Starting this year I thought reaching $1,000/month in cash flow was out of reach, thought I was shooting high, but early mornings, late nights, and a great team made our goal a reality before I knew it.
Put me in Coach! We started 2016 with only one unit and set out with a goal to increase our cash flow to $1,000/month. We didn’t have a specific number of units in mind, just $1,000/month in positive cash flow. If we’re following our rule of $200/unit after all expenses, then we needed 4 more units. By May, we closed on our 4th unit of the year allowing us to do just that. I initially thought $1,000/month in cash flow was out of reach, thought I was shooting high. I’m consumed by my day job and couldn’t imagine how we could get there, but early mornings, late nights, and a great team made our goal a reality before I knew it. What now?
The next several months we spent getting those properties in shape and our last acquisition of the 2016 year was a Tax Deed purchase in August. This tax deed property and inherited tenant situation started out strong, but sad to say we eventually had to evict him and currently going through stabilizing that property. Nonetheless, from one to now six units in our portfolio…wow!
The Pensacola Market is hot and has been hot for a while. Many local and regional experts that I’ve talked to are expecting a down turn in the next 12-36 months.
There is also some solid supporting evidence that a local down turn is imminent:
- volume of sales in Pensacola – at & above 2005 levels (see graph below)
- Price of properties
- # of new RE Agents
- Amount of new construction for both SFR & MFR in Escambia & Santa Rosa counties
- Veteran REIs (regionally & nationally) starting to offload assets
- Two small MFRs hit the Pensacola MLS last month, both were under contract in 2 days of being listed
It could just be the paranoid side of me, but I have a hard time seeing how this will last much longer in Pensacola. However, as I mentioned in How We Use Our Tripod of Adopted Investing Criteria, we are focused on Cash Flow and not so much on appreciation / price. That said, with the predicting market turn we’re going to be more patient and focus on learning more about midsize multi-family properties (15-20 unit apartment buildings).
- Building Relationships / Expanding Circle of Influence
- Stockpile Cash / Reduce Expenses
- Increase Credit Lines
- Build Knowledge Base of 15-40 Unit Apartment Buildings
- Patience for great deals
When we first started thinking about seriously investing in real estate (2011) I found BiggerPockets.com [great site, join it, connect with me]. One of the first articles I read, published by BiggerPocket’s VP of Business Development Brandon Turner was How to Make a Million Dollars from Real Estate. This article laid out a 7-year plan to make a millions dollars in REI. That story stuck with me then as much as it does now. Starting 2017 we are effectively starting year two, in which the article suggest to not do any acquistions. Lining up with Pensacola’s expect downturn I’m fine with sitting on the sidelines…as long as I can be patient.
- How I Started Investing in Real Estate
- How the Florida Housing Market is Affected Before & After a Presidential Election Year
- Real Estate Investing Terms: Cash Flow [Example]
#REI #RealEstateInvesting #HelmsREI