How many units will be an ideal starting point for a newbie? What are the pros and cons of buying a 20 units or 40 units? What are the gotchas? Thanks!
It depends on how much work/learning that a newbie wants to do and whether the property located out of state. With a unit count of about 100, a property can afford full-time property manager and maintenance man. In this case, a newbie can acquire the asset and get a full staffing on the property. The work needed for the newbie will be less, as they can outsource the management to a third party. Their learning will be limited to asset management and managing the staffs/property management company. If the newbie wants to learn property management and investing in their backyard, they can buy a smaller property in the size of 20-50. This size would allow them to learn hands-on property management. I started with 45 units in TX. We hired a part-time property management staffs but we manage the staffs directly. Competition in the smaller size units of less than 100 is not as bad as above 100 units, so it may not be a bad place to start.
Where your fear begins is where your cons start. To me this acknowledgement of this is golden. You know what needs addressing and can work on it. As I continue to learn and network, I want my only “con” to be minimal risk. I want to work on addressing everything else.
Thanks. This really helped me understand this topic a little better.
No problem at all. I’m just trying to wrap my around this one step at a time. It is still overwhelming, but reading, listening to podcasts, and working on proper analysis is really starting to sink in. The unknown can be paralyzing and I experienced this a great deal before making my first single family purchase. I hope to find myself on the other side with having made it happen in multi family. All of that said, I’m am very overwhelmed!
I have started with 68. It worked. It highly depends on your previous experience of being responsible for other people’s money and ability to manage the business.
Wow, that is amazing! Can you share any lessons learned that only experience can teach?