Cash flow strategy for beginners

12 Replies

All,

As a beginner, how should I approach a goal of having 5000$ in Monthly cash flow?

If I do the math, I should be having 10 properties with a surplus of 500$ cash flow each for 5000$ overall cash flow monthly. Taking 300,000$ as the average home price, we’re looking at an overall purchase price of 3M$. Since I don’t have that much cash, I’d be going in for a conventional loan. Even with that I’d have to put 25% down which comes to 750,000 which I don’t have.

What are my options? Not sure if it matters but I’m on a work authorized visa.

Thanks,

Ashwin

@Ashwin Gudipati in my opinion the best strategy to get started is house-hacking. If I were you I would look to get a duplex, triplex, or quadplex. Live in one unit and rent the rest. Because you will be living there you should be able to put a low down payment (around 5%). Live in that for a year then look for another househack opportunity the next year. You will be able to quickly add units without 25% down payments. 

1. Why do you need to buy houses that are at the average home price? If you're target is cash flow, check out Ohio, memphis, etc. Buy houses for 100k that meet your criteria.

2. I did a quick redfin search, and you can get a duplex for 400k (2/1, 2/1) https://www.redfin.com/TX/Aust...

You can use a FHA 3.5% down loan. You're looking at about 25k, all-in including closing costs (off top of my head). If it's still too expensive, go to a nearby town that is not as expensive that you're willing to commute from. You want the cash-flow? might have to make sacrifices.

Originally posted by @Derrick Dill :

1. Why do you need to buy houses that are at the average home price? If you're target is cash flow, check out Ohio, memphis, etc. Buy houses for 100k that meet your criteria.

2. I did a quick redfin search, and you can get a duplex for 400k (2/1, 2/1) https://www.redfin.com/TX/Aust...

You can use a FHA 3.5% down loan. You're looking at about 25k, all-in including closing costs (off top of my head). If it's still too expensive, go to a nearby town that is not as expensive that you're willing to commute from. You want the cash-flow? might have to make sacrifices.

I agree with Derrick, if you pick the right areas with up-and-coming markets you can invest at much cheaper prices. The midwest is a great place to get started, I invest locally here in Columbus, OH and have a lot of friends with similar success here.

 

If your market is over priced then the next best thing would be investing OOS. Building your team will be the most important part of your success. I would recommend just getting the first 1 or 2 out of the way before focusing on the long term cash flow and goals. Good luck! @Ashwin Gudipati

Originally posted by @Ashwin Gudipati :

All,

As a beginner, how should I approach a goal of having 5000$ in Monthly cash flow?

If I do the math, I should be having 10 properties with a surplus of 500$ cash flow each for 5000$ overall cash flow monthly. Taking 300,000$ as the average home price, we’re looking at an overall purchase price of 3M$. Since I don’t have that much cash, I’d be going in for a conventional loan. Even with that I’d have to put 25% down which comes to 750,000 which I don’t have.

What are my options? Not sure if it matters but I’m on a work authorized visa.

Thanks,

Ashwin

Hi Ashwin, there are very few people with that much money. Try breaking down the goal, when do you realistically want to get to 10 properties? How many properties do you need to buy per year? How will you get the money to buy just ONE property? Once you close that property, how will you get the next one? If you are only looking at the end goal, real estate investing can seem very overwhelming. Hope this is helpful! 

Hey @Ashwin Gudipati

Congrats to you for your ambition! If you are looking to connect with someone for some guidance or advice, feel free to reach out. I also recommend you read this article I wrote for Bigger Pockets titled How to Invest in Real Estate Before Turning 21. Once you've read it, let me know your thoughts and if you have any questions. I am a high school teacher in Colorado and I am always looking to help young people get started in real estate investing or help in any way I can. Let me know if you want to chat sometime. https://www.biggerpockets.com/