Wondering if my Goal is possible in the next 12-15 months?

25 Replies

Hello BP friends,

I've been contemplating on one of my goals, and wondering if it's possible to accomplish in 12-15 months? My goal is to have $2,000-3000 (ex. $2,500) of passive income per month from my investments.

Wondering from someone starting out and really dedicated to put in the effort and work would it be possible?  A few things about me: I'm near the Houston area, have a credit score near 800, really have been studying real estate, from multi-families, to creating llc's, understanding cashing, etc, but my income is probably one of my weakess areas, even though i've saved enough for a downpayment and have a constant history of work. 


I'm thinking for this to even work, I'd have to go with commercial/multi-family units, as SFH can take some time, and I'd probably want to find property in a good neighborhood?

Just wanted to hear your honest thoughts and suggestion, wheter it's "possible", or I should "steer away". Thanks.

$2500/month would at best case scenario require about 10 doors (absolute bare minimum). Whether you can do it or not will depend on how mush cash will be required in down payments to buy that many doors.

I agree with @Thomas S. that it will take 10 doors at $250 per door per month. is that going to happen in 12 months? if you have 25% down for a 10 unit apartment building then it is definitely possible. If you are going to be partnering with other people and using their money it would require many more units as you would be splitting the profits. If you are going to be using the BRRR method and repeat the cycle a couple times to get to 10 units that isn't going to happen in 12 months. But just because you can't do it in 12 months doesn't mean you should "Steer away" building a rental portfolio is a great way to build long term sustainable income and wealth.

Thanks for the advice @josh and 

@Thomas S. undefined

10 units hun? So to break that down, that would be: 

- 1x apartment complex with 10 units

- 10x SFH

- 5x duplexes or 2x fourplexes and a duplex

An 10 unit apartment would run 500-million plus right? And 10 sfh around $100k would be a million?

Let's assume I could put $5000-10,000 down for a multi family unit.  About how much could that get me, assuming some basic averages?

Thanks for both of your insights!

As a straight rental you will need minimum 20% down. It is necessary to have money in order to make money. The more the better.

And I said bare minimum 10 doors. Achieving $250 positive cash flow per door is very ambitious. Do not expect that from SFHs, you will need to invest in multi units.

Originally posted by @Randal Remon :

An 10 unit apartment would run 500-million plus right? 

That depends on your market.  I am under contract right now for 5 units with a purchase price of $170,000 which will cash flow $275 per door, self managed.

That depends on a lot of things. As others mentioned 2 main variables are money and TIME! it's obvious that more money makes more money! but think about your time as well! to get $2500 a month you need 10-25 GOOD deals not just any deal! assuming you make no mistakes and all of your investments return strong profits. If you have time to self manage that helps a lot but remember managing that many doors with not much experience is a full time job. Remember that building a rental portfolio usually follows an exponential trend (snowball effect) and you have to think about how much you can leverage your time and money (without overstretching) to maximize that effect. Let's say instead of buying a turnkey with 20% down (no forced appreciation) and managing yourself netting $250 a month per door, you buy off market add equity and outsource management but only cashflow $100 a month. The latter gives you a higher equity % (giving so much flexibility) and takes much less time in the long run. It's true that your cashflow per door is less but you leveraged your money and time making future deals much much easier. This way, you may not hit your goal in the next 12-15 months but your 24-36 months outlook looks much better.

@josh and other BP members, would the average of $250 per unit apply as well for multi family duplexes?

My biggest worry is biting more than I can chew, where a bad market or something happens, and I'm screwed.

Originally posted by @Shayan Malayeri :

That depends on a lot of things. As others mentioned 2 main variables are money and TIME! it's obvious that more money makes more money! but think about your time as well! to get $2500 a month you need 10-25 GOOD deals not just any deal! assuming you make no mistakes and all of your investments return strong profits. If you have time to self manage that helps a lot but remember managing that many doors with not much experience is a full time job. Remember that building a rental portfolio usually follows an exponential trend (snowball effect) and you have to think about how much you can leverage your time and money (without overstretching) to maximize that effect. Let's say instead of buying a turnkey with 20% down (no forced appreciation) and managing yourself netting $250 a month per door, you buy off market add equity and outsource management but only cashflow $100 a month. The latter gives you a higher equity % (giving so much flexibility) and takes much less time in the long run. It's true that your cashflow per door is less but you leveraged your money and time making future deals much much easier. This way, you may not hit your goal in the next 12-15 months but your 24-36 months outlook looks much better.

 Thanks for the insight @Shayan Malayeri, really put things into perspective. I think my first goal now would be to find a multi-family unit, preferably a four plex. The reason why, I would at least have a place of my own, and it doesnt hurt to have a place where it cashflows as well. Would that be possible based on my current scenario around the texas area, or should I be looking towards $300k+ properties, etc. I also read somewhere that its better to find a mult-family in a decent/good neighborhood as there may be issues getting the right priced plex, but in a bad neighborhood?

@Randal Remon that's a good strategy. Do you want to live in on the units or rent out all four? There are a lot of cheap 2-4 units around Houston but in bad neighborhoods. There are many investors making a killing in "bad" neighborhoods but you have to realize the challenges. I would personally stay away from them. Are you looking at MLS deals? if so, then it might be hard to find a good fourplex in that price range and if something comes up it won't stay for more than 24hrs. Having your funds ready helps a lot. Keep looking off market if you have not already.

If you're looking at residential (1-4 units) then your weak income could be a hindrance. Also, you mention you've saved up enough for a down payment but then later mention $5-10k. That to me is not enough for a down payment so maybe we should level set and get on the same page. If you have a weak income and your idea of a down payment is only $5-10k then maybe wanting to make nearly your entire yearly income passively after just 12 months of investing is not a realistic goal. As someone else said, that doesn't mean you should not start working towards this goal. But you need to get realistic about your goals.

Originally posted by @Michael Le :

If you're looking at residential (1-4 units) then your weak income could be a hindrance. Also, you mention you've saved up enough for a down payment but then later mention $5-10k. That to me is not enough for a down payment so maybe we should level set and get on the same page. If you have a weak income and your idea of a down payment is only $5-10k then maybe wanting to make nearly your entire yearly income passively after just 12 months of investing is not a realistic goal. As someone else said, that doesn't mean you should not start working towards this goal. But you need to get realistic about your goals.

Thanks for your insight @Michael Le , where do you suggest I should be at to be able to hit those goals? 15-20k down payment, and what about income? 

Just wanted to know a realistic approach with things. Thanks.

Originally posted by @Randal Remon :

Thanks for your insight @Michael Le , where do you suggest I should be at to be able to hit those goals? 15-20k down payment, and what about income? 

Just wanted to know a realistic approach with things. Thanks.

I don't mean this to sound flippant but you need to find a way to make more money. And I'm not talking about extra investments but money from your W2 job. It's hard to invest when you don't have a lot of money left over to save and invest. So change jobs or get the skills to change jobs so you can make more money to invest. As for the $15-20k down payment you have, that could be enough for a smaller investment house but wouldn't leave you with much capital to fix it up with. You could probably get a private/hard money loan but that is assuming you have the skill and knowledge to go through that process. 

So that goes back to my #1 suggestion is to go and get educated. You can get educated on the relative cheap thanks to websites such as these and the plethora of books out there. Also go to a lot of meetups around town and meet with people. Get to know them and find ways to bring value to them and new avenues will open before you that you never even considered.

Randal Remon

$3000/mo = $36/year. 36k/12% = $300,000 of equity in deals. If you don't have 300k you'll need to learn how to create value in real estate or find other sources of income you can funnel into income properties.  Make sense?

@Randal Remon I’m a little more conservative so I’d say a single family Home gets
You 200 a month and so you’d need 12-13 properties. At say 15k down each and some closing costs you’d need 195k minimum likely much more.

2500 a year times 12 is 30k. 30k/.1 rate of return is 300k. That’s likely more accurate.

@ivan 

@Ivan Barratt undefined I kind of understand. So you are saying I need properties that are cash flowing $36k a year for that to happen?

Would I have to have $300k in cash ready to invest or there are other ways?

Let's assume I could invest $7500-$25,000. That wouldn't get me very far?

@Randal Remon if you don't yet understand what I'm outlining; don't worry. You just need more education. But, in short the answer is you'll need more equity to get to your passive cash flow number. 

to get more equity in property quickly (vs waiting 20 to 30 years) you'll need to learn to create, deliver, exchange something for value.  One method: learn how to be a real estate operator full time (which is what I did) or find other sources of income (job, business, etc which is also what I did with my property management company) that you can funnel excess cash into real estate.

Good luck and never give up!

@Randal Remon in the absolute simplest terms to achieve your cash flow goals you will need minimum 200-300k.  25k probably gets you one nice property if you’re investing in a cheap market 

Originally posted by @Caleb Heimsoth :

@Randal Remon in the absolute simplest terms to achieve your cash flow goals you will need minimum 200-300k.  25k probably gets you one nice property if you’re investing in a cheap market 

I mean 25k as a down paymennt (which I assume is what you meant)? 

My only concern with real estate, is putting money down on something and carrying a large debt. For example, I put $25k down on a $250k property, well I would owe the $225k for the next years, but my intent is for investments and possibly a place to lay my head if I can get a multi family property. 

So the goal would be to pay off the property asap, or hope it builds enough equity so if you have to sell the property, you don't end upside down? 

Sorry just trying to have a detailed understanding if I just dived right in. 

Thanks for all advice everyone!

Originally posted by @Caleb Heimsoth :

@Randal Remon read some books and post about 1000 times on BP and then you’ll have a wonderful understanding of how this all works basically. 

I read a few by ken mckelroy, which was mainly about apartment investing, but none the less, I learned about cash flow and ideal of owning a property. 

What are some good books as far as house hacking/multi family units?

@Michael Le may have the best advice here.  Its the same advice I give all of the newbs at our local meetups who come and ask how to get into real estate but haven't done enough to get their personal finances in order.  #1 Make Money.  #2 Save Money.  #3 Invest.  You definitely need to find a way to make more $.  Either a better job or a 2nd job.  You can combine #2 and #3 with a duplex BRR but that also takes money and I'm not sure you have enough for a down payment never-mind an emergency fund or the funding required to do renovations.  The second stream of income could be wholesaling for flippers in your area but that may also be difficult for you to break into at this point (but not impossible if that's really what you want to do).  You may need to cut expenses to <50% of your income in order to save up a reserve.... Do today what others won't so tomorrow you can do what others can't.          @David Thompson has a good idea but it would require that you are well connected to people with money.  You're first time raising capital will likely be from friends and family who can put up $250k or $500k... this would also assume that you are well versed in Multifamily & Syndication so you don't end up working with a sub-par sponsor and put your network's equity at risk.