$1000000 through real estate - one thing doesn't make sense?

[Humphrey Piccus]

In Brandon's recent webinar, "How To Make One Million Through Real Estate Investing", Brandon says to take the after repair value and subtract 20% for the price you pay. He says it's worth 150,000 and buy it for 120,000. He also says to expect 10% forced appreciation in the first year, resulting from your updates and repairs you do to the property. It seems he is doubling the appreciation from repairing it. If the after repair value is 150K, why would it go up another 15K in one year resulting from you repairing the property?

[Brandon Turner]

Hey @Humphrey Piccus - good question. So here's my logic. At the end of the day, the goal is to get a property at 70% of the ARV. So that could mean 20% off and then 10% forced appreciation, or just 30% off, or maybe 10% off and then 20% forced appreciation. by "Forced Appreciation" I mean - improving the property, thus making it nicer, thus increasing the value.

So, here's a real world example.  2 years ago I bought a 4-plex for $90,000.  But they were not asking $90k. They were asking $120k. But I offered much lower, with a cash offer, and did some other tricks and got it for $90k.  Then, I patched part of the roof, painted the outside, and repainted the inside hallway. Then I added a 5th unit (that was there but was "decommissioned") and after getting it rented out, I had the property reappraised. It came in around $150k. 

So I got a big discount, then I improved it. Today I get about $1,000 a month in cash flow, and I have about $60k in equity today.

So don't get too hung up on the 20% and 10% ... the bottom line is - you need to get a GREAT deal. That $1,000,000 webinar and 7-years book is not as much about following some pre-defined blueprint. It's about understanding how recycling capital can exponentially grow wealth, when combined with cash flow, appreciation, and shopping smart. 

Does that answer your question? Hope so!