The First Step to Financial Freedom
I’m going to use my first deal as an example to demonstrate to you with real numbers how powerful apartment building investing can be. And best of all, I didn’t use any of my own money. Let me show you exactly how this deal added $40K to my net worth every year for five years, and I hope in the process you’ll see that you, too, can do a deal like this.
Here’s how I bought the property:
Source: MLS (listed by residential broker)
Purchase Price: $530,000
Renovations: $54,000 (or $4,500 per unit)?it needed a lot of renovation
Cash Needed to Close: $227,000 raised from 5 investors in return for a 50/50 split
Projected Returns: 15% per year for the investors
Acquisition Fee: $15,900 payable to me at closing
Business Plan: Raise rents from $595 to $825 over the next 5 years and then sell
After closing on the property, I renovated the exterior of the building and many of the units. This allowed me to slowly raise the rents, fill the vacancies,

and evict nonpaying tenants. After five years, I had it under contract to sell for $850,000. Overall, this building made me a profit of $198,434 in five years, or about $40,000 per year.
How is it possible to make $40,000 per year with such a small building and with none of my own money in the deal?
Let me break it down for you by profit center:
Cash Flow: Over 5 years, the cash flow was a total of $130,545 (after all expenses and my fees). That’s about $181 per unit per month. Cash flow was tight the first couple of years, but it picked up in the last 3 years (as we raised the average rent from $595 to $825).
Appreciation: The profit from appreciation was $146,500 after closing and sales costs 먹튀검증.
Loan Reduction: The loan principal was reduced by $48,265 in 5 years.
The total profit from cash flow, appreciation, and loan reduction was $325,310. Since I had a 50% share, my portion of the profits was $162,655.
What about the $15,900 acquisition fee that I pay myself at closing?
Oh, I almost forgot …
I paid myself $15,900 at closing when I bought the building. I also charged an asset management fee of $2,275 per year (1% of money raised) and a 1% disposition fee of $8,500 when we sold the building.
All told, my sponsor fees totaled $35,779 for a total profit of $198,434, or about $40,000 per year.

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