READER MAIL: Outline for producing $20,000/month passive income in the next 5 – 7 years

This week we did a very soft launch of our new real estate investing course. We wanted to extend our absolute best offer to the readers of our email newsletter in order to show our gratitude for their support AND to allow us the chance to iron out any kinks there may be in the ordering and distribution process. And,  some of our readers asked us questions that opened things up nicely for the launch. Here’s one:

Hello Dave and Julie

I have recently signed up on your website and enjoy your fresh attitude of helpfulness.  It is just a breath of fresh air.  I have been looking to augment my income like most and like the idea of investing in real estate.  I am wanting to produce a passive income of $20,000/month in the next 5-7 years.  Can you outline how I might get there?

Thanks again for your insight.
Joe

Here’s my response:

Thanks for your great email Joe – and for your compliments!

It’s pretty much impossible for us to outline a plan for you without knowing your current financial situation, your risk tolerance, the types of properties you’d be willing and able to invest in, and so much more!

We’re happy to tell you that $20,000 per month in passive income is very achievable with real estate in 5 – 7 years, even if you are starting out today with very little money. HOWEVER the price you will have to pay for that today may be higher than you’d like to hear. You will need to devote a lot of time and energy to getting there. And, unless you have lots of cash to play with now, you’ll need to use sweat equity and lots of research to find the best deals, attract partners and generate cash to continue your investments. It’s a tough, uphill battle. This may be fine for you – but for us, we’ve found that steady and low stress real estate investing is more our style.

What’s that mean? Well, following the program we’ve created for our Rev N You readers (The Real Estate Millionaire: The Essential Starter Course), conservatively, you could get to $5,000/month in positive income from simple real estate investments within 6 years. It’s the sure and steady way to building your wealth and your income. Start our process today, and within 6 months you can be painting the walls on your first rental property. 12 months later you’ll be posting “For Rent” signs on your second property … and every six months you’ll add another property to your portfolio. After only 6 years, you can be depositing almost $5,000 a month into your bank account after all the expenses and mortgages have been paid on your properties!

You’ll add the properties slowly to ensure they stabilize and run themselves – and your investing stays part time and low maintenance.

It won’t be glamorous – but if it feels boring then you’re doing it right!! When real estate is full of thrills and excitement it often means you are taking big risks … and we’ve learned that big risks can lead to BIG BILLS and SLEEPLESS NIGHTS.

Joe, you’ll find a little spreadsheet attached showing our steady approach to real estate investing. You can play with it and see how finding properties with more positive cash flow will get you to your goal quicker. You can also change the numbers to see how your monthly income will increase or decrease AND how your total wealth will be growing.  If you want to get to $20,000 in positive income, you can quickly see how many properties you’ll need to buy (or how much cash flow each property will need to generate) to get you to your goal.

Thanks for your email. And, thanks for being a Rev N You with Real Estate reader!
Regards,
Dave

PLEASE NOTE: This spreadsheet is a simple and conservative example of income and wealth accumulation using real estate. We’ve kept it basic so you can only change a couple of variables – but keep in mind that there are MANY variables that can increase your cashflow, and build your wealth quicker (like lower interest rates, larger down payments, reduced expenses, higher rents, etc.). We’ve also made many assumptions (which are listed) to simplify things for illustrative purposes.

We haven’t taken into account the tax benefits of real estate ownership and we’ve also estimated a 2% appreciation in value for the properties purchased. While this value is conservative given historical value increases which have averages around 4-5% annually for most areas, we are seeing depreciation in most areas – so you can change the number to reflect what you think it will be in the area you are looking to invest in.

This spreadsheet is intended to be an illustration not a decision making device.  This spreadsheet can not be relied upon for expected results nor should it be used to determine what is right for YOU. This is just for demonstrative purposes.

15 Comments

Filed under investing, real estate

15 responses to “READER MAIL: Outline for producing $20,000/month passive income in the next 5 – 7 years

  1. Pingback: READER MAIL: Outline for producing $20,000/month passive income in the next 5 - 7 years | BuyWithoutYourBank.com

  2. Brian W

    What’s the password so I can change the variables in the spreadsheet attached to READER MAIL: Outline for producing $20,000/month passive income in the next 5 – 7 years

  3. Richard Ledward

    Hiya Julie:

    Thanks for yours and Brians efforts. Nice stuff for a beginner.
    Where is the spreadsheet? Best, RL

  4. Dave

    Hi Richard,

    Thanks for your comments. It’s Dave here (of Rev N You). The link is on the word “spreadsheet” in the sentence: “Joe, you’ll find a little spreadsheet attached..” Just click on the word “spreadsheet”. Alternatively, here is the link to the spreadsheet:

    http://revnyou.com/downloads/Income%20from%20Property%20Example%20for%20Feb%2019%202009%20Newsletter.xls

    Thanks for stopping by Richard!

    Dave

  5. Dave E

    Julie,
    I appreciate how you two are different from almost every other RE guru hawking their wares like snake oil salesmen. The key difference I see is that instead of appealing to peoples greed or desire to quit their job you are willing to tell it like it is. Real estate is not an easy get rich quick approach to investing. If anyone tells you otherwise advise your readership to run the other direction screaming loudly so you can’t hear them and have your hand on your wallet. I have grown to 52 rentals over the last 4 1/2 years and currently have 3 rehabs in process. Two of which I will flip and the other I will keep as a rental. I have developed a 7 figure net worth but net worth doesn’t buy cars and groceries. I still have a few more to go to be financially independent to support the lifestyly that my wife and I grew accustomed to from my six figure income working for a fortune 250 company.

    Since I went full time as a RE investor, everyone I know who went into this business about the same time has either taken another job (except one and he has started selling knowledge instead of real estate), one friend recently filed for bankruptcy. It P—-s me off the way every guru makes it seem like you can make a million like falling off a log with their program. I’ve spent about 30k on them and have yet to find the good life I do however firmly believe that I am on the right path and am now unemployable. I am not a stupid person, if a BA in business and an MA in finance is any indication and you don’t need either to make it in real estate.

    Instead of showing the big checks which often do not show the real profit after all the expenses and taxes (just saw this at a real estate meeting), let’s talk about maintanence, replacing appliances and what a couple of deadbeat tenants can do to you if you don’t have the reserves to get them out, clean up your place and wait for the next tenant. Please tell your students not to quit their day jobs until their RE business has supported them for a year.

    Keep up the good work and keep it honest. It is your differentiator from the rest.

    You guys are a breath of fresh air. Stay true to your morals and you will be successful. God bless you.
    Dave E

    • @Dave E – thank you so much for your support and for your story! Dave and I read it with interest and real appreciation. We started writing our Rev N You newsletter 3 years ago (our anniversary is actually April 17th) because we felt there was a serious lack of people sharing the “real” side of rental property investing.

      We love it when people “get it” and appreciate the real side we’re sharing. It’s not about getting rich quick, but it IS about getting rich and gaining freedom. Congratulations on your successes!!

      Thank you for sharing your thoughts and for reading Rev N You. You made our day!!

  6. Mark

    Can you also share the password to unlock the protected doc with me
    Thanks for all the great info
    Mark Vandewater

  7. Hi Mark,

    We will email you about this. Watch your inbox for our response. And thanks for your comments!

  8. Jen

    Hi Dave and Julie,

    I’d really like you to share the password to this document with me, too, please. I have bought 3 investment props in the last 6 years and am still nowhere near making passive income! Maybe I can get some idea of what I’m doing wrong and how to move forward. I really admire what you guys have done. Congratulations! And thanks for sharing all this great info with the rest of us!

    Regards,
    Jen

    • Hi Jen – thanks for your note. We protected the spreadsheet for many reasons – including the fact that Dave spent several hours creating the formulas and calculations that went into that spreadsheet. As much as we provide a ton of stuff for free and genuinely want to help people, we also don’t want to give absolutely everything away. There is a ton of value in what we offer. Additionally, this particular spreadsheet was intended for a simple illustration not as a decision making tool. We both are a little uncomfortable turning it loose onto the world where people might use it to make decisions vs. just to see what is possible with basic real estate investment scenarios.

      I hope you understand. If you have a specific question we can help you with please let me know. Thanks for reading Rev N You.

  9. KP

    Hi Dave & Julie,

    I recently started reading your articles, and have to admit, you do provide a lot of valuable insight into Real Estate investing.

    Kudos to you.

    Persnally, I live in Toronto, Canada, and I wanted to ask you a couple of questiions, since I assume most of your readers reside in the U.S.

    I have been planning to invest in real estate for a while now, and in fact took my first plunge into real esatate in 2007, by buying 1 unit in a 23 story condominium building in the Greater Toronto Area. It is a brand new building being built and will close in Spring 2010. I plan to rent out the unit for at least 1-2 years and see how it goes.

    I wanted to get your thoughts on investing in property that is not a single dwelling. For example, most of the articles and stories I hear are in regards to renting out property that can have 1 tenant (ie… A condo unit, or a house). Although there’s nothing wrong with this approach, after talking to a few people who have invested in real estate, they said that they would NEVER buy a single property that would have only 1 tenent. They in fact buy entire buildings (small ones) that have anywhere between 5-20 apt units. The more I think about it, the more this makes more and more sense to me…..Why not have a property that has multiple tentants paying your bills, instead of solely relying on 1 tenant to pay the bills??

    Now, I realize you may be thinking, “Well, Not everyone can afford entire buildings, hence single dwellings are the properties of choice”. Fair enough, so let me elaborate….

    Let’s take an example of a building that is on sale for $1.05 Million dollars, and their are 16 Units within the building with a Gross Income of $15000 monthly.

    Assuming the building did not require any major renovations, what are your thoughts simply from an affordability standpoint, if 5% down was given. (And I’m assuming the bank will finance the rest @ 7% for example).

    I realize you cannot give personalized advice, and there are other expenses that need to be factored in….However, please assume all other expenses are industry average.

    It sounds like a great deal to me (even if I factor in principal, interest, property taxes and insurance)? I am assuming a very low vacancy rate, and maintenance will be a constant industry average.

    I would like to hear your comments and thoughts on such a property.

    ie..Why don’t other people consider multiple tenant properties, and everyone keeps talking about single tenant properties. It makes no sense to me.

    Please tell me what I’m missing here, because I keep telling myself, there must be an incredible amount of risk for other people not to do this?

    tks
    KP

    PS. Please also email me the password for the spreadsheet. tks

  10. Dave

    Hi KP,

    Wow – that’s quite the blog comment! Thanks for passing this along and thanks for your positive comments about our articles. But rather than writing a long blog reply here about buying single family vs. multi-family, we thought it would be better to address it in an upcoming article.

    And kudos to you for jumping into the real estate investing market! That’s very exciting. To give you some extra information about pre construction condo’s (and the pro’s and con’s), please read this article we wrote:
    http://revnyou.com/January_18_2008_Buying_Pre-Construction_Condos.html
    One of the biggest issues to be aware of with pre construction is “phantom rent” which is basically paying the developer occupancy fees (effectively paying them rent until the condominium corporation is registered with the city). This means that for however long it takes between “occupancy” and “closing”, you will pay rent and will not get the benefit of principal paydown with a mortgage. But, there are several advantages to buying pre construction as well. Be sure to check out our article above for more great info!

    As for passing along the password to the Excel spreadsheet, we protected the spreadsheet for many reasons – including the fact that I spent several hours creating the formulas and calculations that went into that spreadsheet. As much as we provide a ton of stuff for free and genuinely want to help people, we also don’t want to give absolutely everything away. There is a ton of value in what we offer. Additionally, this particular spreadsheet was intended for a simple illustration not as a decision making tool. We both are a little uncomfortable turning it loose onto the world where people might use it to make decisions vs. just to see what is possible with basic real estate investment scenarios. We hope you understand this.

    Thanks again KP, please keep reading our Rev N You articles and watch for our “Reader Response” article in the next few weeks on your single vs. multi-family inquiry!

    Regards,

    Dave

  11. Pingback: The Best of 2009 at Rev N You Multi-Media Style! «

  12. Hello Everyone – We continue to receive emails asking us for the password. When we emailed the other people in response we were letting them know that we will NOT share the password. There are many reasons for us keeping the password private. In addition to the fact that Dave spent a lot of time creating this spreadsheet and doesn’t want to give everything we do away … he also felt uncomfortable giving out the password to people who might try to use this spreadsheet for decision making when that was never his intent. He merely wanted to show someone what was possible. It was for demonstration purposes.

    We have plenty of great analysis spreadsheets you can use in our Real Estate Millionaire Program if you’re interested (www.realestatemillionairecourse.com)… you can also check out the spreadsheets at http://www.revnyou.com/express.html

    Thank you!

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