Jonathan Cronin walks through how forced appreciation on a 44-unit apartment building generated $1.2 million in 15 months. He shows the math: raising rents across units increases NOI, which multiplies into property value gains when you apply a cap rate. The strategy relies on operational improvements, not waiting for the market to move.
Struggling with. What's up guys? So today I want to talk to you about how our team created about $1.2 million in about 15 months with just one deal, one 44 unit apartment complex. Okay? And I actually want to walk you step by step through a deal we just bought. But we also have a completely free training on how to get into this deal, how to get into deals like this, because we've done several. And this, and I'll link that in the description, but completely free. It goes into depth into all of this. And you can actually watch several case studies that's happened in the past couple of years. But today I want to talk to you about the number one thing you should be looking for in apartments and how to actually find these types of deals. Because we could come in here today and talk about how to maximize profits, how to do, how to manage well, how to, you know, you know, increase cash flow and all that kind of stuff. But the biggest topic we need to be discussing is how to find these types of deals and what to look for, like the metrics to look for that allows you to create this so quickly. So what is the $1.2 million? So you know, in this deal that we're, we just bought, it's, you know, has the ability to do about 2 to 3 million within the next 18 months. Okay? But it's 88 units either way. The 1.2 million that's created is not in fees. A lot of these big guys out there cardone all these big groups, you know, wanna is really making a lot of money off the fees in syndications. You pull money together and then you charge an acquisition fee. You charge all these different fees. Those are important and I think you need those. But that's not where the real money is made and it's not even in the cash flow. Cash flow is a byproduct of what I'm about to talk about. But it's not the main thing, right? Flipping, wholesaling, it's not any of those. The biggest thing you need to focus on is how the wealthiest of the wealthy in the world create their wealth. And it's how people create massive impact using their money. And it's called appreciation. Okay, now there's two types of appreciation. There's natural appreciation and there's forced appreciation. Okay? There's market appreciation, right? The property value over time goes up because the demand goes up, the market, you know, inflation, all these different things. But we don't depend on market and natural appreciation. Now if you're doing the big ones, like I mentioned, Grant and all these guys, you know, they're, they're getting nice properties, a class properties, all these things that don't have a lot of room to grow immediately in terms of rent increases or in terms of value add situations. But they're depending on natural appreciation. They're depending on 5, 10 years, 15 years from now, it's going to be worth a lot more, which it will be. But the real money, at least in the next couple years is not made there, Right? The real money is made through forced appreciation. Okay. The reason I talk about impact is because we actually have a. We buy apartments, but we also teach other people and have a mastermind full of faith based real estate investors that are focused on impact as well as income. So just give you reference or why I share about that. But just to kind of give you a walkthrough of this, okay, so this deal, we just bought around $200 a month, maybe 150amonth under market rents. Okay? But just suppose, just suppose that it's, it's $200 a month under market rents, 88 units. If we go in there, fix up the place, it really just needs revamp, revamping of the operations, right? And we just create better value to the tenants. However we do that, whether it's a paint job or whatever, right. Just adding amenities or whatever that could be and increase income. So maybe adding lockers or adding something. Right. To increase income, we go increase just say 200 bucks a month per unit, you know, so 88 times 200 and then times 12, right. You're looking at adding an additional, just say around $200,000 to the bottom line, to the NOI, right? The profit, the net operating income, right? And then this, the area is about a market 6% cap rate. So the way apartments are valued is your, your NOI divided by your cap rate gives you your value, right? So, so your 200, your 200,000 divided by 6% is means we just added an additional three to three and a half million, right? So that's where the real money's made. Okay? And like I said, there's several deals that actually played out and the team took down recently in the past year or two that you can actually see how it worked. And we break down how the general partner gets paid, how the limited partner gets paid. But I just want to jump on here and let you know that if you're wanting to get into apartments or maybe you just want to figure out what's the best move for you in real estate right now, I want to tell you, it's through creating massive forced appreciation in apartments, okay? Only apartments have what we call the appreciation multipliers. Right? You have a bunch of units, and it appreciates a lot faster because you have the ability to tweak a few things and make, you know, massive impact, right? Because every dollar you add to the bottom line, you add 7 or 10 to the value of the property. So then you can go and refinance that. Once you've created that equity, you can go refinance that and pay out your investors and. And then your. Your. Your cash flow increases, you know, or you're. And then you can get better debt, cheaper debt with, you know, your, you know, your agency debt, you know, Fannie Mae, Freddie Mac, cheaper interest rates and all that stuff. So I hope that helps kind of a lot there. But again, like I mentioned in the beginning, we just did a free training, walking you through every step of the process, from finding leads to locking up the deal, analyzing the deal, locking up the deal, to getting the funds in play, and then even showing you the example. So you kind of have a really good mindset of what you should be looking for. So if that intrigues you, I'll drop the link down below, check that out, let me know what you think. Otherwise, I hope this was helpful. Have a great day.
