Can I acquire 21 $200 per month doors in five years?

Rental Property Investor · Ogden, UT · Member since 2016 · 14 posts · 4 votes

I have been setting up my plan moving forward and I decided that in 5 years I want to be making $4,200 a month in passive income. I haven't found my first deal but it seems reasonable for me to hit this goal in five years. I just want to get a second and third opinion. Can I reasonably acquire 21 $200 per month cash flowing doors in my first five years?

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Scott TrenchPro Member

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

10y

When many folks ask this question, they have a fundamental misunderstanding of how investing and compounding works, as it pertains to both business and real estate.

Most people approach getting to 21 doors in 5 years like this:

Year 1: Buy 4

Year 2: Buy 4

Year 3: Buy 4

Year 4: Buy 4

Year 5: Buy 5

Total - 21.

In reality, the guy who achieves this goal is going to pursue a path that looks more like this:

Year 1: Buy 1

Year 2: Buy 2

Year 3: Buy 4

Year 4: Buy 6

Year 5: Buy 8

This is the power of compounding. The first property is a huge struggle to learn, adapt, DIY, grow, and make mistaks. The 21st property is just another cog in your system.

It's not just the dollars that you will have available to purchase real estate with that are compounding. It will be your ability to run a scalable real estate business that should compound as well, as you consume more knowledge, and gain practical experience.

If you apply yourself diligently to your pursuit of real estate you'll find that deals begin to present themselves to you, that lenders will be more willing to work with you to finance your deals, and that other individuals might be interested in giving you cash to partner on your purchases.

So yes, it is possible to get to 21 doors like that in 5 years. Just expect the growth to be exponential, and to come at the tail end, not linear. It's unsatisfying at the beginning. But exponentially rewarding down the line.

Podcast Guest on Show #223

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John Van UytvenPro Member
Property Manager · Oconee, IL · Member since 2014 · 536 posts · 202 votes
10y
That is a good go getter attitude.
Can you? Yes. Should you? Maybe. Could things fall apart if you grow to quickly? Yes.
One of my friends bought 6 SFRs last year. She isn't full time.
I don't know Utah, but what kind of market are you living in? Do you want to invest locally or an hour away? Or 6 hours away?
It is possible, just don't buy a rental just to add another rental. Add a rental that works for your long term goals.
4 Reply
William Hochstedler
Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
10y
@Logan Jones
@John Van Uytvenhas some good recommendations. I was buying a property a month from 2004-2007 and that got me into a lot of trouble when the recession hit. Needless to say I am much more conservative now and have learned a lot of lessons on how to determine when a property is truly stabilized so I can put it on autopilot.
It's very hard to find great deals these days, but it certainly can be done. There are a lot of well honed machines with large marketing operations and working on thinner and thinner margins in the metro areas of Utah. So you will need a very good strategy for beating them to the punch to find great deals.
Certainly your financial resources will matter. I would suggest that this will be very difficult with no cash. But you don't need a million bucks either.
I too like your attitude.
Welcome to BP!
2 Reply
Jeff B.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
Quantity vs Quality? 21 units is a bunch, especially for a DIY approach. Nothing wrong with goals, but sometimes the consequences are just not obvious.
I chose a 6-unit MFU and it's yielding $4125 per month from just those six doors - one roof, one property tax and only six leases to manage.
5 Reply
Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
10y
It is definitely possible to achieve that goal, no doubt.
In my opinion, it is more important to make sure to acquire good cash flowing properties and not get to caught up in timelines. For instance, do not force a deal to make it work just to hit your goal. Why? One bad purchase will set you back big time. Just keep the train moving forward.
2 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
10y
When many folks ask this question, they have a fundamental misunderstanding of how investing and compounding works, as it pertains to both business and real estate.
Most people approach getting to 21 doors in 5 years like this:
Year 1: Buy 4
Year 2: Buy 4
Year 3: Buy 4
Year 4: Buy 4
Year 5: Buy 5
Total - 21.
In reality, the guy who achieves this goal is going to pursue a path that looks more like this:
Year 1: Buy 1
Year 2: Buy 2
Year 3: Buy 4
Year 4: Buy 6
Year 5: Buy 8
This is the power of compounding. The first property is a huge struggle to learn, adapt, DIY, grow, and make mistaks. The 21st property is just another cog in your system.
It's not just the dollars that you will have available to purchase real estate with that are compounding. It will be your ability to run a scalable real estate business that should compound as well, as you consume more knowledge, and gain practical experience.
If you apply yourself diligently to your pursuit of real estate you'll find that deals begin to present themselves to you, that lenders will be more willing to work with you to finance your deals, and that other individuals might be interested in giving you cash to partner on your purchases.
So yes, it is possible to get to 21 doors like that in 5 years. Just expect the growth to be exponential, and to come at the tail end, not linear. It's unsatisfying at the beginning. But exponentially rewarding down the line.
Podcast Guest on Show #223
22 Reply
Jeff B.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
With that kind of exponential growth, I would think a PM would be mandatory.
1 Reply
Alan Sweeten
Investor · Vista, CA · Member since 2016 · 30 posts · 9 votes
10y
Scott Trench , your post is so timely and funny. I am writing my business plan and goals down for the next 10 years. Your expected acquisition goal is exactly what I was planning. Revising now. Thanks for the tip. My best.
2 Reply
Logan Jones
OP
Rental Property Investor · Ogden, UT · Member since 2016 · 14 posts · 4 votes
10y
I was hoping to find somewhere in the stretch between Ogden and salt lake because it would be an easy commute. I work in Ogden during the day and I often have time before and after that I can focus my time towards investing. I am definitely not an expert on Utah's markets(not even close) and still have a lot to learn. I have to start somewhere so I figured I would focus close to home.
0 Reply
Al Wilson
Investor · Daphne, AL · Member since 2014 · 1k+ posts · 242 votes
10y
Sure. Just be sure to start with a substantial amount of capital.
2 Reply
Mike Gallagher
Ogden, UT · Member since 2013 · 266 posts · 51 votes
10y
go for it, anything is possible when you work hard at it.
1 Reply
Matt N.
Rental Property Investor · Philadelphia, PA · Member since 2015 · 94 posts · 58 votes
10y
1 Reply
Al Wilson
Investor · Daphne, AL · Member since 2014 · 1k+ posts · 242 votes
10y
Leverage can be a killer. Cash is king.
1 Reply
David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
10y
Agree with J, quality over quantity. Agree with Scott, will be exponential, and it is knowledge and skills compounding, not just money. I would add, are you ok if it turns out to be not nearly as passive as you think it will be, because I'm here to tell you, it won't be, not at first anyway, even (or especially) with a PM ...
1 Reply
George P.
Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
10y
certainly possible. we have 25 and got those in less than 6 yrs.
but in the right market. is it possible in your market? let's not kid ourselves... not very likely since the cost of entry is high.
good luck anyway.
2 Reply
George P.
Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
10y
Originally posted by @William Hochstedler:

@Logan Jones
@John Van Uytvenhas some good recommendations. I was buying a property a month from 2004-2007 and that got me into a lot of trouble when the recession hit. Needless to say I am much more conservative now and have learned a lot of lessons on how to determine when a property is truly stabilized so I can put it on autopilot.
It's very hard to find great deals these days, but it certainly can be done. There are a lot of well honed machines with large marketing operations and working on thinner and thinner margins in the metro areas of Utah. So you will need a very good strategy for beating them to the punch to find great deals.
Certainly your financial resources will matter. I would suggest that this will be very difficult with no cash. But you don't need a million bucks either.
I too like your attitude.
Welcome to BP!
I don't want to derail the thread is but I'd like to know more about what went wrong for u in that time. I am always freaking out that what. I. doing is wrong and I will end up in the same boat. I'd love to know more. could you please either pm me or post what caused it and what you learned from it?
1 Reply
Jeff B.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
Originally posted by @Al Wilson:

Leverage can be a killer. Cash is king.
Please elaborate - - how so?
0 Reply
David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
10y
Originally posted by @George P.:

certainly possible. we have 25 and got those in less than 6 yrs.
but in the right market. is it possible in your market? let's not kid ourselves... not very likely since the cost of entry is high.
good luck anyway.
I respectfully disagree ... just because something is expensive does not mean it is a bad investment. The opposite is also true. I did what the OP is asking about in Southern California, and it sure as heck didn't take me 21 doors to get there, and no it wasn't speculative luck either ... been doing this 12 years, through the worst RE downturn since the Great Depression and have never lost a dime. The strategies in CA are different than in Michigan, though, and will be different in Utah ... doesn't mean it is gambing and doesn't mean it is impossible to make money investing in expensive markets. I agree with you, though, that it probably won't happen in the same exact way as the OP is proposing; just needs a strategy adjustment, not a location change. Many ways to skin a cat.
1 Reply
Cory Mccarthy
Investor · Fenton, MI · Member since 2015 · 142 posts · 46 votes
10y
@Logan Jones, with all due respect, you are asking the wrong question. To quote Robert Kiyosaki in Rich Dad Poor Dad, the right question really is how can I make that a reality, not can I make it a reality. There are many many paths that lead to this outcome, you just need to identify one of them. Live frugally, think creatively, make a plan, work the plan and never stop learning. You will probably find yourself achieving your goals much earlier than you you ever thought possible if you stay focused and Dream BIG. Best of luck and keep us posted along your journey.
2 Reply
Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
10y
your obviously going to need heavy leverage to meet those goals which mean your success will be tied to market cycle and timing. with lots of luck and good judgement maybe, but probably not. worth the try
1 Reply
Ryan Dossey
Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
10y
Wow Steve. That's depressing.
Look into the BRRR strategy.
Buy Rehab Refinance Repeat.
There are several guys building up the kind of portfolio you're talking about turning the same funds over and over again.
0 Reply
Peter MckernanBusiness Member
Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
10y
@Logan Jones
That goal is great to have and it can be done. What needs to be done from you to accomplish that goal is to create capital, create creative financing, and create a few great relationships that would turn into partnerships. These three pillars would set your goals up to be accomplished.
To create more capital, work a side job (i.e. real estate agent, property manager for a friend, working within construction to get house construction knowledge). All these things can be worked on during your nights off, or on weekends off.
To create creative financing you could take to the seller of some properties and work with them to give seller financing. Another way you could work on creative financing is to see what the balance is on the house you own (just a word to the wise, make sure you don't over leverage yourself on your personal residence). If you have a self-directed IRA you could speak to someone about utilizing that for your progression of your goal.
Now you will want to find a partner, or partners that share your same goals and have knowledge within real estate that can help you accomplish your goals, while you help them accomplish their goals. These partners could be found at your local meet ups, local real estate conventions, or maybe you could go down to the rotary club in your town and find some people that are involved with real estate in your backyard.
Good luck!
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2 Reply
Craig Moore
Commercial Property Manager/Facilities Manager · Boston, MA · Member since 2015 · 187 posts · 41 votes
10y
Originally posted by @Scott Trench:

When many folks ask this question, they have a fundamental misunderstanding of how investing and compounding works, as it pertains to both business and real estate.
Most people approach getting to 21 doors in 5 years like this:
Year 1: Buy 4
Year 2: Buy 4
Year 3: Buy 4
Year 4: Buy 4
Year 5: Buy 5
Total - 21.
In reality, the guy who achieves this goal is going to pursue a path that looks more like this:
Year 1: Buy 1
Year 2: Buy 2
Year 3: Buy 4
Year 4: Buy 6
Year 5: Buy 8
This is the power of compounding. The first property is a huge struggle to learn, adapt, DIY, grow, and make mistaks. The 21st property is just another cog in your system.
It's not just the dollars that you will have available to purchase real estate with that are compounding. It will be your ability to run a scalable real estate business that should compound as well, as you consume more knowledge, and gain practical experience.
If you apply yourself diligently to your pursuit of real estate you'll find that deals begin to present themselves to you, that lenders will be more willing to work with you to finance your deals, and that other individuals might be interested in giving you cash to partner on your purchases.
So yes, it is possible to get to 21 doors like that in 5 years. Just expect the growth to be exponential, and to come at the tail end, not linear. It's unsatisfying at the beginning. But exponentially rewarding down the line.
Awesome reply.. Wow! I must implement this into my strategy. Slow and steady wins the race.
1 Reply
William Hochstedler
Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
10y
@George P.
We had several properties being rehabbed at any given time. When the banks basically stopped lending in the Spring of 2007 all of our exits to take out our hard money loans disappeared. We couldn't refi for holds and retail buyers for our properties were starting to have trouble getting loans meaning that our properties that were finished and ready to go sat as dead weight while we were trying to liquidate.
Our $100-200/month cash flow on our stable properties couldn't support the debt service on the vacant/unfinished properties for very long and we ate through our reserves pretty quickly while fire-saling everything to make our private money whole.
The 20/20 hindsight is that we sold our best properties early because we thought we could weather it out with enough cash and prices weren't really dropping. Looking back, we should have walked away from our poorest performing properties instead of trying to save them.
There is no doubt that we were too highly leveraged (in the sense that our portfolio cash flow was not always covering our total debt service because of the unfinished/vacant properties) and we were relying on lax lending practices from the banks to grow. We had a ton of equity but couldn't access it.
Our two biggest mistakes? Not having property management dialed in and wasting thousands upon thousands on deadbeat contractors.
2 Reply
Gino BarbaroPro Member
Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
10y
@Logan Jones
Hi Logan
It is definitely achievable. Find someone who has accomplished this and then mirror their actions. There are a lot of people out there who are accumulating assets for cash flow.
It is simple, but definitely not easy. Listening to Tony Robbins, his point is to find a mentor or coach who can guide you. It is like baking a cake. You get a recipe, follow it and you will get the same result every time. It is our job to find the right recipe and follow it. I have encountered times when it was not the recipe's fault but something I did, like quitting or not believing in myself.
I like the fact that you have goals, a specific dollar amount, a time frame, all very important to have your subconscious working on it. Whatever you tell yourself, you will work on that to achieve it. Stay positive, and revisit your goals every day to stay focused and on the path
Good Luck
Gino
Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
1 Reply
Gabe G.
Greenwood, IN · Member since 2013 · 346 posts · 93 votes
10y
21 is doable.
I have gotten to 11 units in 2.5yrs.
However, I will be taking a break to pay down some debt. I went fast to get my 10 conventional at reasonable rates.
going from 10 properties, 11 units to 21, I will be more cautious as I will be going commercial and terms wont be 30 yr fixes at 4.5 percent.
So 21 in 5 years is doable. Just make sure the property can stand on its own two feet with current rent, and provide an acceptable cash flow.
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