EP269: What does it take to make $8 million in 8 months?

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$8 million in extra enterprise value added to one of our multifamily apartment businesses in just 8 months—by implementing a simple strategy that works for ANY business.

The best part? This strategy lets us live thousands of miles away from our $300 million+ real estate portfolio, while it keeps generating millions for our passive investors—and us.

In this episode, I’ll walk you down the process, so you can copy-paste it straight into your business.

But before I explain the $8 million enterprise value-added, let me give you some context on this business and the timeline. 

When we took over a 295-unit mid-rise multifamily complex, it came with 18 Triple Net Lease (NNN) retail units and 12 live/work units. 

Now, our bread and butter has always been multifamily apartments, so we didn’t have direct experience leasing out NNN or live/work units. 

But we were up for the challenge because the seller had “highly” recommended their commercial broker.

Here’s why NNN retail units are awesome: tenants pay for their own insurance, property taxes, and maintenance.

That means lower expenses for us and a consistent income stream.

Live/work units? 

They combine living space with work areas, like an office or a small retail shop. 

For example, have a lawyer who uses the front as an office and lives in the back—pretty cool, right?

Leasing NNN retail units is pretty straightforward. When we underwrote for the deal, we projected it would take about 18 months to reach full occupancy, and we’re on track to hit that 100% occupancy target.

The live/work units? 

That was a different story. Since it’s a newer concept, finding tenants was tough. 

We tried staging, hosting open houses—nothing worked.

We had to work closely with the broker we inherited, but we hit 2 key problems fast:

Problem NO.1 

No one was dedicated to our account. If the brokerage owner was out, nothing happened. No showings, no leases, hence no income. 

Problem NO.2  

Every time we suggested ideas, it felt like we were stuck in the movie *50 First Dates*. 

It was as if they were hearing it for the first time—”Oh hi, nice to meet you.” No action, no progress, and, you guessed it, no income.

Now, parting ways wasn’t easy because it meant risking potential relationship issues with the city (he was tight with them). 

But we knew we had to make a change. 

That’s when we implemented this strategy that we’re about to share with you.

THE RIGHT QUESTION MAKES ALL THE DIFFERENCE

When you hit a roadblock, don’t ask, “How can I get this done?” 

Instead, ask, “Who can get this done for me?”

So our “who” turned out to be right under our noses—he was already one of our NNN tenants!

On a side note, they were new to commercial real estate, but because they were already our tenant for their residential brokerage (proof that our location is top-notch), they landed their first million-dollar listing with us to kickstart their commercial business.

Here’s what our new broker did in 8 months that made a $8 million difference in enterprise value:

NO. 1 They created killer marketing videos and blasted them everywhere.

NO. 2 They teamed up with our current NNN tenants to show off why being part of this property was a game-changer.

NO. 3 They proactively reached out to franchisees, pitched our retail spaces, and got the units leased up.

NO. 4 Here’s the kicker—they moved into one of our live/work units as a satellite office. This gave prospects a real-life example of how the space could be used.

Now, before we dive into the stats, I want to share a formula that you absolutely need to know like the back of your hand if you want to make big money and big moves. 

This one formula is crucial for making decisions about whether a deal is profitable, when and how to exit a business, and even during the holding period, it can help you decide if you should refinance and pull out cash.

Mastering this formula is like writing a blank check to yourself.

So, what’s the formula?

Value = NOI / Cap Rate

Maximizing and leveraging this formula can unlock incredible opportunities and wealth for your passive investors and you.

So let me walk you through the stats…

So, when we took over the ownership, we had 3 out of 18 NNN retail occupied.  And 0 live/work.

When we started working with the right WHO we were able to add:

Amongst the new NNN:

• Home Developer who took 2 units
• Cryo Lab
• Sushi Restaurant
• Creamery

Live/Work

• Florist
• Clothing Store
• Commercial Brokerage Sattelite Location

NNN Retail = $247,150

Live/Work NOI = $142,300

Total = $389,450

Cap Rate @ 5% = $7,789,000

➡️ It became $7,789,000 million in 8 months.

19th NNN That was not even included in the original retail # so instead o f18 we actually have19 NNN.  Though the last unit is tiny coming in at only 517 sq ft.  But guess

$15,510 / .05 = $310K

✨ Value = $8,099,000 ✨

So that’s what it does it take to make $8 million in 8 months. 

If you want to acquire these assets while leveraging other people’s money this next video is for you.