My RE plan while working full time. Need opinions!

13 Replies

I’m heading into my 3rd year of real estate investing while working a full time job. At this moment we have a total of 15 doors between two buildings. Both of the buildings are financed with two different local credit unions. For planning purposes, I net 20-25k a year easily between the two properties.

My wife and I self manage, she’s a huge help with answer calls and scheduling maintenance/repairs.

We currently have 30k in the bank for a future multifamily down payment. 30k puts us in that 2-4 unit range at a purchase price around 120k. This price is easily obtainable and 2-4 units are readily available.

So my question is about my plan seeing that in a few months I’ll have 2 years of taxable rental income and be able to acquired a residential investment mortgage. I want to continue adding doors in my local area. After doing numerous hours of reading and listening to podcasts. I believe my best path to get to a minimum of 25 doors is to add a minimum of 2 doors per year for the next 5 years. I believe this is achievable by using the cash flow from the previous years rental income as long as I don’t exceed the 120-130k sale price threshold that I set for myself.

My models have the duplex cash flowing roughly 5k a year based on purpose price, down payments, and local fair value rents.

At 5 years, the yearly cash flow would be right around 50k with 25 doors and a chunk of cash in the bank if I only stick to the minimum 2 doors per year at the planned purchase price.

I’m truly blessed to find the deals on my first two buildings to be able to create a sizable cash flow for future down payments. I’m kind of working backwards by going from acquiring a 10 unit, 5 unit, and most likely a 2 unit in 2020.

Am I doing the right thing? Does this plan sound ok? At 5 years I would be faced with paying down debt and/or investing in future properties to gain financial independence.

Any insight or discussion is appreciated.

Thanks!

Yeah I have not gone after any private money.  I would have a hard time if I were to lose someone elses money.  I haven't found a lot to buy in my local area so have tried my hand at flipping some homes.  Just signed a contract to sell my second one.  1st was the very low end of profitable and the second is about average on the profitability scale.

It looks like you are on the right track so far! Best of luck continuing. Let me know if you ever have any interest investing out of state. Sometimes, that could boost your cashflow a little bit more by targeting another market with different advantages. 

@Anthony Brooks love it man! Keep at it you are heading in the right direction for sure. Also keep working hard at your W2 and push for a raise or two during those next few years. Keep your expenses where they are (or lower) and use that extra cash from the raise to accelerate your plan!

@Anthony Brooks

When I opened the thread, I sincerely thought this would be someone in a tougher market trying to run a big project at a distance (that's the typical thread of this kind).

Bay City seems to be a very friendly market from a cost perspective. The fact that you are local: ideal for developing the deal-flow and being available for emergencies.

I would encourage you to groom some extra help on the self-managing side. That will allow you to increase your capacity at work, or for free time. It takes some time to teach, but developing the systems and creating employment feels very rewarding. Best of luck, I think you have a great plan and am very envious of some of the conditions in your area.

@Trevor Ewen

Great advice, I’m actually starting the process to bring a friend into the RE world. He’s got consistent cash available and I’ll be able to leverage him to take on some or most of the property management.