7 years to 7 figures "middle play"

[Alan Feldman]

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. 

[Jon Reed]

Hello!

David's article you reference is more like a fun case study that you would put together for school. It is 100% possible but the plan is very susceptible early on since there will be things that happen, mistakes made, and unforeseen huge repairs that should have been caught during the home inspection. For example, one of my early buy and hold properties had a ban main sewer line... I was early on in investing and didn't think about paying $200 for a plumber to scope a sewer line before closing. That repair cost $3,000 and ate up most of that year's cash flow. This learning curve makes a person a better REI.

I would suggest taking the information from the article as a proof on concept and not an actual road map. The idea is to always keep your investing momentum going (trading up properties, buying new properties, flipping, whatever it takes). For example, you can turn $20,000 into a million with BRRRR even faster than 7 years and never have to sell a property.

What I am getting at is don't get bogged down in how that formula in that one paper can get you to grow your REI profile. Take the nuggets from it, combine it with a few others, figure out what works in your area/for you and just keep the momentum going.