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SHOW NOTES FOR EPISODE 142: ASK BILL! $50K for $1K MONTHLY – 3 APARTMENT BOOKS – REI AND COLLEGE
How would you invest $50,000 in real estate to generate $1,000 a month in cash flow? What are the first three books a person should read who is interested in investing in apartment buildings? Should I go to college if I want to be a real estate investor? In this Fun Fact Fridays episode of Ask Bill, Bill responds to these questions.
How would you invest 50,000 USD so you can at least have a passive (monthly) income of 1,000 USD?
In 2015, I bought a duplex in the Bates Hendrix section of Indianapolis for a little over $50,000. I currently have two renters on either side paying $650 for a total of $1,300 rental income per month. Now, I didn’t pay cash for the property. I choose to finance it at 20% down and have a low interest loan. My mortgage payment is around $333, which includes my insurance and property tax payments. Most months, I receive a little more than $900 cash flow (after property management fees). The other costs are negligible.
If I had paid cash for the property, instead of financing, and didn’t have the mortgage payment, I would be netting close to $1,000 per month in cash flow. Now, keep in mind, you have to allow for expenses such as property tax, insurance, CAP-X, and allow for vacancies, but you would still be grossing $1,300 a month, before those expenses. Also, since this is a very good area, rents and market values have increased significantly. I haven’t raised my rents this year and could easily increase rents to $700 per month, bringing my gross to $1,400.
All that to say, you can easily generate $1,000 per month with a $50,000 investment. That is a return-on-investment of 24% and you would make your initial investment back in a little more than 4 months. Not bad!
Oh, by the way, this same property has increased in value, on top of the great cash flow, and is currently valued at $130,000. You can still finds deals like this in Indianapolis and other areas in the midwest and southern US.
I share a lot of this information on my Old Dawg’s REI Network podcast which airs twice a week. Have a listen and I think you might get some tips and valuable information that will help put that $50,000 to work for you. I also have articles and other resources for people just starting out in real estate investing. Here is the link: Old Dawg’s REI Network. Check it out!
I have looked at the commercial apartment books on your site. Any you particularly recommend?
As some of you may know, we have a resources page at our website at olddawgsreinetwork.com and part of that section is our Bill’s Top 20 Real Estate Books. In that area, we have a variety of different books related to real estate investing that we recommend. To check out that page, go here:
Three good commercial/apartment-focused books that Bill recommends are:
- The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges
- The ABCs of Real Estate Investing by Ken McElroy
- Multifamily Millions by David Lindahl
Should I go to college wanting to be a real estate investor?
I personally don’t feel it is necessary to get a college degree to become a real estate investor. However, if you are uncertain, I would first enroll in a Community College with the intent of getting your AA degree (only 2 years). Take the required courses and make sure you take lots of business and economics courses as well (accounting, finance, economics, etc.). Those courses will only help you in real estate investing.
My son is a senior in high school, wants to go into real estate investing, too, but is looking at getting his AA first. He’s also looking to buy a fourplex near the college, get an FHA loan and live in one unit while he rents out the other three. After his two years in college, he can move out of the fourplex and continue investing or, if he wants to continue his education at a four year college, he can move to the city where the four year college is, buy another fourplex, repeat the process and get his BA in Business. That way, if he has to pay tuition, it would only have to pay the higher tuition for two years.
You have a lot of options with real estate investing but a good business background is important if you want to succeed. I have an episode on my podcast on getting started in real estate investing that I think will be helpful. You can listen here: 006: How to Get Started in Real Estate Investing
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