How to Make 100K Investing in Real Estate

There are dozens of ways you can make a lot of money investing in real estate. You could buy houses and flip them, develop land, acquire self storage, loan money to a developer for a preferred return, or buy apartment buildings.

Every successful real estate investor has developed a system that works for them to generate cash flow. I have been investing into real estate for over 8 years and I was always exposed to real estate ever since I was a kid growing up.

My father took me around to properties that he had purchased and I was always leaning about real estate and how it was managed. My father had built a $2.5 million dollar portfolio. Since we partnered together the portfolio has now grown by over $100 million in new assets under management.

I have shifted our focus to developing larger deals that consist of 150+ units of market rate housing, which will now allow us to grow by approximately $75-$100 million per year if we keep hustling and finding ways to put new deals together.

I have successfully been able to rapidly grow our portfolio step by step. I will show you the numbers through my experience of owning real estate. I will reverse engineer the financials for making $100K per year with my investing model, including actionable steps that I used when we first started expanding our portfolio.

Reverse Engineering 100K Profit With Apartments...

Generating 100K per year means you generate $8,333 of free cash flow per month. Free cash flow is the amount of money your real estate investments generate after your expenses and mortgage payments.

Let's break it down by 1 unit to make this very simple to understand. Say you have 1 unit that that you charge $1,000 per month in rent (or $12,000 per year). Divide the income in half to account for your expenses, bringing your net operating income to $6,000 per year.

Here is how the loan works. If this is an apartment unit where the property contains multiple units, you will try to spend about $85,000 per unit. Most banks will require you to put down 20% ($17,000) unless you are going to live at the property, or you find a lender with a policy that will allow you to put less money down.

Assuming you put 20% down per unit and finance $68,000, you will pay $4,080 if you setup an interest only loan at 6%. Your annual net profit on this unit will be $1,920. Divide $100,000 by your annual profit and you'll need 52 units to achieve the goal.

3 Lessons I Learned From Massive Growth

Never buy a deal you don't feel good about: If I don't get a good feeling about a deal I will never buy it. The deal has to have a lot of things going for it and I must see a path to earning my money back that I initially invested.

Upside potential in the rents has to exist, the location needs to be good. the floor plans need to be marketable, the size of the deal has to be attractive, and my gut feeling about the property when I tour it has to be strong.

Never buy a deal unless you know you can add value to it and improve its value.

Always look for bigger deals: The larger the deal you can buy to start, the faster you will be able to grow. If you can afford to skip the small deals, go for the bigger ones. Larger deals are more cost effective, easier to manage and have less headaches.

It is very hard to own multiple small properties, especially if they are not located near each other. If you buy small deals, purchase them close together. As you grow, ell your small deals and reorganize your portfolio into larger deals.

Grow revenues and reduce expenses: As soon as you acquire a new deal, start increase rents. Chances are the rent is below market. You'll have a quick boost in revenue by raising rents as soon as possible.

Manage the property better and smarter than the prior owner. Maintain the property at a better quality for less cost. Optimize your expenses by quoting other vendors (landscaping, lawn cutting, etc) to make sure you're getting the best price.

Increasing your revenue and lowering expenses will increase the value of your property and increase cash flow substantially.

MG