Strategy for a Corporate Paid 27-Year Old (HELP)

[Cole Agner]

Any and all suggestions are welcome, but please don't be an asshat and troll my post, because I'm looking for some real advice...

I'm 27, live in Tampa, FL, have a great corporate paying job that earns about $100k/year, and would like to passively earn a total of $200k by year 15 (Year 1 is 2021) in order to put a down payment on a dream home. I did some really quick (and probably bad) math, and estimated that if I found 1 investment vehicle every 2 years and received a positive cash flow of $3600/year on each new investment, then I'd come out where I'd like to be in between years 13 & 14 while owning 7 properties and passively making $25k/year.

My strategy needs A TON of tweaking, but my initial thoughts are to invest in a multifamily house with my buddy who owns 4 properties so I can get my feet wet, learn the basics, and then branch out to other multifamily houses over the next 5 years. Then, I'd start considering small & large apartments around year 10. The idea is to buy and hold all of these.

Now please be honest with me. Is this realistic? One of my biggest things today is that I want these investments to require as little oversight as possible, at least for the forseeable future, so I that can continue building upon my career without letting this hinder my professional goals, which are fairly ambitious. So in hindsight, if any of this looks screwed from the get-go, then I'm all ears to suggestions and providing more information if needed.

Thanks a ton

[Randall Alan]

I think you are under-selling the possibilities you have.  Given your time horizon (15 years), if you assume market appreciation of say 3% a year, a $75k property will appreciate $2250 a year (neglecting compounding).  That’s $33,000 in appreciation in 15 years on one (or each property you own).  Add another $2,000 in profit you will make (even property managed) and that is another $30,000 you would have made on each property in that time as well.  So in 15 years, you are talking $63,000 per (Cheap) property you buy.

While good in theory, the  problem with you trying to forecast that far is that your objectives and situations  will likely shift a dozen times along the way.  Higher income, new opportunities, etc.  You don’t need 200,000 because now your dream home now requires $400,000 (don’t forget it’s appreciating as well too).  The expectation that you would save all that money all that time is probably a bit unrealistic as well in my estimation (no offense intended whatsoever)... just that you will (or should) find a better interim purpose for the money. 

I can’t overstate the importance of “buying right”... meaning finding a property that you pick up under value.  We found one for $44,000 that probably should have been $80,000 through a probate sale.  It rents for the same price as an $80,000 property and cash flows $700 a month, on a total of a $50,000 investment.  That’s $8,400 a year, or nearly 17% cash on cash return).  They don’t come along often, but you will speed your process immensely when you find those types of properties.  ($8,400 x 15 years is $126,000 in rent alone)... neglecting rent increases, etc).

The take away is that good money can be made in real estate, and until you get into it, you won’t enjoy the spoils, however you ultimately use them.

Otherwise, try to live below your means and use your savings to get into real estate.   Once you do, your experience will guide your journey.

Randy