Rough business plan review

[Jonathan Hoyt]

My business partner and I are putting together our business plan and I wanted to share the particulars and hopefully get some feedback. We started with these goals:

1. Business partner wants to retire in ~6 years.
2. I want to retire in ~20 years.
3. We want to have $120k in cash flow by year 6 and $600k in cash flow by year 20.
4. After buying and improving each business or property we want to outsource management.

With these goals in mind we came up with a plan to invest $220k per year for the next 5 years ($1.1m total excluding capex), purchasing one passive income business (apartment building, storage units, ???) per year that cash flow (NOI - debt service) at around $24,000 per year. Ideally we would purchase for $850k with 20% down ($680k loan, $170 down payment) and then put in ~$50k in improvements to force appreciation and start with $220-320k in equity (targeting $1m ARV). As an example, for a 20 unit apartment building we would need to hit $100 profit per door per month after debt service to hit our yearly cash flow goal.

After purchasing the fifth business (year 6) my business partner would retire and keep their half of the yearly profit (~$60k) and I would switch from adding new businesses to using the snowball strategy to pay down the debt on the 5 businesses. At this point my partner's equity would get a little smaller each month compared to mine as I put all my profits towards the faster pay down but they would still be making enough to live comfortably until the 1st property was completely payed off in year 10 and cash flow increased from ~$120k to ~$228k. All 5 businesses would be payed off by the end of year 19 with an ideal yearly cash flow of $660k and ~$5m equity in real estate. Our total capital contributions over the 20 years would be about $2.6m.

So my first question is, can you find businesses (like apartment buildings) in the $800k-$1m price range that cash flow $24k per year after debt service and > $120k per year after the debt is gone? My second question is, has anyone tried this strategy and succeeded or failed?

A slight twist on this whole plan is we're only looking for businesses to purchase in Opportunity Zones (https://eig.org/opportunityzones) so that we can use capital from the stock market and defer the capital gains from that capital until 2026.

Thank you for your time!