Real estate scaling/10 year goals
Hello everyone! I am new to real estate investing and have set the goal to have 120,000 in cash flow by 2035. I have $11,500 in investible assets and am going to continue saving at about $1,000/month. My current Investment Thesis is to focus on my local markets, Kalamazoo/Portage MI, and Battle creek MI while starting some property management for a local investor and continue my w-2 job which only pays $40,000/year. I'm currently interested in House Flips and Rentals for SFR or Multi Family homes. Since I am working with low w-2 income my goal is to focus on value add and BRRRR to build equity in the next five years to scale. After I "prove my salt" locally I'd like to target the same types of deals long distance as well. I am reaching out to see if anyone has had success scaling in a similar way and if they have any advice/wisdom to share!
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Cash flow is about 6% of equity. $120k cash flow implies ~$2m equity. At 60% ltv is ~$3.3m of assets.
I am all for challenging goals and challenging goals never hurt. Recognize that it is a challenging goal.
My concern is your emphasis on cash flow. The quality of a purchase is total return. In general the highest initial cash flow properties have poor appreciation and rent growth potential.
They typically are in lower class areas with tenants that reflect the lower class areas. The cash flow projections in these areas are harder to hit especially for those without experience owning/managing in those areas
My advice is
- do not put all emphasis on cash flow Look at total return projection.
- buy in areas above the median price for the broader area. Buy the cheapest in above average areas.
- recognize RE in this current climate is not as favorable at quick profits as a few years ago.
Good luck