How soon did YOU pull cash from investments

Question

Working through information overload, cold feet & finding time syndrome here.  An important question me and my wife have been wondering....

So once YOU started buying homes to hold and rent & houses to flip, how soon did you start using the income/cashflow to live off of?

My wife desperately needs to quit her job to take care of our 2 kids. School has been an issue with my youngest (learning disabilities) She can't quit her job until we replace her yearly income + healthcare (roughly 24K bring home + health)

That being said, when you started in real estate investing how soon did you start using the income to live off of? I know everyone's situations are different. If you have 5 homes and each cashflows $100 per month after all expenses...did you use that for income? Or did you set that aside in case what you've been allocating for expenses was not enough? Then waited until that account hit a certain $$ value then started taking income after that point?

The houses I am looking at with the BP calculators look to only have $100-150 cashflow per month (buy & hold) at most. That would take 20+ homes to achieve this for my wife to stay home. Should we be looking into flipping instead for quicker cash? I just worry that we flip a few homes and think that everything is "ok" so she can quit her job, then our ink well dries up! and now she needs to get a job again! My nerves & anxiety has slowed our progress in the real estate market.

Thanks in advance!

Taylor Chiu · Answer

@Lee Haenschen If you are looking for a quick route to get your wife at home with the kids, There are a number of remote jobs that she could do to keep her income and let her work from home. Real estate can work as well, but with buy-and-hold, it's a more gradual game. Flipping/wholesaling are faster, but you are left hanging until that first check rolls in.

Shawn Ackerman · Answer

@Lee Haenschen If your looking for a buy and hold play to immediately replace your income you may be looking at the wrong strategy.  You may want to look at flipping or wholesaling as one deal can net you the $24K you need to get your wife off the 9-5 bandwagon.  Rental real estate is a "get rich slow" game.  Also the $100 per door rule of thumb is a low standard.  That's a 1% deal all day long.....You should be underwriting 2% or even looking for deals with a higher price to rent ratio.  All the best to you.  Persist and you will WIN!!!

Thomas S. · Answer

Normally it will take 20 - 30 doors to replace a income, depending on how high the income and cash flow. Investing in income rental properties is a very long slow process to financial freedom. Unless you have a large amount of savings to use as a deposit on a large number of doors from the get go it will take many years to achieve financial freedom.

Flipping on the other hand is a full time job with no guarantees. Very high risk to depend on as a income until you are well established. You need a track record and should be doing multiple flips at once.

Lee Haenschen · Answer

Thanks Taylor! We have searched many nights online for remote jobs. Only thing we found that you didn't need years of experience was amazon. Which was a pay cut and after she contacted them twice they never once replied back.

We shall keep looking in that route as well for a backup plan.

We aren't looking for success immediately. But we do need to get started on something that in the next 1-5 years will bring income that we can keep growing. Immediate income would be nice! but we need to grow our retirement as well since we have none at the moment.

Lee Haenschen · Answer

Pavel that's awesome to hear! That's what I would like to be able to find one day!

I guess part of my post is fueled by the amount of post I read on here where the people are 10 years younger then me and make a post about "I've hit financial freedom, I am now officially retired!"  They make it sound so easy. I guess I need to jump into the game and get started asap!  I've read all the books, listened to hundreds of hour of pod casts & audible books. I'm not getting any closer to financial freedom if I don't try.

Pavel U. · Answer

While my area/market is different from yours, I'm sure not that much since it's not California or New York where it's much tougher to find cash flowing properties for cheap. I generally don't get into a deal if it makes less than $1,000/mo cash flow after expenses. Having said that, it can take just 1 good deal to be able to quit your job. Of course those are difficult to find, but definitely possible. One of mine comes to mind as an example - mixed use building (2 retail spaces on the main level and a 2 bedroom apartment upstairs), great area too. I picked it up 3 years ago for $185k, repairs/updates were approximately $70k. So all in for $250k cash. It's generating $50,000/year after expenses not counting repairs. A couple of months ago it was appraised at $400k, so I pulled my initial $250k out, and got a loan. In other words I got that building for free since I took all of my investment money out. Now I have infinite returns - my mortgage will be paid off in another 5-6 years, building will continue to appreciate, and I can continue to pull over $250k or more out. Yes, it's difficult to find great deals like this, but doable. Other properties in my portfolio are not as great as this one, but still at least $1k/mo cash flow per building after expenses.

Frank Wong · Answer

Hi Lee,

Buy and hold is a long term game and it is the safest and most consistent way for you to achieve what you want. It really depends on how much capital you have to work with.  Could you get there within 5yrs? Possible. The reality is that it will be 10yrs+ but once you get there it will be smooth sailing and everything you dreamed of.

Just think about the sheer number of deals you have to do and find and have everything go perfectly.  Real estate does not work that way.  You don't find one buy it rehab it cash out repeat. LOL.  Some deals will work that way some won't.  At some point, you have to look at your risk and leverage and not be in a position to blow it all up.  You need fresh money coming in so you can scale and buy more units.  Gotta increase your income to buy units that's the bottom line.

Good Luck

Lee Haenschen · Answer

Thomas, we don't have deep pockets for deposits on homes. We have enough to get us into one homes!

House hacking is out of the question as we are deeply rooted on a farm with a shop for my lawn maintenance business.

Lee Haenschen · Answer

Thanks guys! All to often you hear the " 1 year in and i'm officially retired"  I don't always believe that

What's considered a faster route to steady income? I have done 1 rehab with/for a old friend of mine. We gutted a house to the studs and built it back up. It was fun but I know in order to make money I would have to sub everything out. So I am somewhat aware of what it takes to rehab a house. I know there are many variables, but I am far from a HGTV couch flipper.

If this takes years - so be it! I know that my future won't change if I don't make the change. Me and my wife keep running circles in this rat race and we know it's time to make a hard turn for a better future.  I am watching my kids grow up via photos while I work 6-7 days a week.

How soon did YOU pull cash from investments

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