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