07/31/2024
How do you increase the value of a multifamily property?
Let me show you...
Step-by-Step Process:
→ Identify Opportunities: Look for properties with untapped potential.
→ Make Improvements: Upgrade units, add amenities, improve management.
For Example:
Increase Monthly Rent:
→ Renovate 10 units.
→ Increase rent by $100 per unit.
→ New Monthly Revenue: 10 units x $100 = $10,000.
Calculate Yearly Revenue:
→ New Yearly Revenue: $1,000 x 12 months = $120,000.
Determine Property Value:
→ Property value is based on Net Operating Income (NOI).
→ NOI is total revenue minus operating expenses.
→ Assume operating expenses remain the same.
→ Increase in Yearly NOI: $120,000.
→ Use a capitalization rate (cap rate) to find value.
→ Example cap rate: 5% (0.05).
Calculate Value Increase:
→ Value Increase = Increase in NOI / Cap Rate.
→ $120,000 / 0.05 = $2,400,000.
In Summary:
→ Initial Improvement: $100 rent increase.
→ Monthly Revenue Increase: $10,000.
→ Yearly Revenue Increase: $120,000.
→ Property Value Increase: $2,400,000.
Small improvements can lead to significant property value increases.
Simple Steps: Identify > implement > improve revenue > increase value.
I help entrepreneurs invest passively in these types of real estate opportunities. If you’re intrigued, shoot me a DM and let’s chat.