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Updated almost 8 years ago on . Most recent reply
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What to invest in to achieve a specific monthly income goal?
My goal is to make net after-tax (take-home) $10,000 monthly from renting out properties. My goal is to achieve that income level by the 10th year of my investment plan. During those 10 years, all positive cash flows and any funds from property sales will be re-invested in the business (e.g. re-invest in property, accelerate mortgage repayments, put in an escrow to raise interest etc.). The strategy is to buy-and-hold and/or buy-fix-hold.
I'm trying to figure out the math of this plan, working it backwards from my goal, and using simple (but smart) investment benchmarks, to guide and determine what is it I need to buy (as expressed in property value, NOIs, IRRs, PVs...) over the course of the 10 years.
There's a ton of great literature that teaches you how to analyze a particular property. I have yet to come across literature that helps you build a plan to achieve an income goal over time. This, of course, can be complex given the many possible scenarios and opportunities: you can hold for long term, hold until peak IRR, do 1031 exchanges or choosing to pay the tax etc. Still, as with any business plan, one must be able to set guidelines. For example the math could point out to: you need to buy properties worth ~$250,000 every year for 10 years, having capitalization rates of no less than 7%, and ensure that each property has a positive cash-flow after tax.
Any advice would be appreciated. I'm going round in circles :)