hey gr Cardone here bringing you all things real estate and today I'm going to share with you how to make a $1 million profit on one piece of real estate that's a million dollars of profit on one piece of real estate and at the end of the video stay tuned I'm going to show you how I made over $3 million on one deal it's very very simple what you're looking for here is the profit on the deal look for One Piece of real estate that will make you one million now remember stay to the end of the video I'm going to show you how I made $3. 6 million on One D and by the way I did that with no money I literally got the money from brother sister uncle aunt mom like people okay you don't need your own money but you do need a Target your target is a million dollars ju not just another piece of real estate that's why single family homes typically don't work to make that kind of profit you know very few people that make $1 million on one single family home so what we're going to look for is the most important number in real estate and that number is the number of units ideally you're looking for 32 units that rents are $200 a month too low they should be $200 higher than they are let's say the rents are $800 and they should be 1,000 you're looking for 32 units where the rents are $200 too low that's what $6,400 a month $76,900 a year okay you're going to multiply this times 12 months and then you're going to divide that by What's called the cap rate this is very very simple basic real estate math okay the cap rate is the return let's say you want a 7% return a 7% return is the cap rate that you need because it's a sea property in a sea neighborhood if it was in Miami and Bickle it'd be like a five cap okay and that would actually achieve a greater profit the lower the cap rate the higher the price the higher the cap rate the lower the price so watch the guy wants a 7% return for me raising the rents 200 if you take to 76,000 and divide by 7% I think you're going to come up with a million 19,000 let me just do the math here you're going to take 200 I'm sorry 32 * 2 200 * 12 times or divide by 07 and you're going to come up with a million 97 of new value that's the increased value of the real estate you've just increased the value of the piece of real estate that already cash flowed by the way let's say it was Cash flowing at 7 or 8% a year you bought it raised the rents on 32 units 200 bucks produced $6,400 more a month in revenue and that produces 7 thou $ 76,800 more Revenue a year which is worth more cash flow to you but that cash flow increases the value of the property remember rental property is based not on the comps of the neighborhood but the revenue that is generated by the rents as as the rents go up the value of the property goes up this new value is 1 million you just made $1,997 th000 and all you did was find 32 units where the rents were $200 too low you went in and said hey new sheriff in town great property you changed the name you put some paint on it you put some Landscaping in place and you told everybody hey we're cleaning this place up we're getting rid of the Dead beats and the bad people and the criminals and we're going to make this property great again and you raise the rents $200 over some period of time it could be 3 months 6 months 9 months a year but you just made a million dooll score on a property because you raised the rents now I told you when you stayed to the end of the video I was going to show you how I did this the more units the easier it gets uh I bought a piece of real estate you can look this up uh Cedar Woods properties in Vista California I bought this I think in 19 998 maybe I paid $1. 9 million for this property I went in it was 48 units and I raised the rents 400 bucks okay that produced just do the math it's the same math for everybody 48 time 400 doesn't matter whether you're in Vista California you could be in uh Michigan you could be in Singapore you could be in Cincinnati it doesn't matter 400 time 48 same math doesn't matter where you go is $19,200 a month in New Revenue time 12 you always multiply times 12 that's 230,000 assume we kept it all and I divide this by a six cap at that time we were buying real estate in uh in Vista California for a six cap stealing it by the way $230,000 I wish I would have never sold this divided by 06 is 3.
8 Million $33,000 by the way I paid 1. 9 million for the property that's what I paid for it I increased the value of it by $3. 8 million and we sold it for $5.
7 million and that's what I made one deal one time $3.
