Real estate investing has long been a source of stable passive income and wealth growth, driven by ever-increasing housing and commercial property demand. Best-selling author and investor Ken McElroy recently outlined on his YouTube channel how he earned $1 million (approximately £810,000) from each of his real estate ventures.
Launching a Property Management Company
Starting as an onsite property manager, McElroy realised the potential of owning his own company to achieve his ambitious financial goals. He founded a property management business that eventually oversaw 4,000 units. Despite high operational costs, McElroy netted between $50,000-$100,000 (£40,500-£81,000) per month, making it his first million-dollar business.
By working with syndicators and independent property owners who didn't want to manage their properties themselves, McElroy created a management company valued between $5 million and $10 million (£4 million-£8 million). This venture tapped into a growing market of millennials seeking passive income through real estate investments.
Combining Properties for Greater Returns
McElroy bought two adjacent buildings—144 and 150 units—and merged their operations, saving $300,000 (£243,000) annually in costs by consolidating management and marketing efforts. The streamlined operations added $5 million-$6 million (£4 million-£4.86 million) in property value.
This concept of creating value by combining assets and trimming expenses illustrates McElroy's philosophy of optimising net operating income to generate long-term wealth.
McElroy's strategic acquisition of a 156-unit property with an adjacent nine-acre vacant lot allowed him to construct 148 additional units, creating a 304-unit property. By using a construction loan and refinancing the project, McElroy recovered his initial investment and generated millions in equity. Today, the property is worth $54 million (£43.7 million) with $10 million (£8.1 million) in equity.
Adding Amenities for Increased Value
In Austin, McElroy purchased a 256-unit property with washer and dryer hookups but no machines. Installing 256 washers and dryers at a cost of $150,000 (£121,500) allowed him to increase tenant rents by $50-$75 (£40-£60), generating $153,000 (£123,750) in annual cash flow. This move added $3 million (£2.43 million) in property value and recovered the initial investment within two years.
McElroy bought two apartment complexes in Las Vegas for $85.6 million (£69.3 million), converted the units into condos, and sold them individually for $171 million (£138.4 million). By legally mapping the properties as condos and renovating them, McElroy earned over $30 million (£24.3 million) in profit.
Building an In-House Renovation Business
To maintain control over property renovations, McElroy launched his own renovation company, handling flooring, appliances, and paint for large apartment complexes. This company generated over $1 million (£810,000) in revenue by renovating 856 units at a cost of $15,000-$20,000 (£12,150-£16,200) per unit.
Before short-term rental platforms like Airbnb became mainstream, McElroy capitalised on seasonal demand. He furnished and rented 200 units in Arizona to Major League Baseball teams for $3,000 (£2,430) per month, generating $400,000 (£324,000) in monthly gross profit. Although he eventually closed the business, it produced millions annually during its peak.
Digital Billboard Innovation
McElroy turned static billboards into digital assets, increasing advertising capacity from four ads to 16 ads per billboard. By investing $250,000 (£202,500) to digitise billboards, he increased revenue exponentially and sold them for $1.6 million (£1.3 million) after two years.
McElroy's ventures demonstrate the importance of diversifying income streams, managing risk, and maintaining control over all aspects of property management. While real estate investing requires expertise and diligence, his strategies illustrate how property owners can maximise value and generate substantial profits in various markets.
Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.
