I’m curious about the goals of the people on this board. My question is “how much is enough”? What are you shooting for? How much per month? How much equity? How will you get there?
Would you feel “rich” if you made $3,000 per month; $5,000 per month; $10,000 per month? Are you hoping for $100,000 in equity; $500,000 in equity; $1,000,000 in equity?
Thought it might be an interesting topic.
Mike
I’m a new real esate investor, and haven’t even purchased my first home. As a college grad with an income of 30k, I am looking to get my Real Estate income to be in the ballpark of 5k a month before I quit this job and focus primarily on expanding my real estate.
I am not concerned as much as how much my assets would be worth, as I don’t plan on selling. I am planning to buy on a graduated scale, with each purchase exceeding the priors worth.
Good topic, I’m a new investor and I’ve struggled with this a lot.
ie, what is realistic while still holding onto my 9-5 job, etc.
Ultimately, my goals are this:
Long term, I would like for my wife and I to both manage the REI company full time so we can also spend more time with the little ones. But she makes enough money that it would be difficult for us to replace her income with rentals.
It’s funny how your goals change quickly once you are actually doing something. I started off just wanting to buy a few houses to hold and use as college funds for my sons. Now I want to do this full time.
Ain’t it great?
Yea I wonder how addictive it will becoem to me. I started, rather I AM starting because I just graduated college and was pissed all year at how much i was paying my landlord. I graduated and said, screw this I want a piece of the action.
Anyone have experience renting to college kids?
I want to sell all my properties and answer questions on this board from a remote Island in the Bahama’s somewhere and never work again! Any buyers? LOL
You might as well go buy the island, REO. Everybody already knows that you don’t work now! ;D
Raj
Im also a fairly new REI. My short term goal is to reach at least $5000 positive cash flow. I would then be able to leave my full time job and concentrate on re-habs to hold or flip. Right now I currently buy and hold move-in condition single family properties.
MY Long term goal would be to hold enough properties that I can manage myself without burning out and make a substantial cashflow($8000-$10000) and ultimately sell once all mortgages are paid off. (1m +)
dun-deel
when considering this question, keep in mind what properties have historically increased per year over the last 20, 30 or 40 years.The last 3 or 4 years may or may not have been an aberration and may or may not be indicative of future value trends. Real estate values increase and decrease over time. In many areas of the country now, especially in southern cal where i live and work (i’m a broker and an appraiser), values appear to be out of whack when taking into consideration rental values.
just be aware that market values and rental values can and do change over time. don’t go into any deal thinking there is a guarantee that it will increase 10%, 20% or more per year.
dun-deel
Just as a question why would you want to manager them yourself!
Robb (the lazy investor)
Why would you want to pay them off, THEN sell?
Talk about a major tax hit!
Raj
Well, I guess this is a more interesting topic than I would’ve given it credit. Definitely brings up some points/questions, huh?
jpstephens, just curious, but why would you need $5K a month in REI income to replace a $30K a year J-O-B? I mean, what do you actually bring home on that, $1700-1800 a month after taxes? What is your plan? Renting, reselling? I’d assume renting, but you also say that you plan on buying on a graduated scale. I don’t know where you’re planning on starting, but upper end homes don’t make the best rentals.
And you ALWAYS need to be concerned with assets and values. Your networth will determine your future or failure in REI. And while you may not ever plan on selling, there may be a time when you need to sell. If you have equity, then that’s not a problem, but if you don’t, it is.
Same question to cecsix. Does $6K a month in REI income meet or exceed your current before tax income, and if so, why the difference? Keep in mind, that with a good CPA, rental income is usually either rarely or barely taxed, so $6K in REI income is actually worth MORE than $6K in earned income.
A million in networth isn’t hard. It’s merely 50 properties with $20K in equity, or 25 with $40K, or 10 with $100K, or even 5 with $200K. It really depends on what you’re buying (and holding). Oh, and don’t forget that rental income, too.
Just some thoughts,
Raj
My initial goals in REI were not to achieve a particular $$$$ number, but to be self supporting. After 4 years of doing this full-time, I keep no properties that I rehab. Everyting is sold once the rehab is complete and rented. Sure there is a major tax hit, however, I sleep great at night, no tenants, no worries.
As to cash flow, I do not want it. Cash flow means managing properties. For Example: I have 4 bldgs that I can sell for a $750,000 net. I then pay the taxes and still clear $450,000 in my pocket. This allows me to buy my next wholesale deals, flips, rehabs using my own money. This time when I sell, the whole sale price comes back to me.
My acct is not always pleased with me, but my goal is to sleep at night with no worries and have lots of cash, not cashflow. Thought I would give a contrarian viewpoint.
Well, I think I need 50K per month income so what does that add up to $600,000 per year.
You need double your job income so that you can pay for health care, retirement planning, etc. taxes, et al. So the 30K is in all actuality is about $40K including his benefits assuming he has them. health care,matching 401K, sick leave, vacation)
Now for what is enought. I believe in diversification. I don’t want to own a bunch of single family homes that I have to worry about. I’m starting with them because they are the easiest to acquire. My long term goal is to own a couple of apartment buildings.
Use the cash flow to buy a couple of brick and mortar companies that are run hands free. I’m thinking Papa Murphy’s Pizza, Marble slab.
Do foreclosures on single family home, arrange financing when appropriate buy & sell for quick profit (while you can). Do quick rehab if necessary
Find and buy more positive cash flow businesses (not necessarily real estate). …
When income gets to $50K month… relax and find other worlds to conquer.
I am planning on renting. Sure I would love to quit my job and just invest but I need proof that it will work for me first. At first it will be just extra income. i mean 2k a month now at my job. Shitty, but its entry level. I want to make 5-10k a month within the first 2 years of doing REI.
Anyone have any experience in College markets? i feel like this could be a killer area, my old landlord had the best lease. We had to pay for everything haha.
Well, I can’t speak for the other guy, but my personal gross income is around $6000 per month and rising, so you are probably right, given the tax considerations, I could probably quit on $3000 or $4000 and get by if I really wanted, but I was also giving myself a buffer. The other thing I’m not sure of, and perhaps some of you can answer, is how will leaving a full time stable $75000-$80000 job impact my ability to get good financing? Obviously, my income would be good just from the rentals, but would it complicate matters?
Wow! There are a lot of lofty goals expressed here!
I applaud your ambition, your energy, and your activity.
No doubt, all of you will achieve far greater success than
most people will ever dream is possible.
It’s good to have goals. It’s better to have written goals.
A long time ago, I wrote this:
“All I want is: all there is, and then some.”
It’s been a heluva ride, so far. But the goal has changed somewhat.
Now it’s more about lifestyle than money. Once you have
enough free cash flow to do what you want, anything extra
doesn’t really change your lifestyle very much.
Your time becomes much more important to you.
Time is the only resource that you can’t ever replace.
I just want to be able to do whatever I want to do, whenever I want to do it,
without asking anyone’s permission, and without regard to costs.
It’s nice to be in the position so that if anyone ever tries to tell me what to do,
I can tell them to go to hell without worrying about the consequences.
That’s how I found freedom in an unfree world.
Doing the deals is still fun, however. So now I focus on helping my kids, my family,
and my friends achieve the same freedom I enjoy. I’m teaching them how to do
this business and invest for a good return.
It’s hard to describe the satisfaction that this brings.
It’s priceless, and it’s tax-free!
LOL best post in the thread right there ;D
I like to manage my own properties because " no one does it like you do it yourself baby"
Why not stay on top of your investment if your time and physical ability allows you to.
also, when you’re managing your own properties your earning your money. When you’re earning your money you respect it more.
i respectfully disagree with the idea that you make more money doing things yourself. if you are spending time patching drywall and fixing the plumbing, that is time you could be out looking for more deals. i understand that it is more expensive to pay somebody the labor to do work, but you have to weigh the opportunity cost that is involved with you spending your time doing work that you could pay somebody $10 an hour to do. just my humble opinion, but to each his or her own.
I like to manage my own properties because " no one does it like you do it yourself baby"
Man, you’ve got that right! In most cases, the professionals that I hire can do it both BETTER and FASTER.
when you’re managing your own properties your earning your money.
Well, let’s see. I currently value my time at $500/hour (based on income per hour of time worked). Property managers are roughly $35/hour. Handyman = $20/hour.
I don’t know about you, but trading $500/hour to “make” $20-35/hour isn’t making money.
Hey propertymanager!! You started this thread but didn’t give your thoughts on the topic. Let’s hear it.
Raj