Cashflow

[Fernando Mendez]

I have a couple questions for people who buy and hold for cashflow: First, for people seeking financial freedom (enough cashflow per month to cover expenses), how long would this normally take to achieve? Also how many properties on average would somebody like this own? I'm just starting out and intend to focus on multi family properties.

[Eric Tait]

There are soooo many variable to consider in your question and is very market specific. In multi family size and location are two huge variable. Stereotypically, if you buy in the "hood", lower income neighborhoods they will often times sell at higher caps rates (the rate of return on your money if you bought the property all cash). This creates higher cash flow per unit, but often times has higher management hassles and maintenance expenses (often because the property is older as well).

I actually generate a higher monthly cash flow per unit from my single family properties than I do with my multi family property (I am in Houston). But the economies of scale and having an onsite manager are helpful with my multi family in terms of convenience.

So I suggest that you figure out what types of property you want to own first, find a mentor who has been successful at that in your area or in an area where you want to invest, and offer to help them in some way so that they will walk you through one of their deals so you can see on a per unit basis what they are achieving per month, then reverse engineer your monthly expenses and that will let you know with that product type how many units you will need to own to achieve that amount.

I hope this helps some, because there are just too many variables about your question to be able to give you a "this many units" answer.