I’ve spent many hours reading the forums and have to say they are fantastic! The level of knowlegde here is second to none.
Here’s the situation:
Cash to begin: $20,000
Time to work: Full-time 24/7
The goal is to create $10,000 average profit per month. My challenge to all of you is what specific plan would you use to meet this goal as quickly as possible?
I plan on documenting my actual deals both good and bad on the road to accomplishing this goal and will gladly share the results with everyone to show it can be done.
So, there you have it…$20,000 cash and 24/7 hours per week to work at it!
Haha i’m in the same boat. Only thing is once again, we’re wished luck. I’m starting to think the actual plan itself we have to come up with. Ive settled with just knowin gall the steps taht go into reaching my goal.
Are you just getting started in RE investing? I posted this challenge in hopes of stimulating some good debate from people who would approach this in different ways. I’m not asking for their secrets, just what their general plan of action for this situation would be. I’m confident they will rise to the occasion.
Would love to chat with you about investing in general and how I am approaching this.
Yea I am , looking to get my first house within the next couple weeks. Have been workin on hard on educating myself though thats for sure. Id love to chat.
The great thing about real estate investing is the variety of ways to make money at it. Everyone has their favorite way or two. Different strokes for different folks.
I almost always advise people to start off with bird-dogging for other investors first to really learn the ropes and the local market. Think of it as an apprenticeship where you earn while you learn. The investors will tell you what they are looking for. All you have to do is find it for them.
Then move into wholesaling as soon as you feel comfortable with your ability to find the good deals and get them under contract. You can come up to speed with this really fast if you apply yourself.
Neither one of these steps requires you to use much of your cash. It’s a low risk way to learn the business and make money at the same time. Some people I know only do wholesale deals, and they make more money than most doctors earn.
After you get good at wholesaling, you can do “Subject-to” deals and other more creative types of deals. You’ll know what areas you like by then. Also consider adding long term keeper properties to build wealth.
Until then, don’t put a lot of your money into real estate deals. Use a little of it to get some education to get you started, and a little more for marketing to find the deals. This doesn’t take all that much. Guard your cash.
Find a 30 unit building that is vacant and boarded up and buy it for 5K per unit. Get a hard money loan to buy it and fix it and then sell it to an investor for a $120K profit. This can be done in 6 months. Then find a 30,000 SF building for $5 per foot and fix it up and sell it for $300K profit for the balance of the year and do about 4 times your goal. I am on part two and trying to close next week on the office warehouse. My next project will be even bigger and hopefully better or two at a time like the previous ones. Set the goal and then take the actions necessary to achieve with a burning desire and a knowingness that you can achieve it and you will.
I thought the same thing only on a smaller level.
Find single family homes, use hard money if needed to purchase and fix up, then flip…
Repeat these steps with larger property each time.
You will make it!
As I stated in a previous post of favorite quotes…
“Those who stick will achieve”
Vince Lombardi
As I’ve stated before, what someone else is/would/be willing to do is not as important as what YOU are/would be/willing to do.
Your goals (which you’ve stated), yourself (desire, knowledge, creditscore, etc.) and your local market will all affect HOW you need to go about making your $120K a year. Do you want to do rentals or resells or what?
However, if you want a blanket idea, then I’d suggest that you put your $20K in the bank, use other people’s money (OPM) to finance your deals, and now you only need $100K a year!
Thanks for the advice guys…some interesting suggestions. I have built new homes and done rehabs, but prefer the rental/passive income approach to generate the $10,000/month goal.
Just found the first deal…see what you think:
6 unit apartment bldg. price…$90,000 appraised value is $150,000…rental income of 2400/month…Seller offering lease/option of 900 down and 900/mo. Any suggestions?
People always ask why did someone sell their building for such a cheap price. Here is an example that sums up the fact that there are opportunities for huge profits.
Someone calls me and gives me an address and purchase price of a building, along with the seller’s phone number. I know the area and call the seller. She is very anxious and wants out bad. She was left at the settlement table twice over a two month period. She also lives an hour from the building and wants to spend more time with her children. She bought the building for $70,000. It is a fully rented 6 unit building that grosses $2,400.00 per month. She tells me she wants $50,000 for it.
I go and look at the building and it is a no brainer. Turn key opportunity in move in condition. I call her back and play a little possum with her. She starts to get very nervous that I am going to walk away and I tell her that I can close by this Friday, 4 days from now. She says “really, if you can close by this Friday I will sell you the building for $35,000.00.” I tell her it is a done deal and I fax her the contract that night at around 1:30 am. I get the signed contract back at 6:00 am. Think she is a motivated seller?
It gets better. At settlement, I get the prorated rent for the building and we split all the settlement charges. I list the building with my realtor on Monday, 3 days later. The paperwork was completed earlier in the week after the contract was signed. I manage the building, collecting next month’s rent and sell it 45 days later for $145,000.00.
Thats all fine and dandy. And it is an understood that there are more things possible that what my simple imagination can fathom.
Yet I still proscribe to the “if its too good to be true it usually is” theory. Not to say that I would automatically discount such an opprotunity, but there would be flags flying.
Dealing with SFH it is pretty apparent why someone is selling below market value. And knowing the motivation for selling is an important piece of the negotiation puzzle. I was simply asking what possible motivation could there be for dumping a passive income below market value.
there are just as many, and just as varied, reasons people dump multi-unit passive income properties as there are for SFHs.
A person not familiar with SFHs would probably say the same thing (in fact, they do); “If it’s too good to be true, then it probably is. People just don’t their properties away.” Sound familiar. If you’ve been in this business for any length of time at all, it should. That’s what basically everyone that doesn’t understand REI says. You know, it doesn’t work, you can’t do that, etc., etc.
I think that the problem lies that you since you don’t know about multi’s and landlording them, you can’t fully appreciate just how bad that you may at one day want rid of them, even if they are a cash cow.
i’m in california and having a REAL tough time imagining where you can buy a 6 unit property for $50,000 or less (or $35,000 like you said) that is generating $2,400 monthly income (this equates to much less than 2x gross. and why wouldn’t this seller list the property with an agent and sell it herself for over $100,000 2 weeks later?? was she just stupid or was she hurting that much.
like i said, just really curious where you can buy 6 units for $50,000 or less??? any specifics (like address and state???