Your personal finances are in order, you can find and analyze your potential deals, and you may even own some property.
You're still working a job, or working full time in real estate in order to fill your deal pipeline. You're making good money, but obviously the goal is to have passive income.
You've built the foundation, but now it's time to systematize what you've done and start growing.
A "system" is another word for a "standard operating procedure."
Every time X happens, you do Y - every tenant gets screened the same, every maintenance request goes through the same process, A late payment always get a notice on a specific day of the month.
Systematizing eliminates the arbitrary and lets you evaluate effectiveness.
The core strategy isn't that complicated.
Pretty simple, right?
In order for this strategy to work, the rental property you need to buy can only be "value-add."
Essentially, you need to find great deals that are under-value.
Sure, deals that are in great shape and cash-flow can make sense to purchase. The goal is to create a repeatable system and spending all your cash on down-payments is not repeatable.
So, you need to find deals cheap.
Notice how I said you need to do the right renovations. That's because renovating for flips and renovating for rentals can be dramatically different.
You need to evaluate each part of the project and try to determine how it will affect the rent. A 10k kitchen might raise the rent $150/month (18%/year return) while a 5k kitchen might raise the rent $100/month (24% return).
With rentals, cheaper upgrades often (but not always) have a higher return on investment than expensive upgrades. Make sure you consider all options when rehabbing a rental property, not just the most expensive ones.
Before you can refinance the property, you need to have stable tenants. Banks hate risk and will almost never give loans on vacant property.
The key to finding great tenants is to have an amazing screening process. Screening tenants is a huge topic by itself, and it's way too much to get into on this page. There are a lot of resources on this site to help you out, or you can download my strategy guide.
If you did everything right, you will be able to refinance the property and get most (or all) of your money back. Once you have the cash in your pocket and the rent coming in, you can repeat the process as many times as you want.
The strategy is pretty simple, but executing it can be really challenging.