Create 10k a month through apartments

Guys, today I want to talk to you about how to create 10k a month in passive income through apartments. And specifically talking about value add apartments and those people who want to use syndications, using other people's money, using investors to fund the deal. Okay? Not saying, hey, you know, we talk a lot about creative financing, seller financing. So you may not need to use that model. You may be able to secure a no money down seller finance deal. Right? Or, or a very little money. Right? We've done plenty of those. But this specific video, I want to talk about the math, the exact math that you need to create that first 10k month or an extra 10k month, or maybe you just want 5k or 20k or 30k, whatever that is for you. You can base your numbers off this model. Okay, so let's dive in. I'm going to share my screen and show you exactly the math. Okay. I've already pre built it and I'm just going to walk you through it. Okay. So I hope this makes sense. Basically what we're looking at here is 10k per month. Now this is actually going to accomplish way more than that. But to be on the safe side, we want to iron out what a deal looks like that guarantees that kind of residual income. Okay, so the deal is 50 units. Okay. And again, we're talking about value add opportunities. We're not necessarily looking at, you know, large properties that are stabilized or don't need a lot of renovations or are, are at market rents, typically those types of deals to buy into it. You're looking at just a longer term. You got to wait longer term to see more appreciation, see more upside potential. And typically those deals you're paying more for based on you guaranteeing natural appreciation. We're not focused on natural appreciation. We're not bargaining on or betting on the market to appreciate or betting on the fact that we can force appreciation. There are properties in the nearby area that have rents that are where we think we can get it. And the property is similar to where we want to bring this property. Okay? So we're going to break down the numbers. First, let's suppose the property that you're buying is 5.3 million. Now, even before I jump into all these numbers, this is the deal. I'm going to be coming out with an actual path to finding this deal in another video and in a document. Okay? But for the sake of just understanding what kind of deal you need to be in, this is it. Okay? So just suppose $5.3 million is the purchase price. The current Average rent, whether that's, you know, a 1500 dollar three bedroom, two bath, or a 500 or $600, one bedroom, one bath, it averages out to $900 a month in rents. Market rents is 1300 bucks. Renault needed $400,000. Okay, so based off these numbers, we'll calculate this in a second. But based off these numbers, we can tell you your buyer's return, assuming there's a 6% market cap rate. Okay. Which is the deal we recently showed you. What's funny is this deal right here is exactly what one of our. Just about what one of our locked in just the other week. And it's. The numbers are very similar to the one that the other deal we also locked in, that was 88 units. And we, and we just, just bought that and we're renovating it now. But so what I'm walking you through is a real time example, okay? The buyer's return. So what we're going to do is we're going to want to see you at the closing table on this deal within a few months. Okay? Two to three months. If you're brand new to the game, you're just learning how to get into apartments. This may take you three or four months. You know, sellers drag their feet. You can't ever guarantee these things. We could be six months max. But at the closing table, you're going to charge a 3% acquisition fee. Okay? This is paying for your time, getting it to the closing table, doing all that stuff. If you saw the video we recently came out with, we walked you through this a little bit more in depth, but that's going to equate to 159,000. That's 3% of $5.3 million price. All right, so that's what you're charging for your time. Boom. You created some massive cash flow that's over 10k. That's because that's going to pay for your time for the first year. Okay. The actual cash flow during the first 12 months, there's generally an interest only period here, or at least we like to look for a loan just like that. And the one we recently got was interest only for the first year. So. But there's a lot more expenses. There's the, the rents aren't up to market rates yet. There's. We're still trying to get the expense ratio down. And so the cash flow during the first 12 months, 60,000. Okay. Yearly cash flow after refinance, 12 to 18 months. We're going to refinance the property based on the new value, which we're going to show you in just a second and you, the cash flow once you do that, once you refinance based on increasing the rates to market rents and putting in renovation is going to be 143,000. Because you're going to refinance, take out your investors, you're no longer paying them their preferred returns because you only pay them based on the money that's in play. Once you give it all back, or at least give part of it back, you're paying a lot lower. Right? And we refinance it once it's over 90% occupied for 90 days, assuming you've, you've increased the rents to where you want it, then it's considered stabilized. Okay? And you can qualify for better debt, cheaper financing. Okay, we talk about all that in a recent video. But so then we're at $143,000 per year. That's where things are going much better. But what's also cool about apartments, value add apartments, is we can charge a 3% refinance fee. Okay? So the exact same thing as the 3% acquisition fee, but this time we're 12 to 18 months later. We've done a lot of work in the value add process. We've done a lot of work in the, you know, getting it up to speed, up to par, making sure the management company's doing what they're supposed to be doing, making sure, you know, we create new leases, we do all this stuff. So 171,000 is what that equates to in your pocket for your hard work. Maybe you had a team, so maybe part of that is, is paying for your staff. Okay, New value. Now, I wouldn't recommend your first deal having a bunch of staff, but at least, you know, once you get this thing rolling, this can be a new thing that you're doing, you know, the added business expense. So new value of the asset. Okay, let me walk you through this math. You got your calculator out. Punch in these numbers. Okay, so our market rent and what we're getting the rents to is $1300 per month times 50. That gives us $65,000 per month that this, this property is bringing in, in gross potential rents, right? So now this is just increasing the rent. This is just a rent income, not considering other income. Now, what we teach is all kinds of ways to increase the rent, okay? Increase your income. So you could have laundry, you could have lockers, you could have, you know, you do some airbnbs in some of the properties we have A training where we teach how to add Airbnbs to part of your portfolio. You have to do a master lease because you know there's. It's not going to be considered income if you don't. It needs to be anyway. There's, there's some nuances to it, but just suppose we're not including other income. 65,000 times 12 gives us a yearly income of $780,000. You don't have that on your calculator. Pause the video and figure out why. Now we're going to times that 780,000 times.55. Why? Because there's a 45% expense ratio. So that means 55% of that is what we keep as called the NOI, the net operating income. All right, so your profit before debt, before CapEx, it's going to be 429. Okay, $429,000. And from there we take the NOI divided by the. The cap rate, which again we're saying is 6% if you're in a nice area. Right. It could be a lot lower if you're. If. But we're just take a conservative number around figured 6% cap rate. Now, the new value of this asset is 7.15 million, which is what we have right here. So the equity created 1 point. So this 7.15 million, minus 5.3, we created 1.85 million in equity. And if you own 80% of this because you gave 20% to limited partners, you own 80% of 1.85 million. That means you added 80% of that to your net worth. Plus you got 171,000 in refinance fee, 159,000 in the acquisition fee, and you created 60,000 in your first year through cash flow, so you got around 390,000. Just between all that and then year, year over year, you should be at 143 in cash flow. Okay, I hope that makes sense to you. That was a lot of math. If you like math. You love that video. But whatever your goal is, we love to help people map this out for them based on your specific goals. Because your deal, where it's at, what kind of partners you need in the deal. You know what you need a loan sponsor, you need a boots on the ground. Who do you need in the deal is going to be dependent upon your strengths, what you like to do, where you're at, you're investing locally, out of state, all that kind of stuff you factor in. But the goal remains the same, okay? No matter what your goal is whether it's 10k a month, 20k a month, 30k a month, whatever that looks like for you. It's just a numbers game, okay? We're just playing with numbers and figuring out what's the buying criteria you need to have. What kind of numbers do you need to put in on the front end to guarantee this outcome? Guys, I hope you have a wonderful day. I hope this makes sense, and I hope that you get to it. It's possible. Apartments are one of the best vehicles to be in, so hope this helps. Let us know if you have any questions. If you'd like to jump on a call and have us map this out even further. You have any questions, you want to get more clarity, I'll put a link in a call with one of our team. All right, guys, have a great day.