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Updated over 6 years ago on . Most recent reply

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Andy Church
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Can this strategy be optimized to generate 100K per year?

Andy Church
Posted

Good day BP,

I am looking to generate about 100k per year from real estate investments and wondering if the plan below can be optimized to get to that goal sooner.

Assumptions:

1. Starting capital $400,000 invested in 12% private equity and syndications with 8% preferred + 15% projected IRR in 5 years.

2. No additional money is contributed for this analysis during the 5 years to keep the math simple.

3. Taxes are not factored in again to keep the math simple.

4. First syndication folds in year 5 generating capital gains, which is why the Year 5 number is high.

Investment Capital Invested COC Year 1 Year 2 Year 3 Year 4 Year 5
Year 1 Principal - Private Money 200000 12% 24000 24000 24000 24000 24000
Year 1 Principal - Syndications 200000 8% 16000 16000 16000 16000 86000 Syndication folds - IRR 15%
Reinvest Year 1 Cashflow - Private Money 40000 12%
4800 4800 4800 4800
Reinvest Year 2 Cashflow - Private Money 45000 12%

5400 5400 5400
Reinvest Year 3 Cashflow - Syndication 50000 8%


4000 4000
Reinvest Year 4 Cashflow - Syndication 50000 8%



4000
Year End Cashflow

40000 44800 50200 54200 128200
Year 5 Ending Equity (Capital Invested +Year 5 Cashflow)





713200

Questions:

1. What ways can the strategy be optimized to reach the 100K goal sooner? 

2. If I have access to more money, up to $1mm how does this strategy change? (a lot of money is tied up in primary home equity)

3. Is owning a small multi family generates better cash flows?

4. Is partnering with someone as a money partner to co-sponsor a deal better way to go assuming I can find someone in the near future to work with.

Thanks for your feedback.

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