As a content creator for obd-de.com and a seasoned auto repair expert, I’m shifting gears to share insights into another area of expertise: real estate investment. Like maintaining a vehicle for optimal performance, building wealth requires a strategic plan and consistent effort. One of my ambitious goals has been to buy 100 rental properties, a plan I set in motion years ago. Having been a real estate agent and investor for over 15 years, I understand the power of passive income generated by rental properties. My aim in purchasing 100 rental properties is to secure financial independence, allowing me to pursue my passions and enjoy life to the fullest. However, my approach isn’t about rapid acquisition at the expense of sound investment principles. Buying 100 properties the right way demands careful consideration of returns and risk. My strategy focuses on acquiring undervalued properties with strong cash flow potential.
I initially outlined this plan in 2013 and have regularly updated it to reflect market changes and my progress. Currently, my portfolio includes 20 rental properties, generating over $10,000 in monthly income after expenses. While I’m behind my original timeline, unforeseen market shifts, particularly the dramatic rise in housing prices, have presented challenges. In recent years, I’ve strategically diversified into commercial properties, as they have offered more lucrative opportunities in my specific market.
Why Aim for a Challenging Goal Like 100 Properties?
Back in 2010, my initial real estate goal was to acquire 30 rental properties within a decade. This seemed realistic when I began my investment journey. However, a few years later, I realized this goal was not ambitious enough. I knew I was capable of surpassing it, and it didn’t push me to innovate or refine my investment strategies and real estate business. In early 2013, I recalibrated my goals, including my rental property acquisition schedule. My new, more audacious goal became buying 100 rental properties by January 2023. This target was deliberately challenging, designed to force me to work harder and think bigger. When I first set this goal, I didn’t have a clear roadmap for buying 100 rental properties, but that’s precisely the point of setting significant goals – to inspire growth, innovation, and a shift in perspective.
The Allure of Real Estate: Why 100 Rental Properties?
My drive to buy 100 rental properties stems from the desire for income and the freedom that such a portfolio can provide. My current rentals generate cash-on-cash returns exceeding 15% because I strategically acquire properties below market value with favorable rent-to-value ratios. Extrapolating this to 100 properties, based on my current cash flow criteria, the financial implications are substantial. My projections indicate an annual cash flow exceeding $900,000, with at least 60 properties fully paid off, and over $11 million in equity. These figures are conservative, not accounting for inflation, property appreciation, or rent increases. This level of income would afford my family and me unparalleled lifestyle choices and the ability to pursue any aspirations we have. Life is finite, and I’m committed to maximizing its potential and experiencing all it has to offer.
The initial part of this discussion focuses on the philosophy underpinning the pursuit of 100 rental properties, emphasizing the importance of ambitious goals and expansive thinking. The subsequent sections will delve into the numerical aspects and a detailed acquisition schedule.
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Is Purchasing 100 Rental Properties Truly Achievable?
Frankly, the path to buying 100 rental properties by January 2023 isn’t entirely clear to me yet. My current income isn’t sufficient to buy 9 or 10 houses annually. Historically, I’ve managed to acquire about three houses per year. My first rental property purchase was in December 2010, marking the starting point of this ambitious goal. Ideally, I should have had three properties by December 2011, six by December 2012, and nine by December 2013. My initial progress was slow, with only one rental in the first year. However, the pace has accelerated, and as of March 2016, my portfolio stood at 16 rentals – still behind the intended schedule. Yet, this doesn’t diminish my belief in the attainability of the goal. The primary reason for the slower pace is the increased difficulty in finding suitable rental properties in my market. Rising property prices have made it more challenging to secure cash-flowing investments. Consequently, I’ve shifted focus towards fix-and-flips, where opportunities are more readily available.
So, why maintain confidence in buying 100 rental properties by January 2023 despite the current gap? My conviction stems from studying wealth-building principles through numerous books and audio programs, starting with Napoleon Hill’s seminal work, “Think and Grow Rich“. Published in the early 20th century, this book is the result of Napoleon Hill’s decades-long study of Andrew Carnegie and other wealthy individuals. Carnegie, one of history’s wealthiest men, commissioned Hill to investigate the principles of wealth accumulation. Carnegie’s influence granted Hill access to the world’s most affluent people. “Think and Grow Rich” is recognized as a foundational self-help book, and its core principles remain relevant and are taught by leading life coaches and mentors globally.
The Impact of Attitude on Success
A recurring theme in self-help literature and audio programs is the power of positive thinking. I firmly believe that our attitude significantly shapes our life’s outcomes. While the rationale varies from anecdotal to scientifically grounded, the consensus is that positivity profoundly influences success. The concept of the law of attraction suggests that the universe mirrors our dominant thoughts and emotions. Positive thoughts and emotions attract positive experiences, while negativity attracts negative outcomes. As a person with a logical and scientific mindset, I initially approached this idea with skepticism. I sought to understand the mechanism behind this phenomenon. How could mere positivity magically manifest desirable outcomes?
My research into the brain and the law of attraction revealed that it’s not purely metaphysical; there’s a scientific basis to it. It’s deeply connected to our subconscious mind and its role in governing our bodies. Our conscious mind is only a fraction of our brain’s capacity. Our subconscious constantly works to sustain life, regulating vital functions like heartbeat, respiration, and muscle coordination. Most of our actions are driven by the subconscious, not conscious thought. We perform tasks like walking, talking, driving, and writing largely on autopilot. Repetitive actions program our subconscious mind to execute them efficiently.
Applying this to positive thinking, consistently positive thoughts program our subconscious to think positively. If our subconscious is programmed for happiness, it actively works to create happiness. The subconscious is far more powerful than the conscious mind, managing millions of tasks simultaneously, while our conscious mind handles only a few ideas at a time. By directing our desires to the subconscious, we enlist its immense power to guide our lives and achieve our goals, be it love, happiness, wealth, or material possessions. The theory also emphasizes focusing on desired outcomes rather than unwanted ones because the subconscious struggles to differentiate between them. Constantly focusing on “not having money” can inadvertently program the subconscious to perpetuate that reality. Similarly, dwelling on “not getting sick” can paradoxically increase susceptibility to illness. The key is to focus on health, wealth, and positive outcomes.
The Significance of Setting Ambitious Goals
Virtually every self-help book underscores the critical role of goals. Without goals, we lack direction, purpose, and clarity about our desires. Approaches to goal setting vary. Some advocate for broad, open-ended goals like maximizing happiness, trusting that the universe will align with our best interests. Others emphasize specific, detailed goals, broken down into smaller milestones with timelines, creating a detailed roadmap for achievement.
Some advocate for realistic goals, while others champion outrageous goals. I lean towards the latter. Outrageous goals are inherently challenging. If a goal is easily attainable, it lacks the motivational spark to push beyond current limits. I prefer goals that stimulate creative thinking and the development of new strategies and systems. The future is unpredictable, with unknown opportunities and challenges. Limiting goals to current capabilities is restrictive. Future income could surge, or innovative, cost-effective property acquisition methods might emerge. Lofty goals are essential because they account for unforeseen possibilities and encourage exponential growth.
The Importance of Collaboration and Support
Many self-help resources highlight the necessity of supportive relationships – friends, colleagues, mentors – to reach our full potential. The concept of a “mastermind group” involves like-minded individuals collaborating to offer advice, motivation, and mutual support. Brainstorming with diverse perspectives enhances problem-solving and idea generation. While I didn’t have a formal mastermind group initially (this has since changed), I enlisted my best friend to join me and learn the real estate business. He left a high-level corporate management position with a six-figure salary to pursue real estate with me. This partnership benefits me through fresh perspectives and additional support in my business. He gains by escaping the corporate grind and learning the path to true wealth. He also enjoys a flexible schedule and freedom from a desk-bound job.
The Power of Focus
Self-help gurus consistently emphasize the importance of focused effort. History’s most successful individuals were intensely focused on their objectives, persevering relentlessly until achievement or death. I’ve always considered myself a multitasker, a jack-of-all-trades. While this has served me well, I recognize the potential for greater efficiency and impact through focused efforts. There are areas within my business that can be optimized for better performance and increased profitability. I initially believed I had mastered the art of finding great real estate deals. However, starting this blog opened my eyes to the vast potential of direct marketing for off-market properties, an area I had previously overlooked. Instead of spreading myself thin across multiple income streams, delegating less critical tasks to my team and concentrating on high-impact activities is crucial. Intense focus on key areas, rather than superficial engagement across many, promises significant improvements in results.
Visualization: Envisioning Success
Elite athletes often attribute their success to visualization. Golfers mentally rehearse their shots before execution. Basketball players visualize game-winning shots repeatedly. Wealth-building mentors are strong proponents of visualization. They assert that visualization programs the subconscious with a clear picture of desired outcomes, prompting it to work towards manifesting those realities. To transform your life, daily visualization of your ideal life is recommended. Even more powerful is immersing yourself in the desired experiences – test-driving your dream car, visiting your dream home, engaging all senses with the things you aspire to. I once wrote a ten-year vision of my ideal life, detailing my dream house. Within three months, I unexpectedly bought that house. Moving wasn’t even on my radar, and I didn’t believe I could afford such a house, yet visualization helped make it a reality.
Integrating Learned Principles to Achieve Goals
Based on these principles, I believe I have a strong chance of buying 100 rental properties. The exact path remains unclear, but I’m confident in either achieving this goal or identifying an even more compelling and challenging one. Training my subconscious through positive affirmations, consistent focus on my goals, breaking down the overarching goal into manageable steps, seeking support, and visualizing success are all crucial components. Even if this journey doesn’t lead to immense wealth, the process will forge me into a positive, determined, and focused individual with clear direction.
Breaking Down the 100 Property Goal into Manageable Steps
While I’ve broken down goals in the past, the 100-property goal is unprecedented in scale. I’ll document the journey on this blog, tracking progress over the next 9.5 years. Writing this article itself is a step towards solidifying my belief in the feasibility of buying 100 properties. The first part of this article addressed mindset. Now, let’s examine the numerical plan. Here’s a year-by-year breakdown of my strategy to buy 100 rental properties.
Year One
With my current income, acquiring three rental properties annually is sustainable, a rate I’ve maintained for the past three years. In 2014, I anticipate completing a cash-out refinance on at least one property, generating capital for another acquisition. Furthermore, I’m banking on the positive impact of my renewed mindset and improved business strategies to generate enough additional income for another rental purchase. Securing a $60,000 HELOC on my personal residence provides further leverage for another property acquisition. The revised goal for 2014 is to buy six long-term rentals.
This will bring my portfolio to 15 houses, generating approximately $9,400 in monthly cash flow, or $112,800 annually, all directed towards mortgage paydown. Having already paid off one house at the start of 2014, I project paying off another 1.5 properties within the year.
Year Two
In 2015, combining income and savings should enable the purchase of four properties. Another cash-out refinance should facilitate another rental acquisition. Continuous business improvements are expected to further boost income through listing and flipping houses. This increased income should support another rental purchase, and leveraging the HELOC again could add another. The addition of my friend to my team is anticipated to contribute to income growth through his real estate activities, enabling yet another purchase. The goal for 2015 is to buy nine rentals.
This will expand the portfolio to 24 houses, generating roughly $15,200 in monthly cash flow, or $182,400 annually, dedicated to mortgage paydown. The remaining half of a property from the previous year, plus two more rentals, will be paid off in year two, bringing the total paid-off properties to four.
Year Three
Continued income and savings growth should allow for five rental purchases in 2016. With 24 rentals in the portfolio, refinancing at least two properties should yield capital for two more acquisitions. The HELOC should provide flexibility for another rental. Income is projected to increase further with my friend’s third year on the team and the momentum of new marketing and listing strategies. This income growth is projected to support three additional rental purchases. The goal for 2016 is to buy 11 rentals.
This will bring the portfolio to 35 houses, generating approximately $22,200 in monthly cash flow, or $266,400 annually, directed towards mortgage paydown. An additional 4.5 properties are projected to be paid off, bringing the cumulative total to 8.5 paid-off properties.
Year Four
Current income levels should support eight rental purchases in 2017. Continuing the strategy of refinancing two properties annually will enable at least two more acquisitions. The HELOC will be utilized for another purchase, and conservative income growth projections allow for one additional property purchase. The goal for 2017 is to buy 12 rental properties.
This will bring the portfolio to 47 rental properties, generating approximately $31,400 in monthly cash flow, or $376,800 annually, dedicated to mortgage paydown. The remaining half mortgage from 2016, plus five more properties, will be paid off in 2017, totaling 14 paid-off properties.
Year Five
Current income should facilitate nine rental purchases in 2018. Refinancing two more properties will provide funds for two additional rentals. While HELOC funds might be less available this year, income growth should support at least one more rental purchase. The goal for 2018 is to buy 12 rental properties. Note: Achieving this acquisition rate requires approximately $300,000 in cash for repairs and down payments.
This will bring the portfolio to 59 rental properties, generating $41,000 in monthly cash flow, or $492,000 annually, dedicated to mortgage paydown. An additional 7.5 properties will be paid off in 2018, bringing the cumulative total to 21.5 paid-off properties.
Year Six
Current income should support ten rental purchases in 2019. Refinancing two more properties will provide capital for three more rentals. Inflation and property appreciation should increase refinance proceeds compared to previous years. Income growth beyond current levels will not be factored into purchase projections, with any surplus income allocated to discretionary spending like vacations or vehicles. The goal for 2019 is to buy 13 rental properties.
This will bring the portfolio to 72 rental properties, generating $51,600 in monthly cash flow, or $619,200 annually, directed towards mortgage paydown. The remaining half mortgage from 2018, plus nine more properties, will be paid off in 2019, totaling 31 paid-off properties.
Year Seven
Current income should enable ten rental purchases in 2020. Refinancing two more properties will generate funds for three additional rentals. Further income increases are not factored into projections, as they are deemed unnecessary at this stage. The goal for 2020 is to buy 13 rental properties.
This will bring the portfolio to 85 rental properties, generating $63,400 in monthly cash flow, or $760,800 annually, directed towards mortgage paydown. An additional 11 properties will be paid off in 2020, totaling 42 paid-off properties.
Year Eight
Current income should support ten rental purchases in 2021. Refinancing two more properties will again provide capital for three additional rentals. The goal for 2021 is to buy 13 rental properties.
This will bring the portfolio to 98 rental properties, generating $75,600 in monthly cash flow, or $907,200 annually, directed towards mortgage paydown. An additional 14 properties will be paid off in 2021, totaling 56 paid-off properties.
Year Nine
Only two more properties are needed to reach the 100-property goal! This puts the plan ahead of schedule. When initially drafting this plan, the path to 100 properties by 2023 was uncertain. Refinancing is no longer necessary, and income can be allocated at my discretion, or retirement could be considered.
This will culminate in 100 rental properties, generating $82,400 in monthly income, or $988,800 annually, available for any purpose. Mortgage paydown can be discontinued, or further property acquisitions pursued if desired. These figures closely align with the initial projections, falling slightly short of the million-dollar income target (which was more of an aspirational number) and just under 60 paid-off properties.
Underlying Assumptions in the 100 Rental Property Plan
The figures presented are based on simplified assumptions for clarity:
- Monthly Cash Flow: Assumed at $600 per property. Current average is between $500 and $700.
- Mortgage Payoff Impact: Each mortgage payoff is assumed to increase monthly cash flow by $400.
- Inflation: Inflation is not factored in to simplify calculations.
- Portfolio Lending: Continued lending availability from portfolio lenders for desired property acquisitions is assumed. Peak financing is projected at 43 properties, decreasing as mortgages are paid off.
- Cash-Out Refinancing: Continued availability of cash-out refinancing options with portfolio lenders is assumed.
- Interest Rates: Significant interest rate increases are not anticipated.
- Rental Rates: Rental rate increases are not projected.
Additional Benefits Not Factored into Income Projections
Rental properties offer significant tax advantages, including depreciation, which can save thousands annually. Property appreciation, already substantial in recent years, is not factored into projections, despite a $600,000 increase in net worth from appreciation alone in the past two years. Similarly, rent increases, which have been realized in the past, are not included in projections. The actual financial outcome of buying 100 rental properties is likely to exceed these conservative projections.
Potential Roadblocks
These projections rely on several assumptions, any of which could deviate from expectations. However, other factors could positively influence outcomes or mitigate potential roadblocks:
- New Property Sourcing Methods: Direct marketing to off-market owners is being implemented to acquire properties at deeper discounts, potentially including owner-financed deals. Utilizing IRAs for property purchases is also a newly realized opportunity.
- Private Money: Securing private money sources is a goal to increase funding for repairs and down payments, accelerating property acquisition.
- New Income Streams: Unforeseen future opportunities and income sources could emerge, potentially enabling cash purchases and eliminating financing constraints.
- Paid-Off Properties: While not currently planned, lines of credit or refinancing on paid-off properties could provide substantial capital for further acquisitions if needed.
What Happens in 2023 Upon Reaching the Goal?
Alt text: Lamborghini Diablo, symbolizing achievement of financial goals and aspirations unlocked through successful real estate investment plan.
With a million dollars in annual passive income and financial freedom, numerous aspirations become attainable:
- Opening a pizza restaurant
- Starting a car dealership
- World travel with family
- Philanthropic endeavors
- Participating in the World Series of Poker
- Attending a Super Bowl
- Global golf excursions
- Purchasing a Lamborghini Diablo (achieved)
- Buying a beach house (achieved)
- Teaching others about real estate (ongoing)
This list represents a fraction of a larger aspiration list, many of which I hope to realize even before 2023. Financial independence will provide the time, resources, and freedom to pursue these and other passions.
Conclusion
The plan to buy 100 rental properties by January 2023 is ambitious, and its full realization is not guaranteed. Adaptability is key, and openness to better opportunities that may emerge is essential.
2014 Plan Update
A slight shift in focus towards fix-and-flips over long-term rentals occurred in 2014, driven by two factors:
- Increased fix-and-flip opportunities compared to rental property deals in the current market.
- The capital generated from flips accelerates rental property acquisitions, as rentals are capital-intensive.
Initially, the income growth needed to buy this many properties seemed daunting when the goal was set in 2013. However, by late 2014, the path to generating sufficient income for 100 properties and discretionary spending is clearly visible. While larger multifamily buildings might become more attractive in the future, single-family homes currently offer greater opportunity in my market.
2016 Plan Update
The Colorado real estate market has become even more competitive. Properties previously purchased for $100,000 now command prices of $160,000 or more. Rent increases haven’t kept pace with property value appreciation, making it challenging to find cash-flowing rentals. Rental property acquisitions in Colorado have been paused, with exploration of new markets like Florida underway.
Early mortgage paydown has also been discontinued. Reallocating capital towards acquiring more properties is deemed a more effective strategy in the current market. This approach has proven beneficial, with 16 rentals acquired in the past five years, resulting in significant equity growth. Approximately $300,000 invested in property acquisitions has yielded nearly $1.5 million in equity. Selling some existing rentals to reinvest capital in higher-potential markets is also under consideration.
This 100-property goal, initially outlined in 2013 and updated in 2014, remains vitally important for driving progress. While achieving the exact 100-property target by 2023 is uncertain, the progress made already significantly surpasses where I would be without this ambitious goal. The true value of goals lies in their motivational power to exceed perceived limitations.
2018 Plan Update
As of mid-2018, the original acquisition schedule has not been met. Disappointment is absent, as unforeseen market forces, both positive and negative, have shaped the journey. The primary challenge has been the Colorado housing market’s unprecedented price appreciation, nearly tripling since the goal was set. Rentals acquired for under $100,000 seven years ago are now valued at or above $300,000. Residential rental properties in this market are no longer cash-flow positive. While Florida was considered for rental property investment, the decision was made to pivot to commercial properties within Colorado. Larger, more valuable commercial properties are being acquired, albeit at a slower pace than the original plan for residential rentals. Market adaptations necessitate plan adjustments.
Focus has also shifted towards fix-and-flips, proving profitable in the current market, with 26 houses flipped in the previous year.
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