Hey, what's up?
John Sonmez here from simpleprogrammer.com.
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Today we're going to be talking about real estate.
Yes.
I have done some videos on real estate.
Some of you are like, "What the heck?
Why is this guy talking about real estate?"
Well, I've done fairly well in the real estate realm.
If you're interested, you can always check out my playlist on real estate investment
and investment in general.
I'm not going to go into all the details here, but occasionally I like to answer a few real
estate questions on this channel.
I got one here from Jonathan and he says, "I'm 21 and set a goal that I want to retire
by 40 to 45."
Cool.
"With 20K of passive rental property income."
Man, that's awesome.
I like that.
I love that goal.
That's a good goal.
"Currently saving money to buy my first property and hopefully, when I get a web development
job I can speed up the process.
My question is how do I plan for this goal?"
This is good.
So, 21, Jonathan is 21 and he's thinking this way and he's got this plan by 40 to 45 to
make 20K of passive income from rental properties.
I love this.
This is great.
"Thanks for everything you do and have a beautiful day."
I am having a beautiful day.
Thank you, Jonathan.
"P.S.
I was thinking of buying a duplex and live in one and I rent out the other one so basically
the tenant pays my mortgage."
So, okay, there's a lot of ways to approach this.
I think Jonathan has got his head screwed on right.
Well, I'll start with the last, the P.S. of renting out a duplex and living in one side.
I think that's a great idea.
This is a fantastic thing.
More people should do this.
A lot of you young people out there that are thinking about renting or buying a house,
consider buying a duplex and renting out one side and if you find the right deal which—it's
out there, you could actually have the renters pay your rent.
You see what I'm saying?
You could actually live for totally free by having a duplex and renting out one side.
I'm not going to say it's going to be super easy.
I'm not going to say that those deals are everywhere.
It depends on where you're at.
You're not going to find that deal in California or New York, San Francisco, not going to happen,
but if you're in the Midwest you might be able to find that deal.
I've seen it before.
I think that's a great idea, but let's talk about the plan.
21, you want to retire by 40 to 45.
You want to get 20K of passive real estate income.
It's not going to be easy, but it's certainly doable.
What you need to do is you need to calculate backwards where you need to be and have a
real solid plan for this.
I can give you a general outline, but I haven't run the numbers so I can't tell you exactly.
There are going to be some factors in here, but you actually need to take a spreadsheet
and actually need to calculate this and figure this out.
It's going to be fairly complex, but you don't have to be super detailed.
You can kind of ballpark this, but you do need a spreadsheet.
You can get some rough answers here, but calculate this out, 20K of passive income from real
estate.
Let's say 45.
What does your gross need to be?
You're going to have expenses, you're going to have rents, I mean you're going to have
property management, you're going to have a bunch of things here.
That can give you an idea of what kind of wrench you need to be pulling in.
It's not going to be a 20K wrench, you're not just getting 20K.
It might be like 30 or 40K a month of rents.
In order to get 40K a month of rent how many properties do you need and how much will those
properties cost?
How can you divide that over time and put inflation into the equation a little bit here
over that period of time?
Work backwards and make a spreadsheet and run some scenarios.
This is going to take time and some planning.
Like I said, you can rough ballpark it.
If I were just going to give you what I think would probably work for you, it also depends
on how big your budget is.
How much money are you investing every year?
How much money do you have to invest every year.
If you can put 10K down onto a rental property every year that's different than, "Hey, I've
got 50K to invest in real estate every year."
That's different.
Or 100K.
Those are all different scenarios.
What you're planning based on your current scenario might—there may not be—there
might be this gap and you might be like, "Well, how do I get there?"
It might not be apparent.
You might have to do some other things.
You might need to make more money in your job or start a side business in order to fuel
that.
I had to do that to reach some of my real estate goals.
Think about that and calculate that out.
I'll give you kind of a rough timeline, a rough plan that I would have if I were you
which would be something like—and this was the plan I initially developed when I was
doing this which would be to buy one property every year, regardless.
The nice thing I like about this plan is that it's scalable.
The size of the property depends—is dependent upon how much money that you have in that
year.
When I first started in real estate investment when I was close to your age, I think I bought
my first house at 19, but I really started doing investments around 21 and started this
plan of buying one house per year.
I think the first house that I bought I was able to put $10,000 down.
It was like a $100,000 house or $120,000 house.
The next year it was probably about the same and then probably like the third or fourth
year I had more money.
I was able to put $20,000 or $30,000 down.
I got to the point where I was buying properties and I was putting about $20, $30, $40,000
down every year on a property when I buy it.
Some of that was because of the real estate that I was already making me money.
Some of it was because I was making more money in my job and I had businesses and side things
going on which helped me to do that.
That's the kind of plan that I would—it's not going to happen magically.
I think that's the key thing.
You actually have to have a solid plan for this and you can run these numbers and calculate
this out.
There's actually a really good book that I recommend called The Millionaire Real Estate
Investor.
I think that's by Garry Keller, the founder of Keller Williams if I recall correctly.
I don't recommend very many real estate books, simply because a lot of them are crap.
The reason why I'm really going to recommend that book to you is because it has these charts
that show you—it gives you a realistic expectation over 20 years what the value of a property
is likely to be, how much money you're likely to make from it, cashflow and all that.
Again, it's as complex equation.
You're not going to be able to nail this down perfectly, but at least if you run the numbers
and you do the best job that you can, you can have a ballpark idea and you can always
adjust the plan.
You've got to have—you've got to know where you are and where you need to go in order
to reach these goals.
I'll also recommend for you—I have a course that I created called Simple Real Estate Investing
for Software Developers.
You can check that out here.
If you buy that course, obviously it has a money back guarantee on it, but that's going
to help you to give you the basics of everything I know about investing.
Just to give you a background, I have about 26 rental properties.
They are all paid off.
I started investing when I was 19.
I kind of know what I'm talking about here.
I don't give a lot of bull shit advice about this.
I give you exactly—practical advice on how to get started and how to do this.
The reason why I created the course, even though it might not seem like it goes along
with a lot of my other content, it was just simply because I was tired of so many people
giving BS real estate advice and doing all these kind of scamming, no money down, speculative
moves that just doesn't make sense.
You need some kind of practical advice so that's what I put together there.
Go check that out.
This is good.
I think you've got a good plan here.
You just need to develop the plan further and it's going to be very dependent on your
individual factors and—I think you have information though to say, "Okay, can you
do this in 45—by the time you're 45?"
absolutely!
I believe that you can.
It's not going to be easy, it's going to be hard to do.
20K is a pretty big number but it's certainly possible, but you're going to have to start
moving now, which it seems like you're going to do, and you have to have a plan and it's
going to take a lot of work and a lot of effort and you got to find good deals in order to
be able to do this in that time frame.
All right, I hope that is helpful to you.
If you have a question for me, you can email me at john@simpleprogrammer.com.
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Take care