My 5 year plan - what's yours?

[Alex M.]

There's a part of me that hopes that in writing this, it will somehow make it much more real - so here goes:

My five year plan in action (2014-2018) - what's yours?

• 2014
  • The plan: Fix credit (destroyed from divorce and stupidity of a youth misspent). Build a small amount of capital and buy first investment.  Learn. Keep full time job.
  • Results: Kept working my full time job. Credit rose from 500s to 700s (cost $$$s). Attempted to buy a small 4-unit MF with FHA. Failed. Hit a zoning impasse and backed out of the deal (lost $1200). Switched plan to working with my partner (my girlfriend and REALTOR) to purchase (house hack) a single family in her name with FHA at a great price ($63k). Put ~$35k into it and fully gut-rehabbed it (mostly ourselves) to make it an awesome home at ~$500/month mortgage. Estimated value now = $160-$180k. Placed offers on a number of other SFRs in the same neighborhood. Landed one a few weeks ago! Rehabbing as I type. Purchase price of $66k. Rehab budget of $10k. Anticipated rent of $1000-$1200. PITI of $400. Education = Took a class on wholesaling (cost = $400); read a lot of BP forum topics; listened to as many podcasts as I could. Attended a few local REIAs. Results = I now know how friggin little I know!!! ...but I was motivated to take action by hearing over and over that that is what you need to do. Thanks.

• 2015
  • The plan: Fill my first property with a (good) tenant. Buy 4 more properties - one approximately every 3 months, based on the following logic = always fill existing property with a tenant prior to moving on (I'm new, and this is my way of managing risk); build resources to purchase next property (I have pretty decent purchasing power right now through conventional lending with my current job, and I also have a private lender ready to loan on my next property, and I also get a quarterly commission check that provides a nice financial bump every 3 months); finding a property takes time, but it is worth it to find the right property in the neighborhoods I want to invest in, at the right price. Stretch goals for the year include: getting my partner started with a flip and providing support as needed - she's a REALTOR, works in property management, and is interested in flipping; begin a marketing campaign to test out wholesaling as a deal-generation strategy. Keep learning and keep working my job. Goal of 6 properties in total (including personal home)
• 2016
  • The plan: Ramp up my purchasing schedule - having built more resources, developed a level of comfort and understanding of the processes of deal finding, purchasing strategies, and other aspects of buy and hold investing. I aim to purchase 12 properties this year - approximately 1/month. Each of my properties should cash flow at a minimum of $100/door, with $300/door as an ideal. Some may be small multis. Keep learning and networking with other investors, and begin to explore more partnership-oriented investing. Have a wholesale and flipping process more firmly established (albeit still low-key) in order to keep a cash-generating engine in place. Goal of 18 homes in total by end of year.
• 2017
  • The plan: Really ramp up my purchasing schedule at this point to 3 properties a month. I am making a huge assumption that I will have figured out access to finances and have a pretty good team in place to be able to move at this pace by then. It's a lofty goal, but I believe achievable. I also am making assumptions that by this point, not all purchases will be one home at a time - I'd like to explore purchasing in bulk from retiring investors, or other strategies to get a number of properties at once. Obviously, this plan will include a significant focus on networking and education. I expect to still be working full time at my current job. By the end of 2017, I aim to have 56 cash flowing properties. 
• 2018
  • The plan: By now, I anticipate that I will have joined the ranks of those who have learned the game - I am sure there will be many mistakes along the way, but hopefully all recoverable. I plan to pace myself at around 1 property per week (still assuming some bulk purchases and some down times), for a total of 52 properties that year. 

• End result = 106 properties. $127,000 in cash flow per year - not enough for me to want to retire from my current job, but enough to know that I can if I need to, leading to the most important results: Personal Freedom; Time to spend with my kids!!!; Ability to travel; Long-term financial independence/stability/security; Happiness!

...now I just need to make it happen :)

(crude math below)

Year	# Properties	# new properties	Cash/door	Cash/month	Cash/year
1	2	2	$100	$200	$2,400
2	6	4	$100	$600	$7,200
3	18	12	$100	$1,800	$21,600
4	54	36	$100	$5,400	$64,800
5	106	52	$100	$10,600	$127,200

Avg equity/home	Net worth equity	Average price/home	Net Worth
$20,000	$40,000	$100,000	$200,000
$20,000	$120,000	$100,000	$600,000
$20,000	$360,000	$100,000	$1,800,000
$20,000	$1,080,000	$100,000	$5,400,000
$20,000	$2,120,000	$100,000	$10,600,000