I had a thought .I saw an ad for completly rehabed and rented homes in a big cashflow city for $40k with $200+/- cashflow Per property.I thought well If I pay cash and refi at 90% with about $5k out of pocket I could own 20 of these for about $100K. Lets see …$100K, 20 barely appreciating properties, for $4k / month ???.Seems like a whole lot of work for very little return. You guys that have 30 ,40 ,50 properties.Is it worth it?
If you had 20 properties at $40K each, you’d have properties worth $800K. Most of these properties historically are appreciating at 3% to 5% per year. Therefore, at only 3%, your appreciation is $24,000 per year.
Twenty properties which are in relatively good shape and initially occupied, will take you about 4-5 days per month to service including routine maintenance, collecting the rents in person and walking through each property. So, you’d work 5 days for $4k, which is $800 per day.
The important thing to realize is that you won’t work much harder with 30, 40, or 50 properties than you’ll work with 20. My biggest efforts are spend collecting the rents and inspecting every unit each month. Once properties are up and running, there isn’t much non-routine maintenance. BTW, the biggest time crunch comes when you are acquiring properties. Evicting bad tenants, rehabbing bad units, and getting them rented is the big job.
So, how many properties are too many? Maybe the question should be “how much do you want to make?” If you want to make $4k per month, then 20 rentals are enough. If you want to make $10K per month, then 50 rentals are enough. If you want to make $20K per month, then 100 rentals are enough.
Good Luck,
Mike
Campbell…Lets see you buy a property for $40K and still clearing over $200 a month on the unit. Sounds pretty good to me, since the monthly payment on $40K is not much more than $400 a month depending on finance method. So basically 1 months rent can probably cover 2 months mortage payments.
Hire a property management company to oversee the properties since they are out of area and i am guessing all in the same area for sale from one owner. If the homes are rehabbed they will be maintance fee for the most part.
One thing I have noticed, many strong cashflowing properties are coming from very low appreciating areas because the houses never increase in value much, the owners need to make money thru the rents.
What cities are the properties in??
I would worry more about getting 1 property before I would be concerned with 20. That is putting the cart before the horse…and I don’t know of any horses that can push a cart.
I would also do my research before I speak in accusation.
yrush2000 they are in the Northeast area
If you meant my post, you misunderstood. My point is why think about 20 or 30…think about 1, then 2, etc. I have no idea what you own. It was just to make a point. My point is, if one is ok for a certain amount of cash flow, why wouldn’t you want 20 or 50 or 1000 for 20 times or 50 times or 1000 times the cash flow?
My apologies if my post was not clear.
Regards, Tony
campbellgroup
$4k / month .Seems like a whole lot of work for very little return.The amount of money you make is relative. What I have done is figured out how much it costs me to live. That is everything from mortgage, to dry-cleaning and going to the movies in a month. As soon as my rental income reaches that level. I don’t have to go back to work. I am not looking for home runs every time at bat, because I am after cash flow. My monthly expenses fluctuate from $4200 to $5200/month. So 20 houses at $300/month each gives me $6000/month ($1000/month slack for unforeseen things). Since the amount of time to manage 20 houses is a lot less than the job I have, I will have a dilemma when that happens. Do I stay or do I go. Retire and catch the next leisure flight to Hawaii or catch the next business flight to Dayton Ohio.