Fastest route to $10,000/Month Passive Income

108 Replies

@Matt Jennissen sounds like you're on the right track. BRRRR process if you can systematize it will be the fastest way to scale. It's been said a million times before but it just comes down to finding deals and finding a way to add value and continually recycle your capital creating more cash flow. Best of luck man.

@Matt Jennissen this won't get a lot of votes, but invest $1,000,000 at 12% tomorrow and you've got $10k per month.

If you don't have the $1,000,000 worth of investment capital then the following is the fastest path and is something I have done recently in this market:

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

Raise all the down payment capital via private money OR have the seller carry a 10%-20% note and finance the rest with a traditional mortgage.

Spend the next year managing the property well, raising rents and keeping the expenses low for prep to sell the property at or above the $3,400,000 ARV.

if everything works well you will have it sold in a year and YOU can either hold $1,400,000 worth of paper on the sale by offer partial seller financing OR sell the property, pay the taxes and reinvest the remaining $1,000,000in a 12% interest bearing investment vehicle.

You could also buy 50 units that cashflow $200 per month, but it would involve more management.

Any of these options will work and I've done all of them.

Cheers to your success!

@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.

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.

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!

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.

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.

Originally posted by @Matt Jennissen :


 Not super passive, I really want to get to the point where I can replace most of my w2 income with this to have greater time flexibility to spend with my wife and kids, but not to the point where I want to kick my feet up and do nothing. 

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? 

 

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. 

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.  

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.

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.

Originally posted by @Matt Jennissen :

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. 

@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?

@Matt Jennissen 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.

@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

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.

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.

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.

@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.

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