Have a goal but need a plan

11 Replies

Hello! Just starting out, trying to learn as much as I can, Biggerpockets has been so imformative and the community seems so supportive. 

My husband and I are in our early 40s and we are ready to make a change from working full time to living off of real estate investments. Two years ago we decided to accept employment overseas because it is allowing us to save 60k a year. We plan to work in our current positions until we are able to invest in real estate that would provide us with 15-20K a month in cash income (after all expenses). At the moment we are trying to put together the best plan possible to reach our goal. I'm hoping that some of you might have some advice for us for our plan moving forward.

We are from N. California and know the area quite well, however we are open to learning about and investing in other areas of the US. 

We are currently living overseas so getting started in purchasing properties is a little difficult (though we have around three months a year off and are able to travel back to the states). 

So far we have planned to stay at our positions for five years which will give us 300K to work with. We have been looking into SFR, multifamily buildings, self storage facilities, we are open to whatever will help us reach our goal.

I have a couple specific questions and welcome any other advice or ideas.

1. Our savings is currently in a savings account earning essentially nothing, is there a better place to put our savings until we are ready to put it into real estate?

2. Is 300K cash investment a realistic amount to potentially earning 15-20K a month?

3. Any specific books/resources recommended?

Thank you in advance for any advice!

Hello and welcome to BP! 300k is absolutely not enough to make 15-20k a month in net income. In California real estate you'll do somewhere between $1200 - 1600 a month on that investment --- supposing you make a good first investment of course.

Your savings is fine in a savings account. The place to put the money to get it working for you is real estate. You're on the right track getting your finances in order by building up your savings reserves.

I suggest instead of reading books you start analyzing investment properties for sale in your target markets. It will teach you the numbers. Real estate is not "get rich quick." Look at all the listings in your target market with the goal of finding the best return in the MLS. Have your husband do the same, if you're at all competitive you can have some fun with it.

Just adjust your expectations about what you can possibly do in this space./

Thank you for your response @JR T. 

Agreed, 300K is not much in California so we are trying to get an idea of how we can grow it to the point of 15-20K a month. We really believe that we need to look out of state.

We'll get going on the analysis to get a better idea of what we can expect. Thanks again for the advice.

Hey Robin,

I work overseas as well and am in the same position as yourself. I'm from Bend Oregon and am planning to buy multifamily properties until I can get involved in commercial real estate. The most important thing for me right now is working with my lender and realtor to build a plan and find potential properties to buy and hold. When I go home on break I'm going to view those properties and do some analyzing to see if they will work for me. I know from experienced at you can buy a property from overseas it just takes longer. You can have documents notarized at the US Embassy and do all documents by email. Let's connect and see if we can't help each other along the way!

300k is absolutely enough to start out with to make 15-20k per month.  Like you said, you have to have a plan, and find the right "market"...unfortunately, I don't think you can do it in the California Market.

1 - Start by using your current $300k as a "Cash Partner" with a REI using the BRRR method of investing, and/or...
2 - Start by using your current $300k as a "lender" to another REI doing flips.

In either case, as long as your returns are reinvested back into the same strategy options, you should be able to double your money in about 7-10 years...depending on the market you are investing in.

You also must develop a plan, and that plan will dictate a set of "Investment Criteria". which then establishes a "Market Profile" of where you need to invest.  Then, find that market, or markets...and camp out in that market.

Steps 1 and 2 above are ONLY starting points, to grow your "seed money". Once your seed money is large enough to buy/rehab at least 3 properties in the Markets you've found, you are ready to start REI.

Now, you have to think of this seed money as "environmentally protected"...as in you must protect it...as in you will never spend it.  You will use it as many times as you can though, compounding it, and then use the profits to expand into your desired cash flow goals.

It's not as complex as the explanation may sound...and if you find the right market, and the right properties (which you will if you found the right market), this can take place (your $15-20k per month goal) much faster than you might think.

Hello and welcome to BP. 

I agree with the other posters that trying to earn $15-20K monthly on $300K invested is VERY optimistic.  Of the investments, you mentioned I would encourage you to take a strong look at self storage.  The underlying fundamentals are favorable as compared to the other investments you mentioned (and all real estate for that matter).  Simply put storage can be the life-changing investment you are looking for but it is not a get rich quick thing.....

Two considerations....First, investing $300K as your first investment, means you are jumping in full bore and that is not a great idea from a risk mitigation stand-point.  It would be better if you could sharpen your skills on smaller projects before spending your whole life savings.  Second, can I ask how you decided on $15-20K per month as your need? Is that because that's what you make now? Is that what you spent your last year in the states?  Or is it just a nice round number?  I would encourage you to look hard at what is most important to you.  Is making $20K a month or is quitting your J-O-B more important? Can you live off $10K per month or $12K? These are just questions to get you thinking.  

I would advise you to spend more time formulating your goal.  I am not saying that your goal of $20K is wrtong....There is just something very powerful that happens when you explore the "why" to your goal and drill down to whats most important to you.  Once you've done that you can design an investment strategy/business plan that serves you and your vision.  Too often, real estate investors get started to "find freedom" only to end up with a portfolio that takes them more time to run than their old JOB did......The $300K you have is a sizable asset but so it the 5 years you have to plan, plan, plan and learn, learn, learn.  My wife and I earn enough to pay our bills (we do live relatively modestly...but comfortably as well) on 10-15 hours per week...but it wasn't always like that.

Please let me know if I can be of any assistance to you.  I think you will find this whole BP community to be very helpful as you move forward.

All the best,

Mike

To get a better understanding of the real estate required to generate $15,000/ year you would likely require between 75 and 150 doors if you assume positive cash flow of between $100 - $200 per month per door. Cost to purchase that many doors is entirley dependant on the market you choose to invest in.

Thank you all for the welcome and your willingness to share.

Joe Villeneuve, thank you for the ideas for growing our seed money (and the other advice), we will definately be doing more research on that and I hope you don't mind if we come back to you to ask more questions.  

Michael Wagner, thank you for your input, we have done some research on storage and like what we have seen so far. We understand that our 15-20 is optimistic and we were in fact thinking 10K a month would cover us quite comfortably. We would rather enjoy life and have fewer luxuries than work ourselves to the bone, I'm sure the 10K is not an easy target either but maybe with careful planning.

Welcome to BiggerPockets :) One thing that not many other people have commented on so far is your savings. I like what @Michael Wagner said about mitigating risk by spreading it over several investments, but before you invest I'd make sure you're getting the most out of savings that you can. I recently switched to an online bank with my savings, because it was 75 times what I was making on my savings at Wells Fargo (not kidding...from 0.01% to 0.75%.) That's not a big difference, but for a half hour of your time, it's definitely worth it, especially with your aggressive saving plan.

Like Michael, I would also recommend self storage. Full disclosure, my day job is brokering self storage, but I'm also working to purchase a self storage facility as an investment, because the numbers are so solid. PwC's numbers on the return on investment for self storage over the last 15 years is 15.43% annually -- which just blows other investments out of the water. The main reason self storage would possibly be a good fit for you, though, is that you could manage it as a job instead of paying someone to manage it for you. Granted, this is definitely a job, but you get to work from home with minimal hours on an investment that belongs to you, and you'd save the 20-30k a year you'd pay a manager. At the end of the day, too, no one cares about your investment as much as you do.

What you should take from all the replies 2 of the most important truths about REI:

1 - not all markets are the same

2 - Any suggestions or opinions you ask for, from other REI's, will be based on their market.