29 Sep MW Managed Multifamily Portfolio Evolution: 4,516% Growth
This example follows one strand of an MW managed investment portfolio from inception over 13 years and 4,516% equity growth. Through multiple 1031 exchanges, the owner deferred all capital gains from the initial and subsequent transactions. As a result, the owner paid zero capital gains taxes from sale to sale and instead put all profits to work in subsequent investments. The figures make allowances for purchase costs (1.5%) and sale costs (7%). However, they do not account for rental income, operations, or loan principal pay down over the years. Instead, the aim here is to show in very broad terms the investor’s net worth increase through aggressive management, as a measure of equity increase over the years. In fact, a return on investment measure accounting for rental income, expenditures, and principal pay down would show even higher overall return on investment.
The portfolio, step by step
Brooklyn, NY Co-op Foreclosure Cash Purchase: $30,000
6 Year Hold
↓
Brooklyn, NY Co-op Sale: $300,000.
Equity Increase: $249,000
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First 1031 Tax Deferred Exchange
Los Feliz (LA, CA) 12U Apartment Building Purchase: $1,217,000
↓
2 Year Hold
↓
Los Feliz (LA, CA) 12U Apartment Building Sale: $1,740,000
Cumulative Equity Increase: $635,680
↓
Second 1031 Tax Deferred Exchange
Eagle Rock (LA, CA) 16U Apartment Building Purchase: $1,800,000
↓
1 Year Hold
↓
Eagle Rock (LA, CA) 16U Apartment Building Sale: $2,400,000
Cumulative Equity Increase: $1,050,215
↓ ↓
Third [Partial /Improvement] 1031 Tax Deferred Exchange Fourth [Partial] 1031 Tax Deferred Exchange
LA, CA 4Plex Cash Purchase: $800,000 LA, CA 20U Apt Building Purchase: $1050,000
↓ ↓
6 Month Hold ($150,000 remodel) Cash Out Refi [Property Hold]
↓ ↓
LA, CA 4Plex Cash Sale: $1,349,000 SC, 67U Mobile Home Park Purchase: $1,040,000
Cumulative Equity Increase: $1,354,785
↓
LA, CA [2nd] 20U Apt Building Purchase: $1,200,000
Results after 13 years
TOTAL CUMULATIVE EQUITY INCREASE: $1,354,785
EQUITY GROWTH 13 YEARS: 4515.95% *
ANNUALIZED EQUITY GROWTH: 376.33%
NUMBER OF UNITS AT START: 1 Unit
NUMBER OF NUMBER UNITS TO DATE [Portfolio Section Reviewed]: 107 Units
ACTIVE MANAGEMENT TIME: 13 YEARS
* Total equity appreciation with current property valuations would show significantly higher growth, as the 13 year period only takes into account management from 1993 to 2006.