This is the classic “Cashflow” way of RE investing. You collect $200 a door and build your way up. It’s kinda the opposite of the “Appreciation” method we are more used to in Bay Area. Both methods work.
I think the biggest hole in his calculation is the “buy properties at 20% discount” assumption. Maybe it can happen outside of prime Bay Area like in deep East Bay or even Stockton?
I believe I suggested to you eons ago that multi units was the way to go and yet you pooh poohed the notion… of course cash flow is the key. Who doesn’t know that???
CCC?
Nuance please. I said I don’t like multi-fam in Bay Area. I never pooh pooh the whole asset class.
You’d have to ask the King.
So his networth has gone from 20k to 1M in seven years. That’s 50 times increase. In 20 years, his networth will increase by 50x50x50, that’s 125,000 times!!!
His networth in 20 years would be 2.5B if you can keep growing like this. This is a billionaire making methodology.
If my math is not wrong, this is immensely better than buying AAPL in 1996
Easy for BAGB to do. Every year can find a property at 80% discount that can be boosted by 10% in the first year, and cashflow 18%! Yes, cashflow not yield. No worries, the tenants would be absolute kwai and no vacancies whatsoever because is so easy to find tenants who is willing to pay whatever you ask for. Tenants would also maintain and make repairs at their own costs. Super cool tenants.
How many doors would that be?
Whoa!
Agreed. The key appears to be to buy at 80 cents on the dollar, then another 10% appreciation in the first year, so roughly 30% gain in one year with only 16% of the capital down. So maybe it’s quicker to just keep trading up like this and forget the cashflow? So flipping is the way to go !
Never sell and buy only!
So if we removed that 20% discount assumption how much can the cashflow investor build up over time? 200k? 500k? 0?
It’s not hard to buy at 20% discount in flyover states. You buy a property at 20% discount and only need to spend 5% to fix it up.
Even in BA, flippers regularly buy at 20-40% discount and spend 10-20% on renovation and then flip for a profit. Don’t we have quite a few flippers here? Nothing new, this is called sweat equity.