Commercial real estate

[John Corum]

Buy a 12 unit motel for $260,000 also comes with a manager suit so 13 units and convert into apartments.4 are made into extended stays with kitchenette. Take the remaining 8 units and convert into 4 units. All in, including 20% down on loan $132000.

4 Reb units 650 a month

4 existing extended stay 595 a month

1 master suite 725 a month

40% expenses = $27475.20

NOI= $41212.80

Cap rate now 12%

How in the hell is it possible that this property is now worth $2,833,333.33

Am I missing something, is this correct?

I mean the total price after rehab plus asking price is 340000. I'm so confused, if I lower the cap rate it makes worth even more. If I make the cap rate 50% I've still doubled my money. Either I'm a moron that thanks I know what I'm doing but im completely screwing this up or I'm a freaking genus and need to jump on this like stink on ****?? HELP!!!