All Forum Posts by: Sam Huang

Happy Thanksgiving to the BiggerPockets community!

I am looking for feedback on what to do next with my real-estate portfolio.

Current situation: 

- We have 5 rentals properties spread across Tulsa & Florida (9 doors)

- Equity is probably around ~600K and cash-flows ~2K/month.

- We have busy but well paying jobs and don't like to spend time in building sweat equity (BRRR, flip), so will take a slightly low maintenance approach and buy relatively newer properties in B class neighborhoods and use property management for day-to-day operations.

Goal:

- To get to $10K/month net profits with real-estate (today's currency) in 15 years when we plan to retire. We like being aggressive in stock market investing but more conservative in real-estate given that we plan to use that for cash-flow eventually.

The options are:
We expect to have $200K/year in taxable savings the next 5 years (barring a job loss)

- Pump all savings to the stock market & keep the current rental properties as-is and payoff the properties over the next 15 years using cash-flow for snowballing. If I assume a 2% rate of rental increase for 15 years and 50% rule for expense, we will have $7.5K/month net-profits in 15 years.

- Split 50:50 between real-estate & stock market. In the next 5 years, we can buy one property per year with 25% down (~100K), and perform the same operation of using cash-flow for paying off properties next 15 years and we will have $15K/month net-profit which hits our goal adjusted for inflation (assumed at 3%). We also don't like to be too heavily indexed in real-estate in our total net-worth.

What would you do? Feedback appreciated.

Family goals: 

We are a family of 4 (2 kids), living in CA. Our goal as a family is to move outside the US in the next 3-4 years and live half way around the world for the foreseeable future (5+ years). 

Financial goals:

Our current jobs provide for high-income but not a lot of time for active real-estate investing, so our strategy is long-term buy-and-hold with less headache properties. In today's dollar terms if we bring in $10K/month with real-estate cash-flow that would make us financially independent.

Current real-estate portfolio: 

- Own 4 properties, mostly duplexes in the state of Oklahoma.

 - Cashflow is ~2K/month and leverage is ~60% (equity being 40% of current value)

Accumulation goals:

In the next 2 years, our plan is to buy lots and have duplexes built by a builder we have existing relationship with that takes care of the whole process without too much of our involvement. 

- Buy 6 additional duplexes. Expect total cost to be ~350K per duplex and bring in 3-3.2K/month rent. We plan to leave 25-40% of equity in the deal. We are conservative investors since we will be out of the country eventually.

- These total 10 duplexes should bring in 30K gross rent per month and cash-flow about ~3-4K/month.

We don't plan to use any of the cash-flow for personal expenses and after keeping sufficient reserves, we will funnel the cash-flow to pay-off existing properties. By our estimate, it should take us about 10-12 years to payoff all the properties with this snowball approach. At the end of it, assuming a modest 2% appreciation in property-value and rents that should give us ~$38K/month in gross rents and $4.5M in paid-off homes. Using the 50% rule (taxes, insurance, Capex, maintenance, vacancies, property-management), that should give us ~19K/month in pre-tax profits that achieves our 10k/month financial goal after-tax and adjusting for inflation.

Our assumption is that building new-construction would reduce capex & maintenance the first few years. The duplexes will be in B-class mix of blue-collar and white-collar neighborhoods with good rental demand and during times of a recession they should hopefully hold their rental price & demand.

How does the plan sound? Feedback appreciated.

This models an investor I heard about on BiggerPockets called Chad Carson in the Small & Mighty Real-Estate investor.

We are real-estate investors from CA & trying to pick an OOS market with Tulsa (stable economy and future outlook, modest appreciation & reasonable cash-flow).

We heard from family/friends about new construction duplexes around the Tulsa metro targeting investors. We are long-term investors (10+ years) and plan to use the properties for cash-flow when we retire in 15+ years. We hope to have paid-off 5-10 small multi-family properties in the Tulsa area by retirement age that should supplement our 401K's and Social-Security income.

Area: West Tulsa (blue-collar neighborhood)

Property Price: $360K

Average rents: $3000-$3200 (duplex)

Has anyone heard/worked with Marc Ruiz in Tulsa? Are these numbers reasonable for Tulsa (0.9 for rent-to-price ratio and B class neighborhoods focussing on affordable housing) and the duplex should cash-flow about ~$200/door with 25-30% down.

For other investors in Tulsa, not targeting value-add (BRRRR, ...) - would you consider this a reasonable deal (don't need a home-run)?