It can be done. You just need time, credit and the power of the 1031 exchange.
Here is one approach, using only $100K in cash.
First, find three $100K pre-construction properties in a strong sellers market with good rental potential. Allocate your $100K cash equally to downpayment and closing costs on each of the three properties.
Next hold the properties as rentals for a year, collecting a positive cash flow while you watch the property values increase from $100K to $200K.
Now, use a 1031 exchange to trade your three properties for four $150K replacement properties. Use $150K of your exchange funds to acquire one replacement property free and clear. Equally allocate the rest of your exchange funds (about $250K) to the downpayment and closing costs on the other tthree replacement properties. Hold all four properties as rentals until property values appreciate to $250K.
Next, keep the free and clear property in your rental portfolio, but repeat the exchange experience to replace three properties with four new $175K properties. Use $175K of your exchange funds to purchase one replacement property free and clear, and apply the balance of your funds (at least $375K) to the downpayment and closing costs on the rest of your replacement properties. If you want to take a smaller equity position, maybe you will want to acquire five instead of four new replacement properties.
Finally, always keep your free and clear properties in your rental income portfolio, but continue to repeat the exchange experience until you have pyramided your equity into as many rental properties as you need to meet your monthly rental income goal.
You can get there, with only an initial investment of $100K, but it does take a little patience and the right market conditions.
I was thinking more along the lines of using the 100K plus 100K from the seller and the balance from a bank to buy a 1,000,000 10-12 cap triple net property of some sort. Or maybe a business?
Would a Million Dollar Apartment Complex (with day-to-day management) or a Strip Mall do the trick? If 100K is not enough how much would be needed up front to get that sort of monthly cash flow?
Just trying to get the creative juices flowing and see what other folks are doing or have seen done out there.
Buy and sell one house every 3 months
[addsig]
I guess it would...Unless you had systems in place that allowed you to buy houses and resale them with out having an active roll.
[addsig]
It can be done. You just need time, credit and the power of the 1031 exchange.
Here is one approach, using only $100K in cash.
First, find three $100K pre-construction properties in a strong sellers market with good rental potential. Allocate your $100K cash equally to downpayment and closing costs on each of the three properties.
Next hold the properties as rentals for a year, collecting a positive cash flow while you watch the property values increase from $100K to $200K.
Now, use a 1031 exchange to trade your three properties for four $150K replacement properties. Use $150K of your exchange funds to acquire one replacement property free and clear. Equally allocate the rest of your exchange funds (about $250K) to the downpayment and closing costs on the other tthree replacement properties. Hold all four properties as rentals until property values appreciate to $250K.
Next, keep the free and clear property in your rental portfolio, but repeat the exchange experience to replace three properties with four new $175K properties. Use $175K of your exchange funds to purchase one replacement property free and clear, and apply the balance of your funds (at least $375K) to the downpayment and closing costs on the rest of your replacement properties. If you want to take a smaller equity position, maybe you will want to acquire five instead of four new replacement properties.
Finally, always keep your free and clear properties in your rental income portfolio, but continue to repeat the exchange experience until you have pyramided your equity into as many rental properties as you need to meet your monthly rental income goal.
You can get there, with only an initial investment of $100K, but it does take a little patience and the right market conditions.
I was thinking more along the lines of using the 100K plus 100K from the seller and the balance from a bank to buy a 1,000,000 10-12 cap triple net property of some sort. Or maybe a business?
Would a Million Dollar Apartment Complex (with day-to-day management) or a Strip Mall do the trick? If 100K is not enough how much would be needed up front to get that sort of monthly cash flow?
Just trying to get the creative juices flowing and see what other folks are doing or have seen done out there.
JohnCl