How would you build up to $50k/yr in cashflow in 10 years?

Question

I'm 24 now. Before I turn 35, our family's goal is to have $50k a year in cashflow from buy and hold real estate.

I'm not asking for you to make me a step by step plan. I'm more so curious of what your individual strategy would be.

Where would you invest? What would you invest in? How much money are you using to get there? What's your schedule look like?

Thanks so much in advance. I greatly appreciate so many of you sharing your knowledge and experience.

Mike Mocek · Answer

Hey @Zach Simpson This is a great question, and an even better goal! I think it just depends on where you are looking, what type of properties you want to invest in etc. I broke down the $50,000 by month, which is $4,166.67 a month in income. If I take that and divide it amongst the average rental home ($700), that is roughly 6 properties you would need to gather on a yearly basis, this is extremely doable in Toledo however, if you go somewhere else, lets say California, that may only be 2 properties.

I own 4 properties in Tampa, FL, Each unit brings in $1,900 to $2,100 a month in rent. Each house is a new build, so there is a lot going on with them however, these two houses would meet what you would need to increase and a great start (For example).

Some of the questions you should be asking yourself would be, where do YOU want to invest? Also need to consider Management Fees, Maintenance Costs, Insurance costs etc. In Toledo, the average rental is around $25,000 to $30,000 (More or less depending on the neighborhood). A yearly insurance number is around $450 a month, with a 10% maintenance, so after everything is said and done, your cash flow can be roughly $522.50 per property. It really does depend on where you go, what you want, and what kind of financing and funds you are working with :)

Paul Smythe · Answer

To me, the better question would be "How did you build up to $50k/yr in cashflow in 10 years?"

That's a lot more interesting to me. Everyone is going to push their current strategy even if it hasn't gotten them to $50k yet. Let's hear from those who have.

Jon Schwartz · Answer

Zach,

I'd invest in a high appreciation/low cashflow market. I'm pursuing a similar goal, and I'm doing so where I live in Los Angeles because the appreciation gains, forced and organic, are really incredible.

Caveat #1: I'm not trying to turn BRRRRing properties into a full-time job. If you interested in being very hands-on, you might consider BRRRRing properties in cashflowing markets. That snowball moves slow, but with a lot of elbow grease, you'll have a nice portfolio in a decade.

Caveat #2: I don't need any of that cashflow in the meantime. I'm happy with an investment that spits of very little cashflow so long as I'm confident that it's in a gentrifying, appreciating part of town. If you're a similar situation -- ie, you have a career that you don't mind and it pays the bills well -- sacrificing cashflow for appreciation will serve you better in the long term.

Good luck!

Best,

Jon

Joe Villeneuve · Answer

There are so many ways to do this, and much faster, that it would be impossible to really answer.  The underlying basis for deciding which of the many ways to go, depends on many, many personal factors as well as the markets and strategies you would invest in and use at the specific timeline in your overall REI plan.

Besides, the way I would do it, the way anyone else would do it, has nothing to do with the way you should do it.

Michael P. · Answer

Generally speaking you could start now and build over time, say buying $45k houses in Toledo over and over until you reach your goal, or just be a frugal professional saver from 24-35 then at 35 you’ll be sitting on enough cash to use as a down payment on one apartment complex that will accomplish your goal in one purchase.

You choose the market and purchase price increment that works best for you.

Greg Koszkul · Answer

If someone wants to achieve these numbers in a short time span (i.e less than 10 years), would it be potentially more feasible to partner with someone who has similar investing goals?

Zach Simpson · Answer

@Paul Smythe That's a phenomenal point. I like that. Have you done it, by chance?

How would you build up to $50k/yr in cashflow in 10 years?

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