Why wait for the Market? “Force Appreciation” with Apartment Investing

Why do we invest?  It’s not a trick question.  To make money of course!  Hopefully enough money that someday we have what we need to live a comfortable retirement.  What I find interesting, though, is the lack of control most investors accept when they make an investment.  Maybe due diligence was performed, fundamentals were understood, and projections seemed realistic.  But once acquired, most leave it up to Mr. Market to determine the fate of their investments.  It’s somewhat of a cross your fingers, hold your breath, “I hope this goes well” mentality.   

Although I don’t mind buying and holding stocks and other assets that are at the whim of the market, I was in search of an asset class that had more similarities to how businesses are run and offered more control to help me reach my goal faster.  Any good business looks for ways to increase top line sales and decrease expenses, thereby optimizing the bottom line.  When you buy an apartment, you are basically buying a business.  When I discovered the concept of “forcing appreciation,” I started to see why apartments truly are the greatest asset class. 

Primer – How Apartments are Valued

Apartments are different from 1-4 unit homes, as their value and how they compare to similar properties is measured by the income they produce, not market “comps.”  Simplistically,  “net operating income” or NOI, is calculated by taking the amount of rent collected and subtracting expenses incurred to operate the property.   Expenses include maintenance, taxes, insurance, legal, marketing, utilities, etc.  Once all these expenses have been subtracted from the effective rental income, NOI has been calculated. 

Note that debt service, the cost to finance the property, is not included in the NOI calculation.  Since properties are financed in many different ways, with buyers having varying sources and access to capital, it would not be useful in trying to compare properties to one another by including the cost of debt. 

Once NOI has been calculated, a multiplier is applied called a “capitalization rate” or “cap rate” for short.  Cap rates are tricky to understand.  Simply put, they are a measure of market sentiment, demand, and what buyers are willing to pay for an income stream.  They vary by market and property class, or quality of the property.  You can find cap rate data by speaking with local brokers in your market.  They are often published by the large brokerage houses for different markets as well. 

As a quick example, let’s say a property has effective potential rent of $250,000.  To operate the property, expenses total $150,000, brining the net operating income to $100,000.  If the property class and market is trading at a 6.5% cap rate, the property is worth $1,538,461 ($100,000/.065). 

Play with the numbers a little bit.  You’ll notice that as the cap rate drops, or compresses, the property value increases without changing NOI.  As cap rates expand, or go up, property values  decline.  Cap rate and valuation are inversely related.

Forcing Appreciation

Hopefully you see where this is going at this point.  If you want to drive the value of the property up and not wait for Mr. Market to compress cap rates, you need to “force appreciation.”  This is one major perk that makes investing in multifamily properties so attractive.  Again, like any business you have two ways to improve the bottom line – increase top line sales (rents) or decrease expenses. 

We target “value-add” apartments for this reason.  These are assets that are a bit older that need some updates to reinvigorate them.  By looking for properties that are in areas where competitive units are already commanding a rent premium by offering nicer amenities, there is an established blueprint achieving higher rents. 

The other opportunity to add value is through operational efficiency, usually through expense reduction.  Perhaps the landlord has been paying for water for tenants because units are not separately metered.  By implementing smart technology that measures water usage at the unit, the landlord can bill water back to the tenants, reducing expenses and encouraging less water usage. 

Forcing Appreciation in Action

We are in the process of repositioning a 40-unit apartment at the time of this writing.  Classic, or pre-renovation, one-bedroom units are renting for $475.  The cap rate in this market for similar properties is 7.5%.

Our value-add plan is to completely update the property exterior, common areas, and interior units.  The overall community upgrade will make it a much more attractive place to live.  The interior upgrades will consist of new cabinets, counters, appliances, flooring, and bathrooms.  Cost to make these upgrades is ~$7,500/unit. 

There a two other apartment complexes adjacent to ours.  One is close in age and looks similar to our property on the exterior.  The units were upgraded 5 years ago, with one-bedrooms renting for $550.  The other property has one bedrooms renting for $675.  This community has amenities we don’t have at ours, like a pool, playground, gym, and clubhouse. 

With our upgraded units the pre-renovation target was $575/unit, which we are now getting.  The question is whether the additional $100/unit we can command after our rehab is worth the $7,500 we are putting in to achieve it!  Let’s see. 

$100/unit x 12 month = $1,200/yr in additional revenue

$1,200/yr / .075 (7.5% cap rate) = $16,000 in added value

$16,000 – $7,500 cost = $8,500 net gain

So for every unit we renovate, we more than double our money we put in.  The answer is yes, it’s worth it!


This is an important concept to understand, whether you are looking to actively get into apartment investing, or if you would rather invest with a value-add sponsor passively, while you collect the checks.  The potential of executing upgrades to grow an income stream is exciting and something that can be forced.  Additionally, when the property is sold, asset appreciation will be realized. 

Forcing appreciation also offers a defensive buffer for the investor.  If cap rates expand, or rise, all things being equal, the property value would be less than what was paid for it.  However, if the property has been improved, and rents have risen as a result, the additional income will help offset any cap rate expansion, and protect investor principal. This makes the investment less prone to the whims of the market. 

Mr. Market can be very kind, but what he giveth he can also taketh away.  Some investments don’t offer the control or ability to implement a business plan to make them more valuable.  With apartment investing, as an active or passive investor, you don’t have to wait for Mr. Market to determine the outcome of your investment.  You force appreciation.  This, along with many other benefits, make investing in apartments one of the best decisions you can make to control your future.


Paul Shannon is a full-time active real estate investor, as well as a limited partner in a number of syndications.  Prior to leaving the corporate world, Paul worked for a medical device company, selling capital equipment to surgeons in the operating room.  After completing a few rehabs employing the “BRRRR method”, he saw scalability and more control over how he spent his time, and left to pursue real estate in 2019.  Since then, Paul has completed over a dozen rehabs on both single-family and multifamily properties.  He currently owns over 50 units in Indianapolis and Evansville, IN and is a limited partner in larger apartments and industrial properties across the US. You can connect with him at www.redhawkinvesting.com

Nothing on this website should be considered financial advice. Investing involves risks which you assume. It is your duty to do your own due diligence. Read all documents and agreements before signing or investing in anything. It is your duty to consult with your own legal, financial and tax advisors regarding any investment.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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