Who here has made 10k a month in real estate

[Kenny Penn]

Hey BP folks. I would like to hear from anyone whose made about 10k or more a month continuously in real estate. How are you doing it? What did you do before real estate? Do you have a lot more free time? How many hours do you work a week now.. etc

[Account Closed]

Originally posted by @Kenny Penn:
Hey BP folks. I would like to hear from anyone whose made about 10k or more a month continuously in real estate. How are you doing it? What did you do before real estate? Do you have a lot more free time? How many hours do you work a week now.. etc

 I think there are a bunch of us. My particular method is using Subject To and Wraps for cash flow. Others have been using Buy & Hold rentals and others are lenders. I started off as a Loan Officer a long time ago and because I knew the financing side and how to find new prospects it was a natural enough path for me to do off market owner financing. I have lots of spare time but I enjoy what I do, I love the thrill of the chase, and I prepare properties for other as turn key investments. We travel a lot. We were just in College Station for the A&M graduation and we have properties in Central Texas. Are you just curious or are you trying to put plans together?

[Matthew Paul]

@Kenny PennIts not polite to ask someone how much they make .  But those who make $10K an more a month , they work hard and smart with a little luck thrown in .  

[Rohith Janga]

i suggest you listen to this podcast .

https://www.biggerpockets.com/renewsblog/biggerpoc...

[Jay Hinrichs]

I suspect your asking this in the context of net cash flow on rentals..  this number seems to be a pretty common theme as to what is successful.. and in some markets this would be a nice Net cash flow.. and you could live on that .

in other markets be pretty tough to live buy a home raise a family save for collage all of that on only 10k a month.

there are MANY ways to make money in real estate.. rental income is simply one of them..

[Esian Henderson]

Hey. I’m new to the real estate game but I don’t fully understand subject to or wraps. Do you know any good resources on these topics?

[Michael Plante]

Do you mean 10k/month in a semi to passive manner?

[Jay Hinrichs]

Originally posted by @Esian Henderson:

Hey. I’m new to the real estate game but I don’t fully understand subject to or wraps. Do you know any good resources on these topics?

 I am sure google has plenty of info.. and of course there will be people that charge to teach you.. 

but in essence sub too is simply buying a property and keeping the existing mortgage in place .. 

wraps are creating a secondary mortgage that in essences wraps the first one.. in second position

both of these methods are very risky for a seller.. IE the sellers still on the hook for the mortgage and now does not have ownership of the asset.. it also can invoke the alienation clause in the debt instrument. 

So for someone starting out with minimal cash reserves I think a seller would be nuts to sell to someone like this.. If the buyer is strong good balance sheet and cash.. then it becomes less risky for seller.. 

[Esian Henderson]

@jayhinrichs thanks for the info. That helps a lot. I’ve read about it on diff blogs and follow investors on social media who swear by it. Guess it’s difficult for me to imagine a seller who would do such a risky thing.

[Kenny Penn]

@Mike M. I’m both curious and planning. 

[Jay Hinrichs]

Originally posted by @Esian Henderson:

@jayhinrichs thanks for the info. That helps a lot. I’ve read about it on diff blogs and follow investors on social media who swear by it. Guess it’s difficult for me to imagine a seller who would do such a risky thing.

 Sellers do it mainly for these reasons.

1. they are upside down  

2. they are in foreclosure and credit is already thrashed.

3. slick talking buyer who withholds info.

most if they talk to an attorney or some advisor that person will tell them not to do it.. best to just sell and get mortgage out of their name.

But if the buyer is substantial enough and can prove it there are some ways that are semi safe to set this up.. but bottom line Seller has deeded away their interest and if their buyer goes sideways its a freaking mess for them.. I know I have seen it first hand many times.

[Account Closed]

@Esian Henderson @Kenny Penn As stated above you should always have adequate reserves when doing Sub To and Wraps. I would add that you should do the first few with a partner who is experienced so that you learn good practices. They are a bit more sophisticated investment types. Sellers will choose this avenue when they have little equity to cover realtor fees or if they need to sell quickly or if the property requires substantial repairs that the seller can't or won't do.

Regarding income, it isn't how much you make each month, the bigger goal is how much you have left over at the end of the month. Taxes and entry costs and carrying costs are so high in places like California, Seattle, New York, Chicago, Austin to name just a few, that it makes more sense in my opinion to invest in places like Mesa, Phoenix, San Antonio, Dallas, and a lot of places in the mid west where you can cash flow properties. The cost of living where I live is far less than So. Cal or the Bay Area, but it is higher than many of the places I invest. 

Your goal should be to find a happy medium where you enjoy the lifestyle of the place you live and are comfortable investing where it makes sense.

And the answer to your actual implied question is "Yes!". Real estate investing does work if done correctly, (It's a real disaster if you do it the wrong way and there are many ways to do it wrong)  but if you learn the correct ways starting out, in a few years you can achieve your goal.

[Jonatan Barbera]

@Kenny Penn You're not always going to make $10K per month. Some months you'll make $50K+ and some $2K. You have to decide if you want real estate as a business or as an investment. What I mean by this is, do you love real estate investing so much that you're willing to do this full-time and deal with all of the **** that comes with wholesaling, flipping, marketing, accounting, finances, and much more? Or, are you looking to invest for cash flow and build wealth while you pursue your dreams of doing something else?

If you choose the first route, you will need both time and money. Now, you can leverage other peoples money if you have time or other peoples time if you have money. But either way, you need both.

If you choose the latter option then all you need is a decent W2 job and patience.

It's very possible to average out well over $10K/mo but it does take time and a lot of work.

[Kenny Penn]

Jonatan Barbera thanks for your input. I’m not sure if I want to do it as a business YET as I’m new and still learning. I’m currently in the oil field working and saving while I try and get into real estate. Thing is oil field is physically demanding and know I can’t do it for rest of my life. Also it a fluctuating industry so I think real estate would be a good bet for cushioning when I eventually get laid off. And maybe I’ll quit altogether and go RE full time. I’m trying to figure out and get a clearer idea as to what I’m going to do in real estate so I can have money flowing in from it passively.

[Aqil Dharamsey]

Getting to 10K a month in gross rent is definitely attainable BUT it all depends on an individuals financial status, needs and wants, market they are investing in, etc.

That being said I started with investing in a 6 unit as my first property. I did that because I desperately needed monthly cash flow to avoid bankruptcy. If you invest regularly and be very principled and not blow your net cash on stupid stuff and actually reinvest every penny back into the business, you can reach the 10K mark within 18-30 months. Hopefully this gives some insight to your question.

[Llewelyn A.]

I don't know if you mean that $10k a month is a particularly good thing because then I have to wonder what is the purpose of asking about the $10k per month.

Just knowing if someone is making $10k per month does not necessarily mean it's a good thing.

Example, Bob buys a property for $10 Million without a Mortgage and makes $10k a month or $120k per year. The Cap Rate/"Cash on Cash Return" on it is $120k / $10 Million or 1.2% ! No matter what market, that's a terrible Cap Rate, even here in Brooklyn, NYC!

Now, let's change the scenario a bit more and say that the purchase price is only $1 Million. The new calculation for Cap Rate/"Cash on Cash Return" (since we are not using a Mortgage) is $120k  / $1 Million = 12% Far better than the 1.2% but not great either! BTW, this Cap Rate is GREAT in the Brooklyn Market!

Just some food for thought!

[Joe Splitrock]

@Kenny Penn I am assuming you want to attain $10,000 per month of income from real estate. My guess is you picked that number because $120,000 per year is a solid income to have a good life.

There is a difference between $10,000 worth of income and $10,000 gross rents. When people talk about $10,000 gross rents, they still have to pay all their expenses, mortgages, etc. So even with $10,000 gross rents, you may walk away with $2000 per month net cash flow. 

When you are talking about rental property cash flow, most people are going to net $100 to $400 per door in cash flow, that is with debt on the property. If your goal is $10,000 worth of passive income, then you would need 25 to 100 doors, with leverage. If you pay cash for properties you may get $10,000 cash flow with as little as 5-10 doors. If you buy commercial property then a single property could net that much each month. The point is there is no set amount of cash flow per property. It depends on property type, expenses and debt load.

Rental properties is a get rich slow business, but the key is getting started early. Time is your best advantage in real estate. Over time, you pay debt down, property values and rents appreciate. It becomes a snow ball effect as you build your portfolio, it gets easier.

[Dan Heuschele]

I agree with @Llwelyn that making $10K/month is not a decent barometer of success as it could provide a poor ROI for exactly the cases indicated. However, I do not agree that, in all markets, COC or Cap Rate are a good indicator of ROI either.

Continuous $10K/month typically requires significant equity. 

I think more interesting would be who has achieved $10K/month on a fairly low investment cost. I know there are many BP users that have done this using buy n hold (fairly passive especially if compared to flipping, wholesaling, being RE agent/broker, etc.) in various ways including BRRRR, other people's money, value adds, purchasing far below market, and appreciation.

I have used BRRRR, value adds, purchasing a bit below market, and appreciation to hit my current level of cash flow in a fairly low unit count.

[John Barrett]

Hi Kenny,

There are numerous ways to make money some are easier paths than others but all require work and sacrifice. I see your profile says you are currently in school. Use this time to look at and analyze lots of potential properties. This will give you the confidence to move forward with investing in real estate if that’s what you choose to do.

Having a dollar per month goal is great but it’s not the end all be all. As you start investing your priorities or goals can easily change overtime so being flexible key.

Best of luck on your investing journey.

[Cody L.]

My guess is most are. If they’re active investors. I know multifamily guys clearing $200-300k/month of cash flow after expenses.

Once you start snowballing a large portfolio the numbers grow quick.

[Jonatan Barbera]

@Kenny Penn it sounds like you need to take advantage of your current income and credit and start picking up properties for cash flow.