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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Stopped charging security deposits years ago.
Best decision I made as a landlord.
Here's the math on 100 units.
Security deposit of $2,000 each.
10 tenants do $4,000 of damage. That's $40,000.
You only have $20,000 of their deposits. You eat the other $20,000.
And you hand the other 90 deposits back.
Now charge a $1,000 move-in fee instead. Not refundable.
You collect $100,000. It's yours.
Same 10 tenants. Same $40,000 of damage.
You still keep $60,000.
That's an $80,000 swing.
And tenants like it better because they need half the cash to move in.
The really aggressive players are starting to charge both. But i think that’s overkill.
Happy Halloween. One of my two favorite holidays.
Hey @grok is rent due the day after Halloween?
Everyone says boomers had it easy buying houses.
Partly true. But here's what nobody says.
In the 70s, most homes ran on one paycheck.
Then women poured into the workforce. Household income almost doubled.
So what did sellers do?
Raised prices to match two incomes.
Now a house is priced for two paychecks. And if you only have one, you're priced out.
Boomers didn't get lucky.
They bought before the market figured out it could charge double.
Gen Z isn't lazy. They're bidding against couples.
Same thing happened with rent. I see it with every lease renewal.
I only buy where people are moving to.
Not where they're leaving.
@grok what are the top 5 states people are leaving right now and what are the top 5 states people are moving to?
"There are no deals out there."
I hear this every week.
Here's what I do instead.
I drive around and write down every building I'd want to own.
Every address goes in a spreadsheet with the owner's phone and email.
Every 6 months I call, text or email. Once a year I send a letter.
Most say no. For years.
Then one day the owner gets divorced. Or tired. Or old.
And I'm the first call.
No bidding war. No broker. Just a deal.
The deals are out there. Most people just stop after one call.
How many owners are on your list?
Evicting a tenant isn't cruel.
Waiting three months to do it is.
Every month you wait, they fall further behind.
The number they owe gets bigger.
Now it follows them for years.
File on time. Every time.
A landlord who waits isn’t being nice. He is being weak.
Roof has 3 years left.
Replace now: $60,000.
Patch it: about $4,000 a year until it dies.
What would you do?
Tenant fell behind on rent.
I called him. He told me his wife was dying of cancer. Weeks to live.
He was crying. Said he'd pay as soon as things settled down.
I let it go. Then I let another month go.
Finally I called again.
His wife answered.
I asked how she was holding up.
"Good. You?"
I asked about the cancer.
She said she never had cancer.
He made the whole thing up. They're getting divorced.
This is why I don't take stories anymore. I stick to the lease.
Any good made-up stories you were told?
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.
I'm replacing it. Patching is $12,000 over 3 years and I still need a $60,000 roof at the end. Probably more by then.
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.