HOW MUCH CASH DO YOU NEED TO BUY 10 PROPERTIES? ANSWER BELOW

[Danny Webber]

One of the large misconceptions in the REI space is that you will not need a lot of cash to acquire multiple properties. That is simply not true these days for a number of reasons. Certainly, there are exceptions to this rule. I myself have purchased numerous properties with little to no money down aside from closing costs. But..... there are always cash costs. These costs can be but are not limited: closing costs, holding costs, rehab costs, marketing costs, opportunity cost, etc...

Even using private/hard money and the BRRR method will almost always require some capital even if it is financed in the 1st or 2nd note in addition to cash out of pocket.

Below are some numbers I ran based on a 10 property portfolio acquired over 9 years assuming you purchased them in Texas and 3 out of the 10 were acquired using the BRRR method requiring less money out of pocket. I believe this is realistic in today's Central Texas Market.  

Q. How much cash or cash equivalent will I need to buy 10 properties in Central Texas assuming a 9 year acquisition time period? 

A.  +/- 400k based on my calculations + app 86k in reserves required by most lenders (6 months for each property)

Some alternatives to straight buy/hold 20% down purchasing as above include utilizing: 1031's, Non Qualified Loan Assumptions or other alternative acquisition strategies. 

Any and every strategy can work if applied at the right time in the right way if you are wanting to reduce the cash out of pocket. Your best bet in my opinion is to learn as many acquisition strategies as you can and when to use them.

Other items to consider: dti's, portfolio loans, equity stacking, partnerships, mortgage wraps + more

Danny

(excuse typos)