$10,000/mth Passive Income

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$10,000/mth Passive Income

Balane Frece
Austin, TX · Member since 2018 · 12 posts · 2 votes

Looking for suggestions on how to take money out of stocks, invest into real estate, and maximize passive income :)

GOAL: $10,000 passive income per month

WHY? To leave our W2 jobs, travel, and spend more time with family

HAVE: Here's a list of what we've achieved so far :) 

1) $600,000 in liquidable stocks/bonds as well as $50,000 in retirement funds

2) $170,000 in annual wages (mix of W2 and 1099 employment) 

3) Ability to become accredited investors (my boyfriend's father is qualified and would support us) *I bring this up in case there is an investment strategy you know of that is only accessible by accredited investors* 

QUESTION: If you had the situation above, how would you most quickly reach the $10,000/mth passive income? Managed rentals? Private money lending? What other strategies do you know of? Keep in mind we work 40 hrs per week each so passive is key! THANK YOU! 

Best, 

Balane :) 

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Ivan BarrattBusiness Member
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
7y

@Balane Frece Lot's of info and insight here already. The answer is simple: if you want a 120k/year in passive income you'll need approximately 1 to 1.2 million of real estate equity earning 10 to 12%. If you aim much higher than this you'll likely end up speculating and putting your hard earned cash at great risk!

In order to execute well you'll need a lot of education in evaluating deals and their sponsor since your first rule is DON'T LOSE MONEY!! Rule #2: Remember rule number 1! Rule #3: figure out how to get yield without much risk. :)

Also, you'll need to continue to work the income funnels (w2 and 1099 earnings) and use the excess cash from earnings and cash flow from passive income to reinvest in the machine.  This will help accelerate the timeline!

All this is simple however it's anything but easy. That's why very few are able to do it!

First step; have the discipline to evaluate 100 private offerings before doing one deal! It's the same concept as looking at 100 rentals before buying one. Also, at this stage in the cycle many people are taking too much risk. Be careful and don' t be in a hurry!


Get educated first!!

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  • Theo Hicks
    Rental Property Investor · Tampa, FL · Member since 2015 · 1k+ posts · 969 votes
    7y

    One option is to find an apartment syndicator and passively invest in their deals. If you goal is $10,000 a month, or $120,000 a year, assuming an annual cash-on-cash return of 8% (it will be higher once the property is sold), you would need to invest $1.2 million.

    Another option would be to purchase property yourself and hire a professional property management company to manage the properties. Not as passive as apartment syndications, but if you find the right management company, you time will be minimized to about 30 minutes a week (for weekly performance calls with the management company). But, of course, you would need to find the deals. But that can be automated too. This strategy requires more upfront work but will help you achieve your goal at a faster pace. 

    I currently have a rental portfolio that generated ~$2,000 per month. Only time I really do anything is when I am ready to buy a new deal and when something major happens at the property (but this just requires reading and replying to an email).

    4Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    7y
    Originally posted by @Account Closed:

    I'll offer a brief word of caution on investing in Triple-Net real estate. The success of these deals tends to be very event-driven. When the lease is up, if they renew, life is good, even though you'll probably have to offer some sort of TI package to get the renewal. If they don't, you can often find yourself in trouble, needing to lower rents or offer massive TI and broker leasing commissions to get it filled, and the lender may get skittish as well. If you go this route, shoot for lower leverage and very long lease terms, and try to get deals where rents are below market, meaning your chance of re-leasing at an acceptable rate are much stronger. 

    What NNN properties are you buying? If you buy the right ones, they usually have options in them with bumps. You negotiate the execution of the option extension before the option date...and unless the tenant is a highly rated one, you don't buy short term...or end of term deals.

    We're not talking about short term "Mom and Poplike" NNN's.

    0Reply
  • Balane Frece
    OP
    Austin, TX · Member since 2018 · 12 posts · 2 votes
    7y

    Thank you everyone for the well-thought-out responses! This was my first post to BP and this is clearly a great community! Triple-net real estate is something we hadn't considered. Thanks @Joe Villeneuve :) Any resources you would recommend to learn more? @Varinder Kumar Love the strategy! What market are you in? @Theo Hicks apartment syndicators are also a great option! What worries me is that your money is not backed by any collateral. Does that concern you? As far as skills, we are both in technology. Our relationship is one that exists in an LLC capacity where an accredited individual would co-sign our partnership. Our strengths would be managing long distance teams and raising capital as I oversee teams/projects and know wealthy individuals who also don't know where to invest. @Eric Nurmi We've been told hard money is the best place for wealth considering that the markets are expected to correct in the near future. What are all of you doing to protect your investments when the market is expecting another correction? 

    1Reply
  • Theo Hicks
    Rental Property Investor · Tampa, FL · Member since 2015 · 1k+ posts · 969 votes
    7y

    @Balane Frece That's why it is very important to do your due diligence on the apartment syndicator, their team, and the deal before investing. You want to see a syndicator with a successful track record, which means you want to review their case studies to see if they were able to meet or exceed the return projections on previous deals and how those deals compare to the current deal.

    3Reply
  • Bob Prisco
    Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
    7y

    @Balane Frecesimply find a market you are comfortable with ( one that can provide at least 10% NET caps per year  ) get your team in place and start buying, SF ,,MF,  KEEP IT SIMPLE ,  Good luck and all the best to you 

    1Reply
  • Londell Reedman
    Pinole, CA · Member since 2017 · 49 posts · 15 votes
    7y

    if I was you I would just deal with a regular bank and get a apartment building

    0Reply
  • Scott Morongell
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    7y

    @Balane Frece like other have mentioned, syndication is probably your best route when it comes to being passive and stiff receiving all of the great tax incentives real estate offers. 

    0Reply
  • Brandon Elliott-Pandey
    Realtor · Erie · Member since 2022 · 194 posts · 88 votes
    3y
    Quote from @Balane Frece:

    Looking for suggestions on how to take money out of stocks, invest into real estate, and maximize passive income :)

    GOAL: $10,000 passive income per month

    WHY? To leave our W2 jobs, travel, and spend more time with family

    HAVE: Here's a list of what we've achieved so far :) 

    1) $600,000 in liquidable stocks/bonds as well as $50,000 in retirement funds

    2) $170,000 in annual wages (mix of W2 and 1099 employment) 

    3) Ability to become accredited investors (my boyfriend's father is qualified and would support us) *I bring this up in case there is an investment strategy you know of that is only accessible by accredited investors* 

    QUESTION: If you had the situation above, how would you most quickly reach the $10,000/mth passive income? Managed rentals? Private money lending? What other strategies do you know of? Keep in mind we work 40 hrs per week each so passive is key! THANK YOU! 

    Best, 

    Balane :) 


     Hum, first off CONGRATS!!! Sounds like you've made some very good choices in the past few years to set yourselves up! :-D

    Next, if I were in your shoes and wanted true passive freedom but 10K/m. I'd probably look for a multifam partner or commercial specialist who could source deals and you would be the money arm/ partner. 

    After going in on a deal together and you structure it to where you'd earn around ~10k/m in cashflow (above expenses) then you can probably focus on growing that nest egg and doing it all over again :-D

    Key here is finding a GREAT partner.... 

    Just my two sense! lol. How do you guys plan on using the money to branch into RE???

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    3y

    Be the money partner in a partnership.

    0Reply
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