How To Create $10,000 Passive Monthly Income And Retire – Real Estate Investing

Joe: Hey, it’s Joe. I’ve got another question.
This one is from Jeff Carrol from Seattle, Washington. Jeff says, “Based on my own background,
the main thrust is, ‘Where is all of this leading? What’s the finish line?’ For example,
how do I create a minimum $10,000 a month permanent income, not lease options that can
cash out? Besides paying off the single family houses, which is great, how do small to large
apartments and self-storages figure in this ultimate plan? In short, where is all of this
leading?” Joe: Well, the goal is to have 100% passive
income. Just like you say here, if you can get $10,000 a month, you’ve got $120,000 a
year; it’s a pretty good income. And if you own rental property or real estate in general,
typically rents go up over time because inflation makes them go up, so that makes your passive
investment inflation proof. If you buy a fixed cd or annuity and you know it’s going to be
_x_ amount of dollars, you know that that’s going to stay the same until you die, whereas
real estate has the potential to go up and the likelihood is that it will go up over
time. Now, values fluctuate and we’ve all seen a big adjustment in values across the
country, but income has stayed pretty stable across the board, all over the country. And
we’ve seen a little bit of adjustment in rents on the downward side over this last year or
so. I was surprised that it didn’t drop earlier but it didn’t. Then we saw in the last year
that it dropped maybe 5 to 10% in some places. But it’s still a good solid investment. All
of the real estate that I own is still bringing in income every month. I own property free
and clear. I also own property that I bought subject-to that is paying off a loan over
time and that’ll work really well, and I bought properties that I even used loans to do. You
can’t get investment loans these days that make any sense at all, and I wouldn’t suggest
that anybody do that, and there are some other problems with that as well which I won’t cover
in this program. Joe: And the other question you had was, ‘Should
I buy commercial property like multifamily and self-storage?’ If you have the cash, they
can be good investments. If you look at single family homes and you look at the rent to price
ratio, it’s much higher on a single family home than it would be on a commercial property,
depending on where you buy. If you buy in good solid, blue collared neighborhoods where
you can get substantial, professional, competent property managers, that’s what you want, because
for it to be passive income, you’ve got to have a good property manager to handle the
work for you, or good property managers if you’re in multiple areas like I am. Joe: So it’s very important to have good people
that can do this for you. You don’t have to manage the properties yourself, whether it’s
self-storage or commercial. So if you have good property management, a lot of the reasons
to buy commercial, which from what I hear from people that own a lot of commercial,
it’s easier to manage commercial property. That’s true, but you also have the potential
for more vacancies, especially in a volatile economic environment. And you still have to
make payments on the mortgage, unless you paid cash for the property, and then it doesn’t
hurt as bad, but it still means that you’re going to have less income per dollar that
you spent. So if you want to get a 5-35% return, which you can do in real estate and which
I’m doing in real estate and more, and if you do even more things to it like become
active in the investing part of it or you turn around and sell some of the properties
that you buy, then single family homes make a lot more sense for that reason. I’ve done
commercial, I’ve done self-storage, and I’ve worked in those environments but I like single
families better and the majority of what I have in my portfolio is single family homes.
And I’d recommend the same to you. Joe: A lot of people think that multifamily
properties are pretty sexy because you think, ‘Well, if one of them is vacant, then the
rest of them will pay for it.’ That’s not always the case. You also have to think about
the loan, you have to think about the return on investment, you have to think about the
headaches to get them filled, who’s going to manage them, and, ‘Is it easier to manage
a multifamily than it is to manage a single family?’ And then you have to think about
liquidity. Because eventually you’re going to die and you’re going to pass these things
onto your kids. Or maybe you’re going to just want to sell these properties and take some
cash out for yourself and if that’s the case, a single family home is a lot easier to sell
than a multifamily building. If you try to sell in a weak market, you can still get your
cash out and you can do alright in it. Also, there’s so many things that you can do with
single family homes that you can’t do with multifamily. Joe: So that’s why I push single family homes
over multifamily. I know a lot of people that are making money in multifamily and they’re
happy with it. Most of them are probably buying using terms (or using cash) and are finding
good cash flow situations where they have enough money to go in and fix up the properties
and get good people to do that rehab work for them inexpensively. But they’re still
coming out of pocket to do that. Joe: Real estate investing is a process. You
start trying to get some income coming in and just trying to get some money to replace
your income so that you can quit your job and do this full time. You start buying these
properties and you just flip them at the beginning, and then you start keeping them. After you
get enough income to support yourself, you start keeping these properties and building
your portfolio — that’s what makes you rich. So buying these properties over the long term
is what’s going to make you rich. You can do it in just a few short years. I’ve got
a student right now that has 4 or 5 million dollars’ worth of property. Half of its paid
off and they’re brining in a lot of income every month and they’ve only been doing this
for 3 or 4 years. So it’s not that big of a challenge to pull this off. Granted, they
are the exception, not the rule; not everybody’s pulling that off on that level. But it does
show you the kind of thing that can happen when you buy single family homes. But as I
said, the goal for most folks is to get started and start flipping deals, because once you
do that, then you can move onto the next step which is building the portfolio. I hope that

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