5k monthly cashflow goal in 2 years. Can anyone give me guidance?

Question

Hi everyone I am Jordan and I’m 20 years old. I have read tons of bigger pockets books, as well as others for the past couple of years. I have one rental property right now that cash flows $300 a month.

I have a cash flow goal of $5000 but I’m in a unique situation. I am blessed to come from a family that is well off. I have family that’s owns apartment complexes, and other commercial properties. My dad and I have talked and he will finance all of my deals but they have to be under his criteria, which are have to be in my hometown or the small towns around us. My hometown has a population of 60k and the 3 towns near us are much smaller.

That’s pretty much his only stipulation. So in your opinion should I just BRRRR SFH, or look strictly for bigger MFH? I personally want to do some STR, but my dad is old school and not comfortable with that. So my plan is to get some more properties to get his confidence in me up, plus my own capital so that I can.

I look forward to hearing your opinion on what can help me get to my goal in 2 years!

Mike Dymski · Answer

You will get to 5k per month a lot faster with bigger MFH than with SFH.

See if he will let you put one or more MFH "test" units on STR.  That's a low risk compromise.

Gary Faraon · Answer

@Jordan Burginton

Reverse engineer 5k a month. Tools in the tool box. Commercials properties, lease options, single fam, multi f, storage unit, whole life insurance (be your own bank), small business(ice cream shop), airbnb,etc...

Paul Moore · Answer

Hi @Jordan Burginton. I’d recommend getting your own financing as soon as possible and doing STR.  For example, there are places where AirBnB cabins clear over $5,000/month. You may be able to put down as little as ~ $100k to get into one of those.

There are also hard money opportunities that would pay you quite well.  If your kind father would fund you, you could arbitrage the interest rate and perhaps hit your goal with about $1mm average loaned out. If your father would not do that there are actually lenders who can loan you money at very low rates and help you qualify local hard money deals. One of them (ILS) had a booth at the Biggerpockets conference in October.  Happy Investing!

Jonathan R McLaughlin · Answer

finance all your deals, how so? What are the terms? Really, really good idea not to make assumptions when dealing with family...or anyone for that matter. Interest rate? Are the down payments yours and he is just the bank? What are the actual ownership terms? You said his only criteria is the location, but then you said he isn't "comfortable" with short term rentals so there is another criteria. Please write everything down and think about what you want. Do you want to be a junior partner, his employee, an equal?

You bought one property that is doing well without him, can you keep that up? Bringing your own relationships to the table is always good.

Tiffany Youngren · Answer

@Jordan Burginton this is awesome.

1. What are his finance terms?

- Interest Rate

- Appraisal Requirement

- Inspection Requirement

- Amortization # of Years

- Does he want early payoff fees?

- Is he strictly a debt investor, or equity?

- Can you buy “value add”/fixers to repair and rent for more $?

2. Are you familiar with finding off-market properties? Do you have a strategy for finding/evaluating projects?

3. How much do you know about your market?

- Jobs

- Vacancy Rate

- Rents

- Cap Rates

- Rental Management Fees

Assuming that you have a handle on all that, if you are new to investing I usually recommend

1. Find out the info above

2. Decide property type: I personally prefer when people start out with  smaller MFRs. It’s usually (generally) easier to get more return on your money.

3. Look at and analyze on market properties. Have a mentor look at your analyses and talk you through them. Go through them with your dad for feedback - you’ll likely learn a lot more about his preferences. And this is great practice.

4. Look up off-market properties and repeat step 3.

5. Make some offers!

6. Start a spreadsheet to track the take-home Cashflow for the properties you have in mind, and make a column for the properties you own as you begin to acquire them. This way you can see how close your pipeline is to reaching your goal and should encourage you to continue to evaluate properties.

7. Join a really good REI group. The power of having a REI friend group can be underestimated.

ANOTHER OPTION is to buy into apartment syndications.

RE: STR >>

Yes, it is much better to start with the types of investments your family is comfortable with. Always.

As you build their confidence, hopefully you’ll also introduce smaller nuances they hadn’t thought of along the way, and they’ll see your success, so you’ll build that reuse to migrate to other investment types like STR.

* You could also introduce them to STR more comfortably by renting your traditional rentals out to STR arbitragers. That’s how we will be easing into STR.

* One other idea is to rent out to traveling nurses. This is especially good communities that are resistant to STR because (1) nurses usually rent longer than the STR rules restrict; (2) the return is usually better because they pay more for furnished units.

Joe S. · Answer

What are the terms your father is expecting? Does he want his original capital back as soon as possible?

5k monthly cashflow goal in 2 years. Can anyone give me guidance?

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