"The world is full of willing people, some willing to work, the rest willing to let them." -- Robert Frost
One question I get asked a lot is, "How much do I need to put down to make ___________ dollars per year," or "How much property do I need to own so I will make _________ in cash flow every year?"
This is a great question, and one that many beginning investors want to know. The best way to describe this is by a simple example. I am making a lot of assumptions and generalizations here, but you will get the picture.
Let's say that you want $50,000 per year income from commercial investment real estate. Let's back this up and see, conservatively, how much real estate you need..
If I have $50,000 of income coming from a property free and clear to me, lets assume that this is a 14% return on my investment (we won't use a no money down scenario, that would be too complicated for this simple example)...
But, $50,000 is 15% cash flow of a $330,000 investment (down payment) into a property. So, we have established that if I can find an investment that gives me a 15% return and I want $50,000 of cash flow, I will be investing $330,000.