Acquiring doors is the fundamental principle of wealth building in real estate. A rule of thumb is the more doors, the more cash flow.
In this phase, I’ll acquire the specific number of doors I need to hit $5,000 a month in passive cash flow. For me, I like to round things and keep numbers easy. I’ll need about 6 doors rented out at $1,000 a month to make $5,000 in cash flow.
This sounds so much easier to type than it is to actually do it.
Acquiring a rental is the goal, but how am I going to get there?
For me, I’ll be using cash saved up (and from an inheritance), loans, and private money to acquire the 5 doors I need.
But buying a property is the easiest part
There’s this concept on the ramifications of decisions, almost like a chain reaction that is caused by this one decision.
So if I buy this rental property, what has to happen?
Well first I need to make sure the area I am buying in has different factors that show a strong rental market.
And it’s not just the name of the city, it can get down to the neighborhood too. Philadelphia Metro is a strong growth market for real estate, but if you went down to north philly vs society hill – you may see a difference in price, rents, in quality of people, how easily accessible an area, and much much more.
After we get an area lined up, we must learn how to analyze deals. Is this property I want to buy going to make me money each month or lose me money? (most people don’t take all expenses into account)
Maybe we analyze 100 deals, put an offer on 10 of them, and 1 gets accepted!
And after the offer gets accepted, comes the due diligence
Inspecting the property, digging deeper into numbers, getting financing and title lined up, preparing for any work that needs to get done, insurance.
And ideally once we close, work is getting started.
Once the work is completed, we must find a tenant to occupy our new rental. It’s important to note that it may seem that everyone wants to rent the place from you, but we don’t want to rent it to anyone. We want to rent to the most qualified person we can so that we can have the least amount of headaches, receive the most amount of money,and avoid costly repairs and vacancies. Some tenants will stay a month, others forever,
Then after the tenant is in place, we’ll have to manage them along with upkeep on the property.
So yeah, acquiring doors sounds easy, but it’s not. It is simple though and with the right mix of mindset and team members – nothing is impossible.
If you’re on your financial freedom journey , reach out and let me know your thoughts. Always down to chat. It’s a long game, but one worth playing in my book.