How To Create $10,000 Passive Monthly Income And Retire – Real Estate Investing

Updated : Aug 30, 2019 in Articles

How To Create $10,000 Passive Monthly Income And Retire – Real Estate Investing


Joe: Hey, it’s Joe. I’ve got another question.
This one is from Jeff Carrol from Seattle, Washington. Jeff says, “Based on my own background,
the main thrust is, ‘Where is all of this leading? What’s the finish line?’ For example,
how do I create a minimum $10,000 a month permanent income, not lease options that can
cash out? Besides paying off the single family houses, which is great, how do small to large
apartments and self-storages figure in this ultimate plan? In short, where is all of this
leading?” Joe: Well, the goal is to have 100% passive
income. Just like you say here, if you can get $10,000 a month, you’ve got $120,000 a
year; it’s a pretty good income. And if you own rental property or real estate in general,
typically rents go up over time because inflation makes them go up, so that makes your passive
investment inflation proof. If you buy a fixed cd or annuity and you know it’s going to be
_x_ amount of dollars, you know that that’s going to stay the same until you die, whereas
real estate has the potential to go up and the likelihood is that it will go up over
time. Now, values fluctuate and we’ve all seen a big adjustment in values across the
country, but income has stayed pretty stable across the board, all over the country. And
we’ve seen a little bit of adjustment in rents on the downward side over this last year or
so. I was surprised that it didn’t drop earlier but it didn’t. Then we saw in the last year
that it dropped maybe 5 to 10% in some places. But it’s still a good solid investment. All
of the real estate that I own is still bringing in income every month. I own property free
and clear. I also own property that I bought subject-to that is paying off a loan over
time and that’ll work really well, and I bought properties that I even used loans to do. You
can’t get investment loans these days that make any sense at all, and I wouldn’t suggest
that anybody do that, and there are some other problems with that as well which I won’t cover
in this program. Joe: And the other question you had was, ‘Should
I buy commercial property like multifamily and self-storage?’ If you have the cash, they
can be good investments. If you look at single family homes and you look at the rent to price
ratio, it’s much higher on a single family home than it would be on a commercial property,
depending on where you buy. If you buy in good solid, blue collared neighborhoods where
you can get substantial, professional, competent property managers, that’s what you want, because
for it to be passive income, you’ve got to have a good property manager to handle the
work for you, or good property managers if you’re in multiple areas like I am. Joe: So it’s very important to have good people
that can do this for you. You don’t have to manage the properties yourself, whether it’s
self-storage or commercial. So if you have good property management, a lot of the reasons
to buy commercial, which from what I hear from people that own a lot of commercial,
it’s easier to manage commercial property. That’s true, but you also have the potential
for more vacancies, especially in a volatile economic environment. And you still have to
make payments on the mortgage, unless you paid cash for the property, and then it doesn’t
hurt as bad, but it still means that you’re going to have less income per dollar that
you spent. So if you want to get a 5-35% return, which you can do in real estate and which
I’m doing in real estate and more, and if you do even more things to it like become
active in the investing part of it or you turn around and sell some of the properties
that you buy, then single family homes make a lot more sense for that reason. I’ve done
commercial, I’ve done self-storage, and I’ve worked in those environments but I like single
families better and the majority of what I have in my portfolio is single family homes.
And I’d recommend the same to you. Joe: A lot of people think that multifamily
properties are pretty sexy because you think, ‘Well, if one of them is vacant, then the
rest of them will pay for it.’ That’s not always the case. You also have to think about
the loan, you have to think about the return on investment, you have to think about the
headaches to get them filled, who’s going to manage them, and, ‘Is it easier to manage
a multifamily than it is to manage a single family?’ And then you have to think about
liquidity. Because eventually you’re going to die and you’re going to pass these things
onto your kids. Or maybe you’re going to just want to sell these properties and take some
cash out for yourself and if that’s the case, a single family home is a lot easier to sell
than a multifamily building. If you try to sell in a weak market, you can still get your
cash out and you can do alright in it. Also, there’s so many things that you can do with
single family homes that you can’t do with multifamily. Joe: So that’s why I push single family homes
over multifamily. I know a lot of people that are making money in multifamily and they’re
happy with it. Most of them are probably buying using terms (or using cash) and are finding
good cash flow situations where they have enough money to go in and fix up the properties
and get good people to do that rehab work for them inexpensively. But they’re still
coming out of pocket to do that. Joe: Real estate investing is a process. You
start trying to get some income coming in and just trying to get some money to replace
your income so that you can quit your job and do this full time. You start buying these
properties and you just flip them at the beginning, and then you start keeping them. After you
get enough income to support yourself, you start keeping these properties and building
your portfolio — that’s what makes you rich. So buying these properties over the long term
is what’s going to make you rich. You can do it in just a few short years. I’ve got
a student right now that has 4 or 5 million dollars’ worth of property. Half of its paid
off and they’re brining in a lot of income every month and they’ve only been doing this
for 3 or 4 years. So it’s not that big of a challenge to pull this off. Granted, they
are the exception, not the rule; not everybody’s pulling that off on that level. But it does
show you the kind of thing that can happen when you buy single family homes. But as I
said, the goal for most folks is to get started and start flipping deals, because once you
do that, then you can move onto the next step which is building the portfolio. I hope that
helps.

46 Comments

  • So, going back to the title of the video, on average how much do you strive to cash flow per property ? That would help me calculate how many deals are needed for the $10k per month cash flow goal.

  • It depends on the deal. I try not to buy anything with negative cash flow after I figure in taxes, insurance and property management costs. If you have fewer properties and good income from another source, negative cash flow can make sense because of the other benefits of owning long term properties like this.

    Most of your income on subject to deals will be later, after they are paid off. These are the deals that make you rich, but don't provide as much income right now.

  • In japan but want to try this, no fund now, what would you do, could i start a website and try it or is it better to travel there and do it.

  • I only own single-family homes at this point. Once I acquire enough and build a good base of cash flow, I would like to buy a commercial property. I see a lot of potential in being able to buy a million dollar property, fixing it up, then buying another one. It seems as though it would be much more efficient than buying individual homes, even if the cap rates aren't as high. I would like to rehab an apartment building, then 1031 it for another, and repeat. I probably won't sell any of the homes, however.

  • Hi Joe, just wanted to start out saying that I am not new to real estate investing. I'm not sure if this post is too old to get a response from you, but I was hoping you could maybe give me a general idea of what I can expect in this scenario even though you are recommending single family homes over multi-unit buildings. 
    I am familiar with rehabbing and selling single family properties, done about a dozen. I am also familiar with single family rentals, had a few, mostly a pain in my butt which is why I'm kind of against building a portfolio of single family home rentals. My goal is to move down to Florida in a few years and have enough passive income from a multi-unit complex.
    My vision is to purchase a nicer multi-family building, maybe not a class A but for sure a B-B+ most likely because I don't want to have low quality tenants. I would be able to put $1,000,000 down, so with the leverage of the bank, I figure I could purchase something up to the $3,000,000 range. I definitely DO NOT want to deal with day-to-day operations (collecting rent, fixing minor issues, standard maintenance, initial eviction letters, etc.) I only want to be involved in bigger issues that I set perimeters on. So I would 100% plan to hire a company to manage this building. 
    So basically my question is what is a ballpark of annual passive income can I realistically expect to earn off of this building after all PITI and any and all other expenses and management fee's are paid? Also is there anything that I would ever have to possibly worry about? Not like the value of the building will go down at this point, and I would have the right insurance for a hurricane god forbid. Thank you very much in advance for your help if able.

  • i agree but i kinda dont… cuz property tax in my state for an averge single family home is 4k.. and its 4k also for a duplex. the single family will get me 2k a month while the duplex will get me 3k… see what i mean?

  • Obviously an excellent video Joe. Very nice job. It's nice to see others along with myself posting about whats still possible in the world of investing.

  • Luck is one of many things you need in RealEstate investing. Your first deal is the most important. Be modest when your underwriting it. Good luck!!

  • Hi Joe! Thanks for the information. May I ask, are you an investor yourself? I work for an established company. We have some new projects and are looking for qualified long term investors to come aboard. We offer very nice compounded interest rates and are a fun bunch to work with. If you or anyone you know are interest please reply. Thanks a bunch!

  • Can someone please help me by answering what it means when a real estate company says they do alot of rentals?? Does that mean they own the property and rent them out?

  • Looking for 100% financing I can help ya. My lender is a private fund that is providing 100% financing on commercial property with fair amount of equity.

  • #Agro BK +Bry cE
    Just seeing this now, first one went very well. Spent about 3 months analyzing and picked up a 9 unit back about 4 months ago at about a true 7.5 cap which is great for my area. Have a great property manager and everything is going smooth. It's a long term hold so all income goes into the building and towards the debt service. Building should be paid off in 13-14 years and then I will use it as a source of income when I retire. 3-4 more buildings to go and I'm all set! @Damir Srdanovic

  • my dad declared bankruptcy and his little real estate properties is the only income he has besides SS. i definitely hope to get into real estate at some point. credit score is ridiculously low at the moment and i quit my job. i know that was dumb but i simply had to and have other options i am pursuing. oil painting can actually pay if you are good enough and in multiple locations. 3K a month is easy.

  • #Romeo Robertson I only own single-family homes at this point. Once I acquire enough and build a good base of cash flow, I would like to buy a commercial property. I see a lot of potential in being able to buy a million dollar property, fixing it up, then buying another one. It seems as though it would be much more efficient than buying individual homes, even if the cap rates aren't as high. I would like to rehab an apartment building, then 1031 it for another, and repeat. I probably won't sell any of the homes, however. @Daniel

  • is there a big danger to buy in a bubble market, is it worth to wait a year or two and see if the bubble burst? if the bank interest rate is low now, is it an opportunity to take a loan or risk since rates can go higher? thanks

  • i found this video to be very helpful i am just starting into this… just got my first studio apt built and have one single family home.

  • Nice voice! I get tired of listening to some of these fast talking YT screamers who think they're competing with each other to see who can talk the fastest! It's a 'no brainer' why you get seller's to say 'YES' nearly every time!

  • If a tenant is paying their rent directly through their employer, it eliminates any chance of them mismanaging their finances or for any other mishap to occur. Therefore, you'll have the peace of mind knowing that your tenants will be held accountable and will pay reliably. Rentremedy(dotcom), 1-800-931-0449

  • I just recently retired after 10 years as a regional Property Manager over Muitiple properties.

    Everything you said here is correct. The only thing in this area that I did not see you cover is with a competent manager and increase of rent often without the owners constantly giving those orders, many owners get shocked to find their Propertys are worth double if not more in just a 3 year period. This occurred with all the properties I overseen. I will not specify here what new buyers aim for when looking however I will say it benefits the old owners and managers . Managers receive increased pay and benefits for taking specific steps and owners make out with alot more money during and after the sales.

  • It's been 4 yrs since the last time I've seen this video. The truth is once you get so good at something no matter the amount of comfortable income you generate you will be thirsty for more. With my additional 64k a year from rental properties. I have a lot more fun but I also buy more real estate. It went from me being retired by 40 to I want my kids to live good with no worries. I'm only 30 yrs old with 9 single family homes. I could retire now but I'm thirsty for more money

  • I was doing good. Owned 2 condos in Chicago. Had 100k in savings plus equity. Then i bought the wrong property and hired a bad contractor/friend. Now i am too depressed to go fwd. Still own one condo free n clear, but took huge step back lost 100k and other property. Depression sucks. Living in regret

  • How do you get the income without loans? For investment properties you need 15-20% down which can be in the tens of thousands of dollars!!

  • I put in $150k and have earned over $470k from investing into trading bitcoin, thanks to Mrs Charlotte Luck a trading expert who handles my trades. I met at a trading conference in Louisville, KY . if interested contact her via [email protected] .com

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