All Forum Posts by: Nicholas Daniels

@Jay Hinrichs

What about acquiring the properties? Will a bank give me loans?

@Jay Hinrichs

You’re not answering the question though. I can put down 20% for the properties, that’s not over leveraged. I could even pay off the entire properties if that’s a better option. All I want is to know how to get the $4k/mo. I CAN live off 4K/mo easily. I’m a minimalist, I live off LESS than 10k A YEAR.

@Erik Whiting

I watch Dave Ramsey a lot! My plan will be to pay off the properties once I get to 4,000/mo cashflow! I want limited risk, because as you’ve alluded, it’s when we’re most confident and things are going right that we get hit the hardest.

I know you said wait 3 days, and I’m fine doing that. But I guess if I’m getting more personal the reason I want to retire (or at least have the option) is because I’d like to be able to help my parents when they get older. I’d also like the option to be able to help my future wife’s (I do want marriage probably not before 26 though) family as well.

I’m an only child, there’s nobody who can help my parents with medical bills, housing, etc other than me. I think they’ve got enough saved, but I’m not sure. I’d like to have security for them as well as myself.

The corporate cog part, believe me I know. I’ve been working since 16 (Wendy’s , McDonald’s, Kroger, pool chemical company). I know what it takes to make a product a reality. But I also know there’s more to life than work. Working for someone else doesn’t give me purpose. I’d rather work for myself than other people. I like having control of my vision and destiny. I want to own my own time. Working for other people is ultimately making their dream become a reality, not yours. I want to make my dreams come true, not some company who would fire me the second my productivity drops off.

@Erik Whiting I’m actually currently 20 years old and in college. It’s not necessarily that I want to retire, I just want the option.

It’s mainly just not having to be a corporate cog if I don’t want to. Having that flexibility is something I yearn for a lot.

My “why” would center around freedom and choice. I value my time. Maybe I’ll volunteer, travel, or maybe I’ll work and get an even greater cashflow.

I just want options!

A couple of things to get out of the way before you read the rest of my layout.

Yes: I can save 70% of my gross income. I’m a minimalist and I require very very little to survive.

No: I’m not planning on having a family at the moment. If I change my mind, I’ll adjust accordingly, but the goal still stands.

Yes: I'm aware real estate isn't completely passive. But I've found multiple deals in my neck of the woods (Michigan) that fit the required criteria of $300 cashflow per single family and $400 per duplex assuming a 7% vacancy, 5% repair l, 5% CAPEX, 10% PM.

My main question is this the best way to get this done? I've tried other formulas but this got me the closest. Am I underestimating the equity I can tap into? I only use 1 cash out refinance or HELOC in this plan. Any issues you see

Goal: $4000 cashflow by 26 years old:

Age 22:

Purchase a $150,000 duplex with a home possible (5% down loan). Investment requires $7500 (down payment), $4000 (closing costs), $3000 (repairs), $1000 (emergency fund), meaning a total investment of ~$15,500. You’ll live on one side of the duplex, rent the other, and have a roomate on your side in hopes of eliminating all housing expenses. Meaning you live for free. When you move out once you have 20% equity this should cashflow $400 ($200/unit).

Summary of Age 22:

Cashflow: $0/mo

Units: 2

Cash reserves: $~3000

Income: $50,000

Savings Rate: $35,000 (70%)

Credit score: 700+

Age 23: Once we have roughly $26,000 saved, we purchase a single family home for $100,000. This will cost us $20,000 (down payment), $2000 (closing costs), $3000 (repairs), $1000 (emergency fund) meaning a total investment of ~$26,000. This house should cashflow $300/mo and we’re assuming (of gross rents) 7% vacancy, 5% CAPEx, 5% repairs, 10% property management.

Summary of Age 23:

Cashflow: $300/mo

Units: 3

Cash reserves: $~12,000 (35,000+3,000-26,000)

Income: $50,000

Savings Rate: $35,000 (70%)

Credit score: 700+

Age 24:

Once we have roughly $26,000 saved, we purchase a single family home for $100,000. This will cost us $20,000 (down payment), $2000 (closing costs), $3000 (repairs), $1000 (emergency fund) meaning a total investment of ~$26,000. This house should cashflow $300/mo and we're assuming (of gross rents) 7% vacancy, 5% CAPEx, 5% repairs, 10% property management. You'll also use an FHA loan 3.5% down on a $180,000 duplex. This will cost $6,300 (down payment), $3000 (repairs), $5000 (closing costs), $1000 (emergency fund) for a total of $15,300. You should live on one size, rent the other, and have a roomate in your side as well. This should cashflow $400/mo when you leave. You'll rent out the previous duplex you occupied and that will start cash flowing $400/mo.

Summary of Age 24:

Cashflow: $1000/mo

Units: 6

Cash reserves: $~5,700 (12,000+35,000-26,000-15,300)

Income: $50,000

Savings Rate: $35,000 (70%)

Credit score: 700+

Age 25:

We purchase 2 single family homes for $100,000. In total both houses will cost $40,000 (down payment), $6000 (repairs), $4000 (closing costs), $2000 (emergency fund) in total this will cost $52,000. You should be able to afford it with your income roughly increasing with inflation and the cashflow from your other rentals. Each should cashflow $300/mo. You'll also use either a HELOC or a cash out refinance in order to purchase another single family with the same parameters as ones before.

Summary of Age 25:

Cashflow: $1900/mo

Units: 9

Cash reserves: $~2000

Income: $50,000

Savings Rate: $35,000 (70%)

Credit score: 700+

Age 26:

We purchase 2 single family homes for $100,000. In total both houses will cost $40,000 (down payment), $6000 (repairs), $4000 (closing costs), $2000 (emergency fund) in total this will cost $52,000. You should be able to afford it with your income roughly increasing with inflation and the cashflow from your other rentals. Each should cashflow $300/mo. We will also pay down our FHA loan and convert it to a conventional. Move out, rent both sides cashflow of $400/mo. You will purchase another duplex with another FHA or conventional loan.

Summary of Age 26:

Cashflow: $2900/mo

Units: 12

Cash reserves: $~0

Income: $50,000

Savings Rate: $35,000 (70%)

Credit score: 700+

Is my goal wrong? I want 6k/mo passive income. I know I can do it!

Okay. I think I'll have to do as many FHA loans as I can. A couple of househacks mixed in will make it more possible I believe!