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Alex M.
  • Investor
  • Philadelphia, PA
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My 5 year plan - what's yours?

Alex M.
  • Investor
  • Philadelphia, PA
Posted Dec 29 2014, 16:54

There's a part of me that hopes that in writing this, it will somehow make it much more real - so here goes:

My five year plan in action (2014-2018) - what's yours?

  • 2014
    • The plan: Fix credit (destroyed from divorce and stupidity of a youth misspent). Build a small amount of capital and buy first investment.  Learn. Keep full time job.
    • Results: Kept working my full time job. Credit rose from 500s to 700s (cost $$$s). Attempted to buy a small 4-unit MF with FHA. Failed. Hit a zoning impasse and backed out of the deal (lost $1200). Switched plan to working with my partner (my girlfriend and REALTOR) to purchase (house hack) a single family in her name with FHA at a great price ($63k). Put ~$35k into it and fully gut-rehabbed it (mostly ourselves) to make it an awesome home at ~$500/month mortgage. Estimated value now = $160-$180k. Placed offers on a number of other SFRs in the same neighborhood. Landed one a few weeks ago! Rehabbing as I type. Purchase price of $66k. Rehab budget of $10k. Anticipated rent of $1000-$1200. PITI of $400. Education = Took a class on wholesaling (cost = $400); read a lot of BP forum topics; listened to as many podcasts as I could. Attended a few local REIAs. Results = I now know how friggin little I know!!! ...but I was motivated to take action by hearing over and over that that is what you need to do. Thanks.
  • 2015
    • The plan: Fill my first property with a (good) tenant. Buy 4 more properties - one approximately every 3 months, based on the following logic = always fill existing property with a tenant prior to moving on (I'm new, and this is my way of managing risk); build resources to purchase next property (I have pretty decent purchasing power right now through conventional lending with my current job, and I also have a private lender ready to loan on my next property, and I also get a quarterly commission check that provides a nice financial bump every 3 months); finding a property takes time, but it is worth it to find the right property in the neighborhoods I want to invest in, at the right price. Stretch goals for the year include: getting my partner started with a flip and providing support as needed - she's a REALTOR, works in property management, and is interested in flipping; begin a marketing campaign to test out wholesaling as a deal-generation strategy. Keep learning and keep working my job. Goal of 6 properties in total (including personal home)
  • 2016
    • The plan: Ramp up my purchasing schedule - having built more resources, developed a level of comfort and understanding of the processes of deal finding, purchasing strategies, and other aspects of buy and hold investing. I aim to purchase 12 properties this year - approximately 1/month. Each of my properties should cash flow at a minimum of $100/door, with $300/door as an ideal. Some may be small multis. Keep learning and networking with other investors, and begin to explore more partnership-oriented investing. Have a wholesale and flipping process more firmly established (albeit still low-key) in order to keep a cash-generating engine in place. Goal of 18 homes in total by end of year.
  • 2017
    • The plan: Really ramp up my purchasing schedule at this point to 3 properties a month. I am making a huge assumption that I will have figured out access to finances and have a pretty good team in place to be able to move at this pace by then. It's a lofty goal, but I believe achievable. I also am making assumptions that by this point, not all purchases will be one home at a time - I'd like to explore purchasing in bulk from retiring investors, or other strategies to get a number of properties at once. Obviously, this plan will include a significant focus on networking and education. I expect to still be working full time at my current job. By the end of 2017, I aim to have 56 cash flowing properties. 
  • 2018
    • The plan: By now, I anticipate that I will have joined the ranks of those who have learned the game - I am sure there will be many mistakes along the way, but hopefully all recoverable. I plan to pace myself at around 1 property per week (still assuming some bulk purchases and some down times), for a total of 52 properties that year. 
  • End result = 106 properties. $127,000 in cash flow per year - not enough for me to want to retire from my current job, but enough to know that I can if I need to, leading to the most important results: Personal Freedom; Time to spend with my kids!!!; Ability to travel; Long-term financial independence/stability/security; Happiness!

...now I just need to make it happen :)

(crude math below)

Year # Properties # new properties Cash/door Cash/month Cash/year
1 2 2 $100 $200 $2,400
2 6 4 $100 $600 $7,200
3 18 12 $100 $1,800 $21,600
4 54 36 $100 $5,400 $64,800
5 106 52 $100 $10,600 $127,200
Avg equity/home Net worth equity Average price/home Net Worth
$20,000 $40,000 $100,000 $200,000
$20,000 $120,000 $100,000 $600,000
$20,000 $360,000 $100,000 $1,800,000
$20,000 $1,080,000 $100,000 $5,400,000
$20,000 $2,120,000 $100,000 $10,600,000

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James Wise#1 Real Estate Agent Contributor
  • Real Estate Broker
  • Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
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James Wise#1 Real Estate Agent Contributor
  • Real Estate Broker
  • Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
Replied Dec 29 2014, 17:09

see it

believe it

achieve it

Great plan. Good luck.

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Alex M.
  • Investor
  • Philadelphia, PA
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Alex M.
  • Investor
  • Philadelphia, PA
Replied Dec 29 2014, 17:13

@James Wise  Thanks! ...and thanks for reading through the whole thing :)

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Jesse Clinton
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Jesse Clinton
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Replied Dec 29 2014, 17:38

Great stuff!

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Eric Bowlin
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Eric Bowlin
  • Investor
  • Plano, TX
Replied Dec 29 2014, 17:46

It's funny you wrote this today. Just last night I was flipping through my business journal (my personal journal but I keep only business thoughts in it). In 2012 I wrote what my goals were for 2013. I look back and I actually came pretty close to achieving it! We made a couple of detours, bought a couple of flips instead of another multi...but similar enough and I count it as a success.

I lost focus in 2014 and went off doing 1000 different things..started a construction company and completely lost focus. I'm just now drawing all the strings back together and refocusing for 2015. 2014 was a wash...made money, increased my portfolio, but could have made MORE if I stayed focused.

I generally have only been thinking 1 year a time...but It's time I come up with at least a 3 year plan. I'll work on that tonight. Thanks for the inspiration @Alex M. 

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Don Harris
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Don Harris
  • Realtor
  • Charlotte, NC
Replied Dec 30 2014, 07:31

@Alex M. I've heard that a plan well conceived is already half achieved. A great book mentions, "a longing fufilled is a tree of life" Plans lead to action. My goal is to make 19 investments in 2015 to reach a goal that I have set for March 2017. Persevere 

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Sam Yin
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Sam Yin
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  • Los Angeles, CA
Replied Apr 16 2024, 19:42

@Alex M.

How are you doing in your REI journey? Any adjustments to the plan? Did you meet or beat it?