Living off Real Estate Investment fulltime

VA · Member since 2022 · 5 posts · 6 votes

I keep seeing videos, articles, etc talking about BRRR and how to use rentals as a means to quit the 9 to 5 job. Maybe I'm missing something but how would one do this with rental properties if the cash flow (assumed $200-$300 per door) is being kept in an account for potential repairs? I guess I would like to hear from folks that are now doing real estate investing full-time and no longer have a W2 job. Would this freedom come after 20 years when most of the properties are almost paid off?

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Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

@Leandro Gabriel Chavarria you got some great responses, and I'll also add the following from a much bigger picture perspective - I think folks usually have some other income stream on top of their rentals, whether it's a part-time job (theirs or a spouse or a family member); social security (for folks eligible for it); dividends from stocks; something online; etc. People who have rental income only (after all expenses, as folks have pointed out) and nothing else whatsoever I think is pretty unusual. For example, for my family, I plan on a combination of part time work, real estate income, and dividends.

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Adri JusczakPro Member
Salinas, CA · Member since 2020 · 51 posts · 34 votes
4y
Hi Leandro,
I haven't retired from my W2 yet, but I'm on my way to retirement. My cashflow is roughly $250 per door after setting aside money for repairs. My cashflow not setting aside for repairs is roughly $400 per door. These homes are in my LLC, once I hit my goal of $10,000 in cashflow monthly, I'm planning on paying myself through my LLC an "owner's draw". I'll then take half of the cash flow towards the owner's draw and will continue to give myself a raise as I buy more rentals.
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Chris Webb
Investor · Central Virginia · Member since 2020 · 394 posts · 253 votes
4y
Google "Dion talk Financial YouTube" and learn about his story. No BRRRR and he is financially free. Still works, but as he says "it's optional." He might give you some inspiration about moving forward. He talks about the income snowball and how it takes time at first, then it builds up. I hope this helps.
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Erik Browning
Lender · CO CA TX WA ID OR · Member since 2020 · 419 posts · 542 votes
4y
Hi @Leandro Gabriel Chavarria, I suspect you are looking at deals on the MLS, is that correct? While this is attainable to buy investment homes "on the market," substantial returns are found on off-market deals. What that means is either from the wholesale channel or network connections you make with other investors/sellers willing to send you a deal "off market."
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Leandro Gabriel Chavarria
OP
VA · Member since 2022 · 5 posts · 6 votes
4y
Quote from @Adri Jusczak:

Hi Leandro,
I haven't retired from my W2 yet, but I'm on my way to retirement. My cashflow is roughly $250 per door after setting aside money for repairs. My cashflow not setting aside for repairs is roughly $400 per door. These homes are in my LLC, once I hit my goal of $10,000 in cashflow monthly, I'm planning on paying myself through my LLC an "owner's draw". I'll then take half of the cash flow towards the owner's draw and will continue to give myself a raise as I buy more rentals.

@Adri Jusczak thanks for the response. It’s good to see it broken out by someone doing it. How many doors do you need to get you to that $10k? I assume these are properties that you have a property management company taking care of? I can’t imagine having a w2 job and doing the management of that many properties.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Leandro Gabriel Chavarria:

I keep seeing videos, articles, etc talking about BRRR and how to use rentals as a means to quit the 9 to 5 job. Maybe I'm missing something but how would one do this with rental properties if the cash flow (assumed $200-$300 per door) is being kept in an account for potential repairs? I guess I would like to hear from folks that are now doing real estate investing full-time and no longer have a W2 job. Would this freedom come after 20 years when most of the properties are almost paid off?

Leandro, you need to really understand what "cash flow" means. It's the money left over after paying all your expenses (taxes, insurance, mortgage, interest, property management, utilities, HOA fees, etc.) and after setting aside a certain amount for projected expenses (maintenance, vacancy, capital expenditures, etc.). Too many investors pay their mortgage, taxes, and insurance, then consider anything left over to be cash flow. That is a recipe for disaster.
Consider taking the Path to Purchase course to get a basic understanding and the tools for analyzing deals: https://www.biggerpockets.com/...
Learn what constitutes "good" cash flow: https://www.biggerpockets.com/...
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Leandro Gabriel Chavarria
OP
VA · Member since 2022 · 5 posts · 6 votes
4y
Quote from @Chris Webb:
Google "Dion talk Financial YouTube" and learn about his story. No BRRRR and he is financially free. Still works, but as he says "it's optional." He might give you some inspiration about moving forward. He talks about the income snowball and how it takes time at first, then it builds up. I hope this helps.

Thanks Chris. I’ll check that out.
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Leandro Gabriel Chavarria
OP
VA · Member since 2022 · 5 posts · 6 votes
4y
@Nathan Gesner I appreciate the precise distinctions. That makes a whole lot more sense. I haven't seen anyone break it down that much. I will check out the links you shared. Much appreciated.
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Leandro Gabriel Chavarria
OP
VA · Member since 2022 · 5 posts · 6 votes
4y
@Erik Browning I definitely will be looking off the MLS since my understanding is a s you said, off-market homes are more likely to give me better cash flow when fixed up.
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Adri JusczakPro Member
Salinas, CA · Member since 2020 · 51 posts · 34 votes
4y
Quote from @Leandro Gabriel Chavarria:

Quote from @Adri Jusczak:

Hi Leandro,
I haven't retired from my W2 yet, but I'm on my way to retirement. My cashflow is roughly $250 per door after setting aside money for repairs. My cashflow not setting aside for repairs is roughly $400 per door. These homes are in my LLC, once I hit my goal of $10,000 in cashflow monthly, I'm planning on paying myself through my LLC an "owner's draw". I'll then take half of the cash flow towards the owner's draw and will continue to give myself a raise as I buy more rentals.

@Adri Jusczak thanks for the response. It’s good to see it broken out by someone doing it. How many doors do you need to get you to that $10k? I assume these are properties that you have a property management company taking care of? I can’t imagine having a w2 job and doing the management of that many properties.

Hi Leandro,
I have been self managing for now, but I plan on getting a management company once I have a few more doors under my belt. Right now I have 3 rentals and a 4th that will be ready for rent by the end of July. Between the 3, I cashflow just over $1,000. I'll roughly need about 30 more doors to hit my goal of 10K cashflow. The stretch goal is to buy two more this year, and then double every year until I hit my goal. That would mean purchasing 8 doors next year, I'm looking into MFH which makes it a possibility and with experience, you gain trust of friends/family members as private money lenders. I currently have built up a list of about 6 people who are willing to invest 20-50K each in my projects. I typically hold the money for 4-6 months and use the funds for rehab, then pay the PML 10% at the end. EG- Current PML deal is 25K for 4 months, I'll pay the PML $27,500 at the end of 4 months.
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
4y
@Leandro Gabriel Chavarria you got some great responses, and I'll also add the following from a much bigger picture perspective - I think folks usually have some other income stream on top of their rentals, whether it's a part-time job (theirs or a spouse or a family member); social security (for folks eligible for it); dividends from stocks; something online; etc. People who have rental income only (after all expenses, as folks have pointed out) and nothing else whatsoever I think is pretty unusual. For example, for my family, I plan on a combination of part time work, real estate income, and dividends.
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