I Made a 344% Return Investing in Multi-Family Apartment

I’ve used many different forms of real estate investing to build wealth for my family, but I’ve never ventured into apartment complexes.

I wanted to let my friend Jeff share his story and how he is able to make huge returns by buying and adding value to existing buildings.

The CAP rate is the building’s profit (before taxes and building depreciation) divided by the purchase price of the building.

What is the CAP rate?

This is the first number a discerning buyer looks at when evaluating a building. CAP rates vary from city to city and, even then, vary within pockets of a city.

Why Is the CAP Rate Number So Important? 

The insurance company no longer wanted to insure the property unless we  provided a written guarantee that there was no knob and tube wiring in  the building.

How I Made a 344% Return in 2 Month

I saw an opportunity to completely gut the units and significantly raise  rents. The problem with rent control, though, is that you can’t just  kick out a tenant.

How I Made a 344% Return in 2 Month

Between the two units, I spent $90,000 in upgrade costs and increased the valuation of the building by more than $400,000.

My Big Return

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