Created $3 mil in 18 months. Here’s how we did it.

Found another crappy ON MARKET deal. The seller had huge expenses, with insurance costs through the roof. It was a good property, well maintained, units were rented for $800 a month and it was full.

Insurance was $375,000 a year, he was spending $0.87 for every dollar on expenses.

Everyone passed on this deal- the expenses were so high, even though the price was cheap ($3.6m for 108 units). At only $34k a unit and rents at $800, maybe we could find value the other people didn’t see.

We had a local expert-this was a deal room member who lived there, owned some real estate, and knew the insurance game. Caleb Breaux looked at the deal and saw 3 things driving the insurance costs;

1. It was under a non-recourse loan. This means they had VERY high insurance requirements. If we got a local bank loan, insurance requirements would relax significantly.
2. They had Stab-Lok breaker panels. Insurance companies hate those, and they charge accordingly. If we spent a few hundred thousand, we could replace all these panels.
3. The corner of one of the buildings was touching a flood zone. Flood zone=Flood insurance=$$$. The map was old and outdated. We could hire a consultant to get the flood map re-drawn for about $15k.

We quoted the insurance under these scenarios. We got a quote for $146k. Bingo. We could increase the bottom line by $225,000 without doing anything else.

We then looked at market rents, and we could get another 10% rent increase to get to market rents.
Suddenly this on market deal-that nobody wanted- looked like a home run.

We put it under contract. Replaced the panels. Did upgrades. Got rents up. Got insurance down. All in for $4.5m.

Fast forward 18 months. New appraisal? $7.8m. We got new debt of $4.7m, paid off our old loan, and paid back investors 100%.

They also got 6% distributions the whole time the money was in the deal, and retain their equity forever. We split equity 50/50.

We cash flow $20,000 a month with $3.1m in equity sitting there, rents keep moving up, and property value is increasing.

You can’t do this by saving. You can’t do it by the hour. You can’t do it by yourself.

You have to build the skills, knowledge, and relationships to execute. Caleb didn’t have all the pieces.

Needed help getting the loan. Needed help with the down payment. He did have something everyone needs in a partner…opportunity and the ability to execute.

Do you have opportunity and need a team to help you get bigger deals done? Do you want to take on bigger deals-ones that will change your life?

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