Newbie- Am I being realistic?

[Adam Shpall]

Hi Everyone!

I have been lurking on this site for a few weeks and am absolutely amazed by the wealth and quality of information available! Josh and Brandon have done an amazing job.

I have become interested in charting my own course. I understand there are a lot of different paths in real estate investing and I am still in the stage of deciding on a niche and strategy…as well as whether or not this is the right business for me.

I understand that real estate investing is not ‘get rich quick’ as many gurus market, but I am curious about the amount of time that needs to be invested and length of time to achieve ‘success’- I do understand that this varies based on capital to invest, region, effort, goals, etc.

Here is a hypothetical path I would consider:

Buy and hold strategy purchasing 2-4 unit multifamily properties at 20% below cost, investing $40k/year leveraging $160k of property. Purchase one multifamily each year for 4 years and 2 multifamily for the next 6 years. At the end of year 10, I would own 16 multifamily properties- approximately 64 units (assuming fourplexes).

I am figuring cash flow using Brandon Turner's criteria. Using the 2% rule, purchase properties yielding rents totaling $3200/mo (2% of $160k); with his 50% rule, my NOI should be $1600/mo; $719 is an approximation for debt service ($120k mortgage, 30-year loan, 6% interest) resulting in $881 cash flow/mo. - approximately $10k/year.

At the end of year 10, my 16 fourplexes would cash flow at $160k/yr.
My questions to the experienced investors are:

1. Is my plan realistic? With enough leg work and marketing, could I close on 1-2 multifamily properties/year with this set of criteria?

2. Does this strategy sound conservative and make business sense accounting for the ‘unknown’?

3. How much time per week would it take to find properties and manage these properties? (I understand this could vary based on region, marketing strategy, etc…) I have a full time career and family, so this is a consideration.

4. How much of my time/week should I expect if I hired a property management company? It seems that Brandon accounts for property management in his 50% rule.

I am looking forward to all the replies!

Best- Adam