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Chris Hill
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$40k/month goal. Which strategy will get me there faster?

Chris Hill
Posted Nov 25 2022, 10:39

I'm 41 and want to retire in 10 years.  I have a few options to reach my goal of 40k a month, 10 years from now, but need some help.

Background:  I have two investment types. 

One -  I have 14 condos, all with loans/leveraged. 7 of them are on one commercial loan at 3.9%  which is a 10 year term (8 years remaining) at which point I will need to refinance. The other 7 loans are all on 30 year loans between 2.5-4.8%. Current cash flow is $10K a month.   Gross rents, 24k.

Two -   I'm in 10-15 syndications.  They are all class B, and I plan to reinvest all of them after the first event, and do it again.  If those successfully do 1.5X, twice, over a 10 year period, at which point I would put all funds into a class A (9-10%) for the remaining future, they would produce $20-25K a month.  Obviously, lots of IFs there, but very possible.   I would need to continually find future deals to keep that CF going indefinitely.  I've been in them for 3 years already and all are performing above target. 

Here are my two options as I see them, and I'm sure there are others.

1.  Pay off condos - If I take all current condo CF, and snowball all 14 loans, those will be paid off in 10 years, and combined CF from condos and syndications in 10 years would be roughly $45k.  Goal reached.  I know it doesnt make sense to pay down low interest rate loans, have the renters pay it off over 30 years, etc.  But I dont want to wait 30 years.  I have the discipline to put 10k a month towards loans for 10 years, knowing the end goal is in sight.

2.  Reinvest the 10k (120K per year) into more syndications.  If the 120k did 1.5X, twice in 10 years, and then I cash out each year after 10 years, it would be roughly $30k a month.  But I would have to continually put 120k in per year indefinitely. 

MY QUESTION - which option would get me to my goal of 40k in 10 years?  I think my math is sound, but could be wrong.  Option two would appear to have greater cash flow at year 10, but I'm not as clear.  Option one is very clear to me.  Which option helps me achieve the goal faster, and with less variability.   For easy numbers, I'm leaving out taxes. 

I'm not trying to start a pay down vs reinvestment argument, just curious which route is more effective. As yes I could diversify more, CRE, STRs, flips, more SFR out of state, etc, but they aren't my wheelhouse.

Thanks for reading, hoping for people smarter/more experienced than me can chime in!


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