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.

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Darren Eady
Rental Property Investor · Lindon, UT · Member since 2015 · 862 posts · 438 votes
10y
Hey @Logan Jones I'm a fellow Utah investor and private money lender. I've done what you are hoping to do. Let's connect and I'll pass along some good info
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Douglas LarsonPro Member
Rental Property Investor · Salt Lake City, UT · Member since 2008 · 410 posts · 337 votes
10y
Start with one or two and see what you think. If it's working then do more. I prefer a few rentals, a few flips here and there, a few wholesales each year and some land deals. I had 12 rentals at once in Utah just before the crash. I sold most at the right time and lost money on a few. I didn't default on a single loan but it was a stressful time. I came out of the tough times with a big net positive but you couldn't pay me enough to go back to that many headaches. I have a few rentals in management now and I manage a few myself. I delegate a lot better than I used to but I still think 21 doors would cost me my sanity!
Once you get a couple under your belt you will know if it's right to take on more.
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David Huynh
Investor · St. Paul, MN · Member since 2014 · 109 posts · 37 votes
10y
Logan Jones it is achievable. Peek at the success stories, I acquired 24 units and got to that point in less than two years. Not trying to steal your post. "Be careful what you wish for" is my post $190/door with real expenses in place.
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George P.
Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
10y
Originally posted by @William Hochstedler:

@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.
do you think if you were strictly buy and hold investor, you'd have had this problem?
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William Hochstedler
Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
10y
@George P.
We were buy and hold investors. When the loans evaporated we had no way to secure long-term financing to hold the property. Only then did we start selling.
The problem was not hold vs flip, it was that we acquired properties on short term financing while we improved/stabalized them. It's what people on BP call the BRRR strategy.
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William CollinsPro Member
Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes
10y
I have done it on my 1st 5 doors, and I am aiming to 10x it! :)
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Craig Moore
Commercial Property Manager/Facilities Manager · Boston, MA · Member since 2015 · 187 posts · 41 votes
10y
Originally posted by @David Huynh:

Logan Jones it is achievable. Peek at the success stories, I acquired 24 units and got to that point in less than two years. Not trying to steal your post.
"Be careful what you wish for" is my post $190/door with real expenses in place.
David,
This is awesome. Do you mind sharing your story?
1 Reply
Account Closed
Real Estate Investor · Rancho Santa Fe , CA · Member since 2016 · 323 posts · 107 votes
10y
Yes Borrow Borrow and Buy i acquired, 16 doors in 18 months, when i was 22 all i started that venture with was an idea and a credit card, i had high paying private equity job so i had outstanding credit and good banking contacts, was making about 4,720 in cash flow but also think the bigger picture about the equity you build thats what i always tell the people i consult, and how much value your properties will gain in the next 5 years.
So yes 21 in 5 years is easy with good credit the right market and most importantly knowing what your doing.
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Jamal White
Real Estate Investor · Chino, CA · Member since 2015 · 147 posts · 18 votes
10y
Go ahead and do it man. nobody is topping you but you. As long you adjust for inflation you're going to do great.
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Craig Moore
Commercial Property Manager/Facilities Manager · Boston, MA · Member since 2015 · 187 posts · 41 votes
10y
Originally posted by @Account Closed:

Yes Borrow Borrow and Buy i acquired, 16 doors in 18 months, when i was 22 all i started that venture with was an idea and a credit card, i had high paying private equity job so i had outstanding credit and good banking contacts, was making about 4,720 in cash flow but also think the bigger picture about the equity you build thats what i always tell the people i consult, and how much value your properties will gain in the next 5 years.
So yes 21 in 5 years is easy with good credit the right market and most importantly knowing what your doing.
I will be starting 1 year later than you (23). This is encouraging to read. Can I PM you for some advice?
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Account Closed
Real Estate Investor · Rancho Santa Fe , CA · Member since 2016 · 323 posts · 107 votes
10y
Yes anytime no problem let me know if i can help @Craig Moore
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Bhekizwe M.
Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
10y
21 is possible in five years.refinancing can be used to build the portfolio
0 Reply
Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
10y
Set your sights a little higher , $ 200 a door isnt worth the headache that goes along with them . I shoot for $ 500 a door plus .
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