Secure Dental_Simon Beylin.mp3: Audio automatically transcribed by Sonix

Secure Dental_Simon Beylin.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Dr. Noel Liu:
Welcome to the Secure Dental podcast. Through conversations with the brightest minds in the dental and business communities, we'll share practical tips you can use to scale your practice and create financial freedom for yourself and your family. My name is Dr. Noel Liu, CEO and Dentist at Secure Dental, and also co-founder of DentVia. I'm your host for the Secure podcast, and I'm so glad you're joining in.

Dr. Noel Liu:
Welcome back to another episode of our Secure Dental podcast. Like my intro, I am Dr. Noel Liu. I'm a general dentist. And today we have a very special guest, Dr. Simon Beylin. He's an endodontist, and now he's not seeing patients anymore. And now he owns Beylin Developments. But before we get started and pass the mic off to him, I would like to mention our sponsor, which is DentVia. It's a virtual dental assistant administration company that assists with back-end office tasks. Definitely visit them at DentVia.com. It's www.DentVia.com. Let's get right on to it. Simon, I'll let you do the intro. Tell us a little bit about how you got started, your dental world, and then what you're doing these days.

Dr. Simon Beylin:
So I started my path of dentistry. I first became a general dentist. I did a year of GPR, and then practiced for a few years, and went back, and became an endodontist. From there, my wife saw a pediatric dentist, so we started building our own offices and through the process of just doing our start-ups. I got my construction license and started building dental offices. So that's what got me into the world of building on my own. I grew up around construction. My father had a construction company, so I knew a little bit of the back-end of running a construction company, but we started building dental offices and just snowballed from there and started developing ground up real estate. And that's what we're doing now. We focus a lot of our efforts on our investment side on ground up development. So we still own our dental offices, but neither one, neither my wife or I are clinical at this point.

Dr. Noel Liu:
How many offices do you have now?

Dr. Simon Beylin:
We have two ... offices. So there, at this point, there are associate-driven, and we do in-house GA. They're very busy ... offices. So it keeps us busy from the ... side. And then we're not in our practices. We're on the investment side and in real estate.

Dr. Noel Liu:
Nice. Tell me a little bit about you. You were an endodontist, right?

Dr. Simon Beylin:
Yeah.

Dr. Noel Liu:
Do you still maintain your license or you give that up?

Dr. Simon Beylin:
Still have a dental license. If I had to, I could still go in there and do root canals. We all get old. It's like an hourglass eventually runs out of sand. So I had some issues with, a little bit of arthritis. And luckily I had enough going with development. So I just focused more of my efforts and more of my energy on that.

Dr. Noel Liu:
So you were a endodontist. You were also developing real estate at that time, is that correct? You were doing both at one time.

Dr. Simon Beylin:
Yeah. So since 2015 we started building commercial. 2019, we started going a little bit more towards the residential side. Now most of what we're doing is ground up multifamily. I still have a little bit of commercial here and there. I shy away from commercial. It's just not my bread and butter. But I purchased land that has commercial aspects to it. It has a commercial aspect to it. Commercial tenants are great if you can have a medical practice or a dental practice, and you can have a triple net lease and a long-term 15-year lease and not have to worry about tenants and toilets. It has its benefits. But the vacancy periods are also much longer. So if you're building a residential ground up development and you do all of your homework correctly, your demographics are well, there's a need for housing in that area. You'll build it. You shouldn't have any issues leasing out your units. But you can build, you build commercial and you get stuck with an empty building for a while. So if I am building any ground up commercial and I have a few projects that way right now is I want to lease 60% of the building leased out before I put a shovel in the ground or. Yeah, I have another building which is multi use. So we have three commercial units on the lower level, 16 units of residential on top. So on that one we have all the units leased out even before we start construction. But I'd be more willing to build something like that because the residential can support the commercial if it's empty for a while.

Dr. Noel Liu:
So you are building basically like a mixed use real estate where there's, and then there's residential also. Is that correct?

Dr. Simon Beylin:
One of our projects is in a downtown district, and that's what they wanted to see. That's the New York style, where you have commercial the lower levels and residential atop; the three story building. In that town, there is no availability for commercials. We had no issues leasing it out. And the residential is also, most of it's going to be pre-leased before it becomes.

Dr. Noel Liu:
So let me ask you here, Simon. You are the expert here, right, with building. So when you are talking about like 60%, like somebody starting out who is looking into, Hey, I want to develop this commercial space; how are you finding these tenants? Is it broker? Is it like you just put a sign up there? What's going on there?

Dr. Simon Beylin:
I hate to sound like a poacher, but first things first, you got to try to poach some clients that are nearby. One of the buildings I have, there's a med spa in town. My wife and I are both patients of the med spa. They mentioned that they want to move. They outgrowned their space. And here I am with a commercial space that's going to be going right down the street. So I just approached them. And if you could do it on your own without realtors, they take 6% of the entire lease period. So if you're talking about a 15-year lease, 6% is a decent amount. So if you could sign some of those leases first on your own, I always say just look around town; maybe some businesses that look like they're busting at the seams and knock on some doors. And beyond that, then you have to start looking at commercial brokers or I make posts on Facebook. So here's this building, here's a rendering of it. Have a very nice rendering of what you want there. I kind of have an idea of what the town wants to see in that area, and then bring that to the different Facebook groups of that town and maybe 3 or 4 towns around it. And that, for me, has filled up all of our buildings. We've never, to this day, have used a commercial broker, even though I did have phone calls with two of them this morning.

Dr. Noel Liu:
So let me go back again. So commercial brokers are taking 6% of the entire length of the lease? Is that what you said?

Dr. Simon Beylin:
In this area, that's what they're looking for.

Dr. Noel Liu:
Wow. Is that area dependent or is that like just?

Dr. Simon Beylin:
It's area dependent and it is negotiable. But at the same time, if you have a commercial real estate agent who's going to get you $5 more per square foot, and that already takes care of their 6%, I'm fine with that. People, if you're going to, if I've got issues filling it and you could fill it at a higher rate than I can fill it out, by all means, go ahead. But if I can put up a couple Facebook posts and knock on a couple doors on my own and I don't need a commercial agent to do it, I'll definitely try that on my own first. I definitely knock on doors first. Economic Commission for specific towns will absolutely be your best friend here. They will know businesses that want to move. They'll know businesses that want to come to the town, and they'll give you a list. For our mixed use, they reach out to us first, saying they have people that want to take over the entire first floor, and they gave us a list. These are people looking for commercial space in this town. I mean, I'm building in New Hampshire and in Maine, so we have much smaller towns than different parts of the US. So a lot of these smaller economic boards, they'll know who's looking for space in those towns.

Dr. Noel Liu:
So who do you go to for a source, to tap into this source?

Dr. Simon Beylin:
We have, it's called the Economic Affairs Commission. It's a separate board in the towns of these small towns in this area, in New England. ...go to the town planning Board and ask who's on your economics board, and they'll give you the person's information. And they're always willing to help. And that doesn't cost you a dime.

Dr. Noel Liu:
Wow, wow. Simon, you're dropping some serious nuggets over here, man, for a lot of people, actually, who are looking into this strategy. So for dental space, the space that you currently have with the two pediatrics; is that something which you currently own?

Dr. Simon Beylin:
I do, I own them. So if you're doing it for owner occupied, you have many different avenues to go out that. If you're looking for SBA loans, which if that's your last resource, is a great resource because you could come in with 0% down. And if you're going to occupy 50% or more, they'll give you a loan 0% down. So that's a very easy way to get into commercial without any outlay, because they'll run the numbers and your 50% from your dental practice should more than cover the note for the entire building. Then anything that comes in from the other 50% is just gravy. So that is how we actually enter into the commercial side was we purchased the condos in which we have our offices. So I purchased three condos for one of my offices and one condo for the other one; built them out. I just, I couldn't imagine, we had a pretty nice build outs to not be in full control of the lease ownership. So that is a nice way in.

Dr. Noel Liu:
So it's all about the control. So let me ask you this here. So when you do buy this land and you do a ground up, how do you differentiate which lender and how hard is it to get those construction loans; number one. Number two is: Would you want to put your one of those favorite questions a lot of people ask is, would you want to put the dental office on the same note as your real estate? Or would you want to have them separate? But if you go with the SBA route, then it's got to be the same, correct? And then if you go different routes then you could put them separate. So what's your expertise? You pretty much know this inside out.

Dr. Simon Beylin:
Well, we built our first office; that was 2015. That was just as we're coming out of 2008. So real estate was still get all the regulations that were following. And you had to, actually, at that time, you had to separate it. So the real estate loan was, we used live oak for the real estate and part of the construction loan and Bank of America for the practice loan, and that was very common at that time. Bank of America was not an SBA loan. It was a better product. But they couldn't give you 25 years if you wanted it. So it's a much shorter loan. But it was an SBA. So it would have been nice to have done everything with a lender like B of A, but at that time it was just an absolute requirement. There wasn't a way around it in this area. So we went that path, where you had SBA lender or a different lender for your real estate and a portion of the construction and then practice loan for the other part.

Dr. Noel Liu:
Is that what's preferred?

Dr. Simon Beylin:
I don't know. If it's up to me, they may have a little bit better percentage. You have to bring less to the table. But if you're talking about a loan like B of A, they fund you, they ask for your documents at the end of one year. They see that you're doing well. We do well as dental professionals and they move on, where if it's an SBA loan, it's every quarter, you have to reach out to your account. They need reports. It's, there's no way around it. It's a federal loan. So it's just, it's a lot more of a headache. So I always say if you can avoid SBA loans, you absolutely want to avoid.

Dr. Noel Liu:
At all costs, right? The only reason I'm asking you, Simon, is because one of those questions a lot of people ask is that if I'm going to do a practice loan and I do a real estate loan, I want them separate so that if ever I wanted to sell the real estate by itself, I want to refi it, it's always a separate deal. What's your experience like? Would you recommend separate or would you recommend the same entity or even the same bank? What's your recommendation?

Dr. Simon Beylin:
If you can't split them because you think that, so you're on the residential side. So it's think of a value add when you get a client in there. But just think about it the same way. But if you're doing this with commercial, we go in there, we increase the value of it. We have a lease that we get signed. Once that lease is signed and you've shown that you're a good client, a good tenant for several years, there are companies now like DSOs, but just for real estate, that only purchase real estate that has a dentist or a medical doctor in that real estate. We, actually, spoke with a gentleman who runs something like that, Johnny and I, when we were in Florida for that podcast. That's all we look at. They only want to buy real estate where it's a dentist occupying it. That's their niche. So if you're doing it correctly and you're paying the, your proper amount of rent, which let's just say if you should be paying $35 a month for that rent, because that's what it would be if you didn't own the property next door. You added a lot of value to that commercial real estate, so now you can't sell it to one of those groups and take out quite a bit of equity and then go put it somewhere else. If your loans are tied together, it makes it a little bit messier, because now you have to close out the entire loan. So in that aspect, yeah, it works out very well.

Dr. Noel Liu:
So what would you say? Like some of these banks, they really want to put collateral on their real estate as well as a practice. And a lot of those times where it's a new dentist, right? They're looking into a practice first time. And the banks want to be like, Hey, I want to put that real estate and everything into one note. Is that something you would say it's okay to start off with, or would you still recommend, Okay, you got to have them separate?

Dr. Simon Beylin:
To me, honestly, I don't think it would matter because if you wanted to get some way out of it, I think there's ways to work around it either way. If I had to do it all over again, I would go for a shorter term notes with a non SBA lender. We have a great relationship with Bank of America. I would just do everything with Bank of America. But at the time, first practice, you're nervous. So it's, Oh, they're going to give me 25 years on the SBA note, and I don't have to put anything down. So let me just take that weight off my shoulders. But you get through the first year, Okay, I never had a day in the red. I should have just taken a shorter note, dealt with less headaches for the next ten years. You know what I mean? That would be my personal recommendation. Not that it helps you sleep at night when you don't have to put 10% down or 20% down and puts a lot longer. So just, I guess it goes to your comfort level.

Dr. Noel Liu:
That's especially for the real estate side, right? Putting those down. Okay. Well, let's switch gears. Let's talk about what's going on currently with you. So currently, you're doing like big developments with multifamily. I've noticed, I've seen that some of those posts on our Facebook group. So let's talk a little bit about that. How did you get started in this from commercial?

Dr. Simon Beylin:
My father's company was, they did residential, commercial, and most of it was all new construction. It was a electrical subcontractors. So pretty large company in California. So I grew up on job sites. And what we build on the commercial side for dentistry, they say in terms of construction, it's the most difficult construction you can have because our outlets need to be in a specific spot for a piece of equipment that's going to go into that little cubby. Chair needs to be set exactly where it needs to go. It's very detailed, like 3500 square foot dental office. I could have a 70-page plant set. Residential is much easier to build, and I always knew I wanted to go that way, but I thought I would own apartment buildings and do value add. But it's just so difficult in this area. Like a 15-year-old building in the New England area. It's taken a beating. It's just, the weather cycles that we have. It's already an old building. They require a lot of maintenance. And people, the competition is fierce for a good building that you want to do; value add being 3 to 7 years and just do the typical cycle that you see. It's very difficult with the assets that we have here. I wanted to start in my backyard. I know plenty of people who invest out of state and they do very well with that. But I thought for the first ones I want it to be, whatever I did, I wanted to be a little bit more control in my own backyard. So I couldn't find anything that was decent for value add. So I reached out to somebody who his name is Greg Dickerson. He's my mentor and friend at this point. But I told him, I have this background. I can build, give me a set of blueprints, and I can build you whatever you want. I don't have a problem doing that, but I don't know how to take a piece of dirt. I don't know how to go through the entitlement process, which is a different beast on its own. Get it approved, which is where most of the profit and development is made; is that approval. You can flip the dirt once you have approvals and have a nice exit and never build it. Yeah. So that's a portion I didn't know. Give me the dirt with the blueprints and the approvals. I can build you whatever you want, but how do I get from the steps I haven't done? So I signed up with him for mentorship for a year, and he held my hand through the first project. But even after the first year, we're still, I don't have a single project that I don't run by him at this point. We just go through it, make sure I have somebody else's eyes who's been doing this for over 35 years, have his eyes on it, and make sure I'm not getting into any deals that aren't going to make.

Dr. Noel Liu:
How did you find him?

Dr. Simon Beylin:
I was on a beach in Florida, and I'm like, I'm ready to take this to the next level, but I have no idea. Let me look for textbooks or podcasts or online courses. And I found he had an online course. It was like 100 bucks. So I downloaded everything and I listened to every last one of his videos on the flight back up. And then as soon as I landed, I'm like, I got to see if I can hire this guy to coach me. And sure enough, he had a coaching program, a mentorship program. I landed, sent him an email. A week later, we were on like a dating phone call because he has a phone call with you first to make sure it's going to work. He doesn't just take any client. We had that phone call. I gave him my background. I was amazed about how much he knew about dentistry. He has a lot of dental and medical clients and probably know of quite a few of his clients. Joe Fairless, who writes the best book on syndication and is one of his clients. Viking Capital is one of his clients. So a lot of people that I followed for a while have been his coaching and mentorship clients. So we had a nice conversation. He knew a tremendous amount about dentistry and medicine and selling practices, and it just rubbed me the right way. And I signed up for a year and took a project through completion. And here we are now. Just, at this point, I don't think there's any development that I can't do without him, but we still just, we chat on a weekly basis.

Dr. Noel Liu:
Do you guys work together on a deal or is it just, he's just a mentor?

Dr. Simon Beylin:
Oh, he's just a mentor at this point. He's, he did, I think 350 million of his own development. But we're talking about 80s and 90s. So in today's money, that's a few billion. It's a lot in today's money. So at this point, his life, he's strictly focused on coaching and mentorship. We do have a mastermind that we get on once a week, but he doesn't do any of his own deals at this point.

Dr. Noel Liu:
Oh that's awesome. So how difficult is it to get it from dirt to approval?

Dr. Simon Beylin:
I'll give you a couple examples.

Dr. Noel Liu:
A time frame. What are you looking at? A year? A few months?

Dr. Simon Beylin:
So it's funny. I have a project you've probably seen. I posted, it's 33 units in Windham, Maine. Windham, Maine is a small town, about 15,000 people, about ten miles outside of Portland, Maine. So we picked it because Portland's now has rent control and it's pushing all the developers out. No longer makes sense to, you can't make the deals pencil in Portland. So everybody's pushing out. And because of that the population is pushing out as well. So numbers made sense. My partner on that project brought me the project. I saw it the end of February. The end of May, I had four approvals, and July we had a shovel in the ground. So that's crazy fast. You have a town that has a major housing crisis. They want housing and they do something about it. I have another project in Windham, New Hampshire. Same town name, but different state. It's a town I live in. Where I bought the project. I've had it for almost three years. October will be three years. The person before me gave up ten years into it, and the person before him gave up 20 years into it. So 33 years to get 45 units approved. So those are your opposite ends of the spectrum. You have a completely we hate development town to we will do whatever it takes to get this housing crisis under control. And you just, you need to know which one you're going into. And I knew.

Dr. Noel Liu:
How do you find omething like that?

Dr. Simon Beylin:
You'll know from the beginning. You can go on to any planning board in the US, and you can watch. They all record their, almost any town that I've dealt with, they all have video cameras recording. And you go back years and watch all the recordings. And you can see if they're approving projects in one meeting or they're approving projects over many years. And you can also see the amount of what's being built in a specific town. If you see a town's only giving, there are towns in Maine, right now, we're looking at another project that's 333 units, which, we're at the finish line of getting that under contract. I think we will get it. But the town is limited development there. Even though it's approved for 333 units, they're only letting you build 45 units a year. So the town, just their sewer systems are water. They haven't built up the infrastructure enough to allow more, a developer to do more than 45 units per year. So you have to find this stuff out before you start exchanging funds. And we always go under contract with minimal outlay of funds. So you always write your contracts that we don't exchange our funds until we have all of our building approvals. So the debt going's to shovel in the ground, that's the day that you're going to get your money. But we don't close until that happens.

Dr. Noel Liu:
Oh, that's awesome. That's a great tip. So are you guys like trying to get those areas already pre leased out or is it just different story with multifamily?

Dr. Simon Beylin:
Yeah. So we, about 3 or 4 months before you get your completions, you start leasing them out so we can start taking small deposits. $50 a unit just on reservations. And a lot of our three bedrooms on that project, we have six, three bedrooms. They're already all spoken for. They won't be available until October and they're already all spoken for. So we definitely pre-lease while we're still in construction.

Dr. Noel Liu:
So, Simon, what does your team look like? That's a lot to undertake, right?

Dr. Simon Beylin:
There is. So you can do a lot of development from your home office. You don't make a huge team. Most of them can be outsourced. We're vertically integrated. So I not only do the development side, but I also have a construction company. So we do have people on my team. But Peter on my team, mainly his days are spent just looking for land. So he gets 1 or 2 deals across my desk a week. We'll put out offers on 1 or 2 a month and maybe 1 or 2 every quarter stick. So it's a numbers game. We try to fill the pipeline several years in advance, but that's all that Peter does. On the development side, all the people on my team are people I sell things out to. So we have a great civil engineers in New Hampshire. We deal with a group called the Dubay Group. It's a neighbor of mine, but they have one of the largest civil engineering firms. That's your best friend. Civil engineers know what land, oh, yeah, they know what land is available. They know who owns the land. They know what could be built on the land. They know more about dirt than I'll ever know. When I'm looking for deals, I'll always knock on my civil engineers doors first, because none of the stuff that I've purchased, not a single property, has ever hit the market. Ever. They've all either come from my civil engineers or land brokers that have just known of a piece of land and reached out to an owner for us. So you drive by, who owns that piece of dirt? You look it up on the town's website, then you send it to your land broker. Hey, find that, find this information. Let's give him an offer on that land. But we've never once put an offer on something that was listed. So it's.

Dr. Noel Liu:
What are some of the criterias for you and Peter that goes, Okay, out of the ten deals, this is the one I would have put an offer on?

Dr. Simon Beylin:
We just run the numbers. I try to say, Okay, we want to be 45 units and above, but sometimes the numbers on a 30 unit are amazing compared to a 300 unit. We just look at the numbers, we do our underwriting, we get quite detailed with the underwriting.

Dr. Noel Liu:
Is it location dependent?

Dr. Simon Beylin:
It's location dependent. Yeah, because if you want to build in certain towns, you're not going to build 300 units in the town that I live in. There's, we don't have water, we have sewers. So everything's all well and septic. So 45 unit development in town, like the one I live in, is a large development for this town. But then, two towns over, we have 170 units that we're building. That's part of a 360-unit development. So we purchased two buildings, and the gentleman that we purchased from is keeping one building on the property. But in that town, they allow 3, 4, or 500 unit apartment buildings. So we just look for the deals and start our underwriting. And if it makes sense, we move on to the next phase. But it's like anything else. With development, people think, Oh, I can overpay a little bit for the land. I'll make it up in the construction, I'll make it up in the engineering. And then the engineer comes in and that was over budget. It needs to make sense from the onset. So if land purchase doesn't make sense, don't move on to the next step. And architecture doesn't make sense because you're on the side of a hill and it's going to cost you tremendous amount more to design this because it's difficult, don't go to the next step. So every step needs to make sense before we move on to the next step because overruns always come up; construction overruns, engineering overruns, architectural overruns, time overruns. So if you're allowing it from the beginning, you're not leaving any cushion to have a little bit of contingency to get you through the finish line.

Dr. Noel Liu:
And how difficult are these lenders to deal with?

Dr. Simon Beylin:
Lenders just because of our backgrounds as doctors, if you've been practicing for a while, they know that we're good for our money, we don't fail, and they think you're going to take that into anything else that you do. In my area, they're very conservative. So 2008 didn't hit hard here because builders are conservative here and lenders are conservative here. But where you have certain parts of the US where they'll lend you at a 1.1 DSER, they won't do that here. They want to see 1.3. So it's, Oh, we show them 1.3, they'll give you whatever you want. But if you want to show 1.1, they're gonna say, Oh, even with low rates, we wouldn't have given you that. And in today's market, we definitely don't want to give you that. We don't know what's going to happen. So they're a little bit just more conservative on their criteria. But if you meet the criteria, they want to lend; that's how they make money. So they've, we've dealt mainly with local banks and they've been very favorable with that.

Dr. Noel Liu:
What are they basing the 1.3 on? Projections, pretty much?

Dr. Simon Beylin:
Yeah. So you'll give them projections of existing properties, newer properties that are built similar square footage. And they'll have a very, when it's ground up, the appraisals that we get, the guy spends a month and gives you a 70-page report on the appraisal. And it shows each and every single way. So the bank really relies a lot on the appraisal and the performance. And we're very conservative. Even though, I know I can get much higher rents than what I expect, I'd rather show more conservative rent and still show that high DESR if it makes sense. And the bank always comes back to us with the deals that Peter and I have done and say, Hey, you guys have this listed as $2,100 a month, but that development down the street that's ten years old is getting $2,300 a month. So that's the conversation you want coming from the bank, not the other way around. If you're trying to present them, Oh, I got a 1.8 DESR, but you put your rent at 3000 when they know that the area is only gonna support 2100. So you always want them to realize that you're being very conservative. So we do that in terms of the rent and also on the construction side. So we tell them that it's going to cost us more than what we think it's going to cost to build it, just doing the underwriting. And then we just take less funds if we have to during construction. So you're never going back and asking them for more. And so far, most of our banks that we've dealt with are excited to do more and more projects. You start inching towards their limit because all of these regional banks, they're typically 100 million limit. And if you have developments above that, they're going to partner with other smaller banks. But as long as you're under that limit, they'll continue to lend to you. That's how they make their bread and butter.

Dr. Noel Liu:
And you're still putting equity down, right?

Dr. Simon Beylin:
We are. I haven't raised for any of my deals thus far. Any deal that we have, it's been my money, my wife's money, or Peter's involved in a few of our deals. We just haven't had to raise. Eventually, we're going to start raising for our deals. It's just, haven't needed it at this point yet.

Dr. Noel Liu:
I feel what you're doing right here, Simon. It's, you have a really good delta when do it ground up versus buying an existing cash flow property. Because it's like everything that you're doing is brand new. And it's also the way you can actually project the ROI down the road. It's pretty significant. Like, do you agree with that statement?

Dr. Simon Beylin:
100%. We did a webinar with our HUD lender, and I'll go through that a little bit separately. But the premise of the entire podcast was we're getting into class A assets and a areas at a ten count. And even though everything that's happening today and they say it's going to have cap rates are going to continue going up and up, we're not seeing class A assets trading at a ten cap. You're not going to see that. I can sell that. We've got some ridiculous offers on the 33-unit that's not even completed yet. Just a gentleman older gentleman coming out of a 1031 who wants to purchase it and leave it for his kids. But we're getting into class A assets at a ten cap. That Delta is massive. And then if you want to, just you want to recycle your cash, we deal with HUD lenders that as soon as you're 90% occupied, they will rewrite the loan as if it's 100% occupied, and they'll go for a 35-year loan. And the interest rates are extremely low with HUD right now. 5, 5.5% today on HUD loan at 35 years. So you can't get out of them. So it's very difficult. So it is an assumable loan. So if you're going to sell a property for the first 15 years, there's massive prepayment penalties for 15 years. But typically it's going to be something that assumes that HUD loan if you do decide to sell it. But that's, you just recycle your cash out so you don't go down to 1.1 on the DSER, and they'll go 35 years. So the amount because of that delta that you get in a ten cap, and the amount of value that you have there, and they're going to value it at a five and a half cap because they're lending ar a 5.5%. So that's a huge delta that you take out tax free as long as you do the next real estate project. So that's how we've recycled our cash flow.

Dr. Noel Liu:
That's amazing. Because if it's one of those trophy assets that you guys are building, you probably just want to keep it. If you're going to convert to a HUD, you might as well just keep it.

Dr. Simon Beylin:
Yeah. So that's, Peter and I know that if we're going down this road, we're keeping it for 15 years.

Dr. Noel Liu:
At least.

Dr. Simon Beylin:
At least 15 years. So I'm not going to pay that massive prepayment penalty. And they're a great lender. He lends in all 50 states, the gentleman that we work with. We just, we give him a heads up. So we're 3, 4, or 5 months away from leasing this asset. We expect to hit 90% at this time. So we start the paperwork, and then as soon as he's ready, he submits and look at that process.

Dr. Noel Liu:
Cool deal. Simon, for somebody who wants to get started, man, how do they get started?

Dr. Simon Beylin:
So development: you can do it two ways. You can either do it just as a developer. And if you speak to Greg, that's, if you don't own a construction company, he's going to tell you that's the way to do it, because a lot of developers, that's all they do. You're not going to get out there and start a construction company just to build your own stuff. It's not necessary. I had the construction company, so it just made sense. But you can definitely start looking for land. Look in an area that you want to build. Just reach out to some civil engineers, see if you can make something work. And then you have to find a GC. So with us being vertically integrated, I have a lot of control over the costs. So that is how we get our spread a little bit better. But even if I was going to sub it out to GC, you can find GCS that will manage the entire project for you from anywhere from 3 to 8%. So 3 to 8%, you still have a massive delta, and you have somebody managing the entire headache portion of construction for you. Just put together a team and it helps, if it's your first deal, you're trying to develop something from the ground up. If you've never built anything, banks aren't going to give you a loan. But if you work with a GC that's built plenty of multifamily or whatever asset class you're trying to build, if they built plenty of that, the banks are going to be very open to lending to them. What they'll look at you is: Can you support this asset? If it's only 50% occupied, they'll just look at your financials and can you can you not. It doesn't matter to them as much in regards to can the developer bring this to the finish line as much as can the GC bring this to the finish line. So we do both. So they look at us from both aspects. We pull bonds when we have to. But if you're just starting out, I would just work with the local GC that's building what you want to build. So I don't know that I would jump into a 500 unit on your first one. So find the GC that's building like 15 to 30-unit buildings and take them out to lunch. See about can we build some projects together.

Dr. Noel Liu:
And it's a partnership, right? Like the other day I mean. So how important is partnership in real estate?

Dr. Simon Beylin:
Well, it's, your team, they say your network is your net worth. It's extremely important on the development side. I couldn't do what we do without our civil engineers, traffic engineers. You have to do traffic studies for approvals. The amount of different team members you have, you can't do it without them. So sometimes it makes sense. If you don't own the construction company, don't pay the GC 100% as his percentage, give up percentage equity in your deal. If he has some cash flow from your deal afterwards, he's going to be more incentivized to go into the next deal with you, build more and more multifamily because as you grow, he grows. I love it. Yeah, it might make a lot more sense to him than having a couple hundred thousand dollars more on one single project.

Dr. Noel Liu:
Love it, Simon. Love it. So just to recap, first thing you need is go find a land, get a civil engineer, partner up with the GC, get your lending in line, get your financials in line, right? And then how, and then you still need to work with an architect or a designer, right?

Dr. Simon Beylin:
Yeah. So specifically look for multifamily architects. You want somebody who's designed multifamily, but now you built it. So you've gone through the, you've gone through finding land, civil engineer, architects, got your GC that built for you. And now what do you want to do with the asset now? A lot of developers will stabilize the asset and now just sell it. That delta is large enough to, I don't want to ever deal with tenant or toilet. I'm just going to occupy it and I'm not going to do the HUD thing. I'm just going to sell this thing and move on to the next. That was 100% Greg's play. He never kept a single one of his assets. As soon as he leased them up, sold them. And a lot of developers do very well with that. Or now do you find the management company, which is what we do. We own our own management company as well. But now you have to manage your asset. So with that being in-house, again, we control some of those costs. We have enough units in localized areas. So it makes sense to have your own management company. But there are plenty of management companies that for anywhere from 3 to 8%, will manage your asset, and you'll meet with them maybe four times a year. So if you want to be very hands-off, I hand it off to a good management company afterwards.

Dr. Noel Liu:
Amd you're only local in Maine, correct?

Dr. Simon Beylin:
So I live in New Hampshire and actually.

Dr. Noel Liu:
New Hampshire. Sorry.

Dr. Simon Beylin:
No. That's okay. Most of our stuff is in New Hampshire, but we do have three projects right now in Maine. So the 33 unit, we have another one contract for 222 units, and a 19 unit in Maine. The rest of them are New Hampshire.

Dr. Noel Liu:
Last question for you. If somebody wanted to partner up with you, what's your feedback?

Dr. Simon Beylin:
I met Peter through the mastermind with Greg. And I made this offer a million times. And Peter so far is the only one that's ever actually showed up. Peter was in Maine, and that's why we're building Maine. So all those projects he brought me in Maine. He's ten years, about ten years younger than me, and he saw a bunch of my posts online. He saw my interviews with Greg, and he said the same thing. Hey, I want to learn from somebody who's a few steps ahead. Can I come and get in on some of your deals? I want to part? So I said, Peter, you know what? You bring me a deal. Not only will I hold your hand through it, but I'll bring half the money to it and we'll do one of them together. It'll be 50-50. And if you like it, we move on after that. We met, I think it was like a Thursday or Friday. And the following week he found that 33 unit for me. So we partnered on it. It's a team effort. So there's always room. Yeah, there's always room in real estate for other people on the team. And I make that same deal with anybody. If you find me a good deal and you want to do it together, ... I'll bring you half cash to the table, too. So I put my money where my mouth is. Yeah, but yeah, that's, that is a great way to get into it. I always, it's difficult because we always want to be in control. We all have our own dental offices, right? We want to run our own practice. It's difficult to get people in our field, I think, to partner up because we still se, I think solo is a lot more popular than the group practice that. And people say, Oh, well, if Simon could do it, I could do 100% on my own. But they don't realize if you did the first one with somebody like a Greg or like a Simon or like a Peter, you get through the first one, learn from somebody who's done a few of them, or many of them, see what mistakes you would save money on by not doing it for someone on your own. And then if you wanted to, you'll do the next one on your own. And that's what I told Peter. But he's not doing the next ones on his own. We're still 50-50 on everything we're doing in Maine, because it makes more sense for both of us.

Dr. Noel Liu:
Makes more sense. Yeah, precisely.

Dr. Simon Beylin:
So why would you take the headache on your own? We're just growing together.

Dr. Noel Liu:
And so, and that's another thing too. Like somebody will say, Hey, I want to do it alone. Yeah, eventually he or she will get there. Eventually, they'll get there. But how much, at what, at whose expense and how long? How much money spent?

Dr. Simon Beylin:
So lesson that learning curve just piggyback and it helps with the bank. So the first one if you really think you're going to do the first development on your own, yeah, you're going to do it. It's going to take a while. You'll maneuver your way through the bank, you'll get your funding. But if, this is going to take you five years where you could have been six months on somebody else's development. And then now you have five, ten, $15 million under your belt on the size of what you built, now you go back to the bank and say, Look, I just finished this three months ago and it's fully occupied. Now, I want to go to the next one. It's much easier on that second one than it is on the first one.

Dr. Noel Liu:
100%. Well, Simon, thanks for the time, buddy.

Dr. Simon Beylin:
Of course. Any time.

Dr. Noel Liu:
So how can somebody find you?

Dr. Simon Beylin:
Visit our website BeylinDevelopment.com. My contact info is on there. And actually, the phone number that's on there is my cell phone. So if you ever have a question, shoot me a text. I always reply.

Dr. Noel Liu:
Great, we're definitely going to put the link down there as well in this pod. Other than that, I think we are pretty good and I appreciate you coming on.

Dr. Simon Beylin:
Of course. Anytime. I appreciate you having me.

Dr. Noel Liu:
All right. Great. Well everybody, we're going to land the plane here. Well, make sure to like and subscribe. We can definitely find SimonDevelopments.com. And that's his email address as well. So definitely reach out if you have any questions regarding ground-up construction. Alrighty. Have a good one, everybody.

Dr. Noel Liu:
Thanks for tuning in to the Secure Dental podcast. We hope you found today's podcast inspiring and useful to your practice and financial growth. For show notes, resources, and ways to stay engaged with us, visit us at NoelLiuDDS.com. That's N O E L L I U D D S.com.

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