Every $25K Cash, Brings $10k Annually - Good Advice?

[Joshua Drummond]

Hey All,

First off this website has been a very big aid in networking, and building relationships. I am into my first month, and I couldn't be more impressed with a community such as this. After diving in, and picking up a few of my own income properties this year I've found myself saying "Every 25k Cash, Brings 10k Annually"(For homes in the 100k range). Again, this is very broad but I feel like its great advice for new investors who are not sure how much money they need to bring to the table, as well as not knowing how much they can expect per door annually. Maybe I was lucky with my first two homes, or maybe this is general advice that can be used more often. Thoughts?

My first home for example was ~89K, 4 bedroom 2 bath in Grand Rapids. After closing costs and 20% down, I was right around a 23.5K down payment. With my mortgage included in my monthly payment I am right around $680. My property is currently renting at 1650 per month. Which is about a net of around $11.5k annually.

Home 2, Kanas City - Purchase price was right around ~$107,000, closing costs and down payment was slightly higher this time around $25K. Still, I'm seeing through this year my net monthly income being around $800, which is right under $10K annually.

When I speak to new investors, I always share my personal income properties that I am fortunate to have. I always tell them my quote from above that every 25K Cash, Brings 10K annually per door. My homes have not needed much rehab, and for the most part were turnkey ready. If I was able to do this, I'm sure there are many out there with similar success. I like to try and make things simple for those who are just getting started. This would not be the case with homes of greater value when you move upwards of the 150-250k purchase home price. But for starters without much capital I feel this is a great, and fairly accurate 1 liner!

I look forward to building and growing relationships here on Bigger Pockets, the knowledge you can obtain here on a daily basis is endless. There are very smart people who love to educate others; I can’t wait to see what the future holds for not only myself but also others in our community.