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Updated over 6 years ago,
Can this strategy be optimized to generate 100K per year?
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.