% is now do and it's not refundable.

So let's go time and we're going to make sure you understand approximately when the plan is going to record when you're deciding on your four Plex. So you know kind of hate here when my goalposts are and when certain decisions have to be finalized by or not. Okay.

So the plat records we have our 10% deposit in, and usually anywhere from 30 days to a couple of months after that plat recordings, we're going to start seeing the first construction loans close. Right? Remember, we're getting a construction loan, we're, we're taking this asset from dirt, all the way to income-producing so we can get a better cap rate, some equity, and a better return. That's what we're after here. Okay.

So now that pre-qualification letter, the 30-year fixed-rate mortgage that lane Aldrich got you pre-approved for, we're going to go grab that. We're going to talk to one of the local banks, we found it's small regional banks and credit unions that have an appetite for these kinds of loans. If you walk into Chase Bank there and say, Hey, I need a construction loan for a new construction four Plex in Utah. They're going to look at you cross-eyed, they're going to have no idea what to do with that. Right. That's like asking the guy at McDonald's to make your sushi. I don't recommend it. Okay.

So you're going to go, we're going to take this to one of the local banks, they're going to review the file, they'll have a couple of cleanup questions for you about, hey, we need these pay stubs, or can you tell us about this part of your tax return?

Okay, just to get that construction loan solidified. And then you close, when you close on that, that's when most of the money that you're going to have into this deal will have come out of your pocket by them. And I'm going to very specific on how much that is here in just a minute with kind of a live case study for you. Okay. So now you own a chunk of dirt in Cypress, Texas, and pace in Utah, right in Surprise, Arizona, I don't know. It's one of those projects that you picked.

And you own this chunk of dirt and you go through the build process that should take it from 10 to 12 months. And when we get into the home stretch of that construction process, you're going to hear from us the whole way with pictures and drone footage and updates on how your construction is going. If you're going to be in the area, you really want to go see your four Plex, that's great, just tell us and we'll set it up, I'll just go wander on to the job site. It's a job site. That's complicated legal issues, but it's your property. And you can see it just coordinate with us and we'll set it up.

So when we get towards the end, you're going to be your property management agreement with Max property management that's fixed in house manager, so that they can begin the marketing process for your four Plex. And you're also going to finish out that refinance. Remember, you have a construction loan, right now.

You got to pay that off construction loan is not permanent financing. It's typically a 12-month term. It's got to be paid off, and that's where lane comes back in, pays that off and it's replaced with a 30-year fixed-rate mortgage. That that is a lot of the reason why to do an asset like this. And then you're done. Right? It's mostly that simple.

There are usually a couple of speed bumps here and there. Some curveballs here and there. For example, lease-up being one of them, which we'll talk about in just a minute, but I wanted to give you kind of a high-level view of how the process unfolds.

If you've made it this far and you're interested in what options may suit you best, be sure to schedule a time to chat with anyone on our team and we'll be more than happy to point you in the right direction.

You can visit www.fig.us/consult to schedule a chunk of time in our schedule or scroll down and shoot us an email with any quick questions.