Reaching $100,000 per year CASH FLOW

[Account Closed]

As with most of us investors, one of our big milestones would be to reach a passive income cash flow of a cool $100,000 a year. Only being on my first duplex and on the close verge of purchasing my next 2-4 unit MF, I'm wondering the timeframe of this goal is. What are some unforeseen challenges, road blocks, and obstacles a newer investor can't see as their starting up that will get in the way of this goal? It seems to me as long as you can put yourself into properties that can cash flow ~$10,000/year and acquire ten of them, you'll be at your ultimate goal. I understand that $10k/year deals are not easy to find. A typical time frame/strategy would be the following: -1 property / year over the next 10 years -minimum cash flow $10k/year -finance each property with as low of down payment as possible, leverage as much as possible From listening to hundreds of podcasts now and reading lots, I'm gathering that most people are not in properties that cash flow $10k/year. More so, it seems that a typical investment property, let's use duplex as an example, would cash flow only $300/mnth, or $3600/year. With this logic, you'd need around 27 duplexes to make this happen. Is it unrealistic to use the $10k/year cash flow logic with 10 total houses, or has this worked for people? How did you get to your $100,000/year cash flow?

[Justin Ericsson]

Zach,

All of our 2-flats in chicago generate $10k per year in passive income using conventional lender with around $50k down payment for 25% down payment requirement. To acquire 10 over time you will need $250k in cash plus verifiable income from a job to qualify for the loans. Assuming a 5 year roll up you need $150k in starting cash from your current job to buy 10 over 5 years. Here is how it works.

Year 1: buy 3 with $150k in savings that each generate $10k per year 

Year 3: buy 2 with $60k earned from first 3 purchased in year 1 (you will only need $60k vs $100k with creative financing). Now you have 5 generating $50k per year passive income 

Year 4: buy 2 with the $50k again creative financing available now you have 7 or $70k per year coming in

Year 5: buy 3 more with $70k again creative financing now you have 10 total and you reach your goal 

Creative financing is utilizing short term hard money with loan that rolls over to 30 years when rehab and leasing is done which lowers your out of pocket expense from $50k per 2-flat to $25k per building which gets you more buildings faster. The trick to all of this is finding the right properties like a market here in chicago that you can consistently buy the $10k per year in cash flow. I'm executing this exact strategy for several of my clients now so if you want to see how it works ring me. You don't have to buy in chicago with this strategy but you will have to search around for turnkey companies that have ample 2-flats to make your goal work. Hope this helps and happy hunting!