1,000 rental houses does this seem reasonable?

1,000 rental houses does this seem reasonable?

Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
Hi BPM(Big Pocket Members)! I have a thought I'd like to run by you all to see if you think it's actually doable. I have a goal of having 1,000 rental property's here in Oklahoma in the next 25 years. Here's the breakdown 1,000 rentals all bought for 120k or less after all expenses 1000 rentals renting for 1200$ per month on avg 1000 rentals each at 600-700$ monthly mortgage 1000 rentals will $2,500 or less property tax each year 1000 rentals with insurance costing 1,500 per year or less Now let's run the numbers 1000 rentals 20% down on a max of 120k = $24,000 per house or 2.4m for all Property management fee monthly $120,000 1000 houses with $700 30 year mortgage = $700,000 monthly 1000 houses with insurance costing $1,500 a year insurance = $125,000 a month 1000 houses with $2,500 property tax each year = $208,333 per month Total costs = $1,153,333 per month Total revenue = $1,200,000 per month Total cost for 1,000 property's out of pocket over 25 years = $2,400,000 Total value of 1,000 properties 120,000,000 Monthly profit after the 30 years would be though the roof at $453,333 a month. I know theses numbers are really rough but the only one that's 100% for sure is the 1,000 rent houses. Do you think this is too crazy to achieve? I'm going to build it up as I go obviously and not do this straight out the gate. It just almost seems insane that with 2.4-3m anyone can have 120m+ in properties! This is my goal let me know if you think I'm nuts! Also let me know your goals!
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Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
9y

Great plan, but you'll need more money than that.  Most likely you'll need 25% down, maybe 30% (depends on lender).  Plus, you'll have to cover closing costs--factor in another 3% or so.  It's also likely that some or all of the homes will need some type of rehab to make them rent ready.plus you'll need some cash reserves not only to satisfy your lender but to cover operating shortfalls, especially as you are initially leasing up--expenses from empty houses but little income from occupied ones.

I bought over a hundred in two year's time around a similar price point as you are proposing.  It took $5 or $6 million to do it.  To do a thousand would be closer to $50 to $60 million.

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  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Originally posted by @Steve Vaughan:

    No way. Even with systems in place, little houses will drive you nuts. 1,000 of them?  Let us know how you like them after about 8.

    Unless you have a why larger than money, this 10x idea will put you in a rubber room!

     250 is my new goal. I will have property managers so ill just focus on finding the houses and getting them ready to rent out they can deal with the rest of that ****.

  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Originally posted by @Callum K.:

    Sorry to burst the bubble here, but I think Deren is correct.  There are a lot of holes in your thought process but I guess it might be nice to look at this as a dream or wish.  Below contains a few items that stuck out to me.

    Financing - Getting 1000 mortgages is impossible.  Not only are you unable to get higher than 10, as your portfolio grows, you will likely need to go with a commercial loan.  With that, you can forget about the 30 amortization schedule and your interest rate is likely going to be much higher.  That will erode your post-financing cashflow substantially.

    Maintenance - Assuming no maintenance over a 25 year period is not likely for one house, let alone 1000.  25 years is a long time and you are likely to experience several significant costs in that period.

    Insurance - That cost of $1500/yr seems high to me.  I'd cut that in half

    PM - If you really do have 1000 rentals, you will likely have your own staff of PM and maintenance, so 10% of rents is probably very high

    Taxes - $2,500 for taxes (at least in Tulsa) seems high to me.  Maybe closer to $1800-$2000

    Operational issues - With that many houses, you will need departments of people and infrastructure to operate.  This will become a significant cost as you grow

    Finally, to help put this into perspective, assuming you will be looking for deals and not just buying at market price, it will be difficult to find so many properties.  Based on your model, you would need to close on 3.33 properties per month (1000 / (25x12)).

    Sorry again to throw the wrench into your idea.  

     Thanks im going for 250 now and i went high on those numbers to account for most other unseen chages that may  come up.

  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Originally posted by @Rhett Tullis:

    I would caution you on your estimate for rents.  You will not find many homes in okc for 120k that rent for 1200 per month.  Most homes that are renting for 1200 per month here in okc are 150k to 170k houses.  5 or 6 years ago this was more doable but now it is tough but who knows maybe it will change in a few years.  You would need to get into properties that are sold under market and need some work and this would take more time and funds.  Overall though if you are at 1200 per month for rent in okc you are at the top 1/3 of the market for rental prices.  not the ideal place to be.  

     Thanks for your feedback they are out there just gotta look. I may end up having to go 130-140k but  as far as the $1200 rent. I rent high like that as that's what the neighborhoods I invest in can get. 

    I am staying away from the 700-1000 rent houses as yes its easier to find people to move in but with that lower price = lower income and I like renting to the people that can afford $1200+ a month.

    I have had no issues at all getting that and I have had no issue at all with the tenants that have moved in for that price. 

  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Originally posted by @Thomas S.:

    Buying SFHs in that volume in financially illogical. Way too mush money and work to justify the effort. SFH investors are generally small time due to the poor economics of SFHs.

    Large numbers are in the realm of apartment investors where it all comes down to scale of economy. 100 tenants one roof, not 100 tenants 100 roofs. Maintenance costs do not make it financially viable.

    Start small with multi units and sell everything to invest in apartments when you have the numbers and finances.

    Leave the SFHs for the little guys.

    Na i love SFH. more SFH = risk spread out and I dont do work on the houses after getting them ready to rent out. My property manager handles that and is trained to deal with things and not need me for anything. Thats how its done right is have a great team in place ones to fixup the house to get it to rent ready and then ones to manage the houses they get their 10% for that.

  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Originally posted by @Ray Johnson:

    @Peter G. Why are you so set on the large number of SFR units in your portfolio? When the get rich in Real Estate Guru's talk about people having large number of SFR units in a portfolio, I don't think they really anticipate many if any of the followers to actually do it, that's mostly hype for the sales pitch, If they did it would mean they didn't truly understand the next level in RE investing.

    I would rethink your plan and conduct some analysis on obtaining Institutional grade Multi-family properties. AS @Callum K. and @Brian Burke and @Jay Hinrichs have all noted, once your SFR portfolio reaches a certain number of units and dollar amount in value it becomes less advantages and more riskier for you exponentially every time you add a property to your portfolio.

    If you're serious about growing a portfolio of that size do it in dollar value on the Institutional Multi-family side NOT volume of SFR's.

    The larger you become in RE investing the further away from the beginners strategy you should be using especially past the 10 million mark.      

    I like SFH and that's all I plan on investing in for the next 25 years. Its spreads the risk out and I just prefer those over MFH or Apartments, Thats the plan for now but lets see how the first 100 go. I just plan on having a team in place for all aspects after getting the house such as getting it ready to rent, to managing the property.

    with the right team in place its really not that unreasonable 

  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Originally posted by @David Faulkner:

    My question would be why? To what end? Just so you can be big man on campus and say you own 1,000 rentals? Because Grant Cardone told you to 10x it? So you can water ski behind your 100 ft yacht? Do you really need $600,000/mo to live a fulfilling life?

    I'm betting that you can meet any sensible financial independence goal with considerably less hassle, less risk, and far fewer units, especially if they are higher quality units. So why take the extra risk and hassle to get to 1,000 if the marginal benefit to you basically goes away (and then goes negative) after, say, 50 units ... and that is still way more than you should realistically need if you pick the right units at the right terms.

    You are free to set any goal you like, but this one just seems silly to me personally ...

     to beable to give most of that back to the community. I live a very basic life I just know with this I would beable to give back to my community big time change a lot of lives and be set for life. Im happy with my house my car isnt fancy it gets me where im going and thats all I care about. 

  • Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @Peter G.:
    Originally posted by @David Faulkner:

    My question would be why? To what end? Just so you can be big man on campus and say you own 1,000 rentals? Because Grant Cardone told you to 10x it? So you can water ski behind your 100 ft yacht? Do you really need $600,000/mo to live a fulfilling life?

    I'm betting that you can meet any sensible financial independence goal with considerably less hassle, less risk, and far fewer units, especially if they are higher quality units. So why take the extra risk and hassle to get to 1,000 if the marginal benefit to you basically goes away (and then goes negative) after, say, 50 units ... and that is still way more than you should realistically need if you pick the right units at the right terms.

    You are free to set any goal you like, but this one just seems silly to me personally ...

     to beable to give most of that back to the community. I live a very basic life I just know with this I would beable to give back to my community big time change a lot of lives and be set for life. Im happy with my house my car isnt fancy it gets me where im going and thats all I care about. 

    That's a noble goal ... in that case, I'd just say go one at a time and don't drive yourself broke or insane to try to get there to give back to your community, because that wouldn't do either you or your community any good.

  • Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
    9y

    I don't understand why some investors even choose to own one SFR at a time instead of waiting and investing in a multifamily. If I were you, I'd focus on somehow gaining enough capital to acquire a 15+ unit and 1031 your way to 1000 units.

  • Rhett TullisBusiness Member
    Property Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
    9y

    @Peter G. More power to you after all I may be wrong after all I only manage 700 units in okc so I may be off a bit, lol.  Best of luck in your goals it will be great when you get there.  I would suggest you watch the market close though, the over $1000 properties in the okc metro are moving extremely slow right now.  

  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Originally posted by @Rhett Tullis:

    @Peter G. More power to you after all I may be wrong after all I only manage 700 units in okc so I may be off a bit, lol.  Best of luck in your goals it will be great when you get there.  I would suggest you watch the market close though, the over $1000 properties in the okc metro are moving extremely slow right now.  

     what part of okc are you in? if you dont mind me asking? I havnt had any issues at all with 11180 on my one house and have people lined up to see the other one this week for $1250

  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    9y

    @Peter G., congratulations on your goals.  They need work, but at least you have a goal.  A few years ago I made my first goal and planned on adding 1-3 houses a year.  Finally changed it to adding 50 houses.  I managed to add 7 that year, but ended up selling 3 of them over the next 2 years.  When you start going hard to acquire properties it is easy to push the numbers too far.  Not all plans work out, but you can learn a lot by trying.  We have had our local economy go bust for while here due to the drop in oil prices.  I still plan to get to 50 units, it may just take a bit longer, as I have learned you have to buy the right properties, not just properties.

  • Rhett TullisBusiness Member
    Property Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
    9y

    @Peter G. all over okc metro.  I would caution you that lined up to see and high quality applicants that are ready to move in are another.  congrats though if you can get it leased this week that would be awesome!

  • Real Estate Investor · OKC · Member since 2016 · 70 posts · 36 votes
    9y
    Rhett Tullis thanks for the advice! I really appreciate it! My property manager is handing all the showings this week :)
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    I know people that own a lot more than 1000 houses.  It is certainly possible.  You have to be very good at operational growth and disciplined.

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y

    @Peter G. there are lots of talkers on BP. My suggestion is come up with a plan to purchase a smaller number for a 5 year plan. It may be 10 or 100 houses. Your conventional 30 year financing caps after 8 properties so after that you will probably get 15-20 year amortized loans with 5 year balloon. 

  • Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    I would not want any part of owning 1000 SFR rentals, but I'd be more then happy to help you locate 1000 of them. :-)

    I agree with everyone else, I'd much rather have 1000 doors in apartment complexes at that point.  Buy 1, see how that goes for you, then get to 10 and see if you still want 1000.  I bet your goal will change.  I can think of a lot better ways to invest $30M. 

  • William BrownPro Member
    Wholesaler · Los Angeles, CA · Member since 2016 · 276 posts · 181 votes
    9y

    Reading the posts I see a very large disconnect between two very different groups of investors. 

    Group A is looking to be financially free, reach their magic number, and put their toes in the sand for the rest of their life. They want to get to their financial paradise, and then call it quits. And I feel that's the majority of people, on BP, in the investing community, and in life.

    Then you've got the other group.

    Group B is a small percentage of people who invest to "play the game." Meeting their goals and settling isn't attractive to them in any way. They are thirsty, they want more. Of course you don't need 450K a month to live, and of course you probably don't need more than 50-100 cash flowing properties to be content and satisfied with life.

    But there are those that want more; they are the game players. They are the individuals who shape the future of society, and don't just live in the present. They are the people history remembers, and are the ones kids and  adults alike look up to wishing they could be them.

    Personally, I won't stop until I own a $1B business. That sounds purely disgusting to most, and ecstasy to the few. Everyone saying it doesn't make sense to own 1000, it doesn't make sense because your WHY is different than their WHY.

    Peter, sail on sailor.

  • Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @William Brown:

    Reading the posts I see a very large disconnect between two very different groups of investors. 

    Group A is looking to be financially free, reach their magic number, and put their toes in the sand for the rest of their life. They want to get to their financial paradise, and then call it quits. And I feel that's the majority of people, on BP, in the investing community, and in life.

    Then you've got the other group.

    Group B is a small percentage of people who invest to "play the game." Meeting their goals and settling isn't attractive to them in any way. They are thirsty, they want more. Of course you don't need 450K a month to live, and of course you probably don't need more than 50-100 cash flowing properties to be content and satisfied with life.

    But there are those that want more; they are the game players. They are the individuals who shape the future of society, and don't just live in the present. They are the people history remembers, and are the ones kids and  adults alike look up to wishing they could be them.

    Personally, I won't stop until I own a $1B business. That sounds purely disgusting to most, and ecstasy to the few. Everyone saying it doesn't make sense to own 1000, it doesn't make sense because your WHY is different than their WHY.

    Peter, sail on sailor.

     The other major difference is that Group A are the ones with experience investing while Group B by and large are the newbies. I wonder why that is ...

  • Wholesaler · Dallas, TX · Member since 2016 · 24 posts · 4 votes
    9y

    1000 SFRs is a great goal to have but I would suggest buying in bulk portfolios like @markallen suggested, much easier to negotiate purchase price and some of the legwork will be done for you [having property management in place, current tenants, etc] you may also find it easier to get commercial loans on an established portfolio.  I have a great lender for commercial loans if you ever need a referral!  Goodluck to you!

  • Investor · South Florida · Member since 2016 · 9 posts · 4 votes
    9y

    I hope you ignore the posts that essentially argue that you adjust your goal because no body needs 400K+ per month to live a fulfilling life. I completely disagree; if you want it, go for it. However, you probably should listen to the experienced individuals who are challenging the business feasibility and mathematics.

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y
    Originally posted by @David Faulkner:
    Originally posted by @William Brown:

    Reading the posts I see a very large disconnect between two very different groups of investors. 

    Group A is looking to be financially free, reach their magic number, and put their toes in the sand for the rest of their life. They want to get to their financial paradise, and then call it quits. And I feel that's the majority of people, on BP, in the investing community, and in life.

    Then you've got the other group.

    Group B is a small percentage of people who invest to "play the game." Meeting their goals and settling isn't attractive to them in any way. They are thirsty, they want more. Of course you don't need 450K a month to live, and of course you probably don't need more than 50-100 cash flowing properties to be content and satisfied with life.

    But there are those that want more; they are the game players. They are the individuals who shape the future of society, and don't just live in the present. They are the people history remembers, and are the ones kids and  adults alike look up to wishing they could be them.

    Personally, I won't stop until I own a $1B business. That sounds purely disgusting to most, and ecstasy to the few. Everyone saying it doesn't make sense to own 1000, it doesn't make sense because your WHY is different than their WHY.

    Peter, sail on sailor.

     The other major difference is that Group A are the ones with experience investing while Group B by and large are the newbies. I wonder why that is ...

     Ha! You read my mind and stole my words! I was going to say the same thing. 

    For the original poster, I have 2 questions:

    1. Why?

    2. How many do you have now? 

    People who set unrealistic goals fizzle back to earth. If you had 300 properties and said your goal was 1,000, I might be impressed. If you said you had 30 properties and said your goal was 1,000, I would find it dubious, but, I suppose, possible with enough work (and luck, and finance guys behind you). If you said you had 3 properties, I'd laugh and move on to another post. 

    For the guy that said about history remembering and kids looking up to, dream on. No one remembers landlords who owned 1,000 doors. No one remembers landlords who own 100,000 doors. No one cares about stuff like that. How many adults or little kids do you know that look up to Hunt Companies or Boston Capital?

    Skyline Properties
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  • Washington, DC · Member since 2017 · 2 posts · 5 votes
    9y

    lots of great points here, 1,000 of any type of income producing property is not the craziest idea on the planet that's for sure. Like any real estate platform one wants to build, you need to create a simple filter to sift the opportunities. Before doing that though, i'd suggest reading up on the best in class single family home aggregators and their competition: America Homes 4 Rent, Colony Starwood, Silver Bay Realty Trust and Altisource Residential. Also, Blackstone's SF REIT IPO. Next considering that you want to proceed, think seriously about the simple filter. Higher quality, newer homes should be given strong consideration. You'll get stronger more consistent rents, they'll stay occupied and your operating and capital improvement costs should be lower. Next think bigger regarding financing. Blackstone floated a debt offering, 1,000 sf won't work as many noted here one by one. And i'd add, with Oklahoma having an above average vacancy rate, almost double the national average you may want to rethink where to buy. Combine OK's 8% + vacancy in one of the hottest rental markets nationally in the last 30 years, its notoriety for storm damage there's likely lower hanging fruit in other markets. Good luck

    Francis.

  • Real Estate Agent · Los Angeles, CA · Member since 2015 · 149 posts · 75 votes
    9y

    You can go work for a SFR REIT or private equity company like Invitation Homes, American Home 4 Rent, etc. which own 500-2,000 homes in a single market.

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    Have you even got ONE yet?  Do you have the pattern down so well you can do even ONE a week?

    Get a reality check on the work and property management before you try riding the RE rocketship.

  • William BrownPro Member
    Wholesaler · Los Angeles, CA · Member since 2016 · 276 posts · 181 votes
    9y
    Originally posted by @David Faulkner:
    Originally posted by @William Brown:

    Reading the posts I see a very large disconnect between two very different groups of investors. 

    Group A is looking to be financially free, reach their magic number, and put their toes in the sand for the rest of their life. They want to get to their financial paradise, and then call it quits. And I feel that's the majority of people, on BP, in the investing community, and in life.

    Then you've got the other group.

    Group B is a small percentage of people who invest to "play the game." Meeting their goals and settling isn't attractive to them in any way. They are thirsty, they want more. Of course you don't need 450K a month to live, and of course you probably don't need more than 50-100 cash flowing properties to be content and satisfied with life.

    But there are those that want more; they are the game players. They are the individuals who shape the future of society, and don't just live in the present. They are the people history remembers, and are the ones kids and  adults alike look up to wishing they could be them.

    Personally, I won't stop until I own a $1B business. That sounds purely disgusting to most, and ecstasy to the few. Everyone saying it doesn't make sense to own 1000, it doesn't make sense because your WHY is different than their WHY.

    Peter, sail on sailor.

     The other major difference is that Group A are the ones with experience investing while Group B by and large are the newbies. I wonder why that is ...

     Hah that's the truest thing I have heard yet. 

    But there is a lot of condescending I see going on from Group A, whether they have experience or not, and I think that is detrimental to someone who is getting into the game and asking questions. I'm a huge Big Thinker, and I know I'm not the only one out there. Constructive criticism and advice is good, and it is the majority of responses, but to those who are just saying "That will never work" without adding any solid reasons why, maybe its best not to dampen others' dreams and thoughts because you don't think it is feasible or possible. 

    There ARE people out there who have made it possible, and maybe we could all learn a lesson if we took a step out of ourselves and watched how they did it.

    my 2c

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