Real Estate Investing Basics

How to Build a Rental Portfolio That Nets $10K a Month

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paying-off-mortgage

One of the most common questions I get is, “How can I replace my W-2 income with passive income from rental properties?”

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Additionally, when I ask most investors what their goal is, 99 percent of people say they want to replace their active income from either a job or a business they own.

Up until recently, my response had been asking them about their risk tolerance, goals, timeframe, investment amount, and so on, and then making recommendations on property types, where to invest, etc.

The challenge was, I was spending a ton of time giving customized advice, and I was getting burnt out. I felt I wasn’t able to help as many people and something needed to change.

I needed a visual guide to share that allowed investors to come up with their own game plan based on some key metrics and something to reference when they were facing challenges in their journey.

Reflecting back on the investors I had helped who were netting over $10K per month, I wrote down the three most important priorities that were common themes for all:

  1. Having the right mindset
  2. Having a strategy for investing
  3. Having the right connections

Related: 6 Mindset Shifts to Make Today to Become Successful Tomorrow

Nothing else mattered if those three priorities were not made a focus. For each priority, I came up with three strategies. I filled in the gaps by sharing my knowledge and experience with different investing strategies and all of my connections over the past 12 years.

Here’s the visual guide:

After putting all of this together, I presented it to a group of 70-plus investors, and their reactions blew me out of the water. A new level of clarity on where to start and what to focus on first helped many in this room take action.

I asked the group to share some of their challenges, and together we found the solutions to their roadblocks somewhere on my diagram.

Don’t have enough funds to invest? Time to get your financial house in order.

Not finding the kinds of deals that meet your criteria? Time to either rethink your investment strategy, build your deal pipeline, or go back to the drawing board on where to invest.

Having a hard time getting your spouse on board with investing? Look at attracting your tribe and spending time with other couples who have had success with investing.

I wanted to share with my community the three priorities and nine strategies in hopes that it helps you, too!

9 Strategies for Building a $10K-Per-Month Portfolio

1. Getting your financial house in order

Problem: Most investors do not get a long-term financing plan in place before they invest. They often run out of money or are unable to qualify for more properties.

Solution: By setting up the right financing strategy, you will be able to qualify and purchase multiple properties and get as many loans as you want.

2. Determine your criteria

Problem: It’s hard to identify the right properties if you don’t know what you’re looking for. A lack of clarity on criteria leads to frustration for investor-savvy agents and wastes time.

Solution: Start with your goals and work backward to arrive at your criteria. Make sure the markets you are searching in offer deals that can meet or exceed your criteria.

male hand writing in notebook with pen

3. Create new habits to reach your goals

Problem: If you always do what you’ve always done, you’ll always get what you’ve always got.

Solutions: Think about the activities that need to become habits in order to build a passive income portfolio—activities such as analyzing deals every week, networking with other investors, and saving for investing are a few examples. Start scheduling those activities in your calendar.

4. Where to invest

Problem: Many people think out-of-state investing is risky, so they choose to either not invest at all or invest in their own backyard, which may not help them achieve their goals. Others are not sure where to start, what to look for, and how to pick a market.

Solution: You need to create your own criteria for where to invest. I personally use population growth, job growth, wage increases, crime rates, and price-to-rent ratio in my where to invest criteria.

Related: 2020 BPInsights Market Study: Top 25 U.S. Cities for Cash Flow & Appreciation

5. Have multiple investing strategies

Problem: If you only have one investing strategy, you could miss out on otherwise great deals. Most people think it takes a lot of units to net $10K per month. In actuality, it doesn’t if you focus on investing strategies that generate the highest per-unit cash flow.

Solution: Having multiple investing strategies gives you an advantage over other investors. For example, the returns might not be very high on a duplex in a hot market, but if you convert the duplex to an adult family home or supported living, the returns might double.

6. Think like an asset manager

Problem: As a real estate investor, your highest and best use is finding new deals and increasing the returns on your existing portfolio. Yet many investors choose to do everything themselves—like renovate and manage—which can lead to burn out.

Solution: Put systems in place to leverage out the lowest dollar-per-hour tasks, and start thinking like an asset manager whose sole focus is to increase returns.

7. Consistent deal flow

Problem: I hear investors complain all the time: There are no good deals out there. Yet our investment-savvy agent network helped our investor community close 119 properties in 2019. The difference? We send at least 10 deals a week to our investor community.

Solution: Network, go to meetups, talk about investing with everyone you meet, build your own investor-savvy agent team, and make sure you are reviewing more than 10 deals a week.

Related: How to Build a Lead Generation Funnel to Consistently Find & Close Deals

8. Build a team of empire builders & empire protectors

Problem: No one succeeds alone, and real estate is a team sport. In addition to having people on your team who will help you build your empire, you need team members who will help protect it, like attorneys and CPAs.

Solution: The right team will help you achieve more than you can on your own.

9. Attract your tribe

Problem: As mentioned, no one succeeds alone, and there’s a chance that those closest to you may not understand your desire to invest in real estate and retire early. In fact, they may even try to talk you out of it.

Solution: If you’re serious about investing, you need to join a tribe of like-minded people on the same journey as you. They can be your sounding board, share resources and connections, and help you get where you’re trying to go.

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What roadblocks are you hitting in your investing journey? Questions for me?

Let’s talk in the comment section below.

A Pacific Northwest native, Jennifer Beadles has been investing in real estate since 2007, getting her feet wet in new construction and land development. From there, she developed more niches, incl...
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    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 7 months ago
    Great article Jennifer!
    Joshua Logan
    Replied 7 months ago
    Awesome article! Concise and informative. Its sound so simple. The more I learn the deeper the rabbit hole goes.
    Kenneth McKnight
    Replied 7 months ago
    Fantastic article! I think a lot of these notions are things that many of us intrinsically understand in whole or part, but seeing it all laid out at a high level can be just the thing to spark forward momentum in the right direction. Well done.
    Sim Kelly from Granite Falls, NC
    Replied 7 months ago
    Great article! Working on getting my tribe on the same page!
    Christian Ames
    Replied 7 months ago
    Trying to find a first rental property. Are there any recommendations on types of properties to start out in? I am searching in multiple states, the states I’m looking for the most in are as follows: Georgia, Arkansas, Denver, New York, New Jersey.
    Dumitru Anton from Cumming, GA
    Replied 7 months ago
    @Christian Ames, I am not replying to you, but also targeting new or newbie investors: You have 2 or 3 mega-city areas in your criteria, and summed together the size of the states is bigger than a lot of world countries. Like that you make the perfect target for unscrupulous turn-key companies or RE players. SO:, please , please, please, focus your criteria: -A,B,C,D,F housing -single or multifamily -group together or spread/how spread connect with a local team and please, physically visit the area. it is a business expense. Also check and double check the numbers presented by a local. And always: -be a PRO -treat it as a business When you find the good team members, treat them right, because they are GOLD in the business. Continuous success
    Irene Rubio
    Replied 7 months ago
    Great article. Thank you!!!
    Jerome Ratliff from Palatine, IL
    Replied 7 months ago
    I really enjoyed this article. In the past I used to just focus on the problem and think of a million and one excuses why I couldn't do anything. What's weird is I never acted this way with my career but when it came to entrepreneurship, I had lots of excuses. I'm done with the excuses and I am now applying the same mindset I have had in my career to how I plan on approaching real estate. Thank you for shedding light on "there is always a solution".
    Noah P Bonds
    Replied 7 months ago
    Could really use some specific how to examples.
    Jacquelyn West from Fort Worth, Texas
    Replied 7 months ago
    Great article, thanks for sharing. I’m a newbie RE Investor, l will this over and over again for guidance
    Jacquelyn West from Fort Worth, Texas
    Replied 7 months ago
    Read this over and over again for guidance
    Dewayne Florian
    Replied 7 months ago
    Nice write! I liked the three important line items to adhere to. And lots of different perspectives when what your investing for. 1, Mindset 2, Strategy 3, Connections Thanks very much!
    Larry Russell Rental Property Investor from Whitsett, NC
    Replied 7 months ago
    Great article and I especially loved the visual image of the three most important priorities that are common themes for us all: (1) Having the right mindset, (2) Having a strategy for investing, and (3) Having the right connections. I have the strategy however I'm very challenged with finding properties that meet my criteria. I've started looking outside my area with no luck as of right now. Also creating a tribe of like-minded people on the same journey is a very good point.
    Adam Leitman Bailey Attorney from New York, NY
    Replied 7 months ago
    Great article, well done
    Sean Newton
    Replied 7 months ago
    I remember being introduced to these concepts about a year ago thinking is it really that simple? For me, having a tribe has opened up so many possibilities. Investing out of state is almost easier than in my home town because there is less emotion to cloud my decision making. Where to invest, deal flow and habits are very intertwined. Once I had criteria to follow on where to invest then I set out to find the deal flow that matched my needs. Then I made it a habit to run the deals I received through my analysis. Eventually spotting great deals takes less effort and even becomes fun! Pro Tip, print out Jennifers visual guide and tape to the wall near your desk.
    Colin Johnson from Portland, OR
    Replied 7 months ago
    Yeah this is fantastic! Great info with no fluff, thank you for laying this out Jennifer!
    Riley Ricobene Real Estate Broker from Chicago, IL
    Replied 7 months ago
    This was extremely helpful thank you!
    Rosanna Delacruz from Belleville, New Jersey
    Replied 7 months ago
    Great visual guide ! Can you talk more about converting your properties to supported living, what are the regulations and how do you then search for tenants that qualify to live in the units
    Patrick Green
    Replied 6 months ago
    Thank you for clear and concise points about how to get started, details to consider and the mindset to adopt.
    Pranav G. Investor from Blackwood, NJ
    Replied 6 months ago
    Agreed Attract your tribe: Love it
    Sean Brauneller Rental Property Investor from Findlay, OH
    Replied 6 months ago
    Good article. As with most, the articles we read on here educate us on a few points, open our minds to some other information, and spawn some more questions. It gives us hope by removing excuses that we thought were in our way. We have tendencies to focus on "what could go wrong?" versus "what could go right?". Our style is overly cautious and talk ourselves out of some opportunities. The one thing that resonated with us the most was for us to "build our tribe". We can talk ourselves out of most anything if given enough time. Our tribe helps us to add a good dose of common sense. We have a realtor that helps us with leads, rental amounts, and hot locations. Our banker gives us advise that is good for our needs in our situation, both helping us achieve our goals. Use your "tribe" to help you achieve your goals.
    Jessica Marsh
    Replied about 1 month ago
    This article was ok but could really be expanded upon with specific how to examples.