7 years to 7 figure wealth?

Real Estate Guru, Book & Course Reviews and Discussions 33 Replies

Has anyone been exposed to the real estae in your twenties article titled "7 years to 7 figure wealth?" I am an eighteen year old looking to start real estate investing and would like to follow this plan. The numbers all seem realistic and it would take $20,000 down payment. I eventually want to own large apartment complexes, but see this as a good way to earn my first million. Comments or suggestions needed.

Welcome to BP! Apartments are the hot market at the present time, predicting 7 years down the road that'll tough to predict. With more easing as the Fed announced earlier today there will be a major drop at some point. The drop will hit everything when the Fed stops printing money. In the mean time good luck!

Hey @Luke Faulconer - That's me! I kinda feel famous now :)

The "7 Figure" book was my sort of "personal philosophy" for investing. It definitely is "ideal", as all the numbers are nice, clean round ones. Essentially - the book is just the Monopoly game put to real world numbers. I try not to advocate this as a "plan" or anything. Just my thoughts put on paper :) Take what you can from it, add more, subtract. It's just kinda a "big picture" look at how ideal real estate investing works!

Thanks and good luck! Keep close to BiggerPockets and you'll learn a hundred times more than just that PDF! These forums are how I learned how to do almost everything in real estate (plus a million books.)

Also - feel free to introduce yourself over in the "New Member Introductions" forum page! Welcome to BiggerPockets!

Medium fbprofileBrandon Turner, BiggerPockets | [email protected] | http://www.BiggerPockets.com

I appreciate it Brandon. Your plan is a good layout, and although I may not follow it step by step, the principles as far as buying up will be very helpful.

I just read this ebook yesterday and I completely agree with the philosophy. Just keep rolling the income and capital gains into additional properties periodically. And then trade up. It is just amazing how the plan begins to snowball after several years.

[email protected] | 214‑929‑6545

Famous @Brandon Turner , where can I find the pdf? And if I print it out, will you sign it for me? ;-)

Looking forward to reading it!

@Brandon Turner would the numbers change if we see taxes increase on capital gains/dividends etc? I am assuming this was written in the 2000s when rates were much more favorable compared to what they might be going forward. Thanks!

Originally posted by Marc Bodinger:
Brandon Turner would the numbers change if we see taxes increase on capital gains/dividends etc? I am assuming this was written in the 2000s when rates were much more favorable compared to what they might be going forward. Thanks!

You would be deferring capital gains via 1031 exchanges.

You may have extra income tax because of increased rates, but you will anyway as your income increases.

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Hey @Marc Bodinger (And everyone else!)

Like @Jon Klaus said, a lot of my strategy hopes in using 1031 exchanges. Sure, the government might end that someday - but I doubt it, since it is essentially the government partnering with successful investors. They know that good investors, in the long run, will make more money for them than T-bills or other investing opportunities.

I actually wrote the eBook last January or February when I started my old blog. I did, however, develop this idea over the past 5 years. It actually works much better today than in the past, because (in a lot of areas) cashflow is so strong. This could change.

For those reading this thread - I'll give a brief outline of my strategy so you don't need to read the whole book:

Buy cashflowing properties, preferably a 4plex, for $100,000 that cashflows $200 per unit (total of $800 per month) with a 20% down payment. Property should be bought 20% under-value and have room for a 10% appreciation during year one (starting amount and only contribution: $20,000)

Save all cashflow for two years, which is about $20,000 (a little less, but close). Use that as a downpayment on another cashflowing property with the same numbers as above.

Rinse and repeat once more.

Sell all three four-plexes and use the proceeds to buy an apartment building - using the same ratios as above (20% down, $200 per unit cashflow, 20% undervalued, 10% appreciation).

Hold for a few years, saving cashflow. Rinse and repeat.

Million dollars.

Of course, this plan is purely "ideal." However- all the numbers are not unreal. Every property I buy, and many others on BP would agree, have to work out like this.

Is it hard to find these properties? YES.

is it hard to find these properties if you only need to find one property every two years across the entire US? I don't think so.

Anyways, I'll post the PDF in the FilePlace, @Karin DiMauro , for a free download, but this is basically the idea!

The important thing is - this is just a guide. It's not fact, or a "guru" plan. It's just my philosophy, put to real numbers. I think this is important for people to do when they begin - create a plan. It might not work out the exact way planned - but that's okay. If it takes 7 years - awesome. If it takes 10 - awesome. 20? That's ok too.

Hope that helps sum it! Thoughts?

Medium fbprofileBrandon Turner, BiggerPockets | [email protected] | http://www.BiggerPockets.com

questions concerning your book @brandon turner

I am looking at the loan amount being paid off and i notice i only goes down about 1,500. But I am assuming you paid more off considering the monthly payments is 2,400. Shouldn't the loan amount be smaller?

hey @Ryan Nguyen , thanks for the question. If I understand your question right, the monthly income on the hypothetical 4-plex is $2400 per month, but the payment is going to be much less. The payment is actually only about $400 per month. And of that payment, only a very small portion goes toward paying the loan down. The way loans are paid off is kinda strange, called "Amortization" which basically means the beginning half of the loan you pay more interest, and the latter half you pay more of the loan amount down. I can go deeper if you want on this, but I won't bore you :)

Hope that helps and I didn't just completely misunderstand your question. Thoughts?

Medium fbprofileBrandon Turner, BiggerPockets | [email protected] | http://www.BiggerPockets.com

Hey @Brandon Turner some questions that I have come up with about the 7 year pdf are below, hopefully it helps others as well!

- How far into this plan are you?
- How long does it take to find a property that fits this criteria and what distance away are they?
- Are you/were you getting 20% reduced price on purchase
- Are you averaging $200/unit in NOI
- How did you use a 1031 exchange on 3 properties to purchase 1 larger building? This seems like the stars would have to align.
- What kind of hiccups have you encountered along the way and how did you deal with them?
- How long into the plan were you able to pursue REI full time and leave a 9-5 job? If you did.

Thanks! This will be great insight for me and hopefully others around BP as well!

can anyone tell me where can i get this book?

Type in 7 years to 7 figure wealth PDF on google and you should find a link on bp or real estate in your twenties

This road map is a good plan, but what is the reality of finding a 4-plex with 2400/month in gross rents that is valued at 100K, let alone obtaining it for 80K. Not only that, but we are assuming the property is in good enough repair that it is eligible for conventional financing.

Is anyone in north Texas finding these types of properties? If so, I need to talk to you.

Brian Hoyt

Very plausible and like it says you don't find them that way you increase the property value by 10% it's first year which in turn can increase rent prices. I have 3 quads I am looking at from 99k-119k that rent for 550-650 that I am unable to pull the trigger on yet.

Brian Hoyt

Did some very brief looking in the area and found these properties

http://www.realtor.com/realestateandhomes-detail/4309-Vinson-St_Fort-Worth_TX_76103_M77694-82961

http://www.rentometer.com/results/es_IVh0z

http://www.realtor.com/realestateandhomes-detail/805-Blandin-St_Fort-Worth_TX_76111_M76104-74075

http://www.rentometer.com/results/HpWxNIhE

http://www.realtor.com/realestateandhomes-detail/329-Blandin-St_Fort-Worth_TX_76111_M76440-12201
^^ Duplex unit 1 has 2 living rooms, convert to 3bd and profit.

http://www.rentometer.com/results/vsBfMvsR

I don't know your good and bad areas but from a quick 30 second assessment these properties all get 200+ per unit with you doing PM duties. If you put a little money in to make them nicer they could get more im sure...Then again I don't know the area.

Originally posted by Ryan Halverson:
Brian Hoyt

Did some very brief looking in the area and found these properties

http://www.realtor.com/realestateandhomes-detail/4309-Vinson-St_Fort-Worth_TX_76103_M77694-82961

http://www.rentometer.com/results/es_IVh0z

http://www.realtor.com/realestateandhomes-detail/805-Blandin-St_Fort-Worth_TX_76111_M76104-74075

http://www.rentometer.com/results/HpWxNIhE

http://www.realtor.com/realestateandhomes-detail/329-Blandin-St_Fort-Worth_TX_76111_M76440-12201
^^ Duplex unit 1 has 2 living rooms, convert to 3bd and profit.

http://www.rentometer.com/results/vsBfMvsR

I don't know your good and bad areas but from a quick 30 second assessment these properties all get 200+ per unit with you doing PM duties. If you put a little money in to make them nicer they could get more im sure...Then again I don't know the area.

Ryan,
The first deal is a single unit for sale within a multi-unit building. This is flat out a bad deal for an investor.

The second deal is very likely a duplex converted from an old house and then a second house on the same lot (as apparent from Google Earth). I’d be willing to bet the water and electric are not separately metered, lots of deferred maintenance and total rent would be around 900-1000 per month. I actually own a rental in this area. The price is too high. It would need to be closer to 50K to even consider, and even at that, I will not own properties that require me to pay utilities because they are not separately metered. You are also assuming these are each 3 BR units where I would bet you they are 1 BR units. Rentometer is a terrible indicator for that area because it is near a historic district…

The third is two separate units – not a 4 plex. This thing has been on the market forever and is certainly not worth 70K, probably not 50K. This has all the same issues as the above discussed property.

Notice that not one deal you have found on the MLS come even close to Brandon’s example. At best, we are looking at a property that generates about a third of what Brandon is using for his example. If you want to look at multi-plexes in my area, this is the best internet source I have found: dfwincomeproperties.com. I don’t know if that link will post, but you can google “dfw income properties” and there you will see the reality of multi-plex listings on the MLS. A decent 4-plex will run you about 200K in a sort of crappy part of town.

You need to do WAY more than briefly looking. Don't think you are going to do a quick realtor.com search to educate a local investor in his/her local.

I will accept Brandon's plan if stated as "14 years to 7 figure wealth" for a part time investor as something that is realistic. I don't scoff at 7 figures in 14 years either. In fact, I think going from 0 net worth to 7 figures (present value of money) in anything less than 20 years is fabulous.

Why don't you think 7 is feasible? I think with enough research and finding the right property it is possible. With that in mind finding that property does take awhile and requires some innovative strategies.

Brian Hoyt I was not attempting to educate you in your own investment area, only stating research can find places. No intention to offend you. If there is nothing in your area you would have to venture farther away. I hear Detroit is nice this time of year ;)

Originally posted by Luke Faulconer:
Why don't you think 7 is feasible? I think with enough research and finding the right property it is possible. With that in mind finding that property does take awhile and requires some innovative strategies.

It's not that I'm saying its not feasible. I am saying that 4 plexes valued at 100K that generate 2400/month in gross rents is not realistic in my area. Think about: What if you had 100K cash? you could dump all that into one 4 plex and that would then generate 28.8K per year in gross rents at 2400/month. That's 28.8%! Even if you exclude 50 percent of gross rents toward expenses, you are still looking at 14.4% return on your money. While it is not uncommon to see this kind of return on you money when calculating returns from down payment money, it is virtually unheard of when paying all cash except of in the most terrible of areas. And not common at that, I don't care what region you live in. If it was that easy to generate 14.4% on our money, every millionaire out there would own 50 4 plexes.

@Ryan Halverson ,

Thanks for the help. I'm not interested in investing out of state. Read my comments above. I don't care what your region is, Brandon's proposal is to take 20K as a DP and that will get you 800*12 in passive cash flow. That is as 48% cash on cash return. I tell you what, you find me those kind of deals in Detroit where I can get a 48% return on my money, and I will buy turnkey properties form you.

I'm not dogging the whole premise. I just think that more realistic numbers could be used. A 14 year timeline would be much more realistic,m and very impressive at that.

I am laughing out loud right now @Brandon Turner . This is fabulous. Brandon – I respect you, and I think that I also like you. Brian Hoyt, as always just reaks of intelligence :)

Here is why I am laughing. About 7 years ago I wrote a business plan, and to make myself accountable I took it to my CPA. She probably still has, I’ve lost track of it all together.

7 years later, I’ve done much better and much worse, but one thing is for sure – nothing went as planned LOL. This is what’s funny guys…

Can someone send me a link please. I would love to read this.

Medium logo 03Ben Leybovich, JustAskBenWhy.com | [email protected] | 1.888.508.9643 | http://www.JustAskBenWhy.com | Podcast Guest on Show #61