Working Out the Strategy

I'm at the shipping depot right now. Let's see, it's 8pm. It just started raining so I'll be soaking wet the rest of the night. I forgot my microwaveable Healthy Choice meatloaf dinner at home so I'll be starving for the rest of the night. My co-worker just farted and I'm locked in this guardshack with him for the rest of the night. Someone tell me how I'm going to make it through the next 4 hours?!!

This week I'm dedicating to refining my three-year strategy for achieving my 10k a month/ $1M goal by the end of 2014. I spent countless hours writing out different strategies at both jobs. I started reading an e-book from some guy named Ken Rosen about real estate investing. I promised myself when I graduated college that I'd never read a book again, but this was an interesting one and I wasn't being graded. I haven't finished it yet, but it's pretty good so far.

Anyway, he confirmed one of the problems that I felt had to be addressed in my overall strategy: buying properties with all cash/no mortgage. It's a complete waste of money. Why buy a 2 family property for 40k in a questionable neighborhood that makes me $1200 monthly, when I can put 40k as a downpayment for a 6 family property in a good neighborhood that will make me $2400 monthly? It's the same amount of money out of pocket, but my net income doubles! Real estate is such a great thing to do primarily because of the banks, so why take them out of the equation and make it difficult for myself so early on? Later down the line, when I'm making alot of money, I can pay off mortgages and buy properties outright. But in the beginning stages?? Forget it!

So I have to buy my next properties with mortgages. A single person is only allowed to have 4 properties under mortgage, but I think I may have found a way around this. While a single person might only be allowed 4 mortgages, a company can have as many mortgages as it wants. In February of 2010, I started an LLC, let's call it MFM (Money For Me) Property Management LLC. Next year, I'm going to file taxes for my LLC, using the rental income. All the tenants make their checks out to the LLC anyway, so it works out. In order for an LLC to qualify for a mortgage, it must show at least two years of taxable income.

Here's where I'm at strategy-wise:

2012: Purchase a property, most likely through a renovation loan, that will net me at least $2500 monthly. This property, called property Charlie, must be bought and renovated before the beginning of September of 2012. Continue working both jobs, and file job income under my name, while filing rental income under the LLC.

2013: Purchase a property that makes at least $2500 monthly. This property, called property Delta, must be bought before the beginning of August of 2013. Continue working both jobs until November (December if I can handle it), then retire at the end of 2013. File personal and business income separate.

2014: Purchase two properties under the LLC that make a combined 5k monthly rental income. These properties, called property Echo and Foxtrot, must be bought before the end of 2014. By the end of 2014, I'll have my total of 10k monthly rental income and that should do it!

I've made appointments for the rest of the week to see commercial loan officers that can help me plan the specifics better, but that's the general outlook of it. There are alot of variables that I have to make room for. For one, I'll have to keep these jobs for the next 27 months. Both of them. Full time. Can I handle that both physically and mentally? Will the jobs still be here in 27 months? There's also the variable of occupancy. Just because I buy a property doesn't mean it's a guaranteed money maker. I have to get and keep these units rented out. I've never owned anything over 2 units, so I'll also have to deal with the learning curve. There's also the variable of my illness returning. I won't even get into that right now.

There's alot of variables that can go the wrong way, but I have 3 more months to figure everything out to a certainty. At first I was overwhelmed, but it's all in perspective now. The rain stopped. I found a lost bag of trail mix in my car, so I'm not hungry anymore. My co-worker's fart smell is gone. Everything seems daunting from the outset; all big plans do. But once the realization sets in that it's this or nothing, the plan goes from daunting to tangible. I'll make it through like I always do, and then my job will be done.