My Next Step: What Would You Do?

Question

Hi everyone,

I’m a newer investor working toward a goal of $10k/month in cashflow within 3–5 years so I can leave my $50k/year W-2. I’d love strategic input from those who have scaled through multifamily.

My Current Situation

I’m finishing a duplex build on my current property (will be 3 units total) and I’m planning to sell and 1031 exchange (not refinance).  After sale costs, I’m estimating I’ll have roughly ~$180k–$215k available to roll into the 1031 (depending on fees).

What I’m Asking the Forum

Given ~$180k–$215k of 1031 equity and a goal of maximizing durable cashflow, what would you target?

Some directions I’m considering:

• One larger multifamily (10–20 units) in a Midwest cashflow market
• Smaller properties (SFR or small multifamily) to diversify risk and operations
• Higher cap-rate secondary markets (with solid property management)
• Creative structures (seller finance, assumable debt, portfolio purchases, etc.)

One larger multifamily (10–20 units) in a Midwest cashflow market

Smaller properties (SFR or small multifamily) to diversify risk and operations

Higher cap-rate secondary markets (with solid property management)

Creative structures (seller finance, assumable debt, portfolio purchases, etc.)

My preferences/constraints:

• Midwest/out-of-state is fine
• Moderate/cosmetic value-add OK (not heavy rehab)
• Pure cashflow focus over appreciation
• Credit score: excellent

Midwest/out-of-state is fine

Moderate/cosmetic value-add OK (not heavy rehab)

Pure cashflow focus over appreciation

Credit score: excellent

If you were in my position, what path would you take — and what would you avoid?

Appreciate any insight and experience you’re willing to share.

Dave Foster · Answer

@Rodolfo Poe, Scaling your income takes two things - Increased return on your capital, and increased capital.  The 1031 you're contemplating is key to doing both.  And either one of your options could be a viable one couple with a 1031 to get you where you want to go.

Just be sure you're proactive and laser-focused on the area and market you look to invest in well before your sale.  Exchanges I see fail are usually ones where the exchanger has too many options to think about when their old property closes.

Garret Rumbea · Answer

Hey@Rodolfo Poe good to meet you.

I’d check whether the strategy actually meets your 3-5 year timeline.

With 200k, even a decent 10-2 unit deal might get you a few thousand a month, but getting to 10k, might need multiple deals and be on top of ops and biz plan execution. Also once you’re in that range that’s commercial debt territory so you’re either self managing or giving up margin to a PM.

I’m biased towards larger multifamily larger multifamily syndications, but even then, one passive investment at that level isn’t hitting 10k that fast. Likely gonna take multiple deals to get there.

If you went active in syndications though that’s a diff story. Earning acq and asset management fees and backend equity across a few larger deals can shorten that timeline quite a bit. But that’s active side and requires more time and effort.

Joe Loveday · Answer

Hey Rodolfo,

If I had ~$200k I would buy a single family home in the Midwest out right, and lease it out with an option