Going to be hard to answer this without more information - but a general goal post to aim for (I believe Brandon Turner does) is $100-$200 per month after ALL expenses per door. So your example you'd need 12-25 doors
How you get to this number and how much of your own capital is needed varies immensely person to person. Investing with other peoples money, self managing higher yield properties, BRRRR, various strategies can be used to get to that level
It all depends on what type of properties you buy and where. If you want it to truly be passive, you will need more as you will be paying a property manager to take care of everything.
The question is very general. If you can cash flow a minimum of $300 per door for SFH then your at approximately 8. A few years ago you could cash flow $500-$600 a door then you were at 5 . Its all relative. I would not invest in a SFH for less then $300 its just not enough.
@Rahul Handa Your question is a bit vague in that you have not provided much information on your market or your circumstances. So, we will need to make some assumptions. Then you can follow the logic. If the assumptions are not accurate, then change them for your needs and re-run the logic. 1) Based upon deals you have analyzed for your market, how much do you anticipate make per door? If you assume 250/door, you need 10 properties. If you make 100/door, you need 25 properties. 2) Again based upon your market and your analyses of properties, how much does a property cost? For this example, we will assume a $60,000 property will cashflow $250/month. We will also assume you will get conventional loans with 20% down, closing costs are $5000, and flooring/paint cleanup is another $5000. So you will need $22,000 per property (12,000 down +5000 +5000). So for10 properties, you would need $220,000.
However, your mortgage would only be for $48,000. Many lenders will charge $2000-3000 extra for loans less than $50,000. Further, you need to have cash reserves for property management, capex, etc. You have to figure this based upon your risk tolerance.
Also note, you may not be able to get 10 conventional loans, so you may need to get business loans where 25-30% down is required.
Anyway, this should get you started with figuring out how to put a strategy together. Good luck to you.
The question is very general. If you can cash flow a minimum of $300 per door for SFH then your at approximately 8. A few years ago you could cash flow $500-$600 a door then you were at 5 . Its all relative. I would not invest in a SFH for less then $300 its just not enough.
Ya im getting my numbers similar to yours. Around $400 per SFH with 8% return. So ill need around 5 in my case. Thanks for your help.
@Rahul Handa Your question is a bit vague in that you have not provided much information on your market or your circumstances. So, we will need to make some assumptions. Then you can follow the logic. If the assumptions are not accurate, then change them for your needs and re-run the logic. 1) Based upon deals you have analyzed for your market, how much do you anticipate make per door? If you assume 250/door, you need 10 properties. If you make 100/door, you need 25 properties. 2) Again based upon your market and your analyses of properties, how much does a property cost? For this example, we will assume a $60,000 property will cashflow $250/month. We will also assume you will get conventional loans with 20% down, closing costs are $5000, and flooring/paint cleanup is another $5000. So you will need $22,000 per property (12,000 down +5000 +5000). So for10 properties, you would need $220,000.
However, your mortgage would only be for $48,000. Many lenders will charge $2000-3000 extra for loans less than $50,000. Further, you need to have cash reserves for property management, capex, etc. You have to figure this based upon your risk tolerance.
Also note, you may not be able to get 10 conventional loans, so you may need to get business loans where 25-30% down is required.
Anyway, this should get you started with figuring out how to put a strategy together. Good luck to you.
Thanks but im only looking to invest in SFH. I know it was kinda of a broad question but my goal is keep owning SFH for as long as i can.
I'm bringing in about $2,900/month after all expenses off 6 SFRs. Two are paid off. The other four are on 15 year loans. Prices range from 100k to 225k. My cheaper properties have a much higher ROI. Good luck! Once they're all paid off, I estimate they'll bring in an average of 1k/month. Not bad..not great. But it adds up with more and more properties under your belt.
I'm bringing in about $2,900/month after all expenses off 6 SFRs. Two are paid off. The other four are on 15 year loans. Prices range from 100k to 225k. My cheaper properties have a much higher ROI. Good luck! Once they're all paid off, I estimate they'll bring in an average of 1k/month. Not bad..not great. But it adds up with more and more properties under your belt.
Thanks, How long do you hold each property on average?
I’ve kept them all. I did sell one foreclosure I bought for 60k then sold it for 100k a year later. Did a 1031 on it. I’m more of a buy and hold investor. Passive income works for me. I aim for base hits vs home runs a lot of people try for recklessly.
I new and still trying to figure this out. How much captial do i need to make $2500 a month passively. Any suggestions will help.
Hi Rahul
This is one of those....... ‘how long is a piece of string’ questions.....
Its dependent on the market you are buying into, entry point will vary significantly
For example, If we were talking Detroit and you paid $35,000-40,000 for each SFH, renting at $800 gross, you will need capital injection of somewhere between $120,000-150,000
Now if we are talking Boston perhaps add another 0 to the capital??
As others have mentioned, a lot of variables here. Purchase price, down payment, rental rate, market, prop mgmt, etc.
For SFH in my market, I normally estimate 40% of rental income for goes to vacancy, repairs, insurance, and property tax (up that to 50% if you hire a property mgr). If you finance at 100%, another 40% goes to p/i.
So, you get 10-20% of rental income as cash flow depending on how you finance, your rent/purchase ratio, and self/hired mgmt.