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Updated over 11 years ago, 07/01/2013
Starting today what would you do to get to $25,000/month cashflow?
Hi,
I've done some flipping and I'm now looking to buy and hold. My goal is to get to $25K/month cashflow so I can afford to donate cash and my time (as a marketer) to charities. I'm trained in buying big multi-family properties but it seems the cashflow as a percentage is better on the smaller properties. My question to all you experienced people is: If you had to start over, what would YOU do to get to $25K/month as directly as possible? THANKS!!!
Tim W....wow over 300 units, thats pretty impressive Tim. I would follow my dads advice as well...
Originally posted by Tim W.:
Originally posted by Jon Klaus:
Back to Springfield, Missouri. I used to live there. ...
Man, Tim W., I thought you were doing it to get closer to Bill Gulley :)
#3 Off Topic Contributor
- Attorney
- Viera, FL
Originally posted by Steve Babiak:
Originally posted by Tim W.:
Originally posted by Jon Klaus:
Back to Springfield, Missouri. I used to live there. ...
Man, Tim W., I thought you were doing it to get closer to Bill Gulley :)
Half the stuff I posted on here over the past two years I posted from a coffee shop while maybe 5 minutes from Murney Associates. ;-) I've been in Springfield a lot more than I let on. Good turkey hunting and fishing here too. Best smallmouth fishing outside the Boundary Waters I've run across.
#3 Guru, Book, & Course Reviews Contributor
- Investor, Entrepreneur, Educator
- Springfield, MO
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#3 Guru, Book, & Course Reviews Contributor
- Investor, Entrepreneur, Educator
- Springfield, MO
LOL, small world! I've sat out on a patio area at an establishment (hate to say bar) with Tim's dad I'm sure of it and enjoyed a few with him, LOL, he's the only guy in town with 300+ units of sfd. Others have MF, I believe he has MF as well. I never worked with him as we met there, known about him but never dealt with him. I doubt he'd know or remember me we talked about other stuff, just a few minutes on RE. :)
Tim, you should listen to your dad! I'll bet you two butted heads, I can see that! LOL Your dad is a heck of an operator/investor, follow his advice!
And next time you're at Panara Bread let me know and we can have coffee and argue..... LOL :)
#3 Off Topic Contributor
- Attorney
- Viera, FL
Originally posted by Bill Gulley:
Actually I've asked him twice and he's never heard of you.
#3 Off Topic Contributor
- Attorney
- Viera, FL
This has gone needlessly off topic. To bring it back, I would do a cash business of whatever I can do (legally) to make the most cash, and reinvest it in profitable buy/hold properties and grow it at a reasonable rate. Again, it's a 1-2 decade commitment, imho.
Because you know how to flip I would focus on a 5 to 1 strategy. Buy 5 and flip them making enough to own 1 free and clear. You can then decide whether to borrow against that freehold one or keep it clear.
Having survived the last 5 years I personally have become anti debt so I prefer to create the cash flow now with minimal debt. YOu need less houses = less management issues and you don't care what the world economy is doing. :-)
Been reading the thread and just another angle I had presented to me that contradicts the too many properties headache. A guy down here in Dallas, Tx started doing rentals ~8 in the 80's. However he suddenly had a light bulb moment and started buying them mostly all cash almost any condition, never fixed them up and did owner financing on them all. To date he has over 50 properties, and does not manage any of them. He's near 76 and he has a few left that were financed but hes got close to $35k per month coming in. Also to date in the past 30 years hes only had 1 paid off. Interesting business model he has and to hear him speak about it, its quite simple and sometimes comical.
Originally posted by Mark C.:
Sounds a lot like what Mitch Stephens has done in San Antonio. It's more challenging in recent years with much stricter regs on seller financing.
I encourage criticism to my post and the metrics within - so feel free to chime in. I'm here to play nice make contacts and learn from the community.
don't be a cowboy and play it safe - moving too fast is what destroyed many investors years prior - personally I'm a huge advocate of buy and hold. What you are attempting falls into my metrics for the current project I am working on.
Buy houses @ 125-185k tops, either get them from auction but there you have to be careful. A MUCH better way to get them is tight realtor relationships in aggressive rental markets. Find people that can supply you insider type deals - where you're not dealing with everyone in your area. They'll be able to supply you with pre-negotiated short sale listings you may have 24-48 hours to get a contract on before they list - if you can get these they are gold.
Aim for 8-13% CAP, buy in nice areas that are appreciating and rent to young professionals, don't be greedy with your rent. If you run these numbers, lets say 150k is your avg, when comped out to rents in the area try to hit 1200-1300 that puts you at 8-8.6% roughly which is nice. You're not hitting nice juicy 10-14% rates, but you also have appreciation/low risk/low rehab costs potential problems, because you're buying shorts that were willingly let go to cut a deal with the bank. Yea.. this process is tedious, yea you're not hunting juicy flips and getting immediate satisfaction. You are however getting 8-12% on your money fairly safely though - really depends how much value you put on that.
Also - whether you agree with my strategy or not, the MOST important thing is find metrics that suit your style, and do NOT deviate no matter how good the deal seems. You need to run a consistent strategy.
I'm not sure what other property managers do /say they'll charge however my firm will be taking 10% and first months rent some people like it some don't - you get what you pay for, and of course you can handle it yourself.
You will need 19-22 homes bought within these metrics WITH CASH to achieve your 25k with little room for error. Remember, the key is to move slow - and patience will save you.
Is there better ways to get returns on 3MM? You bet there is - if you have that kind of cash, or even slightly less - just become a hard money guy and bridge transactions for people - stay outa the market yourself...
Originally posted by Jon Klaus:
Sounds a lot like what Mitch Stephens has done in San Antonio. It's more challenging in recent years with much stricter regs on seller financing.
Jon, have you researched the viability of seller financing techniques (especially CFD) in TX these days? Do you need to pay a mortgage originator to handle it, for instance, or keep your annual deal volume below some threshold, etc.? Does this apply to MHP Lonnie deals as well, or is that a different animal? I also wonder about the tax impact (full recognition of capital gains at time of "sale") if this is done at scale where the seller may be construed as a "dealer".
In my area, quite a few landlords seem to be converting their existing rentals to land contract deals, to get out of the landlording liability and transfer the maint to the buyer, while still maintaining the ability to evict (rather than foreclose) within the first 5 years. I'm meeting with an attorney this week to discuss further.