Cody shows how to gain $100,000 in equity from a sixplex in six months without flipping it. Put $100,000 down, raise rents or cut expenses by $83 per unit monthly, and you generate $6,000 extra annual NOI. The math works if you master operating costs: utilities, taxes, insurance, repairs.
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Hey YouTube, this is Cody, and today's video is about how you can make $100,000 within 6 months by owning a 6-unit apartment building, one 6-plex. Now in the future, it's going to be next week, I'm creating a video on how you actually go buy that 6-plex and manage it. But today's topic is strictly how do you go and make $100,000 off of owning a building You don't have to flip it. It has to do with one thing. It's called income. And really what you're looking for is net operating income. So to start out the video, I'm going to dive into that. Net operating income is the amount of money a property makes or business makes after you pay for operating expenses. And operating expenses are what you have to pay to keep that building running, meaning you're paying for utilities. If the tenants don't pay for it, you have property taxes. You're going to have insurance. You're going to have to budget for repairs, and that's going to come from averages on the building. And after you get an inspection on the property, you know, "Oh, you need to fix the roof." You get to budget for these items. But at the end of every year, whatever amount of money you make is what's called your net operating income. And an investor, when they're buying an apartment building, is looking for what's their net income going to be. If they buy something, they're looking for a return. And so the idea behind this is if you can increase that net income, you can provide a higher return to the next investor and your value goes up. Now, what this comes down to is getting familiar with your numbers. I live in Washington State, I'm in Tacoma, and typically what an investor at least in this market is looking for is about a 6% cash-on-cash return or a 6% cap rate if they paid cash. And the math behind this is if you pay $100,000 cash for a building, you want to make about $6,000 a year or $500 a month in net positive cash flow. That's your net operating income. And the math behind that $100,000, the reason I'm bringing up this number is let's say you're watching this video and you want to go make $100,000. If we reverse engineer that number where we just said, if I pay $100,000 cash, I want to make $6,000 a year in net cash flow. In order to double that value, say $200,000, get that extra $100,000 in appreciation, I need to get an additional $6,000 a year in net cash flow. Or on a 6-unit, I need to get an extra $1,000 a unit per year, which comes down to $83 a month in rent. If I buy a 6-plex and all I do is figure out how to raise rent $83 a month or reduce expenses by $83 a month per unit, I make $100,000 in equity growth appreciation. And so this is a short video, but the premise of this is it's all just numbers. If you learn how to, and you may have to replay this, but if you learn how to manipulate the numbers, all you do is raise rent $83 in 6 units in this market, you make $100,000 in equity growth. Our next video for this is going to be how do you actually go buy that 6-plex? Because if you don't own it, you can't do it. But understand the numbers. You may need to replay this. Let me know if you have questions in the comments. And wrapping it up, that's today's video.
