building my roadmap to 6 figure income and beyond

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building my roadmap to 6 figure income and beyond

Michael DeAngelo
Saint Peters, MO · Member since 2014 · 8 posts · 1 vote

So i'm at point A (tired of working for others and ready to do anything and everything to take charge of my own destiny) and need to get to point B (6 figure net income). I know I need a map, but right now the map I have is pretty blank. My initial idea to get started and get some experience is to save up and buy SFR's. That is not where I want to end. I'm thinking big. I want to control numerous bigger apartment complexes (100-150 units per complex) in c neighborhoods.

As far as financials go, i'm doing well. I have a conservative budget set that even allowing for extra personal expenses we can save $15k-$20k per year. However, that amount of excess is recent due to my wife becoming full time where she works, so no nest egg built up yet. With that being said, my loose plan for this year is to save what we can and start actively looking fall/winter. By then I should have a nice chunk saved up for down payment and reserves. After successfully managing a few SFR's, then what? Should I gradually scale up?

I know that the types of properties I eventually (sooner hopefully, rather than later) want to get into will require well more net worth than what I can bring to the table. So here is where i'm looking for advise and guidance.

What makes an investor of the caliber I would need, let go of their money? That is, other than the obvious ... to make more.

How much experience would it take to prove to a potential investor that I have what it takes?

Why would an investor settle for a percentage (or other fractional financial arrangement) if they have the money, instead of just doing the deal themselves?

I do plan on getting started going to REI club meetings in the near future. Any and all advice is greatly appreciated.

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Duncan Taylor
Real Estate Investor · Member since 2013 · 866 posts · 487 votes
12y

@Michael DeAngelo,

You are asking all the right questions and in my opinion the best way to get there is to scale up as quickly as possible following sound business principles.

But, you do need to start small and actually prove you can buy a income producing property that actually, uh, produces consistent income. Then you have to prove the first time you did it wasn't a fluke.

Lots of people my age talk about the good old days when we could formally assume a note just on our signature. Those days are long gone but, the funding options today are about to explode because of recent changes in SEC regulations.

Long before you need to worry about how to put the large deal together, do some smaller ones. Flip a house or two if the idea moves you. Buy a few SFH as rentals. It won't be easy but if it was we'd see more than 1% of the people who call themselves a real estate investor take the steps necessary to actually invest. Get your processes and procedures in place so you can ramp up when you are ready.

Read the posts on this site. Yes, some are not as good as others but as you read them and any book you can get your hands on about business, real estate and finance you will start to recognize and differentiate those who know from those who pose. Let the library be your friend. Get a Kindle or the Kindle app on your tablet and read like your life depends on it, because your financial life DOES. If you aren't spending 2-3 hours reading each day or night you are cheating yourself.

While you are doing this, network, network, network. I urge you to get and read "Dig Your Well Before You Are Thirsty" by Harvey Mackay. (I know, another book, right?) Then follow his advice. If you do, then when you are ready to ramp up you will have no problem finding the monied partners to take that walk with you.

One last thing, don't try to do things on the cheap. Find a good real estate attorney because you are going to have questions only an attorney can give the right answers to. You need a good CPA because the tax man comes with his hand out, your goal is to get him to leave with as little of your money as possible. Then, when you have a few assets, get a good estate planning attorney. I've found every penny I spend with my professionals comes back dressed up like a dollar. I'm sure 10 years from now, you will agree with me on that.

Good luck and you have lots of people here pulling for you and willing to help, just ask.

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  • Troy Fisher
    Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes
    12y

    Scale up? -- Most of the investors I've met get to the point of wanting to scale up. Some start up! I wish I had started up rather than starting smaller.

    Letting go of money? -- There are different types of investors, from the very active to the not quite so active. Doctors for example work a lot! They don't have time to go do some flips or manage a 10plex! They might give you the money so they get better returns while you put in sweat equity.

    How much experience? -- Worry less about your experience and more about your knowledge and the way you interact with people. Trust can go a long way.

    Active networking works. Get out there and meet people.

    0Reply
  • Elizabeth S.
    Real Estate Investor · Fort Wayne, IN · Member since 2013 · 168 posts · 78 votes
    12y
    You're thinking about great things but you need to just get started first and experience land lording, cash flow, maintenance and the other challenges that come. The education happens at every step, getting money, choosing a property, networking locally, finding contractors and finding good tenants. We all want what the guy on the hill has but he got there after a lot of hard work. Don't be disappointed when it takes time. Keys to success: 1. Cash 2. Communication 3. Drive
    0Reply
  • Duncan Taylor
    Real Estate Investor · Member since 2013 · 866 posts · 487 votes
    12y

    @Michael DeAngelo,

    You are asking all the right questions and in my opinion the best way to get there is to scale up as quickly as possible following sound business principles.

    But, you do need to start small and actually prove you can buy a income producing property that actually, uh, produces consistent income. Then you have to prove the first time you did it wasn't a fluke.

    Lots of people my age talk about the good old days when we could formally assume a note just on our signature. Those days are long gone but, the funding options today are about to explode because of recent changes in SEC regulations.

    Long before you need to worry about how to put the large deal together, do some smaller ones. Flip a house or two if the idea moves you. Buy a few SFH as rentals. It won't be easy but if it was we'd see more than 1% of the people who call themselves a real estate investor take the steps necessary to actually invest. Get your processes and procedures in place so you can ramp up when you are ready.

    Read the posts on this site. Yes, some are not as good as others but as you read them and any book you can get your hands on about business, real estate and finance you will start to recognize and differentiate those who know from those who pose. Let the library be your friend. Get a Kindle or the Kindle app on your tablet and read like your life depends on it, because your financial life DOES. If you aren't spending 2-3 hours reading each day or night you are cheating yourself.

    While you are doing this, network, network, network. I urge you to get and read "Dig Your Well Before You Are Thirsty" by Harvey Mackay. (I know, another book, right?) Then follow his advice. If you do, then when you are ready to ramp up you will have no problem finding the monied partners to take that walk with you.

    One last thing, don't try to do things on the cheap. Find a good real estate attorney because you are going to have questions only an attorney can give the right answers to. You need a good CPA because the tax man comes with his hand out, your goal is to get him to leave with as little of your money as possible. Then, when you have a few assets, get a good estate planning attorney. I've found every penny I spend with my professionals comes back dressed up like a dollar. I'm sure 10 years from now, you will agree with me on that.

    Good luck and you have lots of people here pulling for you and willing to help, just ask.

    1Reply
  • Deborah BurianPro Member
    Rental Property Investor · Oklahoma City, OK · Member since 2013 · 1k+ posts · 412 votes
    12y

    @Elizabeth S. - wow, you said a mouthful there! Cash, communication and drive... I think that sums it up nicely.

    0Reply
  • Michael DeAngelo
    OP
    Saint Peters, MO · Member since 2014 · 8 posts · 1 vote
    12y

    Thanks for the input. @Duncan Taylor I will definitely follow your reading advice and look for the book you mentioned. I do plan on starting to acquire sfh's as rentals and hopefully will be able to start later in the year when I have some reserves saved up. There are lots of foreclosures in all price points close by, so I was thinking of looking that direction first. I'll be honest, I am a little nervous about doing that first sfh deal and I think that's mostly because once I do that it's no longer just talk and numbers ... now i'm in the game and have the responsibilities to sink or swim. However, i'm not that concerned either because i've done most of my own maintenance and light remodeling in multiple homes i've owned. So my focus is to make sure I know enough to not fail in that first deal, but also i'm looking down the road and know I don't want to stay small. So my focus really is on the deal after the next deal and making sure I keep a good track record so I look good to potential investors and learning what I need to know now, so when i'm ready to try for the big deal i'm not trying to play information catch up.

    0Reply
  • Duncan Taylor
    Real Estate Investor · Member since 2013 · 866 posts · 487 votes
    12y

    @Michael DeAngelo,

    You have a good head on your shoulders.

    As for fear, that is healthy, everyone shares that on their first deal. Some still have it after several. Some probably never lose it but they obviously learn to manage it if they stay in the game.

    Don't let fear turn into a reason to not try.

    Don't be so worried about that first deal not making the kind of profit your tenth will make. It might even lose money because there are two ways you make or lose money as a buy and hold investor. The first is when you buy. You have to always strive to buy right, buy based on the numbers not because you want a particular property. The second place you will make money is in how you manage your assets over time. I've seen people selling rental property in desperation not because they paid too much for it initially, but because they managed it into the ground. Those are the opportunities I love. I buy at a discount because of the depressed value of the asset and then I know I can improve the performance of the asset and increase its value. You will learn over time how to squeeze every dollar of profit possible out of a rental by managing yourself first, the asset and the tenant. You will learn over time the value of great customer service to that tenant and how to provide it without letting them take advantage of you.

    All of that applies whether you physically manage the properties yourself, hire an outside property management firm or hire your own property manager(s). I've done all three, the only way I roll now is with property managers who are employees. It's not just a control thing but that is part of it.

    Yes, you have a lot to learn and down the road you will find there is always still a lot new things to learn. I'm still learning.

    0Reply
  • Michael DeAngelo
    OP
    Saint Peters, MO · Member since 2014 · 8 posts · 1 vote
    12y

    Thanks, all good information. Time to read and study so when I have my reserves built up i'll be ready to jump in.

    0Reply
  • Levi F.
    Real Estate Investor · soldotna, AK · Member since 2011 · 69 posts · 36 votes
    12y

    Knowledge is the key to sucess. Jumping in and learning later is the WORST approach in REI in my opinion. Understanding the "deal" is so critical in the begining, it really is do or die. Most quite after one or two "loser deals" without ever figuring out where they went wrong. You seem intelligent, you are on the right site, now learn. Property analysis is the A number one thing to understand. LLC's, LP's, CAP rates, proforma's, all that will come with time. Decide what your entry point is- Flipping, multi-family, single family, wholesailing..... and understand EXACTLY how to analize it. Gather your numbers, run a spreadsheet, then post it here and get opinions for FREE!

    Buying a "LOSER" in the begining is diasterious to your business.

    If you put the effort in to understand this business, you to will wonder why everyone's not doing it.

    0Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    12y

    @Michael DeAngelo great thoughts, but I agree with the others you need to get your first few deals done first. The trip of a thousand miles begins with the first step.

    Since you appear very new I want to encourage you to read the Learn section above, it is loaded with great info. You might also set some key word alerts for areas or items of interest like "Missouri" or "joint venture".

    Get deal one going!

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