How can an apartment building generate 10%+ returns?
Let’s examine my most recent apartment building purchase. The
building was bought for 30 million. And at 90% capacity takes in 4.5
million annual rental income.
The expenses run about 2.4 million per year netting 2,100,000 per
year of profit.
Add financing at 6%.
The general partner borrows $24,000,000 (80% of $30,000,000) at 6%
incurring a $1,600,000 debt expense. But even after debt expense,
you are left with $500,000 profit (2,100,000 - 1,600,000 = $500,000).
Assume all partners contribute 6 million (20% of the property value)
plus also another 2.75 million for initial repairs/upgrades. So total
partner outlay = 8.75 million.
Bottom line: You allocated 8.75 million to purchase the property
and earn $500,000 per year. $500,000/8.75 million = 6% per year initially.
If rents rise and expenses remain constant, you stand to earn much
more. For example a 10% rise in rents (2% for 5 years) generates $500,000
more rental income increasing the profit to $1,000,000. $1,000,000/8.75
million = 11% per year.
Grow
the IRA Or Qualified Plan Dollars Without Income Or Estate Tax
