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How to Retire in Three Years Through Real Estate Investing - YouTube
Channel: BiggerPockets
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Preposterous. Farcical. Absurd.
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That's probably the response most people
have when they read the title to this video.
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Retire in three years? Sure, maybe if the
person was 99% there, but
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there's no way an average person can retire in just three years using real estate,
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is there?
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well that's the question I was asked on
last week's BiggerPockets webinar
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talking about real estate investing and
I took on the challenge and here's the
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gist of how I answered and by the way
did you know that every week we have a
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free online webinar to teach various
aspects of real estate?
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We talked about how to invest in real
estate while working a full-time job, how
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to invest using no or low money down, how to buy fixer-upper rental properties and
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so much more.
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You can sign up for the next one a
BiggerPockets.com/webinar - Right
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so, with that let's get on with the
discussion because you've got three
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years until retirement and time is
ticking.
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Here we go, first of all let's make a few
assumptions because I don't really know
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anything about you.
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So i'm going to assume that you don't
need six figures to retire. Now i'm not
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talking about buying a yacht and
drinking Cristal and swimming in cash
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like Uncle Scrooge, right.
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I'm talking about just retirement - being
able to pay your bills with passive
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income. So pretend assumption let's
use like 54 grand a year 4,500
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bucks a month. Now you might need more than that, that's ok, keep listening
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you can adjust these numbers later on
your own. So ,we have this concrete goal
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of making $4500 in cash flow every month from real estate within three years.
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I'm a strong believer in taking these
lofty goals and putting them into
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something more tangible like $4500 a
month in cash flow.
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I like that, so now that's something we
can go after specifically and now that
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we have that clarity defined $4500 a
month within three years.
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Let's break it down even further and
what does that even mean? Well for me, I
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like to look at that number and ask the
question how many rental units like,
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houses or apartments,
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do I need in order to hit that number. Of
course that's going to depend a lot on
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the deal. A lot of people buy real estate
and lose money every month and we don't
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want that we want to buy real estate
that is cash flow positive that means
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after the income has been received all
the income and all of the expenses have
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been paid and I mean all of them like
vacancy repairs capex management
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utilities the mortgage and everything
else we should have a positive number.
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Now how positive?
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Well for me, I like to see between a
hundred and two hundred dollars a month
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per month per unit.
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It's just a target that I aim for
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and I've been able to get most of my
career. So let's just pick a number of
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smack dab in the middle that $150 a month.
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So now to all the math geniuses out
there let me ask you a question. If you needed
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$4500 per month in cash
flow and each unit gives you a hundred
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fifty per month in cash flow,
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how many units do you need? Anyone? Anyone?
Bueller, Bueller? Right,
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30 units! So now we've got this big crazy
goal of retiring in three years we've
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condensed it down to just needing 30
units that make a hundred fifty bucks a
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month in cash flow.
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So now we're getting somewhere but we're not quite done yet.
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Now we need to make a plan to get those
30 units. So how do you buy 30 units over
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the next three years?
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Well of course you can shop around and
find a 30 unit apartment complex and BAM!
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You're done.
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But that would make for a slightly
boring video so let's get a little more
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creative. You can also buy 30
single-family houses but that's a lot of
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work for three years. So let's work on a
plan that meets somewhere in the middle.
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Small multifamily properties like duplexes
and triplexes or fourplexes.
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Additionally, I want to break up our goal
of 30 units into three mini goals. One
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for each year. We can say that we wanted
10 units per year for 33 years but I
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don't think it's realistic i mean people
tend to start a little slower and they
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speed up over time so I want our goal
to reflect that reality, so rather than
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10 units per year for the first three
years,
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let's set a goal of five the first year
10 the second year and 15
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the third year. So now we've taken that
big lofty goal of retiring three years
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and to be on track to hit that we've got
to buy just five units this year.
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Think you can manage that? I don't see
why not. But plans are useless without
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action, so let's get to the final step of
this is to take action. Take the action
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required to meet your goal this year.
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So what does it take to buy five units
over the next 12 months? Well it's going
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to take some action. For example, maybe
we'll connect with the local real estate
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agent and you'll start looking now for
small multifamily properties and maybe
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in a few months you'll find a duplex
that will cash flow the numbers you need
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and then a few months after that go by a
triplex and boom you hit your one year
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goal. Of course as we talked about
earlier
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not just any deals going to work. You're
gonna have to kiss a lot of frogs before
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you find your
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prince in other words you will likely
need to analyze dozens or even hundreds
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of deals before buying the right one
that fits with your plan. To help with
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that of course, I'd encourage you to
check out the BiggerPockets property
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analysis software which you can find at
BiggerPockets.com/Analysis - you can
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analyze an entire property in under five
minutes and estimate important metrics
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like cash flow and cash on cash return
and lots of other goodies.
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Now, for those wondering how you're going to pay for all this I would encourage
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you with this.
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If you wanted it bad enough you'll make
it happen.
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i bought my first 30 units using almost
entirely other people's money. So maybe
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you'll partner up with someone like I have
or maybe you'll house hack like I have or
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maybe you'll use a HELOC like I have
or seller financing or lease option or
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one of the many other creative
strategies. Of course, if you want to know
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more about that
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be sure to check out my first
full-length book "The Book on Investing
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in Real Estate with No and Low Money
Down". Now the point is real estate
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investing is possible no matter how rich
or poor you think you are you can
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achieve your financial goals no matter
how lofty and they might seem. But it's
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not going to happen by itself. As
personal development author, Jim Rhodes
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says, "Life doesn't get better by chance, it
gets better by change."
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So get out there and break down your big
goals and take the action steps needed
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to accomplish it. For BiggerPockets.com
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my name is Brandon, signing off.
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