I buy apartment buildings. $200mm portfolio. 24% annual growth for 17 years. Follow for real deal numbers - how I buy and run them.
USA
Joined June 2022
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Two brothers inherit $1,000,000 each.
Brother A hates debt. Buys a $1M property in cash. Collects $10k/month. Sleeps like a baby.
Brother B uses leverage. Puts his $1M down on a $5M property and borrows $4M. Collects $50k/month - $25k after debt service.
10 years go by. Real estate doubles.
Brother A: $2M property, $20k/month. Nice and safe.
Brother B: his property is worth $10M and the loan is down to $3M.
He refinances to $8M, pays off the $3M, and pockets $5M.
He rolls that $5M into a $25M property.
Final score after 10 years:
Brother A: $2M in real estate, $20k/month.
Brother B: $35M in real estate, $350k/month in revenue - 175k after debt service.
Same inheritance. The only difference was leverage.
Debt on cash flowing assets isn't risk. It's the whole game.
Got 3 bids to repoint brick on one of my buildings.
$80,000.
$200,000.
$30,000.
The $200K guy didn't want the job. That's how they say no.
The real question was whether the $30K guy would do a garbage job.
So I made the cheap guy and the $80K guy both show me photos of buildings they'd already done.
Went with the cheap one. Great job.
Higher price doesn't buy better work. Get 3 bids and make them show you their work. That $50,000 is still in my account.
Roof has 3 years left.
Replace now: $60,000.
Patch it: about $4,000 a year until it dies.
What would you do?
Most tenants don't pay late because they're broke.
They pay late because they learned nothing happens when they do.
Late fee on day 6. Every time.
And don’t entertain stories.
Just made my first real money with Grok bot.
I gave it my company's general ledger for the whole year and told it to find duplicate payments.
It flagged a bunch. Most were fine. Same work order split across units. Installment payments.
But one landscaper billed me twice for the same job.
My bookkeeper called them. They gave us a credit of just under $700.
We never would have caught it.
$700 isn't life changing. But it's money I already paid and got back for free.
@grok what else should I have it check?
You won’t make much money when you start out. But after a few years if you invest wisely you will be making more than you ever could working for someone else.
I quit my job in 2010 to pursue real estate investing full time.
The response I got over and over again when I told people I was a real estate investor was “wow sorry to hear that.”
Some were serious and some people seemed to say it jokingly.
They didn’t get it. It was the best time to be getting deals and I was making a killing.
Right now we are seeing that in commercial real estate.
Right now is a great time and for anyone who always said they are holding off on getting into real estate until prices get better, now is that time.
Go get some deals!
This is why you don’t invest in blue states/cities
Graham tells Nithya Raman how getting ONE ADU approved in LA turned into a $40,000 sewer repair, an $8,000 sidewalk permit, and a 6-month delay…
“So we go in to try to fix the sewer line. It's $40,000... But to get to the sewer line, you have to break the sidewalk… That was another $8,000. It was a delay of about six months.”
This reminds me of my water heater issue. Find good reliable people and pay on time. It’s worth it.
So many crooks in the plumbing business!
We had a tiny gas leak behind our dryer. Couldn't get the usual guys in quick to look at it. Get a recommendation from a chat for another plumber who comes and says straight faced it will be $2,100. Politely tell him to kiss my ass.
Plumber I work with regularly comes next day and does it for $250.
I can't imagine what old people deal with trades people on electrical and plumbing.
Unpopular opinion.
Your first rental should not be a house.
A house is 100% vacant or 100% rented.
A 4 unit with one empty unit still pays the mortgage.
Change my mind.
A friend of mine just went to Publix parking lot to pick up a guy to help him scrape up some flooring.
Guy said he charges $39 an hour.
The best money I ever made in real estate didn't necessarily come from buying cheap.
It came from fixing bad management.
Same building. Same tenants.
Just collected the rent on time, brought rents to market, fixed things before they broke, and stopped overpaying contractors.
Most buildings aren't bad. They're just run bad.
Hey @grok if you had $500,000 and had to buy an investment property right now, what would you buy?
Here is what I would do
Use the 500,000 as a down payment on a 5 to 15 unit building in a nice area that’s not being run well.
Cut the waist raise the rents an ad value to the property by increasing the bottom line numbers.
Refinance the property in 12 to 24 months and pull out your down payment hopefully more and rinse and repeat.
@grok answer is good, but not gonna get you the most value.
This is exactly why I hate using 3rd party property managers.
I have one complex that I can’t manage in house at the moment.
Manager says a water heater is down and we are using a backup water heater for 8 of the units.
She said the best quote she got was $27.
I said $2700 is a little high for an 80 gallon tank but I’m fine with it you can go ahead and install it.
She says no, not $2700, $27,000.
I don’t even understand the balls someone could have to quote that price. It is so absurd.
At the time I didn’t realize it needed to be a commercial grade which my plumber said he would do for $4500.
But seriously. Manage in- house. Your manager isn’t helping you make money.
At some point real estate will hit equilibrium again.
There are many more sellers than buyers right now, but life happens and people circumstances will change.
I wouldn’t jump into buying just yet.
I think we still have a year or two more before single-family home prices start coming back up again.