Financial Plan to $100K yr income

[Anna Shaver]

This is uncharted territory for me.  Am I on the right track?

Goal: Generate $100k a year net income from rental real estate.
Background: Currently own a few SFH's and a condo from early 90's
I have long term W2 income, current ratios are good, and good credit.
Plan: 50 units @$200 minimum net per door to account for vacancies.

$50K per unit at maybe 60% occupancy so maybe 85 units total. The cap rates are determined based on actual occupancy and gross rents so this would be paying for the 51 or so units right?

Thinking maybe about $2.5 million?? if 5% down $125K with seller carrying a second for the other 15% and getting a Freddie Mac Small Balance Loan program.. not sure if a seller second would be allowed.

What might this look like..
Prefer A properties but understand this might not be realistic without starting with a huge amount of capital. B properties would also be ok (not sure if this can be done).

I have worked way too hard to be willing to allow for too much risk of the gains we have made over time and money we have saved. I would like to factor in a realistic amount of money that would be needed in reserves to prevent a problem with a property resulting in foreclosure because I didn’t have either enough money set aside or don’t have access to the funds needed to do the repairs. How much would be recommended? I would like problems to be bumps, not the end game.

I have a paid off property worth $270K and I prefer not to sell it, but to leverage it in some way. I understand a blanket loan requires 5 properties and a minimum loan size of $500K. A concern I have with a blanket loan is the higher interest rates and lack of flexibility, in addition to the prepayment penalties. Another concern is the short term loan length of 5-10 years with rates at a historic lows. I knew someone who lost their home in the 80’s when rates where in double digits. I don’t know if this will happen again but I know it has happened in the past.

I would like something I can hold long term that will be solid.

I also have about 3 more years to draw on a unused equity line of $45K and then 10 years to pay it off.

It would probably be best if it is a property(s) with upside potential i.e.. under market rents due to outdated kitchens/baths or older landlord who has allowed a property to be in some disrepair (not to bad though). Or maybe it is in a good area but due to mismanagement has vacancies that can be solved.

Maybe get a property(s) with seller financing or 10-15% as a second to a commercial loan or a cross collateralized loan. Even if I could put more down I am not sure that it would be a good idea because it might be better to have the money in a reserves account.

I have great 30 year fixed rates on my other properties and want to keep them separate.

I would rater develop a solid game plan and get my ducks in a row than jump into something that I will regret. With a plan I will know what I need to shoot for and start determining the steps I need to take.

I understand there are more details and variables but wanted to take a shot at this and see what people think.. Crazy or possible?