Why Everyone Needs 100 Units

My long term goal to start off 2022 is the distant goal of 100 units. 100 units is the number where I believe I will feel satisfied in my efforts as an investor. It is also the number that I believe you can truly retire carelessly wealthy, passively. 

What's so Special About 100? 

Should we shoot for a number too high, for example 500 units, we'd have to take into account the time it would take to actually achieve this goal. 500 units could take the average investor more than 30 years to achieve. I will probably play the very fun game of REI until the day I die, however I wanted a number where I could consciously know that if I stopped investing or was not able to invest, that my portfolio would passively pay me over $100,000 yearly. Anything more than that is a bonus in my eyes. 

I decided that if I could at least purchase 6 units a year for the next 15 years, that I would be pretty darn close to 100 units. 15 years seemed like a reasonable minimum standard, since I would be close to 35 years old in 15 years. To me, 35 isn't a bad age to have the option for complete wealthy retirement. 

Expected Cash Flow from 100 Units?

In my market, Pittsburgh PA, the typical cashflow per unit is anywhere from $100 on the low end to $200 on the high end. Sometimes you'll get lucky and have a property near the $300 mark. 

If you were to take 100 units x $100 a month, the equation would equal $10,000 a month of positive cashflow ($120,000 per year.) 

Should you take $200 per unit, your cash flow would result in $20,000 a month of positive cashflow ($240,000 per year.)

Both of these numbers are incredible, because don't forget that cashflow is the profit of a unit after all expenses are paid. This includes utilities, reserves and property management. If you hire a great property manager, the most work you'd have to do for $120,000-$240,000 a year is logging into your bank account to see how much money you made that month. 

Don't Forget About Loan Pay-Down and Appreciation 

The best part about this strategy is the fact that your cashflow doesn't forever stay at that $100-$200 mark. After your tenants have paid off the mortgage on your property, your mortgage payment expense obviously disappears. The mortgage payment is now added back in your cashflow profits. For example, if your mortgage was $700/m and your cashflow was $100/m, after the loan is paid off to zero (typically after 20 years), your cashflow is now $800. 

Just Imagine 30 - 40 years from now, taking your $200,000 yearly cashflow and multiplying it some where around 7 times due to loan pay-down. 

This isn't even taking into account the appreciation of rent. Say you raise the rent every two years $50. We are talking millions of passive income one day down the line, that will pass down for generations through your family. All because of just 100 units. 

Equity Leverage 

Here's something to consider that is apart of my current plan. Like I said, I plan on investing in real estate until the day I die. I just really enjoy the process. One other key component in the '100 unit' strategy is the fact that you will have built a lot of equity over the years. 

Say 100 units works out to be about 25 properties valued at roughly $300,000 each. Should all mortgages be paid off, your 100 unit portfolio should be worth around $7.5 million. Imagine the credit lines and private loans you could collateralize off of the equity of your portfolio. With enough knowledge, you should be able to double your portfolio every year with that kind of financial backing. 

This actually come into play much sooner than just when you hit 100 units. The more properties you have the more this section thrives. Not only will you have more capital with each property that you add to your portfolio, you'll also gain priceless knowledge, skills and credibility with lenders, deal finders and other investors. Long story short, the longer you're in the game the easier it get just like anything else. You're 20th unit is a lot easier than your 1st. You're 300th unit is a lot easier than your 100th. 

Conclusion

The best advice I could give you is to start now and to stop waiting for everything to be perfect to take action. I can't tell you how many investors tell me that they wish they would've started sooner. The best asset to an investor is time. What's the worst case scenario? You miss your mark of 100 units in 15 years by half and now you only are making $60,000/year in passive income? I'll take it if you don't want it!