All Forum Posts by: Tyler J.

@Tyler J. OK.  Based on your numbers, that means each house would need to generate over $550/month.  Does your market allow for that to happen?  If yes, then what would each of those properties cost you?  Keep in mind that your business plan is to own them all free and clear.

Do you understand what effect that has on the overall cost/income process...owning free and clear?  It means that you paid all cash for the entire cost of the house, and you are getting back $550/month.  In other words, if each property that brought you that $550/month cost you $80,000 all cash, you would have $80,000 in cash, all at once, in the beginning, going one way (the wrong way), and $550/month ($6,600/year) going the other way (the right way).

Now, if you plan on doing this within 10 years, it means you will be spending $1.6M on properties over a 10 year period, and receiving $6,600/year per property as you build this empire up.  It also means that your net cash flow would eventually be over $128k/month?  Is that the income level you are striving for?  I'm not critiquing the number...if you said your goal was to have $1M/month, that's find by me.  I'm just asking if you realize that was what the numbers you gave me generated?

 When I first started out, around some && years ago, I had a goal of...., uhhhh,....making it rich??  I had a mentor (one of many) that laughed at that statement.  He asked me to, "define rich".  My answer was, "own a lot of properties, and have enough income so I don't have to work".  His answer was (again laughing), "that's not a definition...that's a description".

Your goals, your financial goals, is your description of "righ/wealth", and they are based on your needs...your financial needs, at the time you set them.  Needs, and the goals that you strive for to achieve them, are always changing as life happens.

Without goals, based on your needs, you just spin your wheels.  Use the goals to work backwards (reverse engineer) to develop a plan of how to get there.  If you were presented with 2 properties, and you could only get one, which would you choose.  Here are your choices:

1 - Cost $50,000; ARV $80,000; Cash Flow $300/month, or....

2 - Cost $70,000; ARV $80,000; Cash Flow $750/month.

@Tyler J. 

  just remember as you get older your expense's will grow.. family etc.

as you make more money your taste's will change to,,, or normally they do... Kind of Human nature to treat yourself to things you may not think you would do today.

If your in a town and it sounds like you are where you can buy these low priced assets its one of the great things we can do with nothing more than a modicum of education and effort and desire and create some financial security... And at those price points I would also look at trying to buy some owner financed deals.. show the owner were a no interest short term loan's NPV  ( see J Scott's post on the topic) equals long term higher rate of return.. shoot for break even and even negative cash flow on those but know you will own them free and clear in 3 to 5 years.. your young enough to do this.. and as your own contract 0 interest notes pay off month by month your cash flow goes up exponentially and so does your net worth.. NO one can criticize you for owning RE free and clear..

Get 20 of these homes paid for over the next 10 years and there you go your 33.. with 10k a month net cash flow and no debt.. now that would be cool right?  and with no debt you can ride out any storm that may come your way.

So that's one way to look at it.

Say what you will, but this kid is crushing it. Congrats on your success so far, @Tyler J. 

While I do agree that you absolutely must outline in detail what your goals and end game are, you're off to a great start and that should be recognized. Conservatively, you could leverage your free and clear property at 50% and can easily buy multiple SFRs. My total cash out-of-pocket on the 4 rentals I bought this year totaled under $7k. Granted, you must maintain healthy reserves, but 50% will more than allow this for you and will not over leverage your free and clear property.

 That's not a plan Tyler...that's just kaos.  Sit down, put the numbers down on paper.  Work your way backwards based on what the rental market in your area will "give".  Figure out how many rentals you need based on what the market will "give".  That will give you an idea of what your goal number of properties is.

Adjust as you acquire...and your needs change.