Get Rich On Rentals

Posted under Investing Strategies, Oklahoma, Real Estate by Darren Hom

Last week, we went to a seminar hosted by the Oklahoma City Real Estate Investors’ Association. Justin Gentry, a local real estate investor, showed us a strategy that will allow him to eventually collect an income of a million dollars a year.

Here is the basic outline of his strategy:

1. Buy a house at a large discount that needs minimal repairs to be put in rentable condition. The gross rent per month should be at least 2% of the purchase price of the house.
2. Fix the house up and rent it out.
3. Borrow against the house at 50-65% LTV to pull all of the acquisition and repair expenses back out of the house. Small, local banks will lend based the overall cash flow of Justin’s housing portfolio.
4. Use the money to buy the next house. Do this once a week.
5. Use the rents to pay the loans down as quickly as possible.

If Justin continues buying one house per week, he’ll have two hundred houses after four years. Once they’re paid off, each house will throw off about $5000/year in net cash flow. For two hundred houses, that’s a total income of a million dollars a year.

That income will rise each year as rents increase. If Justin ever needs to, he can borrow against his free-and-clear homes and have quick access to several million dollars of cash.

You can do this too. One of the challenges will be finding one house a week to buy that will give you enough cash flow to follow Justin’s plan.

There are ways to do this in many areas of the country. Stay tuned as we continue to post profit-generating strategies that take advantage of a buyer’s market.