I’m sure you’ve heard the saying: Never fall in love with real estate. Well, wish I were listening! Here we were, in love with the land, with the views, but we never checked to see if we had plumbing, a furnace, or a septic system. Meanwhile, we thought we bought a 4-family house plus two mobile homes that were on the property.
Oops! Make that two gutted mobile homes, still with loans against them from the manufacturer, compliments of the previous owner who sold everything removable, including the kitchen sinks. The only money we made off those trailers were the storage fees until the bank dragged them out of the field a few months later! Our expectation of 6 units quickly, nay, immediately, became a reality of 4.
People don’t believe me when I say it’s harder to have 4 units than 140. When you only have a few, everything is on you. You have to do every repair yourself. Every bad tenant, every trashed apartment is a personal affront. Every late payment, every vacancy, every repair is a critical cash-flow problem.
When you have multiple units, no one problem, percentage-wise, is as important. One vacancy out of four is a critical 25%. One out of 140 is negligible. You have better cash flow to work with. You can afford to employ others to help paint, clean, re-rent. You don’t know your tenants as well, so you can make decisions with a clearer head. You don’t take it personally when someone leaves an apartment in less-than-stellar condition.
So, at first, weary and just scraping by, until you build to that critical mass, that tipping point, you cry a lot.