How to get $6000 per month positive cash flow

Question

Happy new  year , everyone.  I am in the process of making my 5 year goal—to find commercial real estats which will generate $6000 per month positive cash flow. I am very new to commerical real estate investments, except that of multi apartments investment. Very appreciated suggestions about what kind of commerical real estates should I to consider. I am in BC canada and have some connections with Seattle areas. Thank you very much in advance.

Matthew Baltzell · Answer

@Joyce Orange good job on setting a 5 year goal, it's important to have. I believe you can reach $6k, but you will definitely have to pick one industry to start.

Different kinds of CRE:

• Retail-Shops, malls, strip malls. 
• Hotels and resorts- Full Service, Limited Service, and extended stay hotels. 
• MFH- Class A, B, C, D (Section 8). Turn key, Value Add, Reposition, etc. 
• Land- Development- Green field, Infill land, brown field land
• Offices- CBD and suburban office buildings. 
• Warehouses- Storage Units, Bulk warehouse, heavy machinery, etc.

There are many to choose from. Do any of these interest you?

Pick one which you particularly like and apply your strengths to that field.

Greg Dickerson · Answer

Joyce,

I would not start out with a 5 year plan. That does not invite a sense of urgency to get deals done. I would start with a goal to buy your first property. Thats the hardest one and it only takes one to generate $6k or more per month. Once you get that first deal done you will gain confidence and momentum and everything snowballs from there.

Henri Meli · Answer

@Joyce Orange .

1. Understand how to analyze a commercial real estate deal.

2. Reach out to brokers or get on websites where you can retrieve deals

3. Start analyzing real deals and focus on the cashflow

Account Closed · Answer

For tools I just built my own spreadsheets to plug numbers into.  Took time but it made me understand the numbers inside and out to make it work.

Account Closed · Answer

Joyce,

I agree with @greg D about the 5 Year is a nice end result, but you need to break it down. Find out what you want to make money doing, multi, triple Net, etc... then figure out what your minimum cash flow for each one of those is and then figure a way to find those deals and fund them.

That’s a huge broad stroke for what has to happen. But you need a weekly, monthly, and annual  goals to keep you in track. Like it could be weekly to analyze 20 deals (just randomly pick them to get good at understanding the numbers). Then maybe monthly force yourself to write X amount of offers at a price that works for your goal. You may get turned down 99 out of a 100 times but you only need that one.

I try and analyze 2-3 deals a day just for the practice.

Alex Cons · Answer

Hi Joyce,

A lot of good advice has already been shared so I will take this in a different direction.

The approach I would take if I were you is to make this a math based problem to solve. You have your starting investment amount, you have your ending expected cashflow, and you have a timeframe of 5 yrs.

You can figure out in 5 yrs from now what the total value of your portfolio needs to be in order to generate a $6,000 per month positive cashflow based off the projected cap rate of the asset class you are investing in. Take for example a mobile home park, in Northern BC you can expect a cap rate of 6.5%-8%, assuming a loan to value ratio of 65% and mortgage interest rate of 5% on a 20 yr amortization, you can run those numbers to find out the value of a park you would need to give you positive $6,000/month.

Then work your way back to today to see how you can afford to get to that portfolio size giving your current starting capital. This will provide you with actionable steps.

A great book to read on planning for your goals is called “The One Thing” by Gary Kheler.

I would suggest to specialize in one asset category and in a smaller geographic area so you are familiar with the ins and outs on how those markets operate.

Alex

Scott Morongell · Answer

I can only speak for multifamily syndication. It is the only thing I do in real estate. There are many coaches/mentors in this space. With their programs they typically give you a model/template for underwriting. As you progress you will find yourself tweaking the template or making your own all together.

Erich Bubbel · Answer

@mathewbaltzell has a great point.

With commercial real estate in most cases the income on each property will dictate a majority of what the bank will lend on.

For example. I handle multi-family and if a 5unit and up property is underperforming then it could take a large amount for a down payment to buy a property.

The best way to start is to come up with the amount of money you would be interested in investing and call a broker in each type of CRE (retail, multifamily, etc) in the market you prefer so they can start sending you deals. That will ultimately allow you to firm up you plan.

Erich

Joyce Orange · Answer

Thank you so much @Matthew Baltzell  @Erich Bubbel @Henri Meli @Quito Keutla @Greg Dickerson @Scott Morongell !! Very good points!

I has some experience in residential properties investment so far, other than that no clues how other commerical industries make money. According to my experience, hotels, motels, office buildings, Mobil parks, warehouses,etc are within my consideration. But I heard that retail stores are good choices too.  I am wondering where and how I am able to find the information on what’s the profits of the these industries. Are there any classes for this?

I would like tofind tools which teach me how to analyze a commerical real estate, as Henri suggested. Any recommendations about the analysis tool?

I understand the real estate investment is a journey. I am so appreciated the help from you.

Scott Morongell · Answer

@Joyce Orange if your looking for a passive approach invest 1M via syndication. Many deals are averaging 7-8% CoC per year. That will give you around 75k per year in passive income.

How to get $6000 per month positive cash flow

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