Fastest route to $10,000/Month Passive Income

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Fastest route to $10,000/Month Passive Income

Matt J.
Rental Property Investor · Hugo, MN · Member since 2014 · 283 posts · 257 votes

I’m at $1890/month passive income currently from 4 rental properties and want to scale to $10,000/month in the next 3 years. What is the most efficient or fastest route to get me there?

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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
6y

Nice to finally see a "$10,000/month" post where the OP actually owns a property.

You are at almost $2k per month already with 4 units...that is strong cash flow if it covers everything (including vacancy, management, cap ex reserves).  Sounds like you need 15 or so more units and you are there.  Keep doing what you are doing...scale it up using other people's money, commercial loans, and purchasing fixers.

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  • Rohit Verma
    Denver, CO · Member since 2018 · 29 posts · 21 votes
    6y

    @Gualter Amarelo 

    "Find a portfolio or building that is worth $3,400,000 and get it under agreement for $2,000,000."

    So someone has a property worth 3.4M and they are not able to sell it at that price so they sell it to me for 2M and then in one year I will be able to sell it for 3.4M while they were not? And thats assuming everything went alright (ie no further moratariums etc). Plus operating in 3M+ space means deeper-pockets/reserves which Im sure you might have but not the guy trying to get get to 10K/month mark.

    This sounds to me more like hoping for home run and Im all ears to be enlightened, Im also only 3 years in the game at around 4.5K/month mark myself.

    7Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    That’s my goal and it will take me 10 years. I’m slow I guess. Lol. But I got my 10 SFRs with 4k/month passive income now and will have them all paid off in the next 14 years.

    2Reply
  • Eric Bilderback
    Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    This has been my goal for a few years.  I think you are in a great spot to house hack.  You can move into a 4 plex the next 3 years and buy some rentals.  Your cashflow will start helping you more and more as it grows and you can use it to buy more real estate.  My real estate grows at about 30% on average but my cashflow grows at about 9%.  So from the face of it you might have 3k coming in and if you House hacked maybe you are at 4k.  So you would need to come up with 600k if you can get 10% back on your money which I can’t but you are in a cashflow market.  If you put all the money back into your business for 3 years and house hacked you would need 600k to pull this off which sounds like a stretch.  My advice or that I know you don’t want to hear is keep this up for 7-10 years and you are there.  Maybe even change jobs in a few years.  But you a kicking *** and I know tons of guys who would love to be in your shoes.

    Good Luck!

    3Reply
  • Mark Futalan
    Rental Property Investor · La Quinta, CA · Member since 2018 · 263 posts · 95 votes
    6y

    Invest in furnished vacation rentals! With everything going on right now with the pandemic, there is a lot of demand for month to month, 3, 6 and 12 month leases. I have 2 and use a hybrid approach of short term and month to month to 3-6 month leases and it’s been working out quite well.

    2Reply
  • Justin Reader
    Rental Property Investor · Altoona, PA · Member since 2019 · 44 posts · 63 votes
    6y

    @Nicholas U. Valid point!

    0Reply
  • Claude Calixte
    Rental Property Investor · NY · Member since 2019 · 19 posts · 3 votes
    6y

    @Mike Dymski

    I’m setting the same goal, I have a 5 Unit now... think I need about 20 more Doors

    1Reply
  • Claude Calixte
    Rental Property Investor · NY · Member since 2019 · 19 posts · 3 votes
    6y

    @Zachary Ray good luck !

    0Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    6y

    Here it is again, looking for the royal road. There are no royal roads to do anything in real estate. There are high-probability pathways and low-probability pathways, and usually far too many variables in the problem to isolate any two or three of the high-probability pathways as the highest-probability pathways. In this case, it will greatly depend on the individual and their skills and strengths as well.

    I know I'm not answering the question, but I wanted to remark on the mentality. Because asking after the best way to do something very often leads to people doing nothing if they can't find the best way, if there is no measurable best way.

    One of the my favorite classical quotes comes from the Punic Wars: the Carthaginian general Hannibal's response to a subordinate's question about how he would get his troops over the Alps to attack Rome from its undefended north.

    "Aut inveniam viam aut faciam."

    I shall either find a way or make one.

    4Reply
  • Bryan Danger
    Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
    6y

    So, not that this approach is always very popular on this forum... but have you considered tackling the problem from the opposite direction?  
    We have spent the last several years more focused on the downsizing/minimizing of our lifestyle and monthly expenses than we have on generating more properties and/or more monthly income and it has led to exactly the things (freedom, flexibility, more time together, etc) that you seem to list as your goals .

    You've done awesome for yourself and your current passive income is great, but it seems to me that if you keep tackling this by going after more and more (and more) properties and then having to drive several hours each day to upgrade/maintain them... you're making more income but still not getting any closer to the true goals you were hoping that income would help you achieve.

    What if you reduced your expenses to the point that you and the family could spend all day together while you simply wait for the properties and your passive income to gain in value?  What if you had no 3-5yr "deadline" because you were already living the way you wanted each day and the work you've already done was still working/growing for you behind the scenes?

    I know very little about your story... but at least for us there came a VERY important discussion/decision to pivot aware from the "more, more, more" mentality toward finding the balance that actually led to us having a better life (today and in the future).  
    Im not saying to downsize your goals (quite the contrary) Im just suggesting that there are two ways to tackle this problem, especially if your goals (as it sounds) aren't actually financial ones but rather lifestyle ones.

    It is possible to do both AND to find the "balance" point in between, and if the goal of this whole passive income pursuit isn't to have freedom and spend more time doing what we love today... than what is the point? 

    5Reply
  • Shafi Noss
    Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
    6y

    I think the fastest way to build $10k a month is to be prepared to sacrifice risk and cashflow in the beginning to get the highest growth asset you can find, which in real estate is often new construction. Once your wealth has scaled enough, fold your investments into a diversified set of cashflow focused investments like self-storage, hard money, certain types of apartment complexes, etc. 

    6Reply
  • Israel Torres
    Rental Property Investor · Chicago, IL · Member since 2017 · 40 posts · 54 votes
    6y

    Hi Matt,

    Let me start with congrats on your investments and wish you continued success.  

    Everyone's approach will be different here.  There isnt a cookie cutter way to get there quickest but what I will say is consider the opportunities that arise, even if you have a plan and those opportunities dont fit that plan.  

    I say take the opportunities that arise, even if you have a plan because those opportunities may help the overall plan.  What i mean by that is I have bought houses/multi-families that didnt exactly fit my overall plan but they cash flowed and helped my business grow.  I took those opportunities every chance i got.  It helped me build something I never thought possible.  My goals are now much more than they were 5 years ago and even 10 years ago when i started investing.  

    So while you have this plan, be fluid in the process of the goal.  There may be other opportunities that arise that could help you get to where you want to go much quicker.  Consider those even if they dont fall within your plan.  They could eventually become part of the overall plan.  

    Good luck.  

    4Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    Congrats on the progress so far! Just keep doing what you are doing. Focus on bigger 3/4 unit deals and do a value add. I have a 4 unit which I did a BRRR on in chicago that after all expenses+if I used management it would be $1500+ a month. I like these size buildings. They do not use a complex balloon mortgage and are still a fixed 30 year "residential financing". Pretty easy to manage 4 units in nice areas I get maybe one call a month and it's for something tiny much easier then managing a big apartment building of lower income people. Have never had late rent or anything like that with the demographic of tenants.

    3Reply
  • Brian Ploszay
    Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
    6y

    From your calculations, you'll need more than 20 properties.  Keep in mind that "repairs" sometimes sink some of that cash flow.   One roof replacement or furnace, wipes out your cash flow.  Someone mentioned the best way to scale up are apartment complexes.  Yes, but larger properties are something you should grow into.  I'd suggest patiently building your portfolio up.  You will meet your goal soon enough.

    2Reply
  • Jonathan Doescher
    Coon Rapids, MN · Member since 2019 · 15 posts · 7 votes
    6y

    @Matt Jennissen You May want to join MN REIA. I am a member and we have monthly meetups and I believe they have about 1000 members. There is a cost to join, but has seemed worth it for me so far.

    1Reply
  • Curtis Marker
    Investor · San Diego CA & Lake Havasu, AZ · Member since 2020 · 5 posts · 5 votes
    6y

    @Mark Futalan

    How are the short term rentals in la Quinta? I’ve heard they do really well there.

    0Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    6y
    Originally posted by @Matt J.:

    I’m at $1890/month passive income currently from 4 rental properties and want to scale to $10,000/month in the next 3 years. What is the most efficient or fastest route to get me there?

    So far everything I have read (no, have not read it all) has been intensely specific and strategy based WHICH will not be helpful because not everyone can do any/every strategy. REI strategy is like picking a suite, it's very specific to the person.

    There is 1 correct answer and 1 only: LEVERAGE

    That is how you will get to $10K per month, leverage, IF you'd like to do it for you vs your grandchildren to spend. 

    **** BUT **** rule #1 is to make $, which is completely worthless if you forget rule #2 which is NEVER LOOSE MONEY! 

    You must walk your own path, what works for 1 does not assure working in your markets or by yourself. It's most important to know yourself, take assessment of your tools, knowledge, advantages and disadvantages, with that in hand it will direct you on how your best suited to use leverage to grow to $10K, and nobody can do that for you or tell you other than yourself. 

    2Reply
  • Caleb Christopher
    Title Representative · Denver, CO · Member since 2020 · 126 posts · 66 votes
    6y

    @James Hamling

    "Never lose money"... I can't get with that. Maybe "don't" but not "never." If your goal is to never lose money you won't take the right risks.

    Wasn't it Kiyosaki who said he's never met a wealthy person who hasn't lost money, but he's met plenty of poor people who have never lost a dime?

    7Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    6y

    @Matt J. keep doing what you're doing man, because you're crushing it. Everyone is going to have their opinion (some leading to them making money) but start partnering and buying more. Someone out there wants the cashflow and doesn't want to do the work, which you're doing well at. You need capital, capital needs a home, perfect match.

    [email protected]512-888-9122
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    2Reply
  • Jonathan Farber
    Rental Property Investor · Medellin, Colombia · Member since 2016 · 231 posts · 215 votes
    6y

    @Matt Jennissen - I am in a very similar position to you. I would try wholesaling. You can make an additional 5-10k per month fairly “passively” with the correct system but what’s more valuable is the ability to find off market value add deals for yourself. The money is nice but I’m mainly doing it to learn the skill set

    2Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    At your current cash flow rate, it looks like you need 17 more properties or find properties with better cash flow. Three years is pretty aggressive. It can be done, but you will need to hustle. Most people won't go to that effort so it really depends more on what you are willing to do.

    2Reply
  • Stephen E.
    Rental Property Investor · Member since 2020 · 172 posts · 110 votes
    6y

    This has been said at different points in this thread, but the quickest way to $10k monthly passive income is to have 1 million dollars and invest it in something that pays 12%.

    I  don't think it's that  hard to do, once you have a million  dollars.

    0Reply
  • Louis Jeffries
    Lender · Chicago, IL · Member since 2010 · 149 posts · 127 votes
    6y

    This depends on what you have to work (credit and $$$) with and the market you are in. The general answer is the BRRRR method. Buy, Rehab, Rent, Refinance, Repeat. In this method you can add 3 to 4 properties a year using the same $$$$ you start out with. There is a way to do this with little or no money if you have great credit. The reason the market and money matters is I do not know the type of properties you have available in your market and their costs. Generally, 3 to 4 unit properties are best, because you cash flow per unit and you can add 12 to 16 units per year. At $300 per unit net cash flow it takes 33 to 34 units to net $10,000 per month. At less than 10 new units per year you can accomplish your goal in 3 years. Please understand the difference of units versus properties.

    3Reply
  • Ryan Thomas
    Realtor · Scottsdale, AZ · Member since 2019 · 125 posts · 51 votes
    6y

    @Matt Jennissen

    I’m going to give a more broad answer as there are multiple ways to achieve this. Your more familiar with your own strategy so I might try to amplify that since it’s worked so far. Start by writing a plan on paper...What you need to save every month, what your approach will be, and how to execute. Then just move forward. Save money, drive for Uber or bartend. I like the idea of rehabbing houses but again that might work for someone else. Just put in a little more effort than everyone else and you’ll be golden.

    2Reply
  • Pat GoodyearPro Member
    Syracuse, NY · Member since 2015 · 79 posts · 48 votes
    6y

    @Matt Jennissen

    I will give you my roadmap...YMMV. I got HELOC lines on my primary and vacation homes. I then looked for distressed properties near where I live...like a 8 block radius. I would cash offer, no inspection, no survey. Just updated abstract and title insurance. Fix it up, rent it out. Month to month. Aim for middle class, essential workers. Pay down the loan, buy another. Found houses on auctions, MLS, and word of mouth. Got a great insurance agent and tax preparer. Some years bought none, others bought 4. I am now at 19 houses, 19doors. 4 are not rented.

    I still work a W2 job, but only because I love it and it provides my insurance. I own everything outright. No mortgages.

    5Reply
  • Ron Kayano
    Rental Property Investor · Honolulu, HI · Member since 2020 · 2 posts · 0 votes
    6y

    I want insight Into the Cleveland home buying and rental market.

    If anyone knows wholesalers, or contractors in the area?

    0Reply
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