Best way to scale ?

[Pejmahn Choupani]

Hey all, long time reader - first time poster. 

I started investing in RE in late 2020 and have slowly built up portfolio and have bought 4 SFR (LTR ) + 1 Multi-Family LTR (~2.5K NOI per month) in Central Texas - all were turnkey - I self manage and live in California. All are 10% CoC or higher.

I have decided that I need to acquire at least 1-2 units per year and gradually build up - and eventually will have equity to deploy into other investments. I understand one way to go faster is to value add / take the BRRR route of course...

I have a long-term goal of achieving 20K passive income per month - and I understand this is considered $2M invested at a 10% CoC return. What are your thoughts on the most effective way to scale a portfolio?

[Dan M.]

BRRRR is the fastest but risky if your not 100% with your numbers, and the appraiser feels the same way. Its alot of work to manage contractors throughout the renovation process but it can be rewarding. You built a decent portfolio already, keep snowballing your income into more properties. If you saved that 2.5k per month, plus whatever your earning - living expenses you can buy another property in x amount of months depending on the purchase price.

You can take a 401k loan if you have one.

You can take out a HELOC if you own your primary residence and have equity.

You can cash out refinance if you own your primary and have equity.

You could partner up with someone who wants to make passive income. You do all the work and get some equity ( or 100% whatever you negotiate) in exchange.

You could look for seller financed deals and negotiate to get in for less than the banks requirement of 20=25% down with a bunch of closing fees. 

I personally was very frugal and saved as much money as I could any way I could to get to the next downpayment, 401k loans, home equity, credit cards at 0%, I had a second job when I was growing and put all that money aside.