Interview with Nicholas Tan and Paicy Zhong

Source: AAAB yearbook (2022). Original author: Kewei Gan

The story of the two began ten years ago. Before Tan Haokeng met his wife Zhong Peixi, he was already a well-qualified expert in real estate construction. At that time, the Southern Construction Company was established not long ago, and before that, he already had a resume in his life - the owner of a building materials company.

As a child from a family in the real estate industry, Tan Haokeng's DNA has been engraved with a love for "architecture" since he was a child. His childhood memories began with drawing a young hut on a workbook; then he built castles and mansions with summer sea sand or winter light snow; until the end, when he was a boy, he could not only paint on paper Preliminary house plans were drawn, and an exquisite villa model was even built out of simple old wood.

Surprisingly, after that, Tan Haokeng did not choose a major in architecture in college - until the age of 24, he returned to the real estate development industry and personally developed his first property in Boston. In order to understand every important link of the real estate industry, at the very beginning of the project, Tan Haokeng even went to the construction site himself to learn various construction skills. From electrician and plumber to building material selection, he has accumulated a wealth of construction knowledge with various practical experience. For more than ten years since then, he has gradually started to study various professional knowledge of real estate development and construction and established his own building materials company and construction company. Taking these two companies as an opportunity, Tan Haokeng has been able to contact the different preferences and styles of various customer groups more comprehensively in real estate purchase, site selection, design and decoration in undertaking more projects, and can easily predict. To the technical difficulties in the design of various houses and formulate solutions in advance. Tan Haokeng has also developed the skills to quickly evaluate real estate development projects through the accumulated practice tests. When he was about to enter the real estate development industry himself, he could already assess the profitability of a real estate or property and decide whether to invest or not within three hours. He recalled that when he first started preparing for the DT Developmentern Real Estate Development Company, he could evaluate five real estate properties in one day and decide whether to invest. At that time, DT Development bought an A+ grade school district property in Andover at a low price of US$450,000. Construction started in June this year, and the current market value has reached US$3 million. This fully proves that Tan Haokeng's appraisal skills for real estate projects are already perfect. Before starting the preparation for Zeyuan Nanfang Real Estate Development Company, Tan Haokeng met his wife, Zhong Peixi, who is now the head of the financing and promotion business of Zeyuan Nanfang Company. As for the reason why the two met, Zhong Peixi recalled: "At that time, he was ambitious to develop a commercial street, trying to find a financing of 100 million US dollars. I was in the high-end education industry at that time, and there were many high-net-worth clients. That year , my company happened to be attending a trade show and met him there..."

That year, Tan Haokeng's dream of "commercial street" finally failed to come true; that year, Zhong Peixi felt funny to the boy with huge dreams in front of him; that year, he promised her happiness; That year, she decided to stay in Boston...

The most important thing is that in that year, one thing made Tan Haokeng and Zhong Peixi together set their sights on a blue ocean of real estate development industry - real estate financialization.

According to the memories of Tan Haokeng and Zhong Peixi, the cause of the incident started from being owed a project payment. In 2019, Tan Haokeng's Southern Construction Company undertook a construction project. The developer requested a three-family home in Boston's Cambridge area. At that time, in order to save funds for the company faster, Tan Haokeng led the construction team to work day and night according to the drawings and requirements. But what he didn't expect was that the developer started halfway through, and he actually defaulted on the construction payment for half a year on the grounds that "the bank has not approved the construction payment". It was later found out that in order to raise funds, the developer promised the client the attractive condition of using the house equity as a mortgage, plus a total interest rate of 20%.

However, after getting the investment, in order to take advantage of the loopholes in the contract to reduce the investor's interest, the developer first defaulted on the construction payment on the grounds that "the bank did not allocate funds", which forced the construction time to be extended; On the grounds of "sold out" and "the builder's payment has not been settled", the principal and interest of the investor will not be refunded until 2022. In this way, not only Tan Haokeng himself has paid hundreds of thousands of US dollars for the project in the past few years, but the interest of investors can also get 20% from the original one year, and subtly changed to 20% in four years. The interest rate went from 20% to 5%.

After this battle, Tan Haokeng and Zhong Peixi realized that the traditional "equity pledge" to attract investment has become a common trap for many bad developers. In order to make the soon-to-beestablished Zeyuan Nanfang Real Estate Development Company more attractive and credible, and to make investors who are afraid of being deceived dare to trust Zeyuan Nanfang and invest with confidence, he studied project management at Boston University. Zhong Peixi had a bold idea in his mind-debt investment.

"DT investment" is a financing method often used by banks in the financial market. Taking real estate as an example, traditional "equity investment" divides a real estate into several shares, and only allows investors to hold the corresponding shares of the real estate without any decision-making power. Like stocks, investors' interest and even principal will rise and fall with the volatility of the housing market. Once the housing market slumps, it can be lost at any time. Under the operation of unscrupulous merchants, the high total interest rate promised by the original merchants will be gradually degraded with time delay. Investors can only watch all this and cannot take effective rights protection methods. On the other hand, “debt investment” means that merchants must first purchase real estate as collateral, and finance investors with a fixed period and rate of return, so that investors’ principal and interest are not affected by market fluctuations. Once the developer fails to perform the contract or defaults on the interest, the investor can auction the mortgaged property after the contract expires, and the principal and interest will be compulsorily recovered; and the developer must pay off all debts (return all investments) before the The mortgaged property is sold or re-mortgage. Also, investors have the right to ask the company to disclose all progress at any stage. Therefore, for a real estate development company, it is by no means an optimal path to make profits by purchasing real estate first as collateral and then financing by means of "debt investment". On the one hand, real estate companies need to bear all the risks under this model, which constantly tests the company's risk control level; on the other hand, strict profit returns and financing cycles also require the company to have strong backup funds.

However, this does not deter DT Development. Tan Haokeng and Zhong Peixi, the young innovators, successfully used their professional experience accumulated over the past ten years. Zhong Peixi, who has been studying the market for many years, firmly believes that as long as Zeyuan Nanfang dares to take risks that originally belonged to customers, and promises a clear rate of return and cycle, it will surely win the trust of customers with such sincerity; for the risks faced by the company, she recruits professionals for The design, risk control and financial strategy team of the company, and enables DT Development to have enough strength to avoid risks regardless of the cost. Her market strategy was quickly favored by investors, giving the company a good reputation in a short period of time. The Nanfang Construction Company run by Tan Haokeng has accumulated enough funds to enable Zeyuan Nanfang to acquire a large number of properties with development value in a short period of time. It took only one year for DT Development to develop real estate with a total value of 30 million US dollars from its establishment; it is estimated that by the end of 2022, the company's total development value will be 50 million US dollars. For a young company that was founded during the epidemic and has only been around for more than a year, this number represents an undoubted business level and business reputation. When talking about future business ideals, Zhong Peixi said that DT Development is already a comprehensive real estate development company integrating construction, development and finance. In the future, with the accumulation of development projects, it is imperative to establish the exclusive property management company of DT Development. The establishment of an exclusive property management company can make development projects more profitable, bring more lucrative returns to investors, and bring better reputation and popularity to the company. At the same time, because the real-time cameras of the company's construction sites have license restrictions, it is impossible for all investors to observe the progress of the construction site at any time. Therefore, in the future planning of DT Development, the company will also develop exclusive customer-specific app. Investors can not only log in to the account to obtain permission to supervise the progress of the project, but also check the real-time rise and fall data of the real estate market at any time. DT Developmentern Real Estate Co., Ltd. will be built into a new type of real estate investment company that is rare in the industry and will financialize and digitize real estate investment.

Today, when the traditional business model is facing the impact of emerging technologies, Tan Haokeng and Zhong Peixi, a young real estate couple, undoubtedly perfectly integrate real estate, digital and finance. The success of DT Developmentern Real Estate Co., Ltd. is a testament to their bold attempts and tempered their profound professional knowledge and integrity. They are about to become young leaders in the US real estate development industry.

The hardships and vision of the first Asian American mayor in 300 years ——An exclusive interview with Mayor Wu of Boston, "Asian American Yearbook"

Author: Kewei Gan