$20K Monthly Cash Flow - The Challenge is On! Seeking Your Guidance

Hi Michael,

welcome to BP. 20k passive in 10 years is a very modest target when your investment capacity is 80-100k in the first 4 years and 5-10years up to 200-300k.

I think a mix of investment methods are needed to optimally increase your cash position and asset value, while keeping taxes low.

From experience I know you make around 7% per house flip where you invest into a flipper. If you are not taking out the 7% gain after about 3 months ( typical length of a flip ) and you let it compound in a year. You get 4 flips with 7% each. Because is compounding you get around 30% in return. This means if you invest 100k you will make 30k passively in your first year already. The issue here is high capital gain tax, the 30K capital gain will be taxed with 25% + your personal income tax, when you two are able to invest 80k-100k the first years and later 200k-300k then your tax bracket is already very high. For that reason I would suggest to keep some of the flips or buy some of the flips outright. For example if you buy a fixer upper for 200k put 70k into renovation, you can use the 70k for capital improvements which are totally tax deductable. Means the next flips are capital tax free. You want to keep some of the better flips not just for delaying/avoiding taxes but also use it for passive cashflow, appreciation, loan amortization and just to control assets.

If you use the flips to keep it as long-term rental or short-term rental is up to you. Short-term are making about 1.5 - 1.75 more than regular rental after management and utilities but require a bigger initial investment. A rough estimate is 20-25 USD per SQFT for doing short-term.

All being said. A mix strategy with a portfolio in single family houses focused on long-term to decrease taxes, multi-family properties for short-term for passive cashflow and flips for more $$$ to invest is the best strategy. Of course markets also tends to play a role. So being flexible, adaptable and skillful in more real estate investment ways will lead to bigger success.

Real estate investment being an exponential grower, 20k passive is hugely underestimated. Think about it year 5 to 10 is about 1.25m invested, 240k passive means just 19.2% in return. We have already 30% return in the first year just by flipping. Not adding the different plays with avoiding/delaying taxes, appreciation, passive income and so on.

Real estate tends to be overestimated in the first 3 years but hugely underestimated in 10 years.

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

@Michael Norwood

You would be close if you reinvested the earnings every year

Assuming you can make 8-10% per year by year ten you will have $1.6M-$2.2M invested not including the reinvestments

7e investments53 Reviews

5 Reply

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

2 mill will get you about 200k a year, with 10% net caps, so just start buying rentals.

Yes, its that simple, though many will make it seem more complicated.

All the best

10 Reply

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Member since 2026 · 1 post · 0 votes
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Quote from @Bob S.:

2 mill will get you about 200k a year, with 10% net caps, so just start buying rentals.

Yes, its that simple, though many will make it seem more complicated.

All the best

0 Reply

JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

Podcast Guest on Show #243

Quote from @Chris Seveney:

@Michael Norwood

You would be close if you reinvested the earnings every year

Assuming you can make 8-10% per year by year ten you will have $1.6M-$2.2M invested not including the reinvestments

I was thinking the exact same thing. You just about can just pick a decent no fee S&P fund and hit that target with that kind of income available for investing.

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Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

Quote from @JD Martin:

Quote from @Chris Seveney:

@Michael Norwood

You would be close if you reinvested the earnings every year

Assuming you can make 8-10% per year by year ten you will have $1.6M-$2.2M invested not including the reinvestments

I was thinking the exact same thing. You just about can just pick a decent no fee S&P fund and hit that target with that kind of income available for investing.

Yep. If it was me i would put a percentage in the market and invest some of it in real estate. Depending on the time I have I would determine if I want to own rentals or be passive.

7e investments53 Reviews

2 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Podcast Guest on Show #222

NNN for some depreciation and Be the bank for cash flow.

the example of flipping houses stated above is just not reality and incorrect about whats a write off etc.. if buy a flip for 200k and put 70k into .. the 70k is not a write off its added to basis.

consult a tax professional.

JLH Capital Partners51 Review

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

Time constraints: We have busy schedules, so low-maintenance options are preferred.
Cash flow priority: Our primary focus is generating steady monthly income.
Open to possibilities: We're receptive to various models, asset types, and strategies that align with our goals.

Ok, then don't get your hands dirty with too much physical assets. If you want exposure, just buy enough to get that then buy the reciprocating notes behind it in the short-term.

Buy great property, moderately low leverage once in 4 years. Put reserves aside, the rest in a debt fund that can you pay the 6-10%.

Year 5-10 buy 1 to 2 in STRs with low leverage, in different years, get the tax kickback and (volatile) income, and 1 LTR with low leverage and the rest in debt fun or equity fund that can get 6-10%.

You will have 2-4 low leverage, excellent properties making you very good cash flow & sizable capital in debt/equity that will give you 6-10%.

But really, if you're just looking for steady income and don't want to deal with this. Buy the notes, buy debt, buy equities. This is a commitment.

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @Michael Thach:

Hi Michael,

welcome to BP. 20k passive in 10 years is a very modest target when your investment capacity is 80-100k in the first 4 years and 5-10years up to 200-300k.

I think a mix of investment methods are needed to optimally increase your cash position and asset value, while keeping taxes low.

From experience I know you make around 7% per house flip where you invest into a flipper. If you are not taking out the 7% gain after about 3 months ( typical length of a flip ) and you let it compound in a year. You get 4 flips with 7% each. Because is compounding you get around 30% in return. This means if you invest 100k you will make 30k passively in your first year already. The issue here is high capital gain tax, the 30K capital gain will be taxed with 25% + your personal income tax, when you two are able to invest 80k-100k the first years and later 200k-300k then your tax bracket is already very high. For that reason I would suggest to keep some of the flips or buy some of the flips outright. For example if you buy a fixer upper for 200k put 70k into renovation, you can use the 70k for capital improvements which are totally tax deductable. Means the next flips are capital tax free. You want to keep some of the better flips not just for delaying/avoiding taxes but also use it for passive cashflow, appreciation, loan amortization and just to control assets.

If you use the flips to keep it as long-term rental or short-term rental is up to you. Short-term are making about 1.5 - 1.75 more than regular rental after management and utilities but require a bigger initial investment. A rough estimate is 20-25 USD per SQFT for doing short-term.

All being said. A mix strategy with a portfolio in single family houses focused on long-term to decrease taxes, multi-family properties for short-term for passive cashflow and flips for more $$$ to invest is the best strategy. Of course markets also tends to play a role. So being flexible, adaptable and skillful in more real estate investment ways will lead to bigger success.

Real estate investment being an exponential grower, 20k passive is hugely underestimated. Think about it year 5 to 10 is about 1.25m invested, 240k passive means just 19.2% in return. We have already 30% return in the first year just by flipping. Not adding the different plays with avoiding/delaying taxes, appreciation, passive income and so on.

Real estate tends to be overestimated in the first 3 years but hugely underestimated in 10 years.

Thanks for the insightful advice! While flips sound tempting, we're currently swamped with work and can't commit the hands-on time they require. Appreciate you highlighting the tax implications, too. We'll definitely consider your mix strategy of long-term rentals, short-term rentals (loving those numbers!), and potentially some selective flips for capital gain benefits. We're flexible and open to learning, so your adaptability point resonates strongly. Aiming for $20K/month might seem modest now, but your compounding example really opens our eyes to the potential! Thanks again for welcoming us to BP and sharing your experience. This was invaluable info!

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @Chris Seveney:

@Michael Norwood

You would be close if you reinvested the earnings every year

Assuming you can make 8-10% per year by year ten you will have $1.6M-$2.2M invested not including the reinvestments

Thanks for highlighting the potential impact of reinvesting earnings! Even without it, reaching $1.6M-$2.2M in ten years through real estate is a testament to its consistent growth potential. We're definitely committed to this path for its unique benefits.

I'm curious, though, are you suggesting specific real estate strategies that could potentially yield those 8-10% annual returns you mentioned? We're eager to maximize our income within this asset class while keeping it uncorrelated to the market.

We're already well-diversified in the market, but real estate offers advantages that make it particularly appealing to us, such as tax advantages, passive income potential, and stability.

Do you have any insights on avenues within real estate that could align with our goals?

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @Bob S.:

2 mill will get you about 200k a year, with 10% net caps, so just start buying rentals.

Yes, its that simple, though many will make it seem more complicated.

All the best

Haha, "just start buying rentals!" - love your directness! Any specific types of rentals or markets you'd recommend for hitting those 10% net caps?

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @Jay Hinrichs:

NNN for some depreciation and Be the bank for cash flow.

the example of flipping houses stated above is just not reality and incorrect about whats a write off etc.. if buy a flip for 200k and put 70k into .. the 70k is not a write off its added to basis.

consult a tax professional.

Thanks for the tips on maximizing cash flow @Jay Hinrichs! We're particularly intrigued by your mention of NNNs – the hands-off aspect is definitely appealing. Could you tell us more about how you leverage NNNs in your portfolio and what specific types of properties you find most effective for this strategy?

We're also open to exploring creative financing techniques to "be the bank" for extra income. Any insights you have on those approaches, like seller financing or joint ventures, would be hugely valuable.

Ultimately, we're looking for the best mix of passive income, appreciation potential, and tax advantages. NNNs seem like a good fit on the first two, and your mention of creative financing piques our curiosity about tax benefits as well. We're eager to learn more and make informed decisions.

Thanks again for sharing your wisdom!

Tim Ryan

Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes

Why do all the work when you will be busy generating this amount of funds. You should invest in others syndications as an Accredited Investor. You will get to $20k/year no problem and have equity. The 20k just being the cashflow. You could still do a couple small deals on your own because it will be fun and good experience. But I think it's a no-brainer to be an LP in some very professional syndicated deals.

2 Reply

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @V.G Jason:

Time constraints: We have busy schedules, so low-maintenance options are preferred.
Cash flow priority: Our primary focus is generating steady monthly income.
Open to possibilities: We're receptive to various models, asset types, and strategies that align with our goals.

Ok, then don't get your hands dirty with too much physical assets. If you want exposure, just buy enough to get that then buy the reciprocating notes behind it in the short-term.

Buy great property, moderately low leverage once in 4 years. Put reserves aside, the rest in a debt fund that can you pay the 6-10%.

Year 5-10 buy 1 to 2 in STRs with low leverage, in different years, get the tax kickback and (volatile) income, and 1 LTR with low leverage and the rest in debt fun or equity fund that can get 6-10%.

You will have 2-4 low leverage, excellent properties making you very good cash flow & sizable capital in debt/equity that will give you 6-10%.

But really, if you're just looking for steady income and don't want to deal with this. Buy the notes, buy debt, buy equities. This is a commitment.

@V.G Jason Thanks for the detailed strategy! We really appreciate you taking the time to break it down for us.

We see the appeal of your approach, especially:

- Minimizing hands-on involvement: Balancing work and real estate can be tricky, so the focus on low-maintenance investments like notes and debt funds aligns well with our time constraints.
- Diversification: Combining a mix of LTR, STR, and note investments seems like a smart way to spread the risk and capture different income streams.
- Tax advantages: Utilizing STRs strategically for tax benefits is definitely something we'll consider.

We have a few clarifying questions:

- Note selection: How do you typically identify and evaluate "reciprocating notes" for optimal short-term returns?
- Leverage ratio: Could you elaborate on the specific leverage percentages you recommend for different property types and purchase phases?
- Debt and equity funds: Any particular types of debt/equity funds you favor for consistent 6-10% returns?

Overall, your insights offer a compelling alternative to our initial all-rental plan. We're genuinely intrigued by the potential of a portfolio balanced across these diverse categories.

Thanks again for sharing your expertise! We're grateful for your guidance as we navigate our real estate journey.

Bob S.

Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes

Quote from @Michael Norwood:

Quote from @Bob S.:

2 mill will get you about 200k a year, with 10% net caps, so just start buying rentals.

Yes, its that simple, though many will make it seem more complicated.

All the best

Haha, "just start buying rentals!" - love your directness! Any specific types of rentals or markets you'd recommend for hitting those 10% net caps?

Do you want me to waste your time with a looooooong story LOL, or tell you want you need to hear? ANYHTING that provides the 10%, SF MF,. I just locked up 7 more, all with 15% or better net caps. I have many with 20% net caps. I will close on another next week, all in 60k rent will be 1200- 1300, so another 15% ish. Picked up a 7 unit a few months ago, it will be about 20% net.

Oh BTW I live on the beach in FL and do all OOS, so time restraint is not an issue.

All the best

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Podcast Guest on Show #222

Quote from @Michael Norwood:

Quote from @Jay Hinrichs:

NNN for some depreciation and Be the bank for cash flow.

the example of flipping houses stated above is just not reality and incorrect about whats a write off etc.. if buy a flip for 200k and put 70k into .. the 70k is not a write off its added to basis.

consult a tax professional.

Thanks for the tips on maximizing cash flow @Jay Hinrichs! We're particularly intrigued by your mention of NNNs – the hands-off aspect is definitely appealing. Could you tell us more about how you leverage NNNs in your portfolio and what specific types of properties you find most effective for this strategy?

We're also open to exploring creative financing techniques to "be the bank" for extra income. Any insights you have on those approaches, like seller financing or joint ventures, would be hugely valuable.

Ultimately, we're looking for the best mix of passive income, appreciation potential, and tax advantages. NNNs seem like a good fit on the first two, and your mention of creative financing piques our curiosity about tax benefits as well. We're eager to learn more and make informed decisions.

Thanks again for sharing your wisdom!

notes or be the bank as it were is simply: Lending money to flippers or bridge loans for buy and hold or you can do medium term 2 to 5 years.

you find these potential borrowers at REIA's dont lend to anyone you have not met in person and checked just like your vetting a tenant. Same rules apply.

Only do First position there is a lot of noise in the Pace Morby world about gap funding or Gator funding this is highly risky.

Once you find a few good RE entrepreneurs that you like they will stay with you for years.

u can expect 10 to 15% interest rate on the note with 2 to 5 points on top..

this is just the simple version but I have been putting these types of loans together for myself and clients since the mid 80s.. Like any RE investment nothing is Risk free but this is a pretty good way to go without the TTT adventures with SFR rentals.

Of course there are note funds as well.. but those you lose control your trusting someone else there are threads going around on BP about a company AHP which it seems is melting down so you lose all control. When you are the SOLE lender your risk is your borrower and the project you get lenders title insurance etc.. If you don't want to try to do this yourself every market will have Brokers that specialize in putting these deals together .. Generally they take the points and U get the interest on the Note.

There are books you can buy that will go into great detail how to safely be the bank.

JLH Capital Partners51 Review

2 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

Quote from @Michael Norwood:

Quote from @V.G Jason:

Time constraints: We have busy schedules, so low-maintenance options are preferred.
Cash flow priority: Our primary focus is generating steady monthly income.
Open to possibilities: We're receptive to various models, asset types, and strategies that align with our goals.

Ok, then don't get your hands dirty with too much physical assets. If you want exposure, just buy enough to get that then buy the reciprocating notes behind it in the short-term.

Buy great property, moderately low leverage once in 4 years. Put reserves aside, the rest in a debt fund that can you pay the 6-10%.

Year 5-10 buy 1 to 2 in STRs with low leverage, in different years, get the tax kickback and (volatile) income, and 1 LTR with low leverage and the rest in debt fun or equity fund that can get 6-10%.

You will have 2-4 low leverage, excellent properties making you very good cash flow & sizable capital in debt/equity that will give you 6-10%.

But really, if you're just looking for steady income and don't want to deal with this. Buy the notes, buy debt, buy equities. This is a commitment.

@V.G Jason Thanks for the detailed strategy! We really appreciate you taking the time to break it down for us.

We see the appeal of your approach, especially:

- Minimizing hands-on involvement: Balancing work and real estate can be tricky, so the focus on low-maintenance investments like notes and debt funds aligns well with our time constraints.
- Diversification: Combining a mix of LTR, STR, and note investments seems like a smart way to spread the risk and capture different income streams.
- Tax advantages: Utilizing STRs strategically for tax benefits is definitely something we'll consider.

We have a few clarifying questions:

- Note selection: How do you typically identify and evaluate "reciprocating notes" for optimal short-term returns?
- Leverage ratio: Could you elaborate on the specific leverage percentages you recommend for different property types and purchase phases?
- Debt and equity funds: Any particular types of debt/equity funds you favor for consistent 6-10% returns?

Overall, your insights offer a compelling alternative to our initial all-rental plan. We're genuinely intrigued by the potential of a portfolio balanced across these diverse categories.

Thanks again for sharing your expertise! We're grateful for your guidance as we navigate our real estate journey.

Note selection, you'll definitely have to do your diligence. I can answer this question with the 3rd question. Personally, what I do is a combination of government debt(20-25%) , mortgage notes(40-45%) and private/direct lending(10-30%) most of these are sub 4-years. I'm getting a weighted return of about 9.8% thus far & its taxed as capital gains. As for actual funds that offer this, there are a few. There's an owner of one on the board here, I've done this too little to recommend specific funds-- in my opinion. I would rather face adversity & see the result before I recommend something. And if I never face adversity, that's a great problem. But buying the debt, rather than employing it is likely a better course of action for cash flow, passivity, and lack of physical risk. Research this with the contact on the board or others, but definitely do your diligence as it can get predatory. People will PM you out of the blue right now cause you're interested and try to get you.

As for equities, unless you want to be a hawk at this, I would suggest a common fund allocation- large cap, mid cap, small cap, growth, value, divy, etc. and have it weighted towards the bigger one's and just not worry about the ups & downs. And focus on low expense fees, low as you can get. A suggestion is S&P 30%, Growth/Nasdaq at 15% each, International/Dividends at 10% each and Small/Mid/Value/Emerging Mkts at 5% each. That's not a recommendation-- just a suggestion.

Leverage ratio-- This really depends on the barrier to entry, the cost of capital, and other needs for the house. As for LTRs, specifically, I'd recommend lower than STRs. I'll use Nashville, as an example, cause I do this here. I have put 60-80% down on these houses-- the lower, if it needs more work & the higher, if it needs less work. You must understand the risk of lower leverage; you are now living & dying by the mark to market valuation of the house. So if I put 80% down and this house goes from $1Mil to $700k I am getting crushed. The risk still exists if you put 20-25% down, but as you see your actual capital is way less exposed more so the bank's. High leverage is absolutely excellent way to get wealthy over time, but these goals don't align with your risk tolerance-- hence my suggestion. I do a mix of both, FWIW, but my goals differ.

Just FYI, STRs are only really tax havens the year you buy them so spread it out. For STRs, I prefer no leverage or really low leverage(10-20%) to defeat the volatility in bookings.

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

Also, I don't know where $20k/mo is coming from but if it's a number out of the hat or a hard number to meet your desired living standards. Then please realize every 12-15 year, you will likely need 40-50%. So if this is a 10 year goal, it should be higher if $20k is what you need today.

With that said, chasing strictly cash flow may be missing the forest for the trees especially with a decent time horizon.

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @Tim Ryan:

Why do all the work when you will be busy generating this amount of funds. You should invest in others syndications as an Accredited Investor. You will get to $20k/year no problem and have equity. The 20k just being the cashflow. You could still do a couple small deals on your own because it will be fun and good experience. But I think it's a no-brainer to be an LP in some very professional syndicated deals.

Hey @Tim Ryan thanks for the syndication suggestion! We totally see the appeal, especially the "no-brainer" part of investing in others' expertise. Our initial goal is indeed $20,000 per month, not year :)

We did a few syndication deals and the experience unfortunately was not good, we did a lot of due diligence on the sponsors before investing in their deals, were promised 20-25% IRR, on one deal we got our capital back with no returns and on the second unfortunately we lost capital.

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

Quote from @Michael Norwood:

Quote from @Tim Ryan:

Why do all the work when you will be busy generating this amount of funds. You should invest in others syndications as an Accredited Investor. You will get to $20k/year no problem and have equity. The 20k just being the cashflow. You could still do a couple small deals on your own because it will be fun and good experience. But I think it's a no-brainer to be an LP in some very professional syndicated deals.

Hey @Tim Ryan thanks for the syndication suggestion! We totally see the appeal, especially the "no-brainer" part of investing in others' expertise. Our initial goal is indeed $20,000 per month, not year :)

We did a few syndication deals and the experience unfortunately was not good, we did a lot of due diligence on the sponsors before investing in their deals, were promised 20-25% IRR, on one deal we got our capital back with no returns and on the second unfortunately we lost capital.

Syndications are the worst thing to invest in right now. It could be the very best thing to invest in later this year with the right person managing it, but I personally am going to steer from them. I enjoy this active investing though, that's why.

3 Reply

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @V.G Jason:

Also, I don't know where $20k/mo is coming from but if it's a number out of the hat or a hard number to meet your desired living standards. Then please realize every 12-15 year, you will likely need 40-50%. So if this is a 10 year goal, it should be higher if $20k is what you need today.

With that said, chasing strictly cash flow may be missing the forest for the trees especially with a decent time horizon.

@V.G Jason Thank you for the details on your strategy! 20K/mo was picked after doing some projections but great point on the inflation adjustments that you do need to factor in to.

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @Jay Hinrichs:

Quote from @Michael Norwood:

Quote from @Jay Hinrichs:

NNN for some depreciation and Be the bank for cash flow.

the example of flipping houses stated above is just not reality and incorrect about whats a write off etc.. if buy a flip for 200k and put 70k into .. the 70k is not a write off its added to basis.

consult a tax professional.

Thanks for the tips on maximizing cash flow @Jay Hinrichs! We're particularly intrigued by your mention of NNNs – the hands-off aspect is definitely appealing. Could you tell us more about how you leverage NNNs in your portfolio and what specific types of properties you find most effective for this strategy?

We're also open to exploring creative financing techniques to "be the bank" for extra income. Any insights you have on those approaches, like seller financing or joint ventures, would be hugely valuable.

Ultimately, we're looking for the best mix of passive income, appreciation potential, and tax advantages. NNNs seem like a good fit on the first two, and your mention of creative financing piques our curiosity about tax benefits as well. We're eager to learn more and make informed decisions.

Thanks again for sharing your wisdom!

notes or be the bank as it were is simply: Lending money to flippers or bridge loans for buy and hold or you can do medium term 2 to 5 years.

you find these potential borrowers at REIA's dont lend to anyone you have not met in person and checked just like your vetting a tenant. Same rules apply.

Only do First position there is a lot of noise in the Pace Morby world about gap funding or Gator funding this is highly risky.

Once you find a few good RE entrepreneurs that you like they will stay with you for years.

u can expect 10 to 15% interest rate on the note with 2 to 5 points on top..

this is just the simple version but I have been putting these types of loans together for myself and clients since the mid 80s.. Like any RE investment nothing is Risk free but this is a pretty good way to go without the TTT adventures with SFR rentals.

Of course there are note funds as well.. but those you lose control your trusting someone else there are threads going around on BP about a company AHP which it seems is melting down so you lose all control. When you are the SOLE lender your risk is your borrower and the project you get lenders title insurance etc.. If you don't want to try to do this yourself every market will have Brokers that specialize in putting these deals together .. Generally they take the points and U get the interest on the Note.

There are books you can buy that will go into great detail how to safely be the bank.

Got it thank you!!

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

Quote from @Michael Norwood:

Quote from @Chris Seveney:

@Michael Norwood

You would be close if you reinvested the earnings every year

Assuming you can make 8-10% per year by year ten you will have $1.6M-$2.2M invested not including the reinvestments

Thanks for highlighting the potential impact of reinvesting earnings! Even without it, reaching $1.6M-$2.2M in ten years through real estate is a testament to its consistent growth potential. We're definitely committed to this path for its unique benefits.

I'm curious, though, are you suggesting specific real estate strategies that could potentially yield those 8-10% annual returns you mentioned? We're eager to maximize our income within this asset class while keeping it uncorrelated to the market.

We're already well-diversified in the market, but real estate offers advantages that make it particularly appealing to us, such as tax advantages, passive income potential, and stability.

Do you have any insights on avenues within real estate that could align with our goals?

I am biased as I run a private credit fund, so I would say private credit or private lending as that can be non correlated to the stock market and in many instances housing prices.

7e investments53 Reviews

Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

If you don't want to take on time consuming projects, get your hands dirty, or self manage, you're going to get a better return from lower maintenance investment options.

Funny thing just happened here - I'm betting that you posted this expecting a litany of real estate investors telling you to invest in real estate. You've kind of - not completely though - received the opposite of that. It's a great business with outsized returns, but those outsized returns require a level of specific knowledge/expertise, time, and a real hassle factor.

3 Reply

OP

Investor · Southeast US · Member since 2024 · 23 posts · 6 votes

Quote from @Travis Timmons:

If you don't want to take on time consuming projects, get your hands dirty, or self manage, you're going to get a better return from lower maintenance investment options.

Funny thing just happened here - I'm betting that you posted this expecting a litany of real estate investors telling you to invest in real estate. You've kind of - not completely though - received the opposite of that. It's a great business with outsized returns, but those outsized returns require a level of specific knowledge/expertise, time, and a real hassle factor.

@Travis Timmons Your "funny thing" actually makes a ton of sense. I'm glad you brought up the trade-off between returns and time investment.

Would you be willing to share some of the lower-maintenance alternatives you've found effective for generating passive income? I'm eager to learn from your experience! Thank you!

Nicholas L.Pro Member

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