All Forum Posts by: Dan D.

I guess on a real estate investing forum, it's not a surprise that the majority would like the option to invest.

@Joe Splitrock I'm a big fan of index funds, but part of the risk of investing the $1,000,000 in index funds is what if Murphy's Law takes over and the timing of your investment is sour, and the market tanks by 40% the first year after you invested?  

You're not guaranteed the return, where with the $5,000 per month you are.  

(Part of it depends on whether you need to be using the money from day one, or if you're still able to work / receive other income).  If one could keep earning their regular income (and still want to keep working), the $1,000,000 seems like the only option because the additional cashflow probably isn't as needed. 

It partially depends on your age and lifestyle choices I would assume.

That's why some people buy annuities.  The piece of mind of seeing a check instead of managing money and "risking" things.

I assumed most would choose the $1,000,000 as a no-brainer.  

I'm curious for those who would opt for the $1,000,000, what monthly payment would you need the rest of your life to pass on the $1,000,000?

You have good equity, but not knowing what your LTV's are, it's hard to say which property will be your next best candidate to refinance with cash out. All of your properties were purchased around the same time and not that long ago, so you might have a little bit of a gap there.

The good thing is it looks like you have high valued properties.  Also, paying $1500 for a place to live while making $100k on a salary isn't too bad.  You should be able to save up a nice monthly amount for another down payment.

What's your desired end game?

What if the $5,000 a month was guaranteed to grow with inflation at 3% a year?  

Or what amount of monthly cash flow would you need then to take the guaranteed cash flow instead of $1,000,000?

Is it $10,000, $15,000, $30,000?

My point is that for some investors, growing their portfolio to get $5,000 a month of pure cashflow is their goal.

$5,000 cash flow (if you run 50% expenses) means gross rents of $10,000.  

To get rents of $10,000, that would be 10 properties netting $1,000 a month gross rents at an average price of $100,000 each if purchased for cash.

For those hoping to net $5,000 cash flow a month, why not take it without the headache of 10 properties and tenants?

This is a question that's been bubbling around recently.

My thought is on this form, the majority would take the $1,000,000 to buy multiple homes or multi-family complexes in the hopes of doing better.  Meanwhile, many of us are on here, trying to build the cash flow and security of having $5,000 cash flow a month.

Which would you choose and what factors or lifestyle choices would need to take place for you to choose the other option?

Buy something that cashflows in a growing market.

Keep living at home, or with roommate with super low rent.  Save that money for your next downpayment along with the $300 per month.

Spend the next couple years looking for deals.  Before you know it, you can refinance your first property and take cash out along with your savings from living at home and working full time, and presto...  you can buy house number 2.

Go a couple more years, find a nice significant other who agrees with your mindset.  Move in together into a cheap apartment (or both keep living at home).  Save her paycheck, your paycheck and the two rental houses cash flow to build up money for the third.  Buy the third.  Mix in one or two rehabs that turn you a nice $20k or $40k or 80k profit along the way, and next thing you know you can buy a house at age 35 for cash. (I think Brandon Turner has books on how to buy with little cash).

Your biggest income starting out is still your paycheck.  Don't fall into the trap of using most of it on your own over-sized home.  At worst, you should buy your first house as a rehab that you live in, then eventually roll it into a rental down the road.

The house you live in should be the worst of the houses you own.

All the deals I've done are deals that wouldn't pass the rules here on this forum, but I'm happy with each one (so far).

But my motivation is different than what the next random investor might want.