Invesment and time question

[Bradley Pietrzak]

Hey guys first i want to thank any and every one who responds to this question seens it is basically a noon question. Just on i am a little unsure about. OK so my story I recently Got into college I will be free and clear with no depth what so ever because of the gi bill. I am hitting dental school after this. Dental school will not be free and clear. However I should have about 800 saved up after from military disability and the income that the gi bill gives me to go to school. Now after I finish dental school my goal is in 10 years I want enough propertys to bring in net 100k. That means with the 50 percent rule I need about 200k. How posible do you think that is? The median income as me being a dentist is stated to be 140k. Obviously let's take the worst case senerio  and I make 70k plus my 10k a year disability. If I can manage to live on 20k of that as well as my sweethearts income will i still be able to hit that number ? I still have no bills so I can still plan to live below my means somthing alot don't do. I guess I kind of see how this could work and I can relise the numbers but idk maybe I'm just looking for some confidence with someone agreeing that this could work if I do it.I really want a grasp of realism here. I'm sure I have that at least to some extent I really appreciate all of your input thank you so much God bless.

[Kerry Baird]

I'm going to take a stab at this. It isn't an easy question to answer, which is why you haven't gotten many bites.  There are books written on this, you know!

In 20 years, those numbers you throw out, i.e. the salary projections, will look small.  It seemed as if my airman pay was big at $400 a month, but E-8 pay BAS, BAH, flight pay, at 24 years is $7800.  Wages creep up, inflation (or deflation) affects that income.  You'll probably have kids, etc. to grow your expenses. So predicting your needs down the road is a crap-shoot. You may not want to defer gratification, and might get spendy, etc. There are MANY, many variables in that time frame.  

So, you start where you are and you keep following your feet.  There are a few strategies in real estate, so I'm going to lay a few out there for you: 

Buy, Improve, Hold. You can use your VA loan to buy up to 4 units, occupy one unit and rent out the others. That will be very little money down, when you do use it. You can also do FHA loans for very little down. In fact, if you buy a gentle fixer, improve it for a couple of years, and then rent it out, you can keep getting low interest and low down payments, up to 20 houses with some lenders. I like being a serial mover. :D This is slow and steady and boring, but builds wealth. If you don't occupy, then you must come up with larger and larger down payments: 20% on the the first 4 non-owner occupied properties, and 25% down payments on the 5+ properties, and challenging (but not impossible) to get over 10 loans. If you both qualify, you can each get 10 in your own names.

In Keller's book the Millionaire Real Estate Investor, he tells you how many houses you need to buy in what sort of time period to get to your goal.  The "best practice" would be to buy-and-hold, and refinance when you get below 65-70% loan to value, and then use that money to buy more.  It is slow starting, but liftoff is amazing.  Keller says, "All roads lead to buy and hold." However...there are other strategies, too.

Buy, Improve, Rent...to Buy, Improve, Sell.  You can do these slowly, while you occupy; or speed it up and do one or more a year.  And then you might find that you are doing three a month.  It is addictive!  The more houses you buy, the more you will want to do direct mail marketing, in order to get deals that are off market.  This is a whole other can of worms, and I won't write more here.  Use that search function---> "yellow letters" "lumpy mail" "probate" "motivated seller"

One other thought to throw at you...the Debt Snowball.  You obviously are starting out with great financials.  Once you have a number of houses...even 5 houses (my original goal), and do a debt snowball on them by using the extra income from the rents to pay them off quickly, they generate free and clear income faster than the 30 year loans.  Multifamily also generates more cash flow, but often less appreciation than single families.  

It seems to me that you would not have regrets if you

A) give your all to your classes while you have that opportunity.  Do not waste the GI Bill as I did.  >:-(   

B) Set a goal to look at so many houses a week, and talk with lenders in your area, find a meetup for networking, and ask sellers to carry back notes for you. Be bold and make offers.  You've done Hard Things in the military.  You are going to do Hard Things with your studies.  Real estate can be another one of those things that you just have to press through, until it doesn't give you butterflies to knock on a door, talk to a seller and make an offer.  

Ten houses, paid for (SFR, brick 3-4 bedroom, that E-4 to E-5 or O-1 could afford, in small town Texas) bring in between $7500 and $9000 a month, after property management, just so you know. Oil patch affects the vacancy.

I mentioned the Keller book. It is a book that will resonate with you because he puts in systems, which you know from your military days, and will learn in your dentistry days. It is a cookie-cutter type of business...where you learn a system and then rinse-and-repeat. I made checklists just like those I made in the military. Made scripts to talk with sellers and note prices/terms conditions. Systematized it. Also you might like to pick up Mike Summey's Weekend Millionaire. He tells you how to make offers based upon NOI, and about negotiating gambits, and how he grew his wealth in this same slow-and-steady manner. There are a lot of nuggets in that book, too.

All the best.