All Forum Posts by: Manch Hon

Next year I should exceed $1M in real estate equity, and I started investing in RE only 3 years ago. You can say I am lucky. And I do think I am lucky. Appreciation has treated me very well. 

I agree there are people who achieve 1M wealth thru drip dropping rental income. But the fact that J Scott and others chose not to do that means at least there are better ways to accumulate wealth. I know many, many people all around me who seem to easily achieve 1M equity by doing nothing, like Jay, just by living and breathing in Silicon Valley. 

Are there people getting rich by cash flow alone in flat markets? Of course there are. But I want to see what are the difficulties they face, how easy it is etc etc. 

I totally get the theory. But want to know if anyone has successfully used this strategy to accumulate significant wealth. There are all those gotchas in real life that one only knows thru practice. 

Some people in this thread raised some interesting questions. For example, if one buys in low-priced places that cash flow immediately, how is the tenant quality? Are thefts and petty crimes an issue? Will cap-ex like replacing roofs eat away a lot of your cash flow etc etc. 

If you have successfully used this strategy, speak up. We all want to learn from your experience.

 To get full credit you have to show your work. 

So OP's question is whether one can build meaningful wealth via cashflow. I took the liberty of defining "wealth" to be over 1 million. Multifamily appreciation is much tighter linked to its cashflow so I restrict the question to 1-4 unit properties. 

All the examples people gave so far are of the "I bought this great deal at under market value and rehab it" type. This to me is just another form of appreciation. They are not collecting the $100 or $200 per door to become millionaires.

Sorry. Jumped the gun. Not a proof then. But I have never seen a real life example of anyone building wealth via the drip dropping of rental cash flow. Some on this thread said they did well via cash flow are in fact like you, bought way below market. To me that's just another form of appreciation: delta between property value at two time points. Rent could have been zero and that would not negate your big gain.

So anyone has built >1M net worth in <=4 unit buildings thru drip dropping of rental income? How did you do it and in which markets? Theory is good but I'd love to see some real examples.

For multifamily property value is tied to cash flow. So there is not a big divide there. But still investors have the choice of buying a 4 cap building in Silicon Valley vs a 15 cap in some unknown Midwestern town. 

Definitely. I don't ever mean to degrade anyone. I pride myself having an open mind. It's hard and I have to actively remind myself not to be married to any one idea.

Congrats on the great investment. But it seems to me you made all your money from buying under market value, not from the drip drop of rental cash flow. And that proves the point wealth is made from the delta between property value at time of purchase and time of sale, not from drip dropping of rental income.

@Account Closed 

I really like your signature line "It slowly dawned on me that we won the real estate lottery!" I suspect I too won the lottery.

@Jay Hinrichs You are the anti-turnkey. LOL

I agree 100%. There is really no reason for Bay Area investors to invest out of state. If you want to buy cheap and cashflowing houses go take a look at Central Valley. Any town up and down Hwy 99. You can even go fix the toilet if it comes down to that. 

@J Scott What is the price range of your Atlanta property? And how much is the property tax rate? What does the rental number look like?