Unveiling the Power of Predictable, Income-Based Valuations in Apartment Investing

January 24, 2024
Written by John Makarewicz


In the world of real estate, where property values can be a bit unpredictable, apartment buildings offer a reliable source of income. Unlike the ups and downs of buying and selling homes, apartments follow a different financial tune – they generate a steady flow of money.


Cracking the Apartment Code

Instead of comparing your property to recent sales nearby, the apartment game centers around a simple idea – Net Operating Income (NOI). It’s a straightforward concept where you subtract the money you spend to run the building from the money you make in rent. This shift from comparisons to income as the main driving factor in property value gives investors a valuable advantage – predictability.


Forced Appreciation: The Value Booster

Now, let’s talk about the game-changer – forced appreciation. This strategy is based on the idea that for every dollar you increase income or decrease expenses, the value of your apartment building goes up by a significant amount – $20, to be exact. It’s a concept that goes beyond traditional ways of valuing properties and gives you, the investor, more control.


The Magic of $1 to $20

Imagine this: you decide to renovate and raise the rent in a 100-unit apartment building by $100 per unit. Simple math tells us that you’ve just added $10,000 per month in extra rental income. Over a year, that’s a whopping $120,000. Now, here’s where the real magic happens – apply the $1 to $20 rule. That $120,000 increase in income? It doesn’t just add $120,000 to your property’s value; it boosts it by a remarkable $2.4 million ($120,000 x 5% CAP Rate = $2.4 Million value).


Uncovering the Value Chain

Let’s break it down. The increase in rental income isn’t just putting more money in your pocket; it’s reshaping the entire financial picture of your investment. This rise in value isn’t some vague number – it’s a clear result of the income your property generates. In simple terms, it shows how well your property can make you wealthy.


Beyond Money: Growing Your Net Worth

This isn’t just about making quick cash. When you use forced appreciation to increase your apartment building’s value, you’re not only building up your property’s worth, but you’re also significantly growing your net worth as an investor. It’s a smart move that goes beyond immediate profits; it’s about creating wealth and ensuring your long-term financial security.



Investing in multifamily apartments with Faris Capital Partners is a smart way to see significant financial growth. Our expertise in income-based valuations and forced appreciation strategies increases property values, guaranteeing a future that’s stable and prosperous. Explore the benefits of teaming up with Faris Capital Partners for your journey in multifamily investing.

Interested in learning more about Apartment Investing? Download our FREE E-book – The Full Out Apartment Investor

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