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Oct. 17, 2022

The Limited Partner Solocast #2: Forced Appreciation with Jake Wiley

The Limited Partner Solocast #2: Forced Appreciation with Jake Wiley

Most people jump in Real Estate investing due to the hype of making big money. The commercialized view of real estate is that you can make large checks passively. However, this can lead to making bad decisions. Aspiring real estate investors should do their due diligence first and be mentored and educated by people who have good hands-on experience with real estate investments.

In TLP’s second installment of the Solocast, we are with our very own The Limited Partner Podcast Host, Jake Wiley. He is a podcaster, author, entrepreneur, CPA, former CFO, and head core client relationships for Private Equity Real Estate and Alternative Investments. Today’s podcast episode is focused on the topics on the cash flow myths of residential rental properties, the magic of forced appreciation and the significance of cap rates which will help aspiring Limited Partners in finding the best deals in the real estate market.

Cash Flow Myth of Residential Rental Properties

Jake was inspired by the book Rich Dad Poor Dad and started building his supposed real estate empire. However, with roof replacements, property taxes, air conditioner repairs, clogged toilets, etc., there simply wasn’t cashflow left over.

Investing in Multi-Family Syndications: A Real Life-Hack

It was an aha-moment when Jake discovered that investing in multi-family syndications was an option. This provides zero operational liability, truly passive income, and time freedom as well. In syndications, investment dollars are invested along with different investors to operate a multi-family apartment complex which are managed by professionals who know how to find better deals and operate at cheaper cost thereby putting your money to work rather than putting you to work.

The Magic of Forced Appreciation

Forced appreciation occurs when a real estate investor proactively increases cash flow and property value by raising the rents and reducing costs. This can be accomplished by making renovations to the building, providing amenities such as laundry, parking areas, and storage areas. This can also occur by decreasing operational expenses as well. For example, making electric, water, and gas utilities the sole responsibility of the tenants. Increasing the net operational expenses will also increase the cap rate or the value of the property.

The Significance of Capitalization Rates

The cap rate is what the property is sold for divided by the net operating income. Understanding cap rates for the subject property helps investors prepare for how to best improve the value of the property and what can be accomplished with forced appreciation. With residential properties, values are determined by the values of recently sold properties nearby with similar characteristics, vs. how efficiently the property is managed. This is a significant advantage for commercial properties and seasoned and efficient investors.

Who is Jake Wiley?

Jake is a podcaster, author, entrepreneur, CPA, former CFO, and head core client relationships for Private Equity Real Estate and Alternative Investments.

With nearly two decades of professional experience building businesses, solving problems, and implementing solutions, Jake has the ability to serve his clients from the perspective of having sat in their seats.

He founded a Louisiana-based Residential Solar Finance and Installation Company, which was later acquired by Palmetto where he led strategic initiatives until late 2018 and then moved on to be a Chief Financial Officer and Chief Compliance Officer at an RIA fund focused on commercial solar.

He has been investing both passively and actively in Real Estate for more than 16 years, raising private funds for strategic value-add investments and long-term holds. This is a true passion of his, so much so that he has a Podcast, The Limited Partner Podcast, where he gets to interview and talk to some of the best of the best in the space to learn how they are making it happen.

His diverse industry experience in both corporate and startup companies, as well as layered work experience as an executive, founder, and advisor, allow for unique, well-rounded, and informed perspectives that he is always happy to talk about.

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