During today’s HyperFast Wealth segment, Dan Lesniak and Sunil Saxena share a completed project while breaking down the numbers. This small two-unit project was delivered during the pandemic and still produced a huge margin. Hear what they paid to develop this project, what it sold for, what investors earned from the transaction, and more.
- A lot of wrenches were thrown at Dan and Sunil through the process, but this project did well.
- The top unit sold just before coronavirus. They got more on the top unit and got a little bit less for the second unit due to coronavirus.
- In development, some projects will hit at an optimal time and others won't for whatever reason.
- They experienced a black swan event with massive unemployment, but the D.C. market is resilient.
- Their typical buyer makes six figures and their jobs are resilient in the D.C. market.
- Dan is excited that they delivered a great project and that the numbers worked out very close to their projections.
- Investors from all over the globe want to invest in D.C. because the federal government will continue spending money and providing jobs.
- The jobs in D.C. tend to be high-paying jobs and they're always there.
- This project began when they bought an old row home in poor shape in 2019 for $650k.
- They spent a little more than $250k per unit in construction costs because it was in a higher-end area.
- The bank loan was in the 5% range. They probably paid $70-85k in interest.
- All-in they spent about $1.35m on the project.
- On the sales side, the top unit got just under $900k. The lower unit sold for $730k. Total sale was $1.63m and they paid out about $50k in commissions and taxes.
- Their net sale was $1.58m net profit. They still pulled in $230k.
- They paid investors $60k in preferred returns.
- This was a great project. They delivered 20% return on cost, and had a ton of margin over what they needed to pay investors.
- Dan is excited that they still hit their numbers and delivered.
3 Key Points:
1. D.C. is a resilient market that attracts investors from around the world.
2. When you buy properly and perform properly in a great market, this sets you up for success.
3. A quality project can succeed even during trying times.
- “I literally feel the D.C. market is one of the best in the world, actually.” – Sunil Saxena
- “Per unit on these smaller deals we usually spend about $250k per unit.” – Sunil Saxena
- “The total we had to pay investors to deliver the return was about $60k in preferred return.” – Dan Lesniak
- “We're well above 20% return on cost, which is a great metric to hit.” – Dan Lesniak
- “I'm sure investors were happy there were with us and not in the stock market during this.” – Sunil Saxena