Retire in 10 years after exiting military

13 Replies

So I am exiting the military and my goal is to retire in another 10 years from investing in real estate. So far I own one rental property in El Paso, TX. I currently have $70k saved up and I am trying to figure out the most logical way to have a positive cash flow of $3,000 in 10 years. I will also have a job in the oilfield making about 80k a year but I want to stop working after 10 years. Where do I start and which way would be the best to invest my $70k into real estate? Also, I will be in San Antonio, Texas.

Thanks,

Felipe

Originally posted by @Felipe Lopez :

So I am exiting the military and my goal is to retire in another 10 years from investing in real estate. So far I own one rental property in El Paso, TX. I currently have $70k saved up and I am trying to figure out the most logical way to have a positive cash flow of $3,000 in 10 years. I will also have a job in the oilfield making about 80k a year but I want to stop working after 10 years. Where do I start and which way would be the best to invest my $70k into real estate? Also, I will be in San Antonio, Texas.

Thanks,

Felipe

 In ten years you should be able to replace your entire income of $80k per year or even much more. Start by research research research. 

Positive cash flow of $3,000 a month****

Hi Felipe, thanks for your service! I am assuming you are at Ft. Hood?  I was there too, many years ago...1st CAV :)

Seems like you have a great, and very achievable goal...If you were to pick up 2 units every year that cash flowed at least $150 per month each, you would be able to reach your cash flow goals in 10 years. Have you considered maybe buying a 2-4 unit to save on the down payment and house hack while building your rental portfolio? If you bought a 4 unit in your first year, you would be ahead of your goal by 2 years and build some great equity and cut a lot of your personal expenses as well. You could also look to buy 2 SFH's each year. Tenant's tend to stay in those homes longer and the rents could command a bit of a higher price if you are in at least a somewhat desirable, clean and quiet area. There are definitely some great options for you, and if you are looking for building something slow and steady, a couple SFH's or a duplex a year would get you where you want to be. Hope this helps!

As in research, what do you think I should look into?

Originally posted by @Dorothy Butala :

Hi Felipe, thanks for your service! I am assuming you are at Ft. Hood?  I was there too, many years ago...1st CAV :)

Seems like you have a great, and very achievable goal...If you were to pick up 2 units every year that cash flowed at least $150 per month each, you would be able to reach your cash flow goals in 10 years. Have you considered maybe buying a 2-4 unit to save on the down payment and house hack while building your rental portfolio? If you bought a 4 unit in your first year, you would be ahead of your goal by 2 years and build some great equity and cut a lot of your personal expenses as well. You could also look to buy 2 SFH's each year. Tenant's tend to stay in those homes longer and the rents could command a bit of a higher price if you are in at least a somewhat desirable, clean and quiet area. There are definitely some great options for you, and if you are looking for building something slow and steady, a couple SFH's or a duplex a year would get you where you want to be. Hope this helps!

Dorothy, if you were in my shoes with $70k to invest how would you do it or how would you start? I'm looking more into SFH's.

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@Felipe Lopez  

You are off to a great start! Having that kind of cash reserves and a great W2 income puts you far ahead of the vast majority of people that are wanting to get into this business. One thing I will tell you that most people don't do right is the quit their job WAY to early when their goal is to buy and hold. Having that W2 income is essential when needing to get good 30-year loans.

San Antonio is a great market for cash flow which is what you are needing to target to reach your goal. San Antonio has a very stable market when it comes to appreciation in both cash flow and equity appreciation. Having a timeline of 10 years is very doable. 

I am often asked when is a good time to buy real estate and I will always reply. "Anytime is a great time as long as the deal makes sense today"

For example. Right now South Central Texas (Austin and San Antonio) are said to be the most overvalued residential market in the US according to Forbes. So let's say that you buy two to three properties right now (which is possible given your reserves) and we have a price correction and values drop 10% and you are underwater for what you have put in. I will say two things to that.

1. BUY CORRECTLY! If you are targetting cash flow and buy it where it makes sense today the equity play will pay out in the long run as markets appreciate an average 4% a year over the long term. So what do I mean by buying correctly? Make sure that you have a decent amount of cash flow coming in over your loan value. Most people that I know that have been very successful in this business want at minimum $300 a month over their loan payment. This will make your investment a self-sustaining one. Having good cash flow is an essential to making your investment career a long one.

2. When prices of real estate are sinking rental rates are typically rising. Think about it. If the news is saying that real estate prices are falling across the country do you think your average buyer is going to want to buy a home? Rents are countercyclical meaning the often go up instead of down in hard economies. This is basic supply and demand. If people want to rent and not own because of falling prices that means there are more renters in a market. The only time this doesn't work is when people are leaving an area. That is not the case in San Antonio and much of the southern region of the US. 

There is so much that goes into buying property. You want the right areas, getting the right tenants, managing the real estate, managing the tenants, buying in the right price ranges, cash out refi's, 1031 exchanges, and the list goes on. There is to much to type in one post. If you would like more information please get ahold of me. More than willing to talk more.

I put out my own market reports for SA every month and also have a breakdown of the entire SA area broken down by zip code that gives my opinion of where each area is best for which strategies. I am more than willing to send out both to anyone.

Felipe,

Great goals but plan carefully. Buying in your location can be tricky. I have a SFH in Killeen but it has done well for the last 12 years when I bought it. There are plenty of deals but location is key.

Look for SFHs that are undervalued and find an agent who works on those areas.  You will most likely move two to four more times with the Army.  So where you go you will need to learn the market again since evey place is different.  

I know you are eager to buy but wait for the right deal.  Your patience will set you up for success.  Use Robert Kiyosaki's idea to look at 100 houses before you find the one house to put an offer in for.  

Tom

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Since I know nothing about the El Paso area give us an idea of costs such as if you’re going for single-family homes what do they run on average and how about duplexes? also what are the approximate insurance taxes and utilities?

The Killeen area has more multi-family options than most areas in Central Texas - but they don't cash flow at $150/unit, unfortunately. 

To pull that off in our area, it would likely have to be a solid SFH foreclosure deal. Downside is you are only getting one unit at a time, will likely need more out of pocket in repair costs, but cash flow is a little better.

That said, the Killeen area has a lot of newer housing, and most foreclosures are less than 15 years old, so you can get buildings that are still in great shape and just need some cosmetic stuff like new carpet and paint.

Felipe,

I just separated from the military as well but in June 2017 and I actually have the exact same goal as you do. I watched a video from Brandon Turner and I believe he made post on it as well but it was on how to make enough cash flow through rental properties to quit your job. He went with mainly on what numbers he would search for in properties. He wanted $5,000 cash flow a month with cash flow of $200 (if more than great) and a return on investment (ROI) of 12% so 25 units cash flowing $200 a piece would meet that goal. Those numbers seem to be a great plan to go with. I believe I found that video on biggerpockets YouTube channel so I'd say look around there to get a better breakdown on the strategy he was talking about.
I don't quite have a rental property just yet because I just started but if I had $70k right now I'd look into Multi-family rentals such as fourplexes due to the faster cash flow per property.
One property, one loan, and four units at $200 cash flow minimum doesn't sound bad at all. It is all your preference though but that's what I'll do in your position.
Hopefully this helps you in some way. Best of luck to you and your investing career!

-Rey

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