Going full time with $50,000 in 4.5 years

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Going full time with $50,000 in 4.5 years

Andy Hathaway
Member since 2018 · 9 posts · 1 vote

I plan on leaving the active duty Air Force in 4 and a half years when my enlistment is up. My goal by then is to have 20 units that average at least $300 in monthly cashflow so I can be a full-time investor. My credit score is hovering around 800 and I have $50K that I have dedicated to start buying properties. I've been educating myself on everything REI for over a year and am ready to hit the ground running but I'm having trouble figuring out what my focus niche will be. My only debt is my 4 bed 3 bath home in Dover Delaware where I live that I'm currently renovating and will cashflow ~$300 when finished. My questions are:

1.There are so many options and niches out there, with the goal of 20 units in 4.5 years in mind, do you think focusing on single family homes using the BRRRR strategy is the most efficient? Should I be looking for something larger perhaps with a partner? (Multi-Families in my area are seemingly scarce)

2. Do you typically find that you get more bang for you buck buying 2 properties at say $80K each rather than one at $160K? If so, is the additional cashflow worth the additional time managing them?

3. If you could go back in time, what advice would you give yourself before you bought your first property?

I look forward to hearing your thoughts!


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Jaysen Medhurst
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y

BRRRRing MFRs is probably the best way to achieve your goals, @Andy Hathaway. First off $300/unit/month average is very aggressive and probably not very realistic, unless you plan to hold a ton of equity in each property. Most investors shoot for $150-200/unit.

You may have to look a bit outside of Dover to find the right kind of properties. Something like this maybe? Rent each side for ~$900. I bet you cash flow ~$200/unit. This place is turnkey. 

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  • Jaysen Medhurst
    Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
    6y

    BRRRRing MFRs is probably the best way to achieve your goals, @Andy Hathaway. First off $300/unit/month average is very aggressive and probably not very realistic, unless you plan to hold a ton of equity in each property. Most investors shoot for $150-200/unit.

    You may have to look a bit outside of Dover to find the right kind of properties. Something like this maybe? Rent each side for ~$900. I bet you cash flow ~$200/unit. This place is turnkey. 

    3Reply
  • Andy Hathaway
    OP
    Member since 2018 · 9 posts · 1 vote
    6y

    That's great info @Jaysen Medhurst thank you! I'll widen my search area.

    0Reply
  • Adam Jason
    Rental Property Investor · Medellin, Colombia · Member since 2017 · 83 posts · 33 votes
    6y

    I would go with BRRRR @Andy Hathaway as I find it to be the best way to recycle capital for more deals.  There are some factors for your question about 1 more expensive property versus, 2.  I would look at it from a return on investment standpoint first - 12% on 2 80K houses is the same as 12% on 1 160K house - but then balance that against benefits/challenges of diversification, additional tenants, multiple refinances to pull money out, etc, quality of tenants for less expensive properties.  All things being relatively equal from a returns perspective, I like to go a bit higher in price to get into a better asset class with higher likelihood of appreciation and (although no guarantee) a better tenant pool. 

    1Reply
  • Marlen Weber
    Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
    6y

    @Andy Hathaway Thank you for your service. It sounds like a great plan, best of luck. 

    1Reply
  • Andy Hathaway
    OP
    Member since 2018 · 9 posts · 1 vote
    6y

    @Adam Jason good points, numbers are unbiased but I'm finding that there are plenty of other factors to consider.

    0Reply
  • Jonathan R McLaughlin
    Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    6y

    @Andy Hathaway 50k is a long way from 20 units....trying to do it one at a time is going to be rough. There are lots of retiring investors out there, and I might start networking to see if there is a small portfolio out there to buy with partial seller financing? Someone might want to be out of the day to day but still have the income....

    1Reply
  • Adam Jason
    Rental Property Investor · Medellin, Colombia · Member since 2017 · 83 posts · 33 votes
    6y

    Agree with you @Andy Hathaway

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    6y

    @Andy Hathaway

    What I tell W2 employees... For those who are able to save more than $30k a year or have substantial liquidity (over 200k), being a landlord and especially flipping is a lot of work. If you like it cool/good for you... but just remember why we got into this... To be free from a JOB. A lot of us (80%) who stumble upon simplepassivecashflow.com and start drinking Kool-Aide will be financially free in 4-7 years pending taking action. So I always urge people to start with the end in mind and take a more passive approach.

    Focus on being an Investor not a Landlord.

    Do the math here… with 300 dollars per property (2 months of work to buy a turnkey rental) you are going to need 20-40 of these to replace your income. I have 10 of these and have systems in place but have 1-2 evictions a year and 3-4 big things that happen. Image if I had 30, just 3 x those numbers.

    Directly investing in a turnkey rental or small MFH is a good way to start to learn and build up the war chest to go into my scaleable investments such as private placement syndications. Whatever you do, try to be as close to the investment as possible. This is the fundamental problem I have with Wall Street who takes too much fees off the hard-working efforts of the middle class.

    If your net worth (income minus expenses) is under $200,000 or barely save $30,000, syndications are not for you. Stick with these Turnkey rentals despite what Gurus (who are trying to sell you their program) tell you for now. They have a little higher gains (a lot more volatility) but a syndicator who is willing to put you in a deal with more than 10-20% of your net worth is asking for trouble.

    1Reply
  • James MasottiPro Member
    Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
    6y

    @Blaine Brown - Perhaps once all this Corona craziness is over you could meet up with @Andy Hathaway to chat about what you're doing?

    Podcast Guest on Show #312
    1Reply
  • Blaine Brown
    Investor · Dover, DE · Member since 2016 · 35 posts · 23 votes
    6y

    Thanks @James Masotti.  Yes, @Andy Hathaway we can chat sometime about the area. First of all thank you for your service. Most of my properties are in Dover itself and they are all single family. You are exactly correct in the fact that there is not much in the multi-family market here. Regarding your niche question, I found myself worrying more about the deals and opportunities than staying focused on one niche. If the deal is in multi-family or commercial then so be it. In Dover the deals I have found are Single Family. Yes, $300/month while still pulling out every dollar you put into a house is doable in our market. But like anywhere else, finding the deal is the hardest part. As far as your bang for your buck question, my answer would be whichever target is the best deal. I'll take lower cash flow if it means a much higher ROI, especially if you get into the house for free (i.e. pull all of your money out in the refi). That's the best way to recycle your capital as @Adam Jason put it.  Just bear in mind that $300 over your mortgage is probably a break even scenario depending on the scope of your initial rehab.  Best of Luck to you!

    3Reply
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