Fastest route to $10,000/Month Passive Income

108 Replies

Efficient and fast may not be the same route...

So you’ve amassed some decent cash flow already. Great job!  One option, and already pointed out, is to stick to what you’ve already been doing. If it’s produced that kind of income, you should be able to rinse and repeat. Of course, that may not hit your timeline, but I think that’s the most efficient route....

Fastest route... that depends. I like to look at return on equity. You're making just under $2k per month = $24k per year - divide that by you're total equity and you get an annual return on equity... It may be best to tap into that equity and get it working in higher return investments.


I do apartments... most investment opportunities I've seen recently are projecting mid-teens as average annual returns. If your return on equity is much less than that, your strategy could include selling or refinancing your current portfolio to release the equity and invest it in something like apartments....


@Matt Jennissen

Matt,

Great goal, I am right there with you! I'd say continue to look for value add MF in your area. Try and see if you can owner finance a few deals and get those unit numbers up quicker. Either way keep on pushing and don't give up. I believe you will get there.

@Leslie Crosten if you use a hard money lender they will often give you 100% rehab costs. They will place into escrow and you can take draws usually. Key is not to be leveraged more than 70% so you can refinance once rents are raised and rehab is done. You can refi at 75%-80%, but I like to be conservative.

Any expired lease immediately start raising rents unless your in rent control area.

Remember that appraisals on commercial properties are income based for a large portion of it, so raising rents and showing leases with higher rents is crucial. Also prepare the appraiser with notes on what you've done and pull your own comps that support your position

We do this at 6 months in most cases

No brainer .. Pick up a handful of rental properties in Detroit! If you take the SFR we just rented out section 8 at $1500 a month plus all utilities that we will sell for $70,000 likely at some point this week and the duplex we sold last week for $84,000 that has two cash Covid paying units totaling $1900 plus gas and electric and the two triplexes we sold for $90,000 as well last week that are each receiving $2,100 and $2,200 plus gas and electric and lets say two more SFR's like the one we just placed another section 8 tenant in a few days ago on Montrose who's paying $1266 a month plus all utilities that we will be selling for $55,000 and times that property times two you are cash flowing in the $10K neighborhood for what 70K + 84K + 90k + 90K + 55K + 55K = 444,000 = 1500 + 1900 +2100 +2200 + 1266 + 1266 = $10,232.... Might need one more property like Montrose at 55K to cover all your taxes, PITI, 8% PM, and what little maintenance or Cap Ex because all our properties come fully updated and upgraded. Vacancy would be zero b/c if our cash tenants move out 9 out of 10 times we have someone waiting and ready to move in. And as far as Section 8 tenants are concerned their average stay in Detroit is 5-8 years. So vacancy = 0.

So technically and in essence 7 Detroit rental properties at $500K gets you cash flowing at $10,000 a month. 

Originally posted by @Caleb Christopher :
Originally posted by @James Hamling:


 "Never lose money" is actually a Kiyosaki rule, ironically as you intoned him here.

I'm aware of that line with/from Warren Buffet, but I know I heard/read Kiyosaki say what I said above (never met a wealthy person who didn't lose money).

I can't find the "never lose money" thing from Kiyosaki anywhere.
Is that something you can find for us? I'd like to see the context.

 Better yet, how about you go ahead and learn something and go find it yourself, I prefer that direction. You just highlighted a perfect example of why those of us with experience and knowledge get so exhausted of even attempting to help the younger ego/arrogance filled wanna-b's. It's an annoyance not worth our time.

@James Hamling , I don't want you to think I'm being adversarial.

I did look. I've got above average Google-fu skills, and I did not find that from Kiyosaki. That's why I'm asking you to help me validate your statement --- you're claiming to "help the younger ego/arrogance wanna-b's" but I can't verify what you're saying.

I gave context of where I did know it from, and asked for your assistance. I asked because it seems contrary to what I know Kiyosaki did say, and I would like to understand the context of the sentiment if/when/where it was used.

Thanks for your time.

@Matt Jennissen

Fastest route is do what most here do, fudge the numbers. See the million “I’m making $80 cashflow in month 3 how do I buy 500 more doors?” Threads here.

If that’s not your thing, you gotta scale. Examine your system, can you scale what you’re currently doing? If not, you’ll need a pivot before scaling further. Small/ mid sized multi would be a good target if you’ve got the skills and track record to make it happen effectively.

Originally posted by @Leo F. :

@Todd Pultz nice strategy, I wish it was that easy for me on the east coast NYC area. Maybe I should be looking more in Ohio?  I flew to columbus and Cincinnati few years ago at some large assets 30-90 doors. 

Columbus, Ohio is a great market! I am looking at larger assets in the area as well. 

@Remington Lyman your not busting down quads at our prices in Dayton are you? Give a rough deal on a quad up there if you could, Ive seen prices all over the place. We got like 20 flips gone right now up your way. Send me some value add and let’s knock some doors down!

Originally posted by @Todd Pultz :

@Remington Lyman your not busting down quads at our prices in Dayton are you? Give a rough deal on a quad up there if you could, Ive seen prices all over the place. We got like 20 flips gone right now up your way. Send me some value add and let’s knock some doors down!

 Quads are waaaaay cheaper in Dayton.

I brokered a 9 unit in Dayton for sub $200,000 lol

Originally posted by @Todd Pultz :

@Remington Lyman yes way cheaper lol, but if the numbers work at higher entry, they work! We just took down a 10 fully occupied at 210k, a 16 at 305k............still cheap to get in but we love Columbus!

Buy Columbus real estate has higher upside! We are going to be like Cali or NY in 30 years

Buy a 6 room for about 100k ya mortgage will be about 1000 a month you put down 3.5% + closing is about 10k & rent each room @ 500 monthly you'll profit 2k a month .yr1 24k & do it again 3 years from now you'll be @ 10k +

@Isaura Orellana I love your enthusiasm with Detroit and you have me looking at Detroit seriously over the last few days! However, I’m confused with your math and was just curious what formula your using.

If our gross is $10,232 and we add Montrose we will gross $11,500 monthly. If we simply take off mortgage and interest we are already down to $9,500. Now your 8% management takes us down to $8,500. You have to figure something in for vacancy/rent loss as you'll never move someone in same day you move someone out unless your an absolute rockstar! You will have turn costs and you have to put something into capex, you have to have insurance, you will have repairs no matter how great your guys flip was, your going to have landscape costs(unless all your tenants cut their own grass), you will have water/sewer(unless your tenants pay that), your going to have taxes etc etc. so rough math puts the TRUE cash flow on the property roughly $6k-$6500. Now, you would be buying these at 14-15cap which is decent

These are still good buys at your rents and prices, but I think your quick pro forma is off and we’re going to need a few more houses to get to 10k/monthly.

Keep pumping, I love it!

@Tyreek Mathis you lost me! So we buy a 6 room and cash flow 2k a month then we do this same buy in 3 years? So now we have two six room houses? This by your math would put us cash flowing 4K now? Where you getting the other 6k?

Large multifamily deals will get you there quicker.  The larger deals will allow you to take greater strides instead of chipping away at smaller deals.  Syndications and Joint Ventures could be an option for tackling those larger deals as well.

@Matt Jennissen

Based on your numbers,

It seems that at the edge of your Market,

You should be able to find single-family houses for about 30k

I would buy them,

and sell them using a contract for deed/land contract.

taking 3k to 5k down payment

SP 89k

Owner financing them over 30yr

Which take out all of the expenses out of equation.

@Matt Jennissen there are a bunch of good recs shared here so thanks for asking the question and getting this community response.

1) Rent by the room has been recently discussed multiple times on recent podcasts and works. Given you have SFH, if you were to rent by the room, you could significantly increase your cashflow on existing properties you already have. Some property managers may be able to work with you on this if they are able to profit from the extra work for them.

I'm currently working with a partner out of state using this strategy and the CoC is significantly higher than where I live. I put down the capital and he manages the properties. But have as system that works with a proven track record and then start finding investors that can help you build your portfolio.

2) The seller financing strategy is interesting and I've met with someone who has done this successfully to generate cashflow essentially being the mortgage company.  Definitely something you might look into.

3) I'm in the Bay Area and while cash flow is more difficult, it's not impossible as others have highlighted it just takes more value add opportunities. 

  1. 1. I have a newer construction home with an in-law suite I can rent out separately from the main house. Thus I essentially have a 2 unit property where the main house covers PITI and the in-law unit is all cash flow. (Bay area appreciation and rent increases have helped). Low interest rates allowed us to pull out all our down plus more for additional investments
  2. 2. Bought a property with a lot of value add. Large lot with a dated home. Was able to purchase below market since it was old and dated but has an unfinished basement and large lot for a second home. With CA ADU laws, we are able to convert the basement to a JADU and also add an $1000 sq/ft ADU in the back. The existing house with small updates will cover PITI and the rent from the JADU and ADU which will be new construction and low maintenance can generate $6000 per/mo income. For the construction costs we do have the capital but then can refi it all out and still cashflow well and put that money into something else or just keep that cashflow if we want to be conservative.

High cost of living areas can simplify the quantity of units but require more capital.  I wouldn't say ours is a short term approach since we have always lived in the Bay Area buying properties here and there along the way but are now just tapping equity to switch to cashflow.


@Curtis Marker

They are doing well. Unfortunately the city has a 90 day moratorium on any new STR permits at the moment as many investors and 2nd home owners have been purchasing homes recently. It's a hot market for sure and with the pandemic and ability to work remotely, the demand is through the roof. Our peak months are typically the first quarter of the year with the tennis tournament and Coachella music festivals being lucrative events for us. Hopefully things get back to normal next year!

I just hit 8K cash flow in 2 years.  $96K a year...or the equivalent of a $120K annual salaried  job at a 20% tax rate.  Going to write a blog post about it soon.

@Rohit Verma you got it right man. This strategy only works if you are patient and have a strong network to find deals through and to raise capital from.

If you’ve never done a real estate deal then you can take a few years to build up to the confidence and network level to this kind of deal.

The idea is that once you are the right person you can execute within a year, but the journey to get there will be different for every investor.

It’s just the easiest strategy I can think of and it’s what has worked for me.

When I started in 2012 I wasn’t doing deals like this either, but after 8 years in the game, I don’t have the patience to do more than 1 good solid deal per year.

Some people like doing a ton of deals and other like to do a few solid rare deals. There is no right way to get there and it’s not a race.

You should only tackle a project you know you can confidently handle and never raise capital until you’ve done a deal with your own money and understand the up and down sides to a deal.

Cheers to your success! 🤙🏻

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