Does anyone on here make a million or more a year in real estate? If so can you go through how you came to make that much? I plan on saving up between 300-400 k for my first multi family investment. Any suggestions on what kind of property I should buy? All answers are greatly appreciated
Making $1 million a year with $400k of your own cash invested would be a 250% annual return. That's unrealistic. A 10% cash on cash return would be pretty good for rentals. Very hard to achieve in most areas, not to difficult in a few. Getting much above that is tough. So earning $1 million a year means investing something like $10 million of your own cash. And owning something like $50 million worth of leveraged real estate.
With a huge portfolio, which is what you're talking about, you're probably talking about very hands off. Perhaps even NNN commercial properties. Those are going to have lower returns, 5-7% maybe, depending on the area.
First off. I'll start out by saying I have no experience in multifamily. That being said, the math of what you're trying to do is the same that I'm trying to do with single family only smaller.
To me, the answer to your question is that you can definitely take 400k and build it into an income stream of a million a year. Its all about chunking in the income.But am I suggesting you could do it by investing in one and only one property with that 400k? No. Not unless you find the craziest deal ever found on the planet. :-)
And I'm guessing you're not suggesting that either.
I think your strategy would be to find MF properties that are value plays so you could buy them cheap, fix them up, increase their value, pull your money back out in a refi and still be able to keep them cash flowing.
1.5mil property that you buy for 800k and put 200k in rehab (all in at 1mil). After its fixed up and leased up, it then cash flows at say 150k (10% cap rate?). You then refi the property at 1 million to get your investment back out and now the mortgage payments are say 75k a year so your net profit is 75k a year as well AND you have your investment back so you can do it again.
If you're really good, maybe you can pull out more than just your investment so you can afford even bigger properties as you go.
But the key is being able to get your investment back out so you can add more properties and so you can keep increasing your total net cash flow.
To me, I think getting to your 1 million is less about what you have to start with and more about your ability to continue adding deals with the room you need to increase their value so you can pull your money back out and still grow your cash flow stream once you do.
Bottom line is that if 400k is what you have, then getting the 10 mil or whatever number you need to create 1 mil a year in income just isn't an option. But chunking in income thru multifamily investing is definitely doable. Its just going to require some really solid acquisition finding on your part and the willingness to continue letting your principal ride on the next deal and the next deal and so on.
That would be my strategy if I had 400k to play with anyway.......
Not sure I would need a million a year though either. I think 250k would be good enough for me. :-)
ya sorry for the huge misunderstanding, I may be new here but I know that investing 400k is not gonna magically give me 1 million a year out of no where. What I meant to ask was if I where to start out with 400k what kind of path would I take to achieve a million a year. Even if you started with less or more I would like to know how you traded up to achieve a million or close to it and how long it took
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