my (probably) unrealistic plan to give away a million dollars

Starting Out
7yFollow

my (probably) unrealistic plan to give away a million dollars

Albert L.
Bay Area · Member since 2016 · 82 posts · 55 votes

Hey folks, wanted to get a sanity check on a 13 year old plan i put together to generate 85k/month. i know i know, it's crazy and it's going to take a ridiculous amount of long term focus, sacrifice and hard rock. 

Like any big goal, what i wanted to focus more on was year 1. I feel confident that if I can get 2019 right, things will slowly start to build up from there. 

For me, I operate better when i know there's a plan...even if it's one 13 years out when anything (and everything) will happen. but hey, it's a start. 

WHY

i want to generate 85k and be able to give away a million dollars at the end of the year to an organization I believe can and will help change the world for the better. 

STRATEGY

buy and hold, cash flowing small multi-family first year then upgrade (thru 1031?) to a 50 unit apartment complex in 2020. from there 2023-2030 - continue to focus on apartment complexes and trade up to either bigger units or mix it up with residential or focus on syndication to do even bigger deals? cash flow will always be the focus with conservative leaning on forced appreciation. any natural appreciation will just be a bonus. any after sales profit will be put down in savings for future goals. 

2019 - 1.25k/month in cash flow 

what: 1 duplex - 250/month, 1 fourplex - 1k/month (250 a unit) = total, 1.25k/month

when:

  • by June 2019 - save up 100k. 
  • Between June to September, start to research a market, build a team and analyze 100 deals. Focus on BRRRR strategy.
  • September - purchase duplex ~ all in 60k (depending on what I find, all-in will go into down payment, closing costs,  rehabs, etc)
  • Between September to December - finish upgrades, move in tenant, save up another 30k, start research for fourplex
  • December - purchase fourplex - (40k leftover from initial 100k that was saved,  get back say, half from refinance, 30k, 30k from the 3 months that I was able to save up and 3k from cash flowing property) = all in 103k

2020 - 5k/month in cash flow

what: move up to apartment complexes, 50 unit

when: 

  • Sept - have 150k saved up from day job + cash flow 
  • Jan-Sept - education on apartment complexes and find a 1-2 partners to go in on a deal. 
  • Sept-December - find a market, analyze 100 deals
  • December - purchase 50 unit 

2023 - 15k/month

not sure yet..

2026 - 42k/month

not sure yet..

2030 - 85k/month

not sure yet..

FIRST STEPS

Income/expenses: leave corporate, go back to commission structured job. Scale side hustle. Start earning and saving 50% of income to hit 100k savings in June 2019

Educate - read 1 book every 2 weeks, listen to at least one podcast episode every other day

Network- explore markets, go to a meetup/webinar once a month, take experienced REI out to coffee/lunch/dinner

Platform - start bi-weekly short format interviews with REI

Feel free to rip this apart! Would love to hear feedback on anyone that's already done this, are getting close or are in the middle of the grind questioning everything about life 

Thanks y'all! 

4Reply
50 views

Most Popular Reply

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

@Albert L. "Everyone has a plan till they get hit in the mouth." Mike Tyson

"The plan is only good till the first bullet flies." Unknown Military Officer

The point is focus on your next move. Not what the plan is 3, 5, 10 or 20 years into the future.  Take action and get a deal done. Then figure out the next deal. Rinse and repeat.

I started off house hacking a duplex. By the end of this year I'll go from 1900 units to 2400 units. Now I only buy large deals. The small deals are long gone and so is the first 100 "plans" I had imagined.

The journey of 10,000 miles (or 10,000 units) starts with the first couple of steps (properties). Start moving and figure it out as you go.

All my very best in your journey.

11Reply
See this reply in the discussion

21 Replies

Jump to latestLatest
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    You're going to have a extremely hard time borrowing money to hit these deals... Lenders don't like commission.

    Also a 1031 while efficient in trading up...not an efficient process at all. First you have to find the replacement, which can be extremely hard. Then you have to find a replacement that not only meets your numbers...but are willing to work with you on timing and let's put it this way if you're lowballing deals time typically is of the essence.

    Then if you somehow did that you have to find a buyer for your current property. Then you have to find one that can close quickly who... Will probably low ball you just like you tried to do on your replacement.

    Or you could sell you exisisting and scramble to find a replacement but this isn't easy nor really a good idea. I mean at worse you take a tax hit but your plan doesn't account for that.

    Hate to say it but your plan is fantastic on paper.... But not realistic to actually implement in real life.  Real estate is slow and expensive, if you want big fast  money it's not going to be buy and holds 

    Oh and from a math stand point probably figure 25-30% cash for each deal. 20-25% for down, around 5 for closing fees/reserves. Rehab/upgrades on you out your own pocket and you won't get ANYTHING back on it for a year. Then you can refi to pull money out but closing costs and 75-80% LTV probably eat up your equity quickly...

    6Reply
  • Ivan BarrattBusiness Member
    Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
    7y

    @Albert L. "Everyone has a plan till they get hit in the mouth." Mike Tyson

    "The plan is only good till the first bullet flies." Unknown Military Officer

    The point is focus on your next move. Not what the plan is 3, 5, 10 or 20 years into the future.  Take action and get a deal done. Then figure out the next deal. Rinse and repeat.

    I started off house hacking a duplex. By the end of this year I'll go from 1900 units to 2400 units. Now I only buy large deals. The small deals are long gone and so is the first 100 "plans" I had imagined.

    The journey of 10,000 miles (or 10,000 units) starts with the first couple of steps (properties). Start moving and figure it out as you go.

    All my very best in your journey.

    11Reply
  • Dennis Liu
    Toronto, ON · Member since 2018 · 17 posts · 4 votes
    7y

    Good strategy, and it shows you have ambition. 

    Focus on just one small thing a day. Whether you are trying to build a habit or learning just one more thing about the market. If you keep at it one day you achieve what you want as long as you are obsessive and persistent. 

    You said you wanted to read 1 book a week along with listening to 3 podcasts. Maybe build that habit up first. It'll be harder than you think

    2Reply
  • Albert L.
    OP
    Bay Area · Member since 2016 · 82 posts · 55 votes
    7y

    @Matt K. - thanks for resetting some expectations here. this may take me a little longer than i expected.. haha

    @Ivan Barratt - love this. always inspirational to know that there's been people whose done it before. i guess for me it's a two fold thing - take action today, focus on the ONE thing but still have some vision for where I want to end up and maybe more importantly, why i do what i do. How do you plan your goals if you don't mind me asking? 1 year? 6 months? No plan at all? 

    @Dennis Liu - you're right and thank you for the reminder there. i guess what i struggle with is choosing between a 9-5 job and having an opportunity to work in a commission style, high risk high reward kind of structure. just thinking maybe my one thing i can do today is to make a career move and grind it out till i have a healthy amount saved up... curious to get your thoughts there if you have? thanks again for commenting. 

    1Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    Hard to beat w2 for loans...stable consistent paychecks lenders love.

    Instead of focusing on a game plan, focus on market and become an expert. Know everything about it, who lives there, and what they rent. Know prices (rent and buy and remodel) like the back of your hand...

    Then when a deal presents itself, act. If you understand the process and how to get the money you will know how to get the deals done...

    3Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Albert L.

    It's great that you have your "Why" identified and cause to support. It will help you push yourself to work harder. 

    Now in terms of your plan, I couldn't agree more with the eloquent statement by @Ivan Barratt. What I will add is: do not leave your corporate job yet. As hard as it will be, built up your portfolio to the point that it will allow you to live off the returns. Only after that you can leave. You will "kill two birds at once" this way: you will be eligible for loans on one side, and you will be able to build your track record and gain enough equity to be eligible for future loans and find investors down the road on the other side. So plan accordingly. 

    Best of luck!

    1Reply
  • Albert L.
    OP
    Bay Area · Member since 2016 · 82 posts · 55 votes
    7y

    @Alina Trigub - thanks for your advice on staying in corporate. Maybe this is counter to the popular opinion, but from what I've been learning and reading, it sounds like having a higher paying job, even if it relies on commission would only afford me greater buying power, confidence and flexibility. Higher income, less expense, more that I can invest in this journey. This could mean anything from having enough for cash reserves, looking at undervalued properties in nicer neighborhoods where tenants are somewhat more stable, be able to do add more value in rehabbing/upgrading certain properties etc, 

    Maybe a shorter way to frame that question is, why wouldn't I leave a cushy corporate job for another job that would 2x my cash earnings in less than a year? 

    Thanks again for commenting! 

    0Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @Albert L.:

    @Alina Trigub - thanks for your advice on staying in corporate. Maybe this is counter to the popular opinion, but from what I've been learning and reading, it sounds like having a higher paying job, even if it relies on commission would only afford me greater buying power, confidence and flexibility. Higher income, less expense, more that I can invest in this journey. This could mean anything from having enough for cash reserves, looking at undervalued properties in nicer neighborhoods where tenants are somewhat more stable, be able to do add more value in rehabbing/upgrading certain properties etc, 

    Maybe a shorter way to frame that question is, why wouldn't I leave a cushy corporate job for another job that would 2x my cash earnings in less than a year? 

    Thanks again for commenting! 

     W2= higher chance of being able to qualify for a loan...

    Higher pay would get you higher loan amount initially...but it's all about your tax return for most lenders. They'll want to see up to 2 yrs documented income and if lot of is bonus or commission they won't always count all of it.

    Unless your commission takes you to where you don't need loans or you have time to spare I'd reconsider....

    Commerical once you get to that point is doffent and has to do with property itself but I think you need to be able to show assets or networth inline with what your asking to borrow. So if you want a 2 mil loan you need to either have 2 mil in assets or networth or find someone who does to partner...

    1Reply
  • Ben Wilkins
    Rental Property Investor · York, PA · Member since 2017 · 377 posts · 315 votes
    7y

    @Albert L. - your plan on paper looks similar to how I started.

    I'm not to the point where I'm breaking 2k units, but I went from a single duplex up to nine units in 13 months. This isn't anywhere close to the leaps and bounds that you can find on these forums, but it matches a goal that I laid out a year ago.

    After some research into a market, and some pep talks from someone who wanted to partner up with me, we laid out a plan and decided to make our first move.

    I personally enjoy having the next 20 years on paper. Yes, I know that life won't actually follow this plan - for me, I just really enjoy numbers. I like laying out our projected investments, then seeing how close I was able to calculate it. There's something about developing a model and then comparing to real data... it's the engineering side of me I suppose. I laid out annual cash needed, cash flow, number of units, company expansion expenses, savings for CapEx, etc - "I love it when a plan comes together"

    Again, just to be clear: I know that the plan is only as good as tomorrow, but I personally enjoy having goals and comparing.

    Bottom line: There's nothing wrong with setting goals for yourself. Aim for the stars, shoot for the moon. Fortune favors the bold. So many cliche memes / quotes. Just remember that life hits hard, a lot of people on here have a lot of experience to back their advice, and almost nothing goes to plan. Stay positive through it!

    1Reply
  • Genaro Quinonez
    Member since 2017 · 1 post · 1 vote
    7y

    I think this is a good first step to achieving your goal. As  you actually get experience in  real estate you will become more aware and able to more accurately see what you can accomplish and in what kind of time. I say its a great plan! whether it pans out or not you  need to just take action. Just don't be afraid to move forward and do not listen to everyone's opinion, especially if they have never dealt with real estate. I bet you are going to find yourself reinventing your plan and fleshing out details the further you get into it. This is a great first step. Just keep education as the highest priority. Your mind is your most valuable tool. 

    I myself have 3 units and started  a couple  months ago. I now have more confidence than before and I am excited to jump into my next property to double my unit amount . But I learned I have to be patient and learn that this is a process that takes time. I also have a goal of achieving a million dollars (in 15 years) The more I do this the more possible it seems.

    1Reply
  • Scott Harper
    Investor · Longwood, FL · Member since 2015 · 221 posts · 130 votes
    7y

    Albert, I enjoyed the read and all of the comments. I by no means have achieved these lofty goals but it is great that you have set out a plan. The comments to tamper eexpectations seem very helpful.

    If you can save 100k in a year and can do that consistently, you can be a lender.

    If you use your skill and effort to actually achieve your plan and had a million to give away, what organization would you think would make the world a better place? You have really thought out your personal goals. Consider, funding your own organization and don't give any away. You will make the world a better place. ( Not selfish) 

    1Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y
    Albert, the job strategy is really up to you. However take into account the learning curve on a new job and the amount of hours you will have to put in. If it will still allow you to invest in real estate and give you the bandwidth to do it actively (as it doesn't sound like you want to be a passive investor), then all the power to you!

    Originally posted by @Albert L.:

    @Alina Trigub - thanks for your advice on staying in corporate. Maybe this is counter to the popular opinion, but from what I've been learning and reading, it sounds like having a higher paying job, even if it relies on commission would only afford me greater buying power, confidence and flexibility. Higher income, less expense, more that I can invest in this journey. This could mean anything from having enough for cash reserves, looking at undervalued properties in nicer neighborhoods where tenants are somewhat more stable, be able to do add more value in rehabbing/upgrading certain properties etc, 

    Maybe a shorter way to frame that question is, why wouldn't I leave a cushy corporate job for another job that would 2x my cash earnings in less than a year? 

    Thanks again for commenting! 

    0Reply
  • Ivan BarrattBusiness Member
    Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
    7y

    @Albert L. I have short term (daily, weekly, monthly, yearly) goals and very long terms ones however I have found that my path to 20,000 units (my long term goal) is like climbing a tall mountain.  

    Since I know that I'm on the right mountain I spend most of time focused on putting one foot in front of the other and having the right team, gear/tools (technology), systems to most efficiently and effectively climb. I rarely look up to the summit because it's still very far away and doesn't appear to be getting any closer.

    Now I need to get back to it! Later... ;)

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    7y

    Keep your corporate job otherwise the money you need will be unattainable to achieve your goals. You need leverage more than you need cash to be successful. Commission sales will kill your dreams and goals.

    At this point in time you need to concentrate on saving cash. Prove to yourself that you can accomplish that goal while studying real estate investing, finances etc. 

    I would strongly advise you remove your desire to donate 1M from your investment goals at this time. That goal has nothing to do with your successful investing and is only a distraction. Forget it till you are a multi million air and have money to throw away or are looking for a tax break. At this point it is no more than a fantasy, not a realistic goal. Likley hood is that once you are successful you will be far more reluctant to give any away.  

    0Reply
  • Ray Johnson
    Irvine, CA · Member since 2016 · 545 posts · 614 votes
    7y

    @Albert L. I'm assuming if you're giving away 1 million dollars, this will be a for profit charity, or a Non-profit structured entity?

    If so, This should give you some advantages when acquiring deals as these type of structured entities do get priority in some purchasing channels. 

    1Reply
  • David H.
    Madisonville, LA · Member since 2018 · 125 posts · 71 votes
    7y
    I think your plan looks solid. Everyone just needs to keep in mind this is a plan not the playbook so it doesn't have to be exact. There are probably some holes in it but you will figure that out as you go. And I'm not sure I agree on staying in the current job at half price as it depends on the salary. At the end of the day they are going to look at your yearly earnings and if its double that is factored in. It would be good if your base puts you at a quantifiable level. If not then you may have some issues until you can show the full years earnings. But if it allows you to save up money that fast then it's hard to argue against.
    1Reply
  • Dennis Liu
    Toronto, ON · Member since 2018 · 17 posts · 4 votes
    7y
    Originally posted by @Albert L.:

    @Matt K. - thanks for resetting some expectations here. this may take me a little longer than i expected.. haha

    @Ivan Barratt - love this. always inspirational to know that there's been people whose done it before. i guess for me it's a two fold thing - take action today, focus on the ONE thing but still have some vision for where I want to end up and maybe more importantly, why i do what i do. How do you plan your goals if you don't mind me asking? 1 year? 6 months? No plan at all? 

    @Dennis Liu - you're right and thank you for the reminder there. i guess what i struggle with is choosing between a 9-5 job and having an opportunity to work in a commission style, high risk high reward kind of structure. just thinking maybe my one thing i can do today is to make a career move and grind it out till i have a healthy amount saved up... curious to get your thoughts there if you have? thanks again for commenting. 

     Still not there, not even close haha. I will say, if you really want to do it, focus on one market, focus on one technique and really grind it out. Don't spread it thin especially when you're just starting out

    0Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @Ray Johnson:

    @Albert L. I'm assuming if you're giving away 1 million dollars, this will be a for profit charity, or a Non-profit structured entity?

    If so, This should give you some advantages when acquiring deals as these type of structured entities do get priority in some purchasing channels. 

     You can also set up charitable trusts for tax benefits, I forget the specifics as it was a 2am Google search once ....

    0Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y
    It’s good to make long term goals but your being a bit ridiculous here with planning your life in specifics out that far . The one thing consistent in life is that it’s always changing .
    0Reply
  • Kate J.
    Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
    7y
    What a delusional plan...
    0Reply
  • Matthew G.
    Specialist · Pasadena, CA · Member since 2017 · 133 posts · 86 votes
    7y

    @Albert L., it's definitely an ambitious plan. You probably want to consider where we are in the market cycle and where the market is going in the next few years. If the real estate market dips you might be holding on to your properties longer than you expect which will throw out your first year plans. I'd recommend you go to more than 1 meetup/month, attend as many as you can. Your network is going to be your biggest asset and without that it will be hard to get any good deals on properties. Also consider whether you will be buying the duplex and fourplex as vacant units or not. If they are being rented then you can include the rent in your DTI ratio, but you will have to remove the tenants before starting any rehab. If you buy a vacant property then you don't have the rental income to include in your DTI and will need more cash for the deal.

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free