[Multi-Family Forced Appreciation] How to Compound your Net Worth
There’s a great quote by Charlie Munger, the vice-chairman of Berkshire Hathaway, about increasing the odds of your success.
Charlie Munger and Warren Buffett have amassed quite the fortune over the years using a specific investing strategy. Today I want to share one of our own investing strategies with you.
One of the unique investment strategies in multifamily real estate is called “FORCED APPRECIATION.”
When you buy any asset,
When you buy any asset, you obviously want the asset’s value to increase. Most of the time, investors are left at the mercy of the market and are forced to watch their net worth riding a financial roller coaster.
But what if you could get off the roller coaster onto the fast track and directly influence the value?
*** That’s where the power of forced appreciation comes in! ***
Remember, your apartment complex’s value is directly linked to its net operating income. If you increase the net operating income, the value of your investment rises, which allows you to make a substantially greater return on a consistent and more predictable basis.
Leveraging forced appreciation is one of the ways we “drain the barrel first” at DMI Holdings.
In multifamily investing, you have much more control over the value of your investment because you can directly impact the asset value by increasing revenues and/or decreasing expenses.
An experienced multifamily operator will apply some very specific strategies that “force the value to increase” by:
- Bringing in top quality professional management
- Installing a property wide water conservation & energy efficiency program to reduce expenses by 10% – 20% immediately increasing the value of the property
- Making physical improvements both interior & exterior to attract quality tenants to maximize occupancy and charge premium rents
- Offering high-end and affordable amenities the tenant community can enjoy that improve overall retention & minimize unit turn over
- Focusing on adding or improving other sources of income that directly increases the cash flow and value of the property such as:a.) Charging for or increasing cost for covered parking
b.) Offering in-house internet & cable TV services
c.) Charging for or increasing leasing application fees
d.) Adding additional paid for unit amenities such as washer & dryer, 1st floor gated patios & upgraded units
Unfortunately, not all investing partners are created equally. Therefore we have taken all the precise steps to ensure your investment will be managed professionally, protected and nurtured for maximum cash flow & increased value!