Here is my goal. How would YOU make it happen?

[Cooper B.]

Hi all,

I recently read a post on the BP blog about the importance of having a defined goal for your investment strategy. So, I thought I might share my goal and see what ideas other investors might have for accomplishing that goal in my situation.

So here is my goal. I would like to use about $150k cash to generate $3k in passive positive monthly cash flow.. The time frame for this goal is 12 months. This would cover our mortgage and student loan payment. After that, I will move on to bigger and better goals. I realize that this is a 24% COC return, so it may take me multiple "steps" to get to the $3k mark. Passive does not have to mean fully hands off, but let's say a few hours/week on average at most.

I am asking for ideas, but I should mention up front the things I am just not interested in for this goal. I like to flip, but that is not steady income nor is it passive. I am not interested in section 8 or other bad-part-of-town investing; it is just not for me. I do not want to wholesale. And, I do not want to invest out of my town (Birmingham, AL) although I might consider Atlanta or Nashville as I am familiar with them.

In addition to the cash, I have a fair amount of time to invest right now (approx 20 hours/week). I have good credit and good debt/income, but do not have any experience buying investment property on credit so I'm not sure what the banks will think of me. I am very handy and can do a lot of repairs/improvements myself, and I know some good contractors.

I am leaning heavily towards investing in a multifamily property in the $500k range. This would be a property to which I can add value and increase rents and/or occupancy quickly. Additionally, 1 building is easier to manage and account for than a bunch of SFHs.

Other strategies that I would consider would be buy/fix/rent SFH, private lending, small commercial property investing, storage units. Any other ideas are welcome.

There is so much experience here on BP, so I would love to get any critiques to my plan or advice about other strategies that I should consider keeping in mind the goal stated above, the current markets, my level of experience and knowledge, etc. Any advice at all is appreciated!

[J Scott]

Originally posted by Stephen Masek:

You are looking for a return greater than 20% before management, property taxes, and insurance. Are you joking? If any of us knew where such a thing existed, we'd have bought it.

There are plenty of these deals out there that will return these numbers -- you just need to dig them up and be willing to use leverage to bump up your returns.

I recently purchased a property for $36K, put in $4 in basic cosmetic work, refinanced at 80% LTV (5.5% amortized over 20 years), and rented it for $900/month. COC is over 32% assuming 50% expense ratio; total return is over 42% assuming accrued equity is factored in.

This is a nice house in a nice neighborhood where I'd happily let my wife and kids walk around outside in the middle of the night, and I come across these kinds of deals several times per year. They're not everywhere, but they definitely exist.

Not saying they're everywhere, but certainly where I live...