23 yr old making 30k a month advise!

[Noriel Martinez]

Hey everyone I am 23 years old making around 25-30k a month buying my first rental property in Philadelphia within 30 days any advise on how I should continue to expand my portfolio. I don't want to do "big" deals to start if anyone can could advise me or something it would be amazing. background on what I do with my income I save 85% of it monthly and out of that 85% I max out my Roth IRA and invest in stocks with a 3 fund portfolio also putting a lot into a high yield savings account would really appreciate any help to get my real estate portfolio big and profitable 1

[Randall Alan]

So I’m a rentals guy... have 41 of them.  Rentals do really well on taxes, as compared to flipping houses.      One thing to know is that “passive income” is sort of a misnomer unless you are hiring a property manager to manage your portfolio for you.  They will take 10% of your gross rents, which is more like 33% of your profits if you finance your properties.  So if you pay that price, real estate becomes more passive, but if you manage it yourself to maximize your profits, real estate is a pretty active endeavor... (coming from someone self-managing 40 rentals.) With that being said, it’s a pretty easy gig still!  We can run our business from a cell phone for 95% of what we need to do on a daily basis... but things break, tenants move out, you have to market to find new tenants, you have to research new deals, buildings need repairs and routine maintenance, etc. so know these things take time and effort. 

Flips make more fast money but have fewer tax write-offs and you usually pay higher taxes because they often get charged to you as earned income, versus a discounted capital gains rate.    Others will mention laundry mats, or self storage.  Those aren’t my field, so will defer to others on those.  

What I can tell you is that rentals have the capability to pretty much write off all the income you make on them.  On top of all your expenses, you get to write off about 3% In depreciation... (even though your assets are usually appreciating!). So that’s $30,000 per million dollars worth of real estate you own, which when combined with expenses the properties generate,  takes us to owing no taxes on over $200,000 in “passive” income a year. 

Really crunch the numbers to figure out what makes the most money for the least amount of  capital investment... that will be the sweet spot you want to target for your investing. 

Randy