Rental Portfolio Goal and Structure Feedback

[Greg P.]

Hi All!

I'm interested in getting your feedback on my objectives and how I plan to achieve them.  I'll be terse.

Goal: Generate inflation adjusted free cashflow of $8k per month in 10 years. Minimum goal is $5k per month in 15 years.

Portfolio Design: Acquire multiple properties that generate rents high enough to amortize loans in 10-15 years and cover all costs.

Example: $100k 3/2 property; PITI $733; Allowances $196 ==> Minimum Rent $903 (15yr amortization) Target Rent $1122 (10yr amortization). I am finding properties that meet these requirements. To meet the optimal target ($8k/10yrs) I would need about 7 of these properties.

I'm looking forward to your feedback and creative ideas based on your experience.  

Thanks!

G

[Rob Anderson]

Originally posted by @Greg P.:

Originally posted by @Rob Anderson:

 Hate to be a debbie downer but not sure the numbers make sense.  733 piti on 100k 15yr am seems a bit low.  What are you factoring for interest rate? Down payment? 

Thanks for the quick response!  :)

The PITI is confirmed via my mortgage lender for a specific property I'm considering. 20% down using a 15 year fixed rate of 3.75.

I'm allocating 10% for maintenance and 7% vacancy.  The numbers for this particular property are low because the previous owner occupant replaced the roof, HVAC and flooring all within the last 5 years.  Vacancy is low because of the location (visible and central).  I will self manage.

 Ok, That 20% down and VERY good fixed rate. now I can see the 733... 3.75 on a non-occupied investment property. I need to know your lender!!! When purchasing a property and crunching numbers I tend to run a little bit of a different style. I like to know worse case scenario. I dont plan, and never have had a 10% Vacancy but thats what i Allocate. I manage my own as well right now, but, if i purchase enough and it becomes overwhelming i want to be in a spot i can turn them over and still be in the black. @brandon turner and @Joshua Dorkin talk about this in a podcast. I believe brandon said he wishes he would have implemented this earlier on in his career. The numbers overall look pretty good. If i were you i would look at anticipating higher cap exp even if you believe the property is in good condition, but just my 2cents. Best of luck & keep us posted!!