20k a month in passive income?

51 Replies

I am just begening in real estate investing obtaining as much knowledge as I can before I dive in. I understand that real estate is a slow grind and in by no means of getting rich quick. My first goal of mine was wanting to produce 30k a month in passive income but then i thought that may be reaching for someone just starting out.....so i lowered it to 20k.......Any idea how much time and money it would take to accumulate that many assets? Can it be done? Where do i start? Im currently in Florida and I also live in California. For capital I'm willing to invest in the venture is in the range of 1.8-2.3m. 

I like your questions and so I will give you some advice.  

Can it be done?  Yes.  How long?  That is up to you.  Go kill it and you get it done in less than a year.  I doubt you will because you don't even know what you don't know.  But you might.  You may want to be on the 8 year plan to 40 homes.  

That being said, why don't you get a house under your belt first and see if this is something you want to  do.  Until then, it is only academic.

@Doug Martin

Lend $2M at 12% and you'll obtain your $20,000/month passive. I would say that's pretty easily attainable. 

You shouldnt have lowered your goal. Depending on how passionate you are, will determine if and how long. It is definately an attainable goal. i just listened to a michael Blank podcast were the interviewee went from 0 to 1000 units in a year. Now thats getting it. Its all about the mindset. Ive went from 0-18 in 16 months. I buy small multifamily. Im very fortunate to to live in an outrageous market tho. Just get out there and do. Best of luck.
I mean I dont live in an outrageous market

@Doug Martin  

Doug Martin in Tampa? Pretty famous football player by the same name in the same city ;) 

With that type of money, in an area like Tampa, absolutely attainable. Thing is, you definitely need to get to a point where you can discuss a deal/formulate a business plan, and that takes education. Figure out a game plan. What do you want to own? How active to you want to be? If not very, do you know how to interview property managers? Yada, yada, yada. 

Good luck!

If you already have 2.3M don't waste your time playing with real estate you already have everything you need to achieve your goal, just loan the money out or place it in a moderately conservative mutual fund and watch it grow.

@Doug Martin

EASILY achievable doing HML. Florida is the perfect state for that.

Agree with the HML suggestions above, but if you'd rather get your 'hands dirty' (ironic, for passive income, I know) - you should think about partnering with an experienced player. 20-30k a month does not come from a small property or portfolio - and you should always walk before you run. If you joined with an experienced player, you can bring a good portion of the pre-finance capital to the deal, and your partner would bring a smaller portion of the capital, and the operations experience. Residential, commercial, and mixed use can all deliver these returns easily - you just need the experience side. If you're determined to do it all yourself - start small. Go buy a small multi-family (10 units gives you a decent idea of scalability - whereas 3-4 unit properties run in completely different ways). Use financing, so you're not locking up all your capital, and run it for a year or two before moving up in size.

Partnering for experience is the best way imo - because many operators are missing that piece of the puzzle (the larger share of the capital) and farm it out via pref raises.

Good luck! Keep asking questions - BP is a fantastic resource for knowledge.

@Doug Martin

If you really want to play the RE game I suggest the following.

1. Buy a property.

2. Make a well thought ot plan.

3. Work your plan.

If you want to do notes, do that. I retired after 9 years of R.e with 1.6 million in notes at 10-12%. That was 200K a year. (1979) Certainly more than 20K per month and very passive in todays' market. Warning!!! always plan for a reserve. Notes can go bad, security for note can go bad, economy can change.

There is no limit to monthly #. One of  my apt. buildings in Dallas did 30K per month net, purely passive. I have three.. Just be careful what you choose and who you choose to do it with..

If you want some examples, check some of my 5000 posts or my Book. 

PS. It isn't how much you make but how much you keep... The center 2 pages of  my book shows letters of apology from IRS and a reduction of over 500 K they said I owed for 1979 and 1980. Those were fun letters.

Good luck.

PSS I'm in the Villages in FL. If you ever travel through, I'll let you buy me lunch. I don't want or need your money.....

Hi there @Doug Martin . First of all, big fan of your play.. and congrats to you and the bucs on landing DeSean Jackson. As others have mentioned, HML would be a good route to your goal. If you're interested in buying property, I would find partners who do larger deals (75-150 units) and partner with them. But I think everyone agrees that you have a solid base and that you have the ability to lend or partner relatively easily.

@Doug Martin Seems like you have enough money to get what you are looking for.  The real question is how fast do you want to get there and how much work you want to put into this. 

Passive income is a nice term but there are very few options out there can generate 12% returns ($240K/year from $2MM investment) and be really passive, "mailbox money".

The advice above talks about hard money lending, buying properties, etc. Neither is really "passive". even HML involves underwriting the deals you're getting pitched and making sure you have recourse on the loan. If the borrower is defaulting, you have to do work and try to collect or foreclose on the property, etc.

I think you can get close to that though investing in multifamily apartments. Especially if you calculate the revenue from the sale of the property but even that won't be enough if you want to invest $2MM today and get 20K/mo starting next month. 

If you are willing to do SOME work for that, then you have more options and greater chances to achieve your goals. Just make sure to weigh your options in terms of risk and effort.

Just depends on if you want to be hands on and control everything or if you want to be hands off and treat it like a stalk.  That would be the "hiring people to find you deals." I'd start small, but first I would talk to a real estate attorney who represents the larger developers in your town.  They should be able to give you some referrals to apartment developers and owners and you'd be an equity guy. you get a 7%-10% preferred rate of return, plus the % of cash flow, off of the % of equity you put in.  Ie: $1M total equity needed to build or buy an apartment building and you put in $200k or 20%, you get 7%-10% preferred rate of return on that money (1st money out of the deal) and t hen 20% of the cash flow on the deal.  So if the deal cashflows $500k a year, you'd get $100k.  Another avenue may be an accountant or if you are an athlete, you could talk to your sports agent or your financial guy.  

Originally posted by @Doug Martin :

I am just begening in real estate investing obtaining as much knowledge as I can before I dive in. I understand that real estate is a slow grind and in by no means of getting rich quick. My first goal of mine was wanting to produce 30k a month in passive income but then i thought that may be reaching for someone just starting out.....so i lowered it to 20k.......Any idea how much time and money it would take to accumulate that many assets? Can it be done? Where do i start? Im currently in Florida and I also live in California. For capital I'm willing to invest in the venture is in the range of 1.8-2.3m. 

HI Doug, welcome to the game.  I am sure you are already thinking this way, but May I suggest something?  If I had 1-2 million dollars to invest today, I would invest slowly, maybe get it invested over the next 3-5 years. 

I would consider what your goals are.  For instance, If I had a substantial income for a relatively short number of years, I would probably keep myself to 0 or low leverage.  IF you took 2million, invested it in fully paid for properties with say a modest 7% return, you would be around 150K/year.  A little more leverage and that return goes up.  But I don't think I would be doing most of the unconventional financing that individuals around here are doing.  IE hard money, or private equity etc.

I would consider risk weighted returns. With huge risk you can probably pull in large returns, but if there is a severe downturn you might end up with nothing.

Many if not most of the investors on this board are looking to get rich from real estate.  Most began investing after the financial crisis and have done well in a short period where real estate prices have bene skyrocketing.  But if you already have wealth, you might find that a little lower returns with much less risk might suit you better. 

IF I was trying to preserve risk, there is no way I would put more than 15-20% of my real estate portfolio in any one project.  And I would make sure that IF I had loans they were non-recourse, and that they had long term mortgages.  That way you don't have to refinance if we go into a recession.

Best of  luck to you!!

Thank you everyone for the great advice today. I really do appreciate it. ; )

If you're friendly with Ryan Broyles, he might be a good guy to turn to for advice. 

Good luck, and thanks for all the fantasy football points you've given me. 

Once you are at 20k, 30k will be easy.  A good bit of free and clear properties or a ton of leveraged ones would create this.  Passive is a strong word in this business as very very few people actually pull that off.  Most people are somehow involved.

If you truly want it to be passive income lending would be your best bet. $2M even at 10% interest is almost $17k/mo. and that doesn't include fees. You could easily get that up to $20k/mo. 

If you're wanting to own property, partner on deals, whatever the case may be, it's never going to be truly passive. You're going to have to manage the properties or projects yourself, or manage the property manager/business partner. Basically you're going to have to be involved in one capacity or another. 

Lending is about as passive as it gets. Good luck! 

Hey @Kevin Manz I see your from Indiana. Is Fort Wayne also where you invest??

@Doug Martin

I have exceeded these goals by accumulating a large package of SFR's. Competent property management in an appropriate market is the key ingredient.

I am now expanding into other sectors as well but my bread and butter is my package of SFR's.

I would be happy to discuss with you if you would like to get on a call at some point.

Good luck

@Doug Martin

I have found REI to require much more than a target financial goal.

To persevere through the pitfalls and tough times all of us go through on our journey we must have passion.  That involves an aligned mission, vision and purpose.  

Economic benefit is a result of passion properly executed. 

Looks like youre on track to not be on 30for30 Broke sequel. much luck

@Doug Martin


with 2mil, you can definitely go the lending route that everyone has talked about.
for myself, I used about 250k in cash and am cash flowing close to 12k/month now. (10 rental units)

I know I'm a little bit out of the norm, but it is doable with the right tools. You should be good making 20-30k passive with that kind of capital in even modest investments.

and don't ever ever dumb down your goals. 1.5 years ago when I first started RE investing, I thought I would buy one property a year and I beat that in less than 1. Reach for whatever you want sir

@Doug Martin how much do you want to learn vs simply getting decent results? If you're just looking to put your money to work for you, you may want to check out one of BiggerPockets' sponsors, RealtyShares (www.realtyshares.com). There are people there putting together deals that you can get in on without doing much your end. The more you do yourself the more you'll learn, but you have options, and you need to decide how far you want to go.

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