I Don't Buy Apartment Buildings for Cashflow What???!!!

I don't buy apartment buildings to convert my or my investors' capital to cashflow.

Why? The returns are too little especially as mortgage interest rates rise. I mean, a $1M apartment building with a 5% cap means it only produces $50K/yr in income. You might as well invest in bonds. If you use debt at 7%, then you're now upside down.

Instead, I buy apartment buildings with the strategy of increasing its VALUE. The nice thing about this strategy is that the only way for me to increase the value of the apartment building is by increasing its net operating income.

Higher NOI means higher cashflow. By doing this, me and my investors are getting paid handsomely (10-12% cash on cash) while we wait to sell the property 5 years down the road.

By doing this, we were able to achieve sometimes as high as 3x equity multiple in some of my apartment buildings. That means per every $1M invested, we got $3M back. That's how apartment buildings beat bond returns, even stock market returns.

Information presented is for educational purposes only and is not intended as, or may not be relied upon as tax, legal, investment or real estate advice. Consult your tax, legal, investment or real estate professional before investing. Information presented is not an offering.

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