Starting Out
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated over 4 years ago, 07/16/2020
7 years to 7 figures "middle play"
I'm trying to figure out the "middle play" in this investment strategy. Let me try to explain what I mean by that.
Following the "7 years to 7 figures" formula that @Brandon Turner has laid out in his guide, basically states that, a $100k 4plex purchased for $80k with $20k down, effectively turns into a 6 figure annual return in year 8 with 7 figures in real estate value.
And adjusting to some more conservative numbers and assumptions for today, a $200k 4plex purchased for $160k with $32k down, effectively turns into a 6 figure return in year 8. So let's assume the formula still works no matter how you make the initial purchase.
How would someone invest new cash into this scenario, expecting the same return in 8 years? Do you just start over with the new cash? Could you somehow "recycle" your own 4plex(es) and 24plex instead of selling and purchasing again? Or is that inherently part of the strategy, using compounded interest, equity paydown, purchasing at the right price, rent profit savings, etc.?
Let's say I'm able to save up another downpayment for a 4plex in a year, or maybe 2 years. Can I inject that into the middle of this scenario as a "middle play" and expect the same return 8 years later? It doesn't seem like it can work that way. Also seems like a waste to have to start over with new properties if there is a way to inject cash and pull out the equity to use to get the same return after 8 years of 6 figures annually.