Building Futures
Dave Ramsey Says Build Your Own New House Now!

Dave Ramsey Says Build Your Own New House Now!

Yesterday, I shared Dave Ramsey’s advice to a caller on his show where he not only advised the caller to go ahead and build their new home, but he said he’s about to do the same!

My Book: “Don’t Buy a New House! BUILD IT” shows you how you can too,
You can see some of the numbers in my prior video Here: https://youtu.be/46Kgn48KMc4
But better yet read my book, there is a link below!
✅ Get Print Book on Amazon: Don’t Buy a New House! BUILD IT https://www.amazon.com/gp/product/B09PRTVBMH/
✅ Amazon Author Page: https://www.amazon.com/author/rogerluri
✅ Download FREE eBook: http://ld2development.com/custom-homes/ _________________________
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Dave Ramsey: https://youtu.be/Vgbny3M6VOo

Chicago Neighborhoods for New Construction Condos

Chicago Neighborhoods for New Construction Condos

There are a lot of great neighborhoods in Chicago where people want to live in new construction and builders are putting up small condo and rental projects to meet the demand.

So why build in Lincoln Park?

Most of these other areas have lower land prices which allows building more affordably priced units.
When you look at building a standard 3 or 6 unit building on a standard single or double lot, regardless of neighborhood, the buildings are very similar.
The size limit is determined by the zoning district, so allowances are the same accross neighborhoods. Generally builders want to build as much as is allowed in order to maximize returns. But if you look at total returns for condo sales, they vary substantially.
For example, a condo project for 3 unit building on a standard lot in NorthLincoln Square/Bowmanville might have total sales of about $1.7M.
A very similar 3 unit building In the East Village area might fetch $2M to $2.1M in total sales.
In Lincoln Park, for a similar building, the units might achieve total sales of close to $3M.
Now of course land prices are higher in the more expensive areas and construction costs will also be higher for the more expensive units because they need to have upgraded finishes, but still, the higher sales numbers far out weigh the extra costs, so margins are considerably higher for the more expensive neighborhoods.
Another consideration is that buyers in these Class A locations like Lincoln Park are more affluent and are less affected by economic factors like inflation, etc.
When they want to live somewhere they have the capital to buy or rent there regardless of market conditions.
If the real estate market experiences a glitch and values begin to drop, we see that Class A locations/ projects generally tend to hold their value best and are first to recover.
From my years serving as a Bank director and on the loan committee looking at many construction loans, I’ve seen first hand that higher end projects in the best locations always tend to weather market turbulence much better.
✅ Download FREE BOOK:
Don’t Buy Multi-Family! BUILD IT
LD2development.com/
✅ Order New Book on Amazon:
Don’t Buy Multi-Family! BUILD IT https://www.amazon.com/gp/product/B09PSFMC6Z/
✅ Amazon Author Page: https://www.amazon.com/author/rogerluri 
_________________________
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Appreciation vs Depreciation

Appreciation vs Depreciation

People often talk about houses appreciating, but what if I told you that this is actually a myth?  What actually appreciates is the land that your house sits on.

The “sticks and bricks” and all the building components that make up your house itself actually start losing value as soon as they leave the supplier, just like any other items you buy new at the store and bring home to use.
The appreciation that you see in your home’s value over the years includes the appreciation in land value plus the affect of inflation on replacement value (which includes both labor and materials).
In other words, the cost to build a new house keeps going up, so an older house gets a bump from inflation.
Still, This value is actually reduced by the depreciation of the existing structure. As the existing structure loses value over the years, at some point, the value is equal to the land value.
When you are close to this point, unless you are talking about major renovations, any money that you put into fixing it up is basically down the drain because it will still only be worth land value.
The repairs / renovations will just not be enough for a buyer to think it’s in move in condition, so it will still only appeal to a buyer who wants to tear it down.
That’s why you always want to look at any major renovation project very carefully and extrapolate the future value of your home.
In other words:
1. Value today?
(Estimated renovation cost)
2. Value after planned renovation?
3. Value estimated upon future sale?
For #3 you’ll need to estimate how long you’ll probably stay in your home.
What we see is that when we renovate, the finishes seem new to a buyer for the first few years. After a few years, finishes begin to seem dated and negatively affect the price.
If you own a property that is in need of some major work, you’ll want to get a professional to help you to evaluate your options.
I find that often, people are surprised when they look at the numbers.
It can make a substantial difference to your bottom line.

✅ Get New Book on Amazon:

Don’t Buy a New House! BUILD IT https://www.amazon.com/gp/product/B09PRTVBMH/

Of course It’s going to take some effort on your part and it’s definitely not for everybody, but if you enjoy creating new things in your life and building wealth in the process, it will be a lot of fun for you.

✅ Amazon Author Page: https://www.amazon.com/author/rogerluri_________________________

✅ Let’s connect:

YouTube: https://bit.ly/LD2YouTube

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LTC & LTV in Multi-Family – Your Lender’s Perspective

LTC & LTV in Multi-Family – Your Lender’s Perspective

Regardless of whether you are doing new multi-family development, or Value-Add rehab projects, Understanding how your lender looks at Loan to Cost and Loan to Value ratios is critical to understanding and mitigating your risks in any multi-family deal that involves construction.

Having served on the Board of Directors and loan committee for a Chicago community bank that specialized in commercial real estate and construction lending from 2005 through 2010, I not only experienced the 2008 “Great Recession” first hand in my own development business, but had extensive experiencing helping our borrowers work their deals out.

Many of the bigger developers that came through that time in the market have now become very successful and are semi-retired. A lot of the smaller developers (and lenders) are not around today.

The vast majority of people doing these deals today did not have the benefit of experiencing the drop in values that came with the Great Recession. 

This video can help you to understand. It’s all about values and capitalization!

✅ Download FREE BOOK:
Don’t Buy Multi-Family! BUILD IT
LD2development.com/
✅ Order New Book on Amazon:
Don’t Buy Multi-Family! BUILD IT https://www.amazon.com/gp/product/B09PSFMC6Z/
✅ Amazon Author Page: https://www.amazon.com/author/rogerluri 
_________________________
✅ Let’s connect: YouTube: https://bit.ly/LD2YouTube
Linkedin: https://www.linkedin.com/company/ld2-development/
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Multi-Family Risk Factors – Your Lender’s Perspective

Multi-Family Risk Factors – Your Lender’s Perspective

Most of us would like to avoid Risk, but lenders and professional investors, know that understanding risk is actually their path to long term success.

It’s important for all multi-family investors to understand the lender’s perspective because when you have a commercial mortgage / construction loan, your lender ultimately has a great deal of control.

Multi-family income property is an great way to build wealth and right now, it’s the perfect way to hedge against inflation, but most of us do understand that you just you don’t make money without risk, right?

Now if you’ve been out looking for multi-family investment properties to buy, you’ve probably found that any property in good condition, in a good area with good cash flow will cost so much that you won’t be able to make very much money on it.

If you want higher returns (which most investors do), you need to find properties that are underperforming and can be renovated and re-positioned to increase their income, these are what they call “Value Add” deals.

Likewise, Developing new construction multi-family is like the ultimate value-add deal because it is 100% new. These properties attract the best tenants and generally get the highest rents for the area. When executed properly, they can also create the highest returns.

Having been on the Board of Directors and the loan committee for a Chicago community bank specialized in real estate lending from 2005 – 2010, I want to talk about the risk factors involved in multi-family deals that involve new construction and/or renovation.

The fact is that, assuming the principals know what they are doing, the vast majority of Value Add or New Construction deals are going to be quite successful and profitable, but once in a while, they can and will run into troubles.

If you do 10 deals and 7 are very profitable, you may have one or two that are only so so and you may also have one or two that get caught in a bad market period.

To mitigate risk, we want to consider what can happen if things don’t go according to the original plan and have some contingency plans in place.

Once they are completed, leased up and stabilized, these projects will have all the same risk factors as any other stabilized properties you might purchase. Less actually because they will be new or newly renovated.

Of course the income numbers projected in their loan application rely on renovation / construction being completed before they can be leased at these higher rents.

This means that they will be subject to additional construction related risk factors. These risks are what we discuss here and in the next video where I’ll discuss why you need to understand the lender’s perspective on Loan to Cost and Loan to Value ratios and how they affect you.

✅ Watch NEXT VIDEO – Loan to Cost & Loan to Value: https://youtu.be/lap9Jy0-KCY

✅ Download FREE BOOK: LD2development.com

✅ Purchase New Book on Amazon: Don’t Buy Multi-Family! BUILD IT https://www.amazon.com/gp/product/B09PSFMC6Z/

✅ Amazon Author Page: https://www.amazon.com/author/rogerluri

_________________________

✅ Let’s connect: YouTube:

https://bit.ly/LD2YouTube

Linkedin: https://www.linkedin.com/company/ld2-development/

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Multi-Family Best Hedge Against Inflation?

Multi-Family Best Hedge Against Inflation?

I just heard Elon Musk telling a group of his investors that now is a good time for them to invest in real property as a hedge against inflation.

In other words, Elon is talking about using their capital to expand or make improvements to their manufacturing facilities by adding new land, buildings and/or machinery.

Inflationary times normally signal a rough patch for stocks. It makes sense to put your capital into real property because your cash becomes worth less, while real property generally increases in value along with inflation.

For individuals investors, multi-family income properties are by far one of the most reliable and profitable ways to hedge against inflation.

Not only will multi-family investment property normally increase in value along with inflation, but you can also earn great returns which include:

Appreciation: Aside from increases in value due to inflation, we normally see 3-5% appreciation compounding every year.

Leverage: Your investment capital is leveraged by borrowing at historically low rates

Passive Income: (in a desirable property, rents tend to escalate year by year, but rents also tend to increase with inflation )

Loan Principal Reduction: Your tenants are paying down your debt every year which is money in your pocket.

Tax advantages:

1. Depreciation Deduction (in addition to operating expenses). 2. Lower capital gains rates on sale. (can often be deferred and rolled forward into another investment using a 1031 exchange).

All of these add up to make your “hedge” a great investment for you to build wealth, but If you’ve listened to me before, you know that I’m always talking about the many advantages of building new multi-family investment property as opposed to buying older buildings.

To learn more, grab a copy of my new book on Amazon:

Don’t Buy a MULTI-FAMILY! BUILD IT

I’ve also included a link in the text below for a free eBook, so you can start reading right away.

You’ll want to click to the next linked VIDEO:

https://youtu.be/Hhq4RrpWRpE

To see the Equity numbers and begin to understand why building new investment property is so much more profitable than buying older buildings!

✅ Download FREE BOOK: LD2development.com

✅ Purchase New Book on Amazon: Don’t Buy Multi-Family! BUILD IT https://www.amazon.com/gp/product/B09PSFMC6Z/

✅ Amazon Author Page: https://www.amazon.com/author/rogerluri

_________________

✅ Let’s connect: YouTube: https://bit.ly/LD2YouTube Linkedin: https://www.linkedin.com/company/ld2-development/ Facebook: https://www.facebook.com/LD2Development/ Instagram: https://www.instagram.com/ld2development/