I played with several options on small loans in a $260 million dollar portfolio and 12% seemed like the magic number.  

@Russell BrazilOnce I get to 10,000 posts on the dot I will be sure to update everyone on my progress since I made this post when I was at 7,000 posts.In regards to finding time to do actual real estate work we can't forget that this IS actual real estate work.The amount of business I have done that I can directly correlate back to this site is staggering.The site is not magic though, you have to work it the correct way.

It would be magic for an agent to have more knowledge of a property than a) a home inspector and b) FEMA! 

My favorites are:Rich Dad, Poor Dad and the 3 sequals (also the game is great)Buy,Rent and Sell by Robert Irwin5 Magic Paths to making a fortune in RE by James LumleyI liked Andy Heller's philosophy of doing RE as well.

Since we are wanting to start getting into multi family units...what is the different thing that happens once you hit that magical 5 unit mark?  

For credit score, our recommendation is above 560 for an approval, but I do not think there is a magic number.

* option 1: hold cash    * this is just cumulative cashflow that you save up (add up cashflow every month)    * counting cash balances in net worth, this increases net worth by amount of cash saved every month (call it x)  * option 2: throw cash flow at principal on mortgage    * this decreases your liabilities (mortgage balance) by the exact amount that you would have increased your net worth by holding cash    * decreasing liabilities by x is same as increasing net worth by x, since net worth = assets - liabilities      * so at this point, we are in same spot (net-worth wise) as option 1      * however at this point, you have a lower outstanding loan balance which means that you will accrue less interest in the next month        * interest is technically a liability, even though it is a good liability in the inflationary environment that we have now      * therefore, above and beyond option 1, we are also decreasing our liability every month (monthly mortgage payment will stay thesame contractually, but mortgage will be paid off faster so there will be many terms of a $0 payment)        * decreasing a liability by y increases your net worth by y, therefore option 2 increases your net worth by x + y, whereas option 1 increases your net worth by x only* when looking at it from the initial condition of already having the asset and cashflow, it is like you are investing your excess cash in reducing your mortgage and getting a return of 3% on cash invested as opposed to just consuming your cash flow* this seems to be like investing profits for a 3% return, which would be like a conservative bond yield* I think it might make sense to invest in a stock-market index fund at 7-10% during the interim (except that you take on more risk and will pay taxes), until you have enough for a down payment that you can pull out and reinvest in more property  * of course, when reinvesting into paying down mortgage, there are no capital gains and also no risk, so that might make it just as good to do that* the short answer I think is that you are either using your cash flow (from previous real estate, stocks, job, or whatever) to consume (spend on stuff you want that keep net worth same or decrease it, but not make you more cashflow) or spend that cashflow on things that increase your net worth and/or pay you cash flow  * then paying down a mortgage that reduces payments by 3% is like buying a bond that returns 3% with no taxes (because overpaying a mortgage isn't taxed, and bond yields are) * continually doing this is like funneling your excess profits from other stuff back into your 3% tax-free bond-yield* the problem is that you lose this avenue when the loan balance actually hits $0, which is why long before this point, you actually refi, take out enough for a down payment to get another re investment working in parallel, then use both mortgages on properties as tax-free 3% bond yields (taking out another mortgage introduces a compounding effect here as well, beyond the 3% return)  * this would be like selling your bond portfolio with no capital gains taxes (bc refis/loans are tax-free, even though you pay some closing costs), buying as much re as you can with down payments, and "buying more bonds - which are actually your mortgages" such that your bond portfolio increases (because your LTVs on mortgages are higher) and you magically get a house out of the deal (and did I mention no taxes) * then rinse repeat* long-story short, I think that it might actually be a next-level genius strategy, after all* this is either the smartest thing I've heard in the past year or I'm completely chasing my tail* can someone poke holes in this?

Half the rent goes toward expenses and reserves, vacancies etc.It's a personal choice what the magic number is for each person.

For rehabbing, a magic number is 70%.  

I also attended one of those guru "free" seminars where I ended up paying for 3 day training, which then turned into me paying about $7,000 for education and a so called mentor that literally spoke to me one time and magically disappeared when I actually needed help.