520k increase in value. Today was a Good Day.

[Shiloh Lundahl]

12-plex in Tucson, Arizona. Purchased August 2020.

Purchase Price: 680k

Repairs: Around 50k

Raised rents from $500 to $725

Today the appraisal came in at 1.2 million.

Today was a good day.

[Shiloh Lundahl]

@Marco G.By increasing the rents, it didn't increase any of the expenses.  So roughly  every $100 increase in rent (using a cap rate approach) it increases the value of the property by 10k if the cap rate is around 10%.  If the cap rate falls to 5% then for every $100 that you increase the monthly rent, the value of the property goes up 20k in value.  We increased the rents $2700 a month among the 12 units. So at a 5 cap rate, it increased the value by roughly 540k.  This is not an exact science but it does explain how we increased the value of the property so much.

With the 50k, we painted the outside of the buildings for about 15k and we rehabbed 6-8 units.  Not all of the units were bad so we didn't have to rehab every unit. Also, some of the people have not moved out yet but we explained that we were rehabbing the units and increasing the rents.  So we still have some rehab to complete on some of the properties.  But the appraisal still came in at 1.2 million even though not every unit was fully rehabbed because the rents were all increased.